Since Australia imposed plain packaging, which is an extreme anti-intellectual property rights policy, to reduce the smoking rate, the two-decade decline in smoking stopped.
That’s according to the government’s records. There are more smokers and more seizures of illicit cigarettes in Australia than there were five years ago when the plain packaging policy started.
The policy is a direct attack on economic freedom and should not have gone into practice.
International treaties at the United Nations and the World Trade Organisation protect intellectual property rights, including the ability of producers to differentiate their products with their brands.
Yet, the World Health Organisation (WHO) continues to promote the policy despite international legal objections.
The policy prevents tobacco companies (the next sectors will be sugary drinks, fast foods and alcoholic beverage industries) from using their trademarks on cigarette packs.
Governments have not denied intellectual property rights in this way before, and steep unintended consequences were expected by those of us concerned about property rights.
Without trademarks, consumers are fooled into buying illicit packs and companies find it increasingly difficult to compete on reputation.
A new international coalition of 62 organisations has written to WHO director-general Dr Tedros Ghebreyesus, calling on the organisation to stop infringing on intellectual property rights with plain packaging policies.
Intellectual properties — like inventions, artistic work and trademarks — represent work and hold value. The ability to use and exchange these properties can’t be discarded to meet policy goals.
Brand usage rights are not just about ownership. As an asset that holds value, any regulation restricting their use would also have an economic impact.
Brand Finance, an independent branded business valuation consultancy, assessed the loss of brand value of eight of the largest food and beverage companies targeted by the plain packaging policy.
Its answer: a US$187 billion (RM728 billion) implied loss to the world economy, or an amount equal to the gross domestic product of New Zealand.
That is excluding the downstream impact on jobs or equity markets.
Trademark-intensive industries in the United States and European Union together employ more than 87 million people, more than any of the other IP-intensive industries and pay higher wages than their non-IP-intensive counterparts.
This group includes some of the largest companies in the world. Brand Finance estimated the implied loss to the world beverage industry would be US$293 billion, or an amount equal to the gross domestic product of Singapore.
WHO should rethink the plain- packaging policy. Other countries have reduced smoking prevalence without this measure.
The United States, for instance, has seen one of the largest drops in prevalence from 42 per cent of adults in 1965 to 16.8 per cent in 2014.
Last year, the US consumed more bottled water than carbonated beverages for the first time.
Other organisations have also started to endorse e-cigarettes as a harm-reducing substitute to cigarettes to reduce smoking.
WHO should protect IP rights and provide alternative solutions that actually work to reduce smoking prevalence.
Lorenzo Montanari
Executive director, Property Rights Alliance (a Washington, DC-based, global advocacy policy group in charge of publishing the ‘International Property Rights Index’)