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Thailand faces tough fight on plain packaging

Little known among the public, Thailand is set to introduce standardised packs for tobacco products – internationally known as “plain packaging”.

Published last year, the draft Tobacco Consumption Control Act sponsored by the Public Health Ministry is now being considered by the Council of State. The new regulation would require larger warning labels on all cigarette packages that would minimise the size of trademarks. All branding – colours, imagery, corporate logos and trademarks – will be removed, with manufacturers permitted to print only the brand name in small size.

The law is being billed as the authorities’ latest ploy to curb smoking. According to the Thailand Tobacco Monopoly, Thais puff through about 32 billion cigarettes a year, worth a total Bt40 billion. This is despite the latest excise tax hike, which cut down consumption by around 3 per cent.

If the bill is passed, Thailand would join developed countries like Australia, France and the United Kingdom in introducing plain packaging.

Australia led the way by passing its Tobacco Plain Packaging Act in 2012, since when all tobacco products have been sold in the same standard dark-brown packaging with matte finish. Authorities said the new rules would help reduce smoking rates and combat the ill-effects of tobacco.
France will be next, when it rolls out plain packs from January 1 next year, followed by the UK from May.

Meanwhile, some countries – developed and developing – are considering following suit, which should further dampen the mood of big tobacco companies like Philip Morris International, British American Tobacco, Imperial Tobacco and Japan Tobacco International.

Mulling the move are Ireland, New Zealand and Malaysia, whose Health Ministry director for disease control Chong Chee Keong has announced the plan but no date for implementation.

But it is developing countries that have to tread carefully here, since the law risks attracting lawsuits from tobacco companies while also boosting sales of contraband tobacco products.

Plain-packaging pioneer Australia was lauded by World Health Organisation regional director Shin Young-soo, whose beat covers 37 countries ranging from Australia, Japan, South Korea, Singapore and China to Vietnam. It is estimated that two people die every minute from a tobacco-related disease in this region, which consumes one in three cigarettes sold across the world.

“The legislation sets a new global standard for the control of a product that accounts for nearly 6 million deaths each year,” Shin said, urging other countries to follow suit.

But the road so far has not been smooth. Australia has faced lawsuits and accusations from World Trade Organisation member countries Dominica, Cuba, Honduras and Indonesia of breaching internationally accepted trademarks and intellectual property. A case against Australia was filed with the WTO in 2013, but a ruling is not expected within this year, due to “complexities”.

Meanwhile, Philip Morris Asia launched a challenge in 2011, arguing that the ban on trademarks breached foreign investment provisions of Australia’s 1993 Investment Promotion and Protection Agreement with Hong Kong. But the arbitral tribunal in December 2015 declined jurisdiction to hear the case.

The Thai authorities must be closely following the case, since the Kingdom will definitely face the same ordeal, which could take years to resolve.

Indeed, Thailand is already facing headwinds.

During the WTO’s Trade Policy Review in November 2015, Thailand was asked several questions concerning its plan and how it would ensure that intellectual property (IP), especially trademarks, is protected.

Honduras was pretty active in the session, firing a barrage of questions at the Thai representative.

One inquiry was whether Thailand had scientific evidence that prohibiting the display of product names, marks and the name of the manufacturer or importer would have significant impact on tobacco consumption. Thailand admitted it did not.

Questioned on how it would uphold the value of IP with plain packaging, Thailand said the move was purely to reduce public health risks, and there was no restriction on the use of trademarks.

Asked how current trademark displays would be affected by the bill, Thailand said the new law had not yet been implemented.

Honduras also enquired whether Thailand’s Commerce and Finance ministries had taken any role in the decision. The Thai representative confirmed they were asked to comment when the draft law was tabled for Cabinet approval.

Thailand was also asked by China to explain how plain packaging protected trademarks and how the new act would ensure fair competition for the sale of tobacco products. Again, the response was that the legislation had not yet come into force and the objective was to reduce health risks – a legitimate public policy objective.

Meanwhile the United States and the European Union expressed concern that Thailand might extend the legislation to cover alcohol products. Thailand responded with neither a Yes or a No, merely saying that if the legislation is enforced, it would apply to both domestic and foreign products on a non-discriminatory basis.

The fight will be a long one, with all stakeholders desperate to maintain their status in a huge global industry worth more than $600 billion.

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