RI seeks options for WTO ruling on US ban of clove cigarettes

JAKARTA. Indonesia is considering appealing the World Trade Organization’s (WTO) recent ruling that supported the United States’ ban on imports of clove cigarettes, according to officials.

“We have not taken any position on the ruling and we’ll have 60 days to convey our position. We’ll study the ruling, such as the scientific evidence regarding whether flavored cigarettes encourage teenagers to smoke,” Trade Minister Mari Elka Pangestu told a press conference at her office on Monday.

The WTO judges concluded in their report on Friday that a US ban on clove cigarettes aimed at preventing teenagers from smoking was discriminatory as clove and menthol-flavored cigarettes were “like products.”

However, they said Indonesia had failed to prove the ban was unnecessary, saying that the ban was a legitimate approach to prevent teenagers from smoking.

“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 the number of youth smoking,” the panel said on the trade arbiter’s website.

Under a law on tobacco control that took effect in 2009, the US government banned all kinds of flavored cigarettes, including clove cigarettes, 99 percent of which were imported, mainly from Indonesia.

However, the US government exempted menthol cigarettes, the most popular flavor in the country, which were locally produced by US cigarette companies and held a 20 percent share in the US market, according to the US Federal Trade Commission data.

Indonesia, the world’s largest producer of clove cigarettes, or popularly known as rokok kretek, lodged its petition to the WTO in April 2010, saying that the US broke global trade rules because it excluded mint, an ingredient to make menthol cigarettes, from the flavored cigarettes ban.

Around 6 million Indonesians work in the clove cigarette industry, according to the government.

The Trade Ministry’s director general for International Trade Cooperation, Gusmardi Bustami, said that the government would do everything in its power to ensure clove cigarettes could enter the US again.

“We still don’t know whether to appeal or not. But the most important thing is that our main complaint that the US is discriminatory has been proven,” he said.

Although the export value of clove cigarettes was small, Gusmardi added, it was feared the US’ move to ban clove cigarettes would be matched by other countries.

Indonesia lost around US$200 million in sales of clove cigarettes, made by Gudang Garam and Djarum, following the halt of shipment in 2009 after the ban was implemented, according to Gusmardi.

Reached separately, the Industry Ministry’s director general for Agriculture and Chemical Industries, Benny Wachjudi, shared a similar view.

He told The Jakarta Post that the US ban could be followed by other recipients of Indonesian clove cigarettes, such as European countries.

Therefore, he said, Indonesia needed to appeal the WTO ruling as the US was applying double standards. (Linda Yulisman/The Jakarta Post)