WTO Complaint on the Clove Cigarette Ban

As some may have seen in the news, Indonesia is going forward with its WTO challenge to the U.S. clove cigarette ban.  Here is the key part of the WTO consultations request:

The Government of Indonesia maintains that the ban on the sale of clove cigarettes in the United States is inconsistent with various US obligations under the WTO rules and principles, including:

(a) Discrimination under Article III:4 of the GATT 1994 between clove cigarettes and menthol cigarettes which are deemed to be "like products": Indonesia sees that these measures discriminate against imported clove cigarettes where clove cigarettes sold in the United States are imported (primarily from Indonesia), while virtually all of the menthol cigarettes sold in the United States are produced domestically (imports are negligible).

(b) Article XX of GATT 1994 provides that any measures taken shall only be applied to the extent necessary to protect human, animal or plant life or health. The measures shall not constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.

(c) The TBT Agreement Article 2 obligates the United States to, inter alia, ensure that technical regulations accord imported products treatment that is no less favourable than that afforded to like products of national origin. Article 2 also obligates the United States to ensure that its technical regulations are not more trade-restrictive than necessary, thereby creating unnecessary obstacles to international trade. Article 2 also sets out additional commitments for the preparation, adoption, and application of technical regulations. In that regard, the TBT Agreement requires that the United States take account of scientific and technical information in adopting regulations.

(d) Article 12 of the TBT Agreement obligates the United States to take into account the special development and trade needs of developing country Members, such as Indonesia and to ensure that technical regulations to not create unnecessary barriers to exports from developing countries.

(e) The SPS Agreement Articles 2, 3, 5, and 7 provides detailed obligations on the adoption of sanitary and phytosanitary measures necessary to protect human, animal, or plant life or health.

With regard to the other possible WTO tobacco complaint, relating to a similar Canadian law, Eyes on Trade recently had this to say:

In October of last year, the Canadian Parliament passed the Cracking Down on Tobacco Marketing Aimed at Youth Act, which contained a provision outlawing the sale of cigarettes made with flavor additives that appeal to children.  This law applies equally to tobacco products that are imported and domestically produced, but this hasn’t stopped several countries from attacking the new law.

Last month, 14 countries, including the United States, raised concerns about Canada’s new tobacco law at a WTO committee meeting.  They believe that the public health law might constitute a technical barrier to trade that could be challenged under the WTO dispute resolution mechanisms.

The U.S. Trade Representative (USTR) raising concerns about the law is objectionable enough, but a 1998 law prohibiting the USTR and some other federal agencies from “using appropriated funds to promote the sale or export of tobacco or tobacco products and from seeking the removal of nondiscriminatory foreign restrictions on the marketing of tobacco” could get USTR into some hot water if it chooses to directly challenge the law.

In a letter obtained by Inside U.S. Trade, Rep. Lloyd Doggett, the sponsor of that 1998 law, asked USTR to change course:

I strongly urge that USTR take no action contrary to Canada on this matter, and indeed, good public policy on tobacco voiced generally by the Administration suggests USTR should be actively supporting the Canadians….Even beyond the troubling implications of the United States opposing a strong public health measure of another country, in this instance, prior law expressly forbids USTR from doing so.

USTR also raised the issue in its National Trade Estimate report last month.  In the report, though, USTR stated that “The United States strongly supports the objective of deterring youth from tobacco use.” If this is the case truly the case, USTR should back down from this misadventure and respect Canada’s right to enact common sense laws regulating its tobacco market.

I looked back at the discussion of this issue in the TBT Committee, and I was surprised to see there was no mention of discrimination.  I would have thought there would be some way to make a discrimination claim, similar to the way Indonesia raised it with regard to the U.S. law.  But at least according to the minutes of that meeting, it was not mentioned.  Perhaps the burley situation is different, in the sense that the impact is as great on Canadians as it is on others?  I'm not sure about all of the facts here.