Tobacco giant suing Australian govt 'a warning' for NZ

Tobacco giant Philip Morris suing the Australian government for introducing plain packaging laws for tobacco should send shockwaves through this country as it seeks a free trade deal involving the US, says an academic critic of the deal.

American company Philip Morris' Hong Kong arm launched legal action today against the Australian government over plans to strip company logos from cigarette packages and replace them with grisly images of cancerous mouths, sickly children and bulging, blinded eyes.

Several outraged cigarette makers have threatened lawsuits but Philip Morris is the first of those companies to file claim for compensation, which could run to billions.

The tobacco company says the treaty protects companies' property, including intellectual property such as trademarks. The plain packaging proposal severely diminishes the value of the company's trademark, Philip Morris spokeswoman Anne Edwards told The Associated Press.

"Our brands are really one of the absolute key valuable assets that we have as a company -- it's what helps us compete, it's what enables us to distinguish our products,'' Edwards said. "This move ... would essentially amount to confiscation of our brand in Australia."

Jane Kelsey, of the University of Auckland Law School, said the move to sue the Australian government as it tried to protect the health of its citizens was exactly what opponents had been warning could happen if US firms were given powers to sue the New Zealand Government under the Trans-Pacific Partnership (TPP).

Philip Morris had found a back door route to protect its profits by a "classic exercise of treaty shopping" -- using an obscure bilateral investment Treaty that Australia signed with Hong Kong in 1991, Prof Kelsey said.

"The champions of these agreements dismiss concerns that they could be used to challenge public policies that are in the national interest, such as tobacco controls, offshore mining regulation or stricter telecommunications laws.

"This development should send shock waves through the Parliament, local government and ordinary citizens," she said.

"It's clearly not enough to stop these powers being included in a TPP. All New Zealand's trade and investment agreements that have investor-state enforcement powers need to be revisited as well."

New Zealand is involved in TPP negotiations, which is the first multi-party free trade agreement linking Asia, the Pacific and the Americas.

Details of what is at stake have not been made public and opponents say the TPP will also allow American drug interests to water down the powers of this country's Government drug buying agency Pharmac.

The Australian government denied its tobacco legislation breaks any laws and said it would not back down.

Health Minister Nicola Roxon said the Australian government would not be deterred by tobacco companies making threats or taking legal action.

Prime Minister Julia Gillard also brushed off Philip Morris' threats. "We're not going to be intimidated by big tobacco's tactics," she told Australian Broadcasting Corp.

The legal notice filed Monday opens up a three-month period of negotiation between the two sides. Philip Morris said if a "satisfactory outcome" isn't achieved by the end of the three months, it will seek arbitration.