Plain packaging for tobacco does not restrict trade

Australia was the first country to introduce legislation requiring tobacco products to be sold in plain packaging, as a measure designed to discourage smoking and so improve public health. Ukraine, Honduras, Indonesia, the Dominican Republic and Cuba filed a complaint in relation to Australia’s plain packaging legislation with the World Trade Organisation (WTO) on grounds that included the allegation it restricted trade because competition for tobacco products in Australia had been affected.

Greg Houston, Luke Wainscoat and Sarah Turner prepared a report for the Australian government that was submitted as part of the WTO dispute settlement proceedings.

Our report explained that the plain packaging legislation did not affect:

Our analysis showed that competitive conditions in the supply of tobacco were weak prior to the introduction of the plain packaging legislation. In particular:

The introduction of the measures required by plain packaging legislation did not change those conditions, ie:

Our analysis showed that Australia’s plain packaging legislation had not restricted trade. First, the plain packaging measures apply equally to all tobacco products sold in Australia, whether or not they are manufactured locally or overseas.

Second, the proportion of imported products in the Australian market continued to rise since the introduction of the tobacco plain packaging measure. Import penetration, as a proportion of total tobacco sales in the Australian market, increased following since the introduction of the tobacco plain packaging measure in December 2012, as domestic producers left the Australian market

In its decision on the dispute proceedings, the WTO panel rejected all of the claims that the plain packaging was inconsistent with WTO rules.

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