The Government is throwing its support behind Australia in its fight against tobacco giant Philip Morris, as unbranded cigarette packets look likely to be introduced in New Zealand.

Tobacco giant Philip Morris Asia is threatening to sue the Australian Government over its plans to severely restrict advertising on cigarette packaging, with new laws set to be introduced by the Prime Minister, Julia Gillard.

The laws would restrict tobacco industry logos and brand imagery, with only the product name in standardised text allowed on the packet. All packets would be green, a colour research has shown is unattractive to smokers.

Australia will be the first country to introduce the laws, and Associate Health Minister Tariana Turia said New Zealand was watching the situation closely to see how best to follow.

"We are very supportive of Australia's initiative and it is our expectation that New Zealand will inevitably follow their lead and look to introduce the plain packaging of tobacco products."

It was no surprise that tobacco companies could "see the writing on the wall", and were feeling threatened, she said.

"Tobacco companies are very wealthy – they make a lot of money from peddling their dangerous, deathly, addictive product – and they clearly have no problem instigating legal challenges even if they have little chance of success."

Philip Morris has filed legal action against Australia under that country's bilateral trade agreement with Hong Kong, which means the Government has to protect Hong Kong investments in Australia.

Mrs Turia said officials would look at New Zealand trade agreements when drafting plain-packaging laws, to see how to counter legal challenges from the tobacco industry.

"Like Australia, we are probably in a position where the public health arguments for tobacco control outweigh the tobacco company interests, but ... we are also mindful of doing things in a way that is not going to unnecessarily cut across our trade interests."

But Green Party MP Russel Norman called for the removal of "perverse" investor rights given to foreign companies in free trade agreements, saying they would allow Philip Morris to sue New Zealand – possibly for billions of dollars. "That means taxpayers will be funding big tobacco's profits. That's not free trade, that's global extortion."

A report on possible alignment with Australia's packaging laws is set to be reviewed by Cabinet.

The Government has already committed to making the country smokefree by 2025.

- © Fairfax NZ News