United States – measures affecting the
production
and sale of clove cigarettes
Request
for the Establishment of a Panel by Indonesia
The following communication, dated 9 June 2010, from the delegation of Indonesia to the Chairman of the
Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.
_______________
On 7 April 2010, the
Republic of Indonesia requested consultations with the United States pursuant
to Articles 1 and 4 of the Understanding
on Rules and Procedures Governing the Settlement of Disputes (DSU), Article
XXII of the General Agreement on Tariffs
and Trade 1994 ("GATT 1994"), Article 11 of the Agreement on the Application of Sanitary and
Phytosanitary Measures ("SPS Agreement"), and Article 14 of the Agreement on Technical Barriers to Trade
("TBT Agreement") with respect to the measure adopted by the United
States banning flavored cigarettes, including clove cigarettes. The Republic of
Indonesia and the United States agreed to hold those consultations on 13 May
2010. Unfortunately, consultations did not resolve the dispute.
The
measure that was the subject of consultations is reflected in Section 907 of
the Family Smoking Prevention and Tobacco
Control Act[1]
("the Act"), which prohibited the production or sale in the United
States of all cigarettes with a "characterizing flavor" other
than menthol or tobacco beginning 90
days after the Act was signed. Indonesia believes that the measure discriminate against imported clove cigarettes based on
the fact that the clove cigarettes that were sold in the United States were
imported (primarily from Indonesia), while virtually all of the menthol
cigarettes sold in the United States are produced domestically (imports are
negligible). Indonesia also believes that the measure creates an unnecessary
obstacle to trade in that the United States has available to it less
trade-restrictive means to accomplish the objectives of the Act.
The
Government of Indonesia maintains that banning clove cigarettes in the United
States while exempting menthol cigarettes from the ban is inconsistent with the
following provisions of GATT
1994:
·
Article III: 4 of the GATT 1994 because the measure provides treatment to
an imported product, clove cigarettes, that is "less favorable" than
that accorded to a like domestic product, menthol cigarettes.
·
Article XX of GATT 1994 because there is no scientific or
technical information indicating that clove cigarettes pose a greater health
risk than menthol cigarettes and, as a result, the measure results in arbitrary
and unjustifiable discrimination, a disguised restriction on trade, and is more
trade restrictive than necessary to achieve a legitimate objective, if one were
to exist.
Indonesia
also considers the measure to be inconsistent with the following provisions of
the TBT Agreement:
·
TBT Article 2.1 because the
measure results in treatment that is "less favorable" to imported
clove cigarettes than that accorded to a like domestic product, menthol
cigarettes.
·
TBT Article 2.2 because there
is no scientific or technical information indicating that clove cigarettes pose
a greater health risk than menthol cigarettes or that youth smoke clove
cigarettes in greater numbers than menthol.
As a result, the measure is more trade restrictive than necessary and
constitutes an unnecessary obstacle to international trade.
·
TBT Article 2.5 because the
United States did not respond to questions from Indonesia seeking an explanation
and justification for the ban submitted during bilateral discussions held 27
August 2009 and through the TBT Committee on 20 August 2009 (G/TBT/W/323).
·
TBT Article 2.8 because the ban
on characterizing flavors is based on descriptive characteristics.
·
TBT Article 2.9 because the
United States did not comply with the requirements of Articles 2.9.1, 2.9.2, 2.9.3, and 2.9.4 when
adopting a technical regulation that has a significant effect on the trade of
Indonesia.
·
TBT Article 2.10 because in the
event the United States believed there was a justification for not following
the procedures in Article 2.9, it did not provide the Secretariat with
notification of the measure and the urgent nature of the problem.
·
TBT Article 2.12 because the
effective date was less than six months from the enactment of the ban.
·
TBT Article 12.3 because the
ban created an unnecessary barrier to exports from developing countries.
Should the United
States assert that the flavored cigarette ban is an SPS measure, then it is Indonesia's
view that the measure is inconsistent with Articles 2, 3, 5, and 7 of the SPS
Agreement.
Additionally, the
measure identified in this request has nullified or impaired benefits accruing
to Indonesia directly or indirectly under the cited agreements.
Therefore, the
Government of Indonesia respectfully requests that pursuant to Article 6 of the
DSU, the Dispute Settlement Body establish a panel to examine the matter, with
standard terms of reference, as set out in Article 7.1 of the DSU.
__________