Britain's Implementation of Plain Cigarette Packs Could Lead to an Obama-esque Loss for the Taxpayer

Britain's Implementation of Plain Cigarette Packs Could Lead to an Obama-esque Loss for the Taxpayer

Australia has now had a full year of ‘plain packaging’ of cigarettes. Uncompromising pictures of smoking-related illnesses are set to a backdrop of a deliberately unattractive olive green colouring, with an identical font to signify the brand.

The British Conservative-led government’s review by paediatrician Sir Cyril Chantler has recommended the same in the UK despite two new, discomforting papers which refute what the anti-tobacco lobby have been promising.  

Firstly KMPG published a report after a full twelve months data. It was paid for by Australia’s three major tobacco suppliers, Philip Morris International, Imperial Tobacco and British American Tobacco. Many people may look at a tobacco-sponsored report as being biased but KPMG’s methodology is “recognised by UK NAO, OECD and national customs authorities and government departments.”

It does not make for positive reading. Illegal contraband sales are up from 13.3 percent to 13.9 percent of the market, while legal sales have risen by 2.4 percent as people switched from tailor made cigarettes to loose or hand rolling tobacco.

Perhaps the more disquieting evidence was offered by Dr. Ashok Kaul and Dr. Michael Wolf from the University of Zurich. They analysed Australian data for January 2011 to December 2013 for fourteen to seventeen year olds and concluded that “both analyses fail to find any evidence for an actual plain packaging effect on Australians aged 14 to 17 years”

Kaul and Wolf flew over from Zurich to London on the 20th March and had a meeting with Christopher Cox who described himself as “a secondee from the Department of Health… supporting Sir Cyril Chantler in his review… Sorry that Sir Cyril himself can’t make this meeting… we will give him a full briefing in the light of what you tell us.”

Dr. Kaul told Chris Snowdon, Director of Lifestyle Economics at the Institute of Economic Affairs that “the Chantler review team claims that our work was considered in reaching the conclusions of the review.”

It appears in this case to have been discarded.

Should plain packaging get green-lit in the UK, what awaits when tobacco exporting companies take the government to the World Trade Organisation may cost the British taxpayer £millions in compensation. The move seems to be in conflict with the WTO’s 1986 Uruguay Round on Trade-Related Aspects of Intellectual Property Rights where “The use of a trademark in the course of trade shall not be unjustifiably encumbered by special requirements..”

One example would be the Indonesia-USA Case. The former country is a large tobacco exporting nation which produces Kretek, a mixture of tobacco and cloves for flavouring. U.S. President Barack Obama banned flavourings of cigarettes in 2009, but omitted menthol as the administration was uncomfortable banning something which is smoked disproportionately by African-Americans.

Indonesia has taken America to the WTO Dispute Settlement Body (DSB) and has won one case after another. Obama will probably be faced with fines of $50 million a year and Indonesia will be allowed to retaliate to block American goods.

Plain packaging remains a contentious issue and at this stage it maybe too early to draw any conclusions as to its efficacy. With the evidence still unclear and huge costs to governments at risk, taxpayers and free market, free trade proponents must keep an eye on the public purse, and their own.


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