Ruling Sought From WTO On US Clove Cigarette Ban, 13/06/10

Indonesia will ask the World Trade Organization on June 22 to rule on its complaint that a US ban on clove cigarettes aimed at preventing teenagers from starting to smoke is discriminatory.

“We will ask the panel of judges and experts to rule in favor of our complaint and also ask the organization to issue a directive demanding that the United States withdraw its discriminatory regulation on clove cigarettes,” Deputy Trade Minister Mahendra Siregar told the Jakarta Globe on Sunday.

The complaint, Indonesia’s second against the United States and its fifth since joining the WTO in 1995, says tobacco legislation signed by US President Barack Obama last June is unfair because it bans cloves and not the mint used to make menthol cigarettes.


US tobacco companies told the Food and Drug Administration on March 31 that adding menthol did not make cigarettes more harmful or addictive.

“The United States must stop its discrimination against clove cigarettes. What we want is to have clove cigarettes treated with the same regulation as other cigarettes,” Mahendra said.

Menthol-flavored cigarettes that are produced by US manufacturers such as Altria Group Inc.’s Philip Morris USA and Lorillard Inc. were exempted as part of a 2008 compromise by lawmakers that led Altria to back the legislation. Menthol cigarettes, the most popular flavor, constitute 20 percent of the US market, according to Federal Trade Commission data.

Washington is almost certain to block the June 22 WTO request, after which Indonesia can make a second appeal that cannot be thwarted.

“We’re optimistic that the WTO will rule in our favor,” Mahendra said. “Indonesia and the United States are both WTO members, and there is no reason for the organization not to support us. We want equal standing on this matter.”

Indonesia is the world’s largest producer of clove cigarettes, produced by companies such as PT Gudang Garam and exports $500 million worth annually, a fifth of that to the United States.

Indonesia is the world’s fifth-biggest tobacco market, and clove cigarettes still account for most of that. The upstream and downstream industries employ 6.1 million people. Exports of cigarettes and cigars totaled $358 million in 2008, the last year for which data is available.

Only a relatively small number of clove cigarettes are exported, and they are coveted by some young people in the United States who see them as an alternative to more conventional brands.

The Indonesian government recently reorganized its road map for the tobacco industry through 2020, shifting priorities from revenue, health and workers, to the new order of workers, revenue and, finally, health.

The United States’ FDA banned cigarettes with fruit, confectionery or clove flavors last September, arguing they were particularly attractive to children. But the US ban does not include menthol-flavored cigarettes smoked by about 19 million Americans. Indonesia thinks the clove ban is unfair considering menthols are allowed.

Studies show that 17-year-olds are three times as likely to use flavored cigarettes than people over 25, according to the FDA.

Supervising the consultations with Indonesia will be one of the first tasks of the new US ambassador to the WTO, Michael Punke, whose Senate confirmation was held up for six months by Republican senators from the tobacco-growing state of Kentucky.

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