Issue link: https://read.dmtmag.com/i/550316
62 tobaccoasia CLOSING NEWS 卷尾新闻 government will be taking action in combating illicit cigarette trade. LT Group had previously claimed that illicit trade was a result of the increase in taxes implemented by the government in 2013 and had affected the group's market share as consumers naturally chose lower-priced cigarettes. US NYT: China Lacks Oversight A recent New York Times report said that e-cigarettes had become increasingly popular, particularly among young adults, yet hundreds of e-cigarette manufacturers in China operate with little oversight. Health experts have warned that poorly manufactured devices can vaporize heavy metals and carcinogens such as lead, tin, nickel, chromium, and zinc alongside the nicotine, harming users. There have also been reports in the US of e-cigarettes that exploded after a lithium ion battery or electric charger overheated, causing burns. However, many e-cigarette manufac- turers in Shenzhen, China's "e-cigarette center" are legitimate and have made concerted efforts at quality control. In a five-square-mile area in the northwestern part of Shenzhen called Bao'an, in a district packed with industrial parks, there are believed to be more than 600 e-cigarette producers, and many more component suppliers selling bulk orders of tube casings, integrated circuit boards, heating coils and lithium ion batteries, the essential components of the e-cigarette. Of course, there are also some lower-end operations that either have no safety testing equipment or specialize in counterfeiting established brands, often with cheaper parts. Unlike the counter- feiters' shops, the largest Shenzhen e-cigarette manufacturing operations are clean and of high standards. The US FDA has just begun to move toward regulating e-cigarettes, working on rules that would force global producers, in China and elsewhere, to provide the agency with a list of ingredients and details about the manufacturing process. Yet, setting those rules and new manufacturing guidelines could take years. Some Chinese companies are trying to get ahead of the anticipated FDA rules. Large manufacturing companies operate facilities that have glass-enclosed, dust-free rooms that could easily rival pharmaceutical labs, coupled with quality-control standards on par with medical device makers. Global tobacco giants that have entered the e-cigarette market are also manufacturing in China, and are doing so with stringent controls. Plain Packaging: Act vs Case Before Australia's Tobacco Plain Packaging Act (TPP) was challenged by countries (Ukraine, Honduras, Cuba, and the Dominican Republic have all challenged the TPP Act at the World Trade Organization) as well as contested pursuant to the 1993 in- ternational agreement between the government of Australia and the government of Hong Kong for the promotion and protection of investments, or the Hong Kong Agree- ment Philip Morris Asia (PMA) argued that the TPP Act breached articles 6 and 2.2 of the Hong Kong Agreement, on the basis that Australia was depriving or expropriating Philip Morris Asia's investments or assets and that Australia was not treating Philip Morris Asia's investments fairly and equitably), the TPP Act was challenged in the Australian High Court in the Plain Packaging Case. What follows is a summary of what happened in the case. The plaintiffs in the Plain Packaging Case were tobacco companies which manu- factured, packaged, and sold tobacco products. They argued that the TPP Act pre- vented them from exploiting their intellectual property rights on the packaging of their tobacco products which they had previously enjoyed (including the use of trademarks and goodwill in their tobacco packaging). The plaintiffs said that this constituted an acquisition of their property not on just terms, in breach of section 51(xxxi) of the Australian constitution. In this case, the High Court had to consider if the plaintiffs' intellectual property rights were 'property' for the purpose of section 51(xxxi), and if yes, did any provisions of the TPP Act result in an acquisition of that 'property'? The High Court recognized that intellectual property rights of the plaintiffs, in- cluding tobacco related trademarks, cigarette packaging get-up, copyright, design patents, packaging and licensing goodwill, and intellectual property licensing rights, fell within the concept of 'property' for the purpose of section 51(xxxi). That some intellectual property rights were created by way of legislation was irrelevant to that characterization. This answered the first question. For the second question of whether any provisions of the TPP Act result in an acquisition of that 'property', the High Court held that an acquisition is not made out merely by extinguishing rights. Thus, by prohibiting the exercise of intellectual prop- erty rights on cigarette packs, the Government was not appropriating those rights for itself and so there was not a prohibited acquisition by the Government of private property. Further, the majority judgment noted that such an acquisition has to be propri- etary in nature. The Australian Government did not acquire any proprietary benefit from the imposition of the TPP Act on the plaintiffs. Accordingly the constitutional challenge to the TPP Act failed.