Tobacco.org

• Indonesia responds on U.S. appeal against WTO clove-flavored cigarette ruling  

The Indonesian government has given an answer to the United States' appeal against a World Trade Organization (WTO) Panel ruling that requires Washington to stop discriminating against "kretek" (clove-flavored) cigarettes from Indonesia, an official was quoted by Antara news wire as saying on Tuesday.

Director General for International Trade Cooperation of Trade Ministry Gusmardi Bustomi said that the ministry sent the rejoinder to the U.S. appeal on Monday.

"In essence, we forwarded our opinion that the Panel's decision favoring Indonesia was already correct," Director General for International Trade Cooperation Gusmardi Bustomi said. The director also said that the Indonesian government had reaffirmed its stance that the U.S. Family Smoking Prevention and Tobacco Control Act had disadvantaged Indonesia.

The act among other things banned the production and sale of cigarettes containing additive materials such as Indonesia's kretek cigarettes.

The regulation excluded U.S.-made menthol cigarettes and was thus seen discriminating against Indonesia's kretek cigarettes.

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• Indonesia will not appeal WTO ruling on US tobacco ban  

Indonesia will not lodge an appeal against a WTO ruling on the import ban of flavored tobacco by the US, citing satisfaction despite losing its argument on the efficacy of the ban in reducing the number of young smokers.

Director general for international trade Gusmardi Bustami told reporters on Friday that Indonesia had won the backing of the WTO on its stance regarding the discriminatory nature of the US import ban.

The US Food and Drug Administration banned cigarettes with fruit, confectionery or clove flavors in September 2009, arguing such cigarettes were particularly attractive to children.

The ban affected Indonesia’s clove cigarette industry, as it immediately blocked nearly US$200 million in exports to the US market. The Indonesian government deems the ban discriminatory as the US still allows the sales of menthol flavored cigarettes that are produced widely in the US and smoked by about 19 million Americans. . . .

The WTO’s Dispute Settlement Body issued a ruling on Sept. 2, 2011 that acknowledged Indonesia’s grievances on the discriminatory nature of the import ban, saying that the US violated international trade rules by favoring domestically produced menthol-flavored cigarettes.

The settlement body, however, said the notion that the ban could prevent youths from smoking was relevant and logical.

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• US Appeals WTO Ruling On Clove Cigarette Ban ($$) 

The U.S. on Thursday appealed a World Trade Organization decision concluding that the country's ban on clove cigarettes violated some international trade rules by favoring mainly domestically produced menthol-flavored cigarettes over cloves imported largely from Indonesia.

In its appeals brief, the U.S. argued that the panel erred both in concluding that clove and menthol cigarettes were like products and in ruling that U.S. laws treated the imports less favorably than similar cigarettes made domestically.

In particular, the panel improperly concluded that it didn't have to consider the "tastes and habits" of current consumers in weighing whether the two items are "like" products under international trade agreements, the U.S. argued.

While the U.S. applauded the panel's conclusion that the regulation was not unnecessary because it was in the service of the legitimate goal of reducing youth smoking, it argued that the two findings were "difficult to reconcile." The problem, according to the U.S., is that it should be allowed to regulate menthol cigarettes, a product to which millions of adults are addicted, differently than it deals with clove cigarettes, which are "used almost exclusively by novice smokers."

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• WTO Accession of the Russian Federation - Implications for Alcohol and Tobacco Sectors 

Russia’s accession to the World Trade Organization (WTO) will create opportunities to increase exports of alcohol and tobacco products to Russia. On 16 December 2011, WTO Members accepted the terms of the Russian Federation’s accession. Russia will officially become a WTO Member 30 days following the ratification of its Protocol of Accession, which will take place before 15 June 2012.

As part of its WTO accession agreement, Russia has commitment to reduce and “legally bind” import tariffs on alcohol and tobacco products. Russia must also follow WTO rules on non-tariff barriers, particularly under the WTO Agreement on Technical Barriers to Trade (TBT Agreement), and on the protection of intellectual property, under the WTO Agreement on Trade- Related Aspects of Intellectual Property Rights (TRIPS Agreement)...

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• Former HEW, HHS Secretaries, Surgeons General and CDC Directors Urge Trade Representative to Accept Finding of WTO Panel and Encourage FDA to ban Menthol Flavoring in Cigarettes  

Former Secretaries of the U.S. Department of Health, Education, and Welfare and of Health and Human Services, U.S. Surgeons General, and Directors of the Centers for Disease Control and Prevention, back to the Johnson Administration, known as The Citizens' Commission to Protect the Truth, today urged the United States Trade Representative, Ambassador Ron Kirk, to accept the determination of a World Trade Organization (WTO) panel and ask the Food and Drug Administration (FDA) to ban menthol cigarettes in order to bring the United States into compliance with its international treaty obligations.

In a letter, signed by the Citizens' Commission's Chairman, Joseph A. Califano, Jr., U.S. Secretary of Health, Education, and Welfare under President Carter who began the nation's first anti-smoking campaign in 1978 and Vice Chairman Louis Sullivan, M.D., president emeritus of the Morehouse School of Medicine and Secretary of Health and Human Services under President George H.W. Bush, the Citizens' Commission cited the WTO panel decision which found that by banning cigarette flavorings except menthol, the Family Smoking Prevention and Tobacco Control Act (the Act) discriminates against Indonesian clove cigarettes in violation of the Agreement on Technical Barriers to Trade. The panel recommended that the WTO Dispute Settlement Body ask the United States to conform the Act with its obligations under the Technical Barriers to Trade (TBT) Agreement and accord menthol and Indonesian clove cigarettes like treatment in recognition of their being like products.

In concluding that menthol and clove flavored cigarettes are like products, the WTO panel's decision drew heavily on the FDA Tobacco Product Scientific Advisory Committee's March 11, 2011

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• Manila, Bangkok agree on WTO tobacco tax ruling compliance  

Manila and Bangkok have agreed on the reasonable period of time for Thailand to comply with the ruling of the World Trade Organization (WTO) over the two Asean countries' tobacco tax row, the Department of Trade and Industry said on Tuesday.

In a statement, Secretary Gregory L. Domingo described the agreement as proof of the effectiveness of the multilateral trading system in resolving trade issues to expand global trade.

The DTI initially consulted the Technical Committee on WTO Matters (TCWM), external counsels, and affected private industry on the time frame.

Under the agreement between the two countries, Thailand will adopt a two-track approach, where certain rulings by the WTO Dispute Settlement Body (DSB) must be complied with until October 15, 2012; and the rest even earlier, or within 10 months before May 15, 2012.

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GARDNER: The World Trade Organization’s silent victims  

Unbeknownst to many, the World Trade Organization has increasingly attacked U.S. consumer and environmental policies. In the past month, the WTO has ruled that both dolphin-safe tuna labels and the U.S. Family Smoking Prevention and Tobacco Control Act are, in fact, in violation of the organization's rules.

If the U.S. refuses to abandon or revise these policies, it could face trade sanctions from the WTO. . . .

These are two blaring examples of the WTO placing corporate interests ahead of public interest. Are corporate profits more important than the positive effects derived from these consumer and environmental policies? Apparently, to the WTO, profits are more significant than saving dolphins and preventing teenagers from developing an unhealthy addiction.

Viewing these progressive policies (which have been popular with the public) as "barriers to trade" is the WTO's first mistake. While reducing barriers to trade can achieve economic growth, mislabeling these policies "barriers" will cost society more than it could hope to gain. Consumers (and of course dolphins) lose with the elimination of dolphin-safe tuna labels, as consumer preferences have shown that it is clearly an important issue to many.

In the tobacco case, public health will ultimately suffer the greatest loss. Further addiction could place an additional monetary strain on the health care system. . . .

the WTO has chosen to assert its influence over American policy decisions, while placing corporate profits ahead of the interests of the people.

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UNITED STATES – MEASURES AFFECTING THE PRODUCTION AND SALE OF CLOVE CIGARETTES (PDF) 

CONCLUSIONS AND RECOMMENDATIONS

8.1 As described in greater detail above, the Panel finds that:

(a) Section 907(a)(1)(A) is a "technical regulation" within the meaning of Annex 1.1 of the TBT Agreement;

(b) Section 907(a)(1)(A) is inconsistent with Article 2.1 of the TBT Agreement because it accords to imported clove cigarettes treatment less favourable than that it accords to like menthol cigarettes of national origin;

(c) by failing to demonstrate that the ban on clove cigarettes imposed by Section 907(a)(1)(A) is more trade-restrictive than necessary to fulfil the legitimate objective of reducing youth smoking, taking account of the risks non-fulfilment would create, Indonesia has failed to demonstrate that Section 907(a)(1)(A) is inconsistent with Article 2.2 of the TBT Agreement;

(d) by failing to request the United States to explain the justification for Section 907(a)(1)(A) "in terms of Articles 2.2 to 2.4 of the TBT Agreement" through its questions in document G/TBT/W/323, Indonesia has failed to demonstrate that the United States acted inconsistently with Article 2.5 of the TBT Agreement;

(e) by failing to demonstrate that it would be "appropriate" to formulate the technical regulation in Section 907(a)(1)(A) in terms of "performance", Indonesia has failed to demonstrate that Section 907(a)(1)(A) is inconsistent with Article 2.8 of the TBT Agreement;

(f) by failing to notify to WTO Members through the Secretariat the products to be covered by the proposed Section 907(a)(1)(A), together with a brief indication of its objective and rationale, at an early appropriate stage, i.e., when amendments and comments were still possible, the United States has acted inconsistently with Article 2.9.2 of the TBT Agreement;

(g) by failing to demonstrate that it had requested the United States to provide particulars or copies of Section 907(a)(1)(A) while it was still in draft form, Indonesia has failed to demonstrate that the United States acted inconsistently with Article 2.9.3 of the TBT Agreement;

(h) by not allowing an interval of no less than six months between the publication and the entry into force of Section 907(a)(1)(A), the United States has acted inconsistently with Article 2.12 of the TBT Agreement;

(i) by failing to demonstrate that the United States did not take account of the special development, financial and trade needs of Indonesia, in the preparation and application of Section 907(a)(1)(A), Indonesia has failed to demonstrate that the United States acted inconsistently with Article 12.3 of the TBT Agreement.

8.2 In the absence of any evidence or argument on the existence of urgent problems of health that arose or threatened to arise for the United States at the time of adopting Section 907(a)(1)(A), the Panel declines to rule on Indonesia's claim under Article 2.10 of the TBT Agreement.

8.3 Having found that Section 907(a)(1)(A) is inconsistent with Article 2.1 of the TBT Agreement, the Panel also declines to rule on Indonesia's claim under Article III:4 of the GATT 1994.

8.4 Having declined to rule on Indonesia's alternative claim under Article III:4 of the GATT 1994, the Panel further declines to rule on whether Section 907(a)(1)(A) is justified under Article XX(b) of the GATT 1994.

8.5 Under Article 3.8 of the DSU, in cases where there is an infringement of the obligations assumed under a covered agreement, the action is considered prima facie to constitute a case of nullification or impairment of benefits under that agreement. Accordingly, we conclude that the United States has nullified or impaired benefits accruing to Indonesia under the TBT Agreement, to the extent that the United States has acted inconsistently with Articles 2.1, 2.9.2 and 2.12 of the TBT Agreement.

8.6 Pursuant to Article 19.1 of the DSU, having found that the United States has acted inconsistently with its obligations under Articles 2.1, 2.9.2 and 2.12 of the TBT Agreement, we recommend that the Dispute Settlement Body request the United States to bring Section 907(a)(1)(A) into conformity with its obligations under the TBT Agreement. 

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US Discriminates Against Indonesian Cigarettes, says WTO 

The World Trade Organization (WTO) said the Tobacco Act applied by the US government discriminates against clove-flavored cigarettes. With the new law, Indonesian cigarettes are banned from being sold in the US while menthol cigarettes produced in the US are sold without restraint.

"This means we can prove that the US is discriminative," the Trade Ministry's international trade cooperation director-general Gusmardi Bustami said last weekend.

He was responding to a report released by the WTO in Geneva on September 2, which deemed clove cigarette restriction was inconsistent with article 2.1 in the Technical Barriers to Trade (TBT) agreement.

The panel also found that clove and menthol cigarettes are similar products because both are flavored and can appeal to young people.

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Indonesia Loses Bulk of WTO Case on U.S. Clove-Cigarette Ban 

A U.S. ban on clove cigarettes that's designed to prevent teenagers from starting to smoke is discriminatory, though Indonesia failed to prove that it is unnecessary, World Trade Organization judges said.

Indonesia argued that U.S. tobacco legislation, signed by President Barack Obama in June 2009, breaks global trade rules because it outlaws cloves and not the mint used to make menthol cigarettes. Indonesia, the world's largest producer of clove cigarettes, or kreteks, made by companies such as PT Gudang Garam, has exports valued at $500 million a year, a fifth of which go to the U.S. . . .

"The panel's conclusion was based, in part, on its finding that there is extensive scientific evidence supporting the conclusion that banning clove and other flavored cigarettes could contribute to reducing youth smoking," the judges said on the trade arbiter's website.

When Indonesia lodged its complaint at the WTO in April 2010, the country's trade minister, Mari Pangestu, said there was "a discriminatory component" in the Obama administration's decision to exclude menthol from the cigarette-flavorings ban.

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Indonesia Fails to Convince WTO on U.S. Clove-Cigarette Ban 

Indonesia failed to prove that a U.S. ban on clove cigarettes, designed to prevent teenagers from starting to smoke, is unnecessary, a panel of World Trade Organization judges said.

"The panel found that the ban is inconsistent with the national-treatment obligation because it accords clove cigarettes less favorable treatment than that accorded to menthol-flavored cigarettes," WTO judges in Geneva said in their report yesterday. "However, the panel rejected Indonesia's second main claim, which was that the ban is unnecessary."

Indonesia argued that U.S. tobacco legislation, signed by President Barack Obama in June 2009, breaks global trade rules because it outlaws cloves and not the mint used to make menthol cigarettes. Indonesia, the world's largest producer of clove cigarettes, or kreteks, made by companies such as PT Gudang Garam, has exports valued at $500 million a year, a fifth of which go to the U.S. . . .

"The panel's conclusion was based, in part, on its finding that there is extensive scientific evidence supporting the conclusion that banning clove and other flavored cigarettes could contribute to reducing youth smoking," the judges said on the trade arbiter's website.

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Indonesia Examines WTO Decision on Indonesian Cigarette Distribution in the US 

Indonesia is still studying and has yet to make any legal move over the recent decision issued by the World Trade Organization, or the WTO, in regard to distribution of clove cigarettes in the US. "We still have 60 days to state our position. We are examining it [the decision]," said Trade Minister Mari Elka Pangestu on Monday.

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• WTO Torpedoes US Ban on Importation of Kretek 

The Indonesian government has welcomed the World Trade Organization’s ruling against a US ban on the importation of clove cigarettes, calling for shipments to resume.

The global trade body ruled on Friday that the United States was imposing discriminatory trade rules in banning the sale of kretek — Indonesian clove cigarettes.

Gusmardi Bustami, the director general of international trade at Indonesia’s Trade Ministry, said on Sunday that the ruling made it clear that the US had engaged in trade discrimination.

“With this ruling, the US must admit that they were wrong for their discriminatory trade rules. I don’t see any reasons why we can’t resume selling kretek cigarettes to the US,” Gusmardi said.

The US Food and Drug Administration in September 2009 banned cigarettes with fruit, confectionery or clove flavors, arguing they encouraged young people to smoke.

That resulted in a ban of imports of kretek the following year. But menthol cigarettes were not banned

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WTO Issues Mixed Ruling on US-Indonesia Clove Cigarette Spat  

The World Trade Organization ruled Friday that the US flouted trade rules by banning the sales of Indonesian clove cigarettes, but said Washington’s aim of cutting youth smoking with the restriction was “legitimate.”

Washington had banned the production and sales of clove cigarettes under a health act that also blocks the sales of other cigarettes with flavors such as grape, coffee or strawberry, in a bid to prevent the young from getting hooked on smoking.

The move prompted Indonesia to lodge the case against the US at the WTO, with Jakarta arguing that the act had not been applied uniformly as it did not cover menthol cigarettes, a claim that the WTO upheld in its ruling.

“By banning clove cigarettes while exempting menthol cigarettes from the ban ... accords imported clove cigarettes less favorable treatment than that it accords to domestic menthol cigarettes,” the WTO said in its ruling.

However, the WTO threw out the Indonesian claim that the ban was unnecessary.

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• Indonesia Fails to Convince WTO on U.S. Clove-Cigarette Ban  

Indonesia failed to prove that a U.S. ban on clove cigarettes, designed to prevent teenagers from starting to smoke, is unnecessary, a panel of World Trade Organization judges said.

“The panel found that the ban is inconsistent with the national-treatment obligation because it accords clove cigarettes less favorable treatment than that accorded to menthol-flavored cigarettes,” WTO judges in Geneva said in their report yesterday. “However, the panel rejected Indonesia’s second main claim, which was that the ban is unnecessary.”

Indonesia argued that U.S. tobacco legislation, signed by President Barack Obama in June 2009, breaks global trade rules because it outlaws cloves and not the mint used to make menthol cigarettes. Indonesia, the world’s largest producer of clove cigarettes, or kreteks, made by companies such as PT Gudang Garam, has exports valued at $500 million a year, a fifth of which go to the U.S.

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