A New Zealand anti-smoking group says legal action by a tobacco giant against the Australian government is proof that plain packaging on cigarettes will reduce smoking.
The federal government is introducing legislation to remove branding from cigarette packets as part of a public heath initiative.
Cigarettes would be sold without any company logos and with all the brand names written in the same bland font.
But international tobacco company Philip Morris is suing, claiming the move will adversely affect and devalue its intellectual property.
The company said it had no other option and that the legal challenge had the potential to win billions of dollars of compensation if the proposals come into effect next year.
A spokesperson for ASH, Ben Youden, says Philip Morris would not be investing so much money into fighting the legislation if it did not think it would reduce smoking - which proves the legislation is a good idea.
Mr Youden say the tobacco industry has not made such a fuss about legislation since governments around the world banned cigarettes in workplaces and bars.
He says if the company's lawsuit fails, plain packaged cigarettes could easily be brought to New Zealand under trade deals with Australia.
The associate health minister Tariana Turia the move across the Tasman won't deter her from introducing plain packaging for cigarette packets here.
She says the company has been threatening legal action as long as the plain packaging policy has been under discussion in Australia.
The co-leader of the Green Party, Russel Norman, says the case shows multi-nationals can, and will, use international trade agreements to take action against governments.
Dr Norman says there have been cases overseas where governments have backed down from tough environmental and health legislation because of the threat of legal action.
He says the government needs to restrict the rights of overseas companies in trade agreements to prevent that from happening here.