An Egyptian man lights a cigarette in Cairo on June 10, 2010.
An Egyptian man lights a cigarette in Cairo on June 10, 2010. - 
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STEVE CHIOTAKIS: Tobacco giant Philip Morris is now threatening to sue Australia saying the government there is violating international law by requiring all cigarette packs be sold in generic packages with pictures of diseases caused by smoking.

Reporter Stuart Cohen joins us from Sydney to explain. Good morning, Stu.

STUART COHEN: Good morning.

What is Philip Morris accusing the Australians of doing, exactly?

COHEN: It's a bit technical. All Phillip Morris cigarettes that are sold in Australia are actually sold by 'Phillip Morris Asia' -- which is based in Hong Kong. So what Philip Morris says is that forcing removal of its trademarks from its products would violate the terms of a investment treaty Australia has with Hong Kong. That's something the company says is enforceable under United Nations trade rules, and they're seeking billions of dollars in compensation if the law goes ahead.

Phillip Morris Asia's spokeswoman Anne Edwards talked with the Australian media today and here's what she had to say.

ANNE EDWARDS: By attempting to take our company property, which is what the government is essentially doing, it's a very, very clear violation of the investment treaty that Australia has with Hong Kong.

CHIOTAKIS: Stuart, the U.S. just put out its new packaging and there are scary images, and big tobacco was saying that the government was violating laws here in this country. Could the legal debate down there spread back here to the United States?

COHEN: Well, Australia is really the canary in the coal mine with this whole thing. The rest of the world is watching and any successful challenges to the Australia law will certainly be tried in the U.S. and of course any other countries working on similar laws.

CHIOTAKIS: All right, Stuart Cohen in Sydney. Stuart thank you.

COHEN: Always a pleasure.