Australia and Korea seem to be working hard towards a free trade agreement:
Australia and South Korea should seal a free trade agreement by the end of the year, after Julia Gillard and South Korean President Lee Myung-bak agreed yesterday to fast-track talks.
Mr Lee hosted the Prime Minister in Seoul yesterday, greeting her as a friend, holding her hand and lauding the special relationship between them.
"It makes me feel as if I have known you for a very long time," he said after welcoming Ms Gillard with a warm embrace.
Ms Gillard emerged later, saying she and Mr Lee had agreed to press for a swift conclusion to the FTA talks.
"I will be instructing Australia's trade negotiators to work to this timetable (the end of the year)," Ms Gillard said. "A comprehensive high-quality FTA is good for both of us. Trade means jobs for both of our nations."
One issue that might get in the way is Australia's proposed regulations on plain packaging of tobacco products:
Drastic plans by Australia to become the first country to enforce plain packaging for cigarettes could cut smoking rates, and are likely to be emulated by Canada, New Zealand, and Britain, reinforcing Australia's record as a world leader in antismoking measures.
The Australian government has announced draft legislation to outlaw all logos, colors, brand imagery, and promotional text from cigarette packets. The move will “take away the tobacco industry’s final capacity to promote its product,” says John Daube, professor of public health at Curtin University’s Institute of Public Policy in Perth.
Under Australia’s plan, all cigarette packets will be a drab olive green – the least appealing color, according to research – and covered in health warnings. The brand name will appear in a standard font and position on the box, which “will now only show the death and disease that can come from smoking,” says Health Minister Nicola Roxon.
Korea's tobacco industry is not happy with these regulations, and has raised the issue in the context of the possible FTA:
Korea’s tobacco farmers are planning to hold a rally protesting the Australian government’s moves to reduce the country’s cigarette market.
The farmers claim the action limits Korean exports unfairly as the countries discuss a free trade agreement.
The Korea Tobacco Growers Cooperative Association, KTGCA, demanded yesterday that Australian Prime Minister Julia Gillard, who will be arriving today to discuss a possible free trade agreement, withdraw proposed plain packaging regulations.
The official said that for a company trying to enter a new market already dominated by global companies such as Philip Morris, limiting package design completely blocks its chances of selling in the market.
Korean tobacco farmers said that a comprehensive ban on tobacco advertising already in place in Australia has made it difficult for new brands to enter the new market, and the additional antismoking measures will make things worse.
That last bit is interesting. Clearly, plain packaging hurts sales of all tobacco products. But who does it hurt most? Unknown, prospective new entrants, or established incumbents? The Korean farmers are assuming it hurts new entrants, but I wonder about that. Would appealing packaing by the new entrants really be able to unseat the familiar designs of the incumbents? Or would the incumbents' familiar packaging hinder the progress of new entrants? Perhaps the new entrants are better off with a system where customers can't tell the difference between packages, and base their decisions only on price.
Either way, though, all producers will no doubt lose sales. More here, including a sample picture of what plain packaging might look like.
Finally, here's a letter from the ICC criticizing Australia' plain packaging measure: http://www.iccwbo.org/uploadedFiles/BASCAP/Statements/Letter%20-%20Australian%20Trade%20Minister_plain_packaging.pdf