EXECUTIVE SUMMARY OF THE
FIRST WRITTEN SUBMISSION OF INDONESIA
1. The Republic of Indonesia ("Indonesia") challenges Section 101 of the Family Smoking Prevention and Tobacco Control Act of 2009 (the "Act"). In particular, Indonesia challenges the "special rule for cigarettes" in Section 101(b), which banned the production or sale of certain cigarettes it characterized as "flavored" (hereinafter the "Special Rule").
2. According to the legislative history of the Act, the Special Rule was meant to stop cigarette manufacturers from targeting underage smokers with flavours intended to increase the appeal of smoking. One type of flavoured cigarette escaped the ban – menthol cigarettes.
3. Cigarettes may contain a variety of ingredients and flavours that are added to the tobacco or filter. There is, in short, "no logical difference", according to Professor Michael Siegel of Boston University, "between menthol and the hundreds of other flavor additives put into cigarettes", and that includes clove.
4. Clove cigarettes have been produced in Indonesia for over a century. It is estimated that as many as 6 million Indonesians are employed directly or indirectly in the manufacture of cigarettes and the growing of tobacco. The cigarette industry, including clove, accounts for approximately 1.66 per cent of Indonesia's total gross domestic product ("GDP"). Indonesia has exported clove cigarettes to the United States for well over 40 years.
5. Notwithstanding the importance of clove cigarettes to its economy and its people, Indonesia does not object to the United States regulating the production or sale of cigarettes within its borders. Nor does Indonesia object to reasonable measures designed to keep cigarettes, including clove cigarettes, out of the hands of minors. What Indonesia objects to is a measure, in this case the Special Rule, that imposes a complete ban on clove cigarettes from Indonesia, while little or no restrictions are placed on regular cigarettes and menthol cigarettes.
6. The challenged measure is, in short, discriminatory and a violation of Article 2.1 of the Agreement on Technical Barriers to Trade ("TBT Agreement") in Annex 1A of the Marrakesh Agreement Establishing the World Trade Organization ("WTO"). For largely the same reasons, the challenged measure also violates Article III.4 of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"). Furthermore, the challenged measure is more trade restrictive than necessary to achieve the stated goal of reducing youth smoking and is, therefore, in violation of Article 2.2 of the TBT Agreement.
7. Finally, in adopting the Special Rule, the United States failed to follow a number of additional requirements of the TBT Agreement. The Special Rule is inconsistent with Article 2.8 of the TBT Agreement because it bans cigarettes solely on the basis of descriptive characteristics. The United States also failed to live up to a number of its procedural obligations under Article 2 the TBT Agreement. Accordingly, the United States acted inconsistently with its obligations under Article 2.5, 2.9, 2.10, and 2.12 of the TBT Agreement.
8. The ban on clove cigarettes in the Special Rule created an unnecessary barrier to exports from Indonesia, a developing country Member. The United States was obliged to take account of the special and development and trade needs of Indonesia, a developing country Member of the WTO, when preparing and implementing the Special Rule. It did not do so. As such, the United States acted inconsistently with Article 12.3 of the TBT Agreement.
9. Because the United States has violated the GATT and the TBT Agreement, its actions are considered prima facie to constitute a case of nullification or impairment of Indonesia's rights under these agreements. As such, there is a presumption that the United States' actions have had an adverse impact on Indonesia in adopting and applying the Special Rule. The burden of proof, therefore, shifts to the United States to rebut the charge.