Packet of fags: Tobacco industry fights against further cigarette packaging ‘restrictions’

28th June 2011

The industry has already successfully used trade law to water down tough rules on packaging from Uruguay after Philip Morris argued they violated a bilateral trade agreement with Switzerland where it is headquartered. It is now threatening to use an Australian trade agreement with Hong Kong to challenge the ban, by arguing it violates its intellectual property rights.

The Australian government is adamant the law will go ahead, but if it does, Philip Morris says it will be seeking compensation worth billions of Australian dollars.

British American Tobacco, one of the biggest cigarette manufacturers in Australia, is already preparing to challenge the move.

The Guardian has a video showing the Australian Welsh-born Prime Minister Julia Gillard saying she will not be intimidated. It also has tobacco company representatives outlining their case with the report from the newspaper, here.

Tobacco is under threat in many jurisdictions with the US Food and Drug Administration enforcing new warnings as reported here by The Street which has hit the performance of share prices.

US firms Lorillard, Reynolds American, and Altria Group all came under share price pressure, though  US listed Philip Morris International, was also hit, despite only selling outside the US.

Tobacco firms have also just lost a Supreme Court appeal against a payment of $270m levied by the state of Louisiana to help fund people trying to quit, as NPR's website reports here.

The Independent business editor David Prosser believes the writing is on the wall for Big Tobacco.

He suggests the reasons for such vociferous opposition in Australia is that the tobacco firms fear countries in Asia will follow suit.

Meanwhile, SeekAlpha discusses Star Scientific, a firm that is developing products that could reduce the symptoms of Alzheimers from tobacco plants as well as low tobacco smokeless products that would not create carcinogens and hopefully therefore not lead to cancer.

SeekingAlpha suggests it may be early days before a tobacco or pharmaceutical firm considers buying the company.

At the start of this month, the shares of Imperial Tobacco fell as the firm said a ban on cigarettes in Spain had cost it £110m as the International Business Times reports here.

Here the Economist says that with China and India protecting their own industries, Indonesia and the Philippines are the golden geese for Big Tobacco.

It writes: "Indonesia, one of the world's least regulated markets, is one of few Asian countries not to have ratified the World Health Organisation's treaty on tobacco control. Cigarette advertising is rampant. One in four children aged 13-15 smokes."

"The Philippines also combines growth with light regulation. Last year PMI, already a big investor in the country, formed a joint venture with Fortune Tobacco, which makes cigarettes for low- to middle-income Filipinos."

One contact, a data-analysis firm in Jakarta, told the Economist on condition of anonymity for itself and its client, that a tobacco giant hired it to identify and approach Indonesian "influencers" on Facebook, Twitter and other social media, so they could be offered incentives to plug its brands.

In response, Sueco, a smoker sounds like he has had enough writes:

"This is where my support for laissez faire ends. I'm a smoker, and I support every consenting adult's right to choose whether to smoke or not. This is not about having the freedom to smoke. This is about gigantic corporations with nearly unlimited resources embarking on a sophisticated propaganda effort to hook unsuspecting minors of the third world."

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