WTO Torpedoes US Ban on Importation of Kretek
Sep 4, 2011
The Indonesian government has welcomed the World Trade Organization's ruling against a US ban on the importation of clove cigarettes, calling for shipments to resume.
The global trade body ruled on Friday that the United States was imposing discriminatory trade rules in banning the sale of kretek — Indonesian clove cigarettes.
Gusmardi Bustami, the director general of international trade at Indonesia's Trade Ministry, said on Sunday that the ruling made it clear that the US had engaged in trade discrimination.
"With this ruling, the US must admit that they were wrong for their discriminatory trade rules. I don't see any reasons why we can't resume selling kretek cigarettes to the US," Gusmardi said.
The US Food and Drug Administration in September 2009 banned cigarettes with fruit, confectionery or clove flavors, arguing they encouraged young people to smoke.
That resulted in a ban of imports of kretek the following year. But menthol cigarettes were not banned, and the Indonesian government said the US was protecting domestic sales of menthol cigarettes and that it intended to keep kretek out of the market.
"Our study concludes that clove and menthol are equally harmful to health, therefore, the ban was discriminatory," Gusmardi said.
In its ruling, the WTO panel found that clove and menthol-flavored cigarettes are "like products."
Gusmardi said that kretek is used by fewer than 1 percent of young smokers and accounts for less than 1 percent of total cigarette sales in the US. Meanwhile, menthol was consumed by 43 percent of young smokers and made up almost 25 percent of total cigarettes sold in the country.
The ruling was not entirely favorable for Indonesia. The WTO rejected its second claim, that the ban was unnecessary. The WTO found that the ban was a legitimate approach on the basis that it was aimed at reducing smoking among young people.
But Gusmardi questioned the ruling, saying that having cigarettes available does not mean kretek manufacturers were targeting young people.
"The problem with smoking is that it's more of a habit-forming problem rather than one of the product being widely available," he said.
The WTO concluded by asking the US to bring its restrictions into conformity with international trade rules. Both parties have 60 days to appeal the ruling.
Gusmardi said Indonesia would not appeal, saying the ruling made it clear the US had discriminated against Indonesia's clove cigarettes.
Before the ban, Indonesia was the biggest exporter of kretek to the US, accounting for 99 percent of the clove cigarette market there, with annual sales totaling $100 million.
Menthol cigarettes are almost produced entirely in the US. Gudang Garam and Djarum are Indonesia's two biggest exporters of clove cigarettes to the nation.