It is possible to deduce, without any doubt whatsoever, one of two things about Prime Minister Rudd’s recent proposal to impose the world’s most draconican restrictions on tobacco products through “plain packaging”. Either a)Kevin Rudd doesn’t bother to read evidence and advice submitted to him or b)he reads it, and just doesn’t care. Either prospect demonstrates a very dangerous character trait from a Head of Government. The end result? A bill to the taxpayers of up to $3.4 billion dollars, for a policy that won’t even work.
That plain packaging is a blatant violation of intellectual property rights, of numerous treaties Australia has signed, as well as of international law in general, is not in doubt. So why has Prime Minister Rudd done this? Well, it is clear that Kevin Rudd is on the nose. In the last week he has jettisoned the job-killing ETS, scrapped the disgraced home insulation scheme, and withdrawn from debating Tony Abbott. The fact that he is desperately trying to create a diversion is without question, “ banking that it’s enough to change the topic from his deceit and cowardice, and talk instead of his being “tough” and “bold”.” In many ways such behaviour is on par for Kevin Rudd’s Labor. What makes this case more problematic than most, however, is the severe flow-on effects this proposal will have.
But first, let us look at Kevin Rudd’s justification: that it will reduce smoking rates. A nice soundbite in a press conference, sure, but is it actually true? Even if we ignore the extreme nanny-state authoritarian implications of this policy, will it actually do what it claims?
The answer is an unambiguous no. There is no credible evidence that plain packaging will reduce smoking. None. Zero. Zip. Zilch. This is a fantasy made up by Kevin Rudd to justify this proposal. Nothing more. The reason for this is two-fold. Firstly, with cigarette advertising already banned, plain packaging will remove the only method of brand distinction available. As a result, brands will have only one thing to compete on: price. So they’ll drop prices. The result could, paradoxically, be an increase in smoking rates.
Secondly, this will create black market in cigarettes. Trademarks are the strongest protection possible against counterfeiting, and when you abolish them, a black market will invariable arise. It is already possible to buy a carton of cigarettes on the internet in for as little as $15, and this will doubtlessly increase. Indeed, this is already happening all over Eastern Europe, where trademark protection is minimal. And whilst some people may this this a minor issue, people die as a result of the illegal cigarette trade just as they do as a result of drug and human trafficking, and tobacco smuggling has also been found to directly finance terrorism.
Not only will this utterly fail in terms of its aims, however, the negative consequences will be disastrous to our economy, and our international standing.
As I have written previously, private property rights ought to be sacrosanct in any democratic country. The right to own and enjoy property is a fundamental part of rights of people, and indeed we consider it an extension of human rights. The protection of property, both physical and intellectual, is critical to economic development, and is the most important guarantee of freedom we have. Yet plain packaging legislation would clearly violate the intellectual property rights of companies, through forbidding them from displaying their trademarks and thereby differentiating their products on the basis of said trademark.
Tobacco companies have created significant intellectual property rights through their trademarks, as demonstrated in the significant degree of ‘brand loyalty’ in the market, and plain packaging legislation would significantly erode the value of these property rights. By denying tobacco companies their right to use their trademark to identify their product, the government – literally – intends to steal their intellectual property. This not only violates the legal rights of the companies affected, but furthermore sets a very dangerous principle for the future of a government unwilling to honor or respect intellectual property rights. And this doesn’t even begin to note how important trademarks are to prevent counterfeiting.
Yet this is not only morally bankrupt, it is also illegal. The Paris Convention, the Agreement on Trade-Related Aspects of Intellectual Property Rights, and the U.S-Australia Free Trade agreement clearly prohibit such conduct. There can be no question of this, which is why companies have the right to sue to recoup their lost investment.
The most galling situation about this is that there is currently a Senate Inquiry into plain packaging, set to report later this year. If Kevin Rudd had a shred of integrity, he would have waited till it released its report. However, in what can only be described as a cheap media stunt, he decided to announce it anyway. This is just madness. And will cost the Australian taxpayer, who are already suffering the burden of record spending, and a future of outrageous interest rate payments due to this, billions.
Yesterday, I was on the 2GB Afternoon Show discussing this with Chris, which you can listen into here. Alternatively, if you wish to read a more in-depth analysis of the legal issues surrounding this matter, you can read the Senate Submission I authored for the Property Rights Alliance here.