* This is my column in BusinessWorld on March 27, 2018.
Last week, March 22, a global coalition of 62
market-oriented independent or nongovernment think tanks and institutes sent a
letter to the World Health Organization (WHO) on the subject, “Five years of
failure: Global coalition letter against plain packaging.” Three institutes
from ASEAN countries were among the signatories: the Center for Indonesian
Policy Studies (CIPS) in Jakarta, the Institute for Democracy and Economic
Affairs (IDEAS) in Kuala Lumpur, and Minimal Government Thinkers (MGT) in
Manila, my think tank.
The statement was circulated well in social media
particularly by signatory-institutes. The paper noted,
“After Australia implemented the policy, other industries
have been targeted around the world: alcohol, sugary beverages, fatty foods,
even toys. These industries employ millions and any regulation that would deny
key IP assets would have a devastating global economic impact. The trademark
value alone of only twelve companies associated with these sectors is estimated
to be more than $1.8 trillion.
The costs of plain packaging are enormous: the loss of
the innovation incentive, the mutilation of established international IP law,
the market carve-out to illicit actors, including terrorists. We urge the WHO
and governments around the world to stop infringing on intellectual property
rights with plain packaging policies.”
This coming April 18, IDEAS will hold a public forum on
“Intellectual Property Rights in the ASEAN Economic Community: Challenges and
Potentials” to be held at Intercontinental Kuala Lumpur. The forum will partly
cover an emerging big issue in international trade — the proliferation of
illicit products.
The proliferation of illicit trade and smuggling is
ironic in a period of overall tariff reduction and trade liberalization in the
ASEAN and many other regions in the world.
What explains this irony?
It is non-tariff barriers (NTBs) or non-tariff measures
(NTMs). After all, these require additional permits, sanitary and phytosanitary
measures (SPS), and technical barriers to trade (TBTs).
And, as mentioned in the letter, the emerging attack on
IPR — plain packaging, abolition of trademark and logo, abolition of corporate
branding, initially for tobacco products. Then advocates will move to other
“unhealthy” goods like alcohol, sugary drinks, confectionery and candies, and
so on.
Australia is the first country in the world to legislate
and implement plain packaging or standardized packaging in December 2012. The
estimated consumption of illicit and smuggled tobacco products was 12.2% of
overall tobacco consumption in 2011 and 11.5% in 2012.
When plain packaging was implemented, the estimated
illicit consumption went up: 13.5% in 2013, 14.5% in 2014, 14.1% in 2015, 13.9%
in 2016 (source: KPMG, March 2017. “Illicit Tobacco in Australia, 2016 Full
Year Report”).
Removing the trademark, logo and brand via plain
packaging is less of an assault on tobacco companies with long years of
corporate existence but more of an assault on a country’s tradition of
protecting private property rights.
Below are some numbers showing average wealth and IPR
protection in 15 economies, ASEAN + five in Northeast Asia. Data sources are
(a) IMF’s World Economic Outlook (WEO) for GDP per capita, (b) Property Rights
Alliance (PRA) International Property Rights Index (IPRI) 2017 Report, and (c)
World Economic Forum (WEF) Global Competitiveness Report (GCR) 2017-2018.
The GCR is composed of 12 pillars and pillar #1 is about
Institutions; among the sub-pillars there is IPR protection (see table).
These numbers show that countries with high per capita
GDP whether in current or nominal prices or in purchasing power parity (PPP)
values are also those with high scores and global ranking in intellectual
property rights (IPR) protection. And countries with low per capita income also
have low scores and ranking in IPR protection. The exception to this trend is
Brunei in the IPRI Report, and South Korea in the GCR.
High and rising taxes and now plain packaging as measures
to discourage smoking is successful only in reducing smoking of legal and
branded tobacco products. Not mentioned by advocates is that these measures are
highly favorable to producers and distributors of illicit, fake, non-branded,
and cheap tobacco products.
Since brand and product differentiation is effectively
abolished, producers and manufacturers, old and new players, will only compete
in pricing. So more cheap tobacco will be introduced and this will encourage
more smoking.
To further reduce smoking incidence, governments and NGOs
should continue public education about the dangers of smoking. But almost all
smokers already know the dangers of smoking, the same way that cliff and plane
jumpers, high wall/rock climbers, motorcycle stunt drivers, extreme bicycle
downhill riders, deep sea scuba divers, MMA/UFC fighters, etc. know the dangers
of their sports and passion but they keep doing it anyway, repeatedly.
People own their body, not governments or health NGOs.
There is a limit to state nannyism and very often, such nannyism results in
adverse, unintended consequences.
Governments should instead focus on protecting private
property as a way to encourage more economic prosperity.
Bienvenido S. Oplas, Jr. is President of Minimal
Government Thinkers, a member-institute of Economic Freedom Network (EFN) Asia.
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See also:
BWorld 197, Estimating electricity price hikes because of TRAIN, Part 2, March 22, 2018
BWorld 198, Three levels of global disruption, March 24, 2018
BWorld 199, Charity and giving should not be legislated, March 27, 2018
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