Statement By The Delegation Of The Republic Of Indonesia WTO Dispute Settlement Body Unites States – Certain Measures On Clove Cigarettes (Ds 406)

July 20, 2010 Trade/WTO

Thank you, Mr. Chairman

Upon instruction from my authorities, I am pleased to speak before the Dispute Settlement Body regarding this agenda item – United States – Measures Affecting the Production and Sale of Clove Cigarettes – Indonesia’s request for the formation of a panel in DS 406:  United States – “Certain Measures on Clove Cigarettes.”

On April 7, 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 held those consultations with the United States on May 13, 2010.  Unfortunately, consultations did not resolve the dispute.

The subject of the consultations and subsequent panel requests is the prohibition on the production or sale of so-called “clove cigarettes” in the United States pursuant to section 907(a) (1) of the Family Smoking Prevention and Tobacco Control Act of 2009.   This law took effect on September 22, 2009.  Pursuant to the Act, clove cigarettes produced in Indonesia may no longer be imported into the United States.

Indonesia made its first request for a panel to review this matter at the June 22 meeting of the Dispute Settlement Body.  The United States, as is its right, blocked the formation of a panel at that time. During the discussion of this matter in June, Indonesia presented a lengthy statement outlining its justification for bringing this dispute.  I will not repeat those points now, but they are all still relevant and reflect the views of the Indonesian government.

Also during the June 22 discussion of this issue, the United States indicated that it believed that Indonesia’s request to establish a panel to review its ban on clove cigarettes was “premature.”   I do want to respond to this particular point.

Indonesia strongly disagrees with the United States’ view.  Indonesia has been extremely patient and has worked with the United States at every opportunity to avoid this dispute, but we can not wait any longer.

In its statement at the June meeting, the United States referred to an ongoing review of menthol cigarettes by U.S. officials that may result in additional regulations or restrictions being placed on menthol cigarettes.  Indonesia does not believe that this review should delay the establishment of a panel in this dispute.  The fact remains that since September 22, 2009, clove cigarettes have been prohibited from the U.S. market while menthol cigarettes have continued to be sold.

The review of menthol cigarettes is not due to be completed until March 18, 2011. We can’t predict what the United States may do in the future with respect to menthol cigarettes. However, in our view, the statute, as it exists now, is inconsistent with the United States’ WTO obligations.  The claims that we intend to make go beyond a violation of national treatment, so it is both relevant and essential that a panel be formed to hear this case.

In conclusion, my government has been trying to avoid this day since 2004. We have written letters, spoken to Members of the United States Congress and their staff, and met repeatedly with U.S. Administration officials.  We even held informal, bilateral consultations with the United States in Geneva last August.  All in an effort to avoid formal, WTO dispute settlement proceedings.

Unfortunately, however, no resolution has proven possible. Therefore, the Government of Indonesia respectfully makes its second request that pursuant to Article 6 of the DSU, the Dispute Settlement Body establishes a panel to examine the matter, with standard terms of reference, as set out in Article 7.1 of the DSU.

Thank you.

Geneva, 20 July 2010