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The Jakarta Post
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WTO agrees to set up panel to rule on US clove cigarette ban

  • The Jakarta Post

Jakarta | Wed, July 21 2010 | 09:21 am

The World Trade Organization (WTO) has agreed to establish a panel to rule on Indonesia’s complaint that a US ban on clove cigarettes aimed at preventing teenagers from starting to smoke was discriminatory, a government official says.

Trade Ministry Director General of International Trade Gusmardi Bustami said the WTO’s Dispute Settlement Body (DSB) agreed during their second court session on July 20 to establish a panel to rule on the issue.

“It agreed to establish a panel of experts despite ongoing US objections,” he told The Jakarta Post via telephone.

He said the panel of three judges would be assisted by third parties consisting of representatives from Guatemala, Brazil, the EU, Turkey and Norway.

The US raised its objections on the establishment of a panel in the first DSB court session in June.

“In the second court session, the US did not have the right to raise objections, something it was aware of,” Gusmardi said, adding that during the second meeting, the US delegation continued to object to the establishment of the panel.

After the panel had been formed, he said, the Indonesian government would decide whether it would accept the established panel.

He said the judges would be formally appointed in the next two weeks.

The Indonesian government sees the establishment of a panel as the best final effort to settle its disputes on tobacco trade restrictions with the US at the WTO due to the lack of a successful resolution from bilateral negotiations.

Gusmardi said Indonesia submitted the request in a session of the DSB at the WTO in Geneva on June 22, after a failed formal consultation between the two countries on May 13.

He said Indonesia had requested the WTO create a panel of experts to rule on the issue even though the two countries had 60 days to resolve their differences through consultation after launching a formal dispute on April 12.

The US ban on Indonesian clove cigarettes was instigated by the enactment of a new law targeting a reduction of young smokers in the country.

US President Barack Obama enacted section 907 of the Family Smoking Prevention and Tobacco Control Act into law on June 22, 2009, prohibiting all flavored cigarettes, including clove cigarettes, from being sold in the US as of September 22, 2009.

However, menthol cigarettes areexempt from this regulation.

Gusmardi said the government would ask the panel to review US violations on trade regulations, including the General Agreement on Tariff and Trade (GATT) 1994, Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) Agreement.

As a member country of the WTO, he said, the US shouldn’t engage in trade discrimination, as stated by the TBT Agreement and GATT 1994.

“It impedes our tobacco exports,” he said.

The Trade Ministry says Indonesia’s tobacco exports to the US, including clove cigarettes, which peaked at 30,196 kilograms worth US$604,420 in 2007, fell since the US ban on clove cigarettes. In 2009, tobacco exports dropped to 9,984 kilograms worth $83,616.

The TBT Agreement states that clove cigarette and menthol cigarette are “like products”.

Gusmardi said 99 percent of clove cigarettes sold in the US were imported, especially from Indonesia, compared to menthol cigarettes, which were mostly locally manufactured by US cigarette producers.

“We see the US interdiction on the importation of clove cigarette as discrimination, showing less favorable treatment to it compared to menthol cigarettes,” he said.

The Tobacco Act issued by the US government targets the reduction of cigarette consumption among young smokers, addressing health problems caused by a high consumption of cigarettes.

About 43 percent of young smokers in the US consume menthol cigarettes, meaning menthol
cigarettes account for about a quarter of all cigarettes consumed in the US. (ebf)


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