'Cigs down' after case goes up in smoke

The High Court yesterday dismissed the plain packaging case brought against the Australian government by the world's largest tobacco companies. The companies had challenged the government's new law - due to be fully implemented from December 1.

The Court released its decision without detailed reasons, which are yet to come. This Friday, British American Tobacco Australasia is due in another court over its efforts to obtain documents dating back to the Keating government under freedom of information laws. The High Court may have considered that the company's interest in these documents was now a fool's errand and so gave it a chance to reconsider.

Like the mortally wounded Black Knight in Monty Python and the Holy Grail, Big Tobacco will now be hoping that, despite losing its right arm and buckets of blood (just flesh wounds), two other cases will see off the scourge of plain packs, against all the odds.

Three governments - Ukraine, the Dominican Republic and Honduras - have filed complaints with the World Trade Organisation against the Australian government's laws. None of these nations has any significant trade with Australia, let alone in tobacco products.

For all Big Tobacco's bluster and its sternly worded submissions from a variety of US-based trade associations, it is telling that these three puppets are the heaviest hitters it could convince to run its case with the WTO. Specialists in global trade law give the challenges little prospect of success.

A third case is being brought by Philip Morris Asia (based in Hong Kong) via a bilateral trade agreement between Australia and Hong Kong, signed in 1993. The timeline of this case is fascinating.

On April 29, 2010, the Australian government announced its intention to introduce plain packaging. At the time, Philip Morris tobacco products in Australia were manufactured by Philip Morris Australia. On 23 February, 2011, Philip Morris Asia purchased Philip Morris Australia and on 27 June, 2011 - a full 14 months after knowing the government intended to introduce plain packs - Philip Morris Asia served its notice of claim to the Australian government.

Imagine someone learning that a property would be badly affected by a new freeway being built nearby, then going ahead and purchasing the property anyhow and taking the government to court for compensation over damage to their investment.

So what can we expect locally from Big Tobacco? First, dramatic price falls. Many will think "these [famous name brand] cigarettes are costing me $3 to $4 a pack more than cheap unknown brands in exactly the same packaging except for the small brand name."

Tobacco companies chase the "value market" because they know that total sales volume is steady and the margins on high-end brands are where they profit most. A leaked BATA staff development DVD from 2001 explains how the company then needed to sell five packs of budget brands to get the same profit from one premium brand pack.

Australia is a tiny market for Big Tobacco, and it may well be willing to treat us as a "loss leader". The industry will be so desperate to demonstrate that plain packs "don't work" that it might even be prepared to wear local losses for a year or so.

But the government can simply raise tobacco tax overnight as often as it needs to effectively maintain a floor price for cigarettes that will deter smokers from buying more than they could have afforded previously.

Second, stand by for lots of "independent" reports by academics from obscure universities or consultancies, purporting to demonstrate that the new packaging has not affected smoking. The rhetoric will oxygenate ignorant assumptions that plain packaging was somehow going to cut smoking overnight. The reality of the historical fall in smoking over the past 40 years is that annual declines have been by fractions of 1 per cent, driven by the combined effects of all policies.

Plain packaging may amplify this downward trend, but no one expects it to dramatically increase it. The main goal has always been to deglamorise smoking among children.

The last significant vestiges of local tobacco advertising ended in 1992. So a 20-year-old today has never been exposed to it. Today's youth smoking rates are the lowest ever recorded. Plain packaging is designed to turbo-charge that decline.

Simon Chapman is professor of public health at the University of Sydney. This article was first published at The Conversation.

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