NZ can't be sued by tobacco companies over plain packaging law, PM Key says; 'They can take us to court, but it doesn't mean they're right'

New Zealand has not signed any trade agreements which would stop the government from introducing a law requiring plain packaging on cigarette packets, Prime Minister John Key says.

Associate Health Minister Tariana Turia last week said Cabinet had agreed to introduce the law, following a similar move by the Australian government.

But the Australians have run into difficulty with the law change due to clauses in an investment treaty with Hong Kong. Tobacco maker Philip Morris is currently suing the Australian government over the move, and has claimed the law change could trigger compensation claims worth billions of dollars.

'You'll break international laws and trade agreements'

Philip Morris last week attacked the New Zealand government's move, saying it would be in violation of international laws and trade agreements it had signed up to.

“Philip Morris New Zealand will be submitting its detailed views on plain packaging for tobacco products as part of the public consultation. These views include that plain packaging will not reduce smoking rates, will trigger a variety of adverse consequences and violates numerous international laws and trade treaties," a company spokesman said in a media release.

"This is demonstrated by the fact that plain packaging recently passed in Australia and is now subject to three different types of legal action,  including complaints from two countries to the World Trade Organization (WTO). In addition, some 21 other countries have voiced concerns about the policy," the spokesman said.

"The legislation in Australia also met strong opposition from retailers, particularly over the likelihood that plain packaging will boost the illegal, unregulated market for smuggled and counterfeit cigarettes,” he said.

'We're OK'

In July last year, Key said it was his understanding the government could not be sued for introducing plain packaging legislation. He reiterated those comments on TV One's Breakfast programme on Monday.

Key was asked whether clauses in the Trans Pacific Partnership trade agreement, which the US is currently looking to join, would allow American firms to sue to the government over policy changes.

“No. Obviously not," the Prime Minister replied, adding the US had not yet been signed in to the TPP agreement.

“They may well want to protect the rights of their companies as they see it. But my understanding is, we don’t have a free trade agreement at the moment that - if we passed a law that said there had to be plain packaging in New Zealand - would open us up to  a legal challenge," Key said.

Key noted the debate in Australia.

“But that’s not the case, as we understand it, in New Zealand," he said.

“We retain sovereign rights for lots of things, and if we want to have the sovereign right that says, if you want to bring cigarettes into New Zealand and they have to have plain packaging, then I haven’t seen anything yet that tells me our law would prevent us from doing that.

“There are always people who can test their rights in the court. [It] doesn’t mean they’re right,” he said.