New Zealand's wine and dairy producers will be forced to export their products without branding in retaliation for Government's introduction of plain packaging of cigarettes, tobacco firms are warning MPs.
A senior Indonesian official has been reported saying New Zealand exporters will pay a price for draconian law changes which will require tobacco producers to sell their products in plain packs with standardised fonts and colours.
Tobacco firms and lobbyists repeated the warning to a Parliamentary committee yesterday.
Emergency Committee for American Trade president Cal Cohen told MPs that plain packaging was likely to lead to restrictions of trademarks for other goods such as wine and dairy.
Tobacco giant Phillip Morris pointed to a letter by Indonesia's former Minister of Trade Gita Wirjawan to New Zealand's Ministry of Health, in which he said plain packaging breached WTO rules and would have an impact on New Zealand exports.
The former minister, now the Indonesian Director General for International Trade Co-operation, made a similar warning in a local news report: "If the cigarettes we export there are not allowed to have brands, then the wine they sell here shouldn't also."
New Zealand's exports to Indonesia were worth nearly $900 million, half of which came from dairy. Food and beverages made up 70 per cent of total exports.
Trade Minister Tim Groser said New Zealand was "exercising its normal rights" through the plain packaging legislation.
He told the Herald: "I've met numerous Indonesian officials since we initiated that action and no concern has been expressed to me personally.
"So I would be very surprised if I hear talk in the future of that."
Government is expecting New Zealand's plain packaging legislation to be challenged in court by tobacco companies and also by tobacco-producing countries at the WTO.
Mr Groser said; "There's a very widespread misunderstanding that taking people to the WTO is considered a hostile act. Actually it's not. It is perfectly consistent with maintaining friendly relations."
New Zealand was likely to delay the implementation of the law change until legal challenges against Australia were resolved.
Tobacco firms also argued that the law change was likely to fuel a blackmarket.
Consultant Will O'Reilly, who was flown from the UK by Phillip Morris to submit to the committee, said a spike in illicit products followed the introduction of plain packs in Australia.
Public health officials dismissed this argument, saying that any illegal increase was the result of tax increases and not packaging.