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NEWS UPDATES 23 July 2010

Indonesia-US dispute over clove cigarettes

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The Dispute Settlement Body (DSB) of the World Trade Organization (WTO) has decided to establish a panel that will settle a dispute between Indonesia and the United States over the ban of `kretek` (clove-flavored) cigarette imports to the United States.

Indonesia has so far asked the United States to lift its Family Smoking Prevention and Tobacco Control Act of 2009, which it considers discriminative.

The Act bans the importation of aromatic cigarettes, including Indonesia`s `kretek`, but does not prohibits menthol cigarettes which according to the Agreement on Technical Barriers to Trade are like products.

As a last resort to settle the dispute, Indonesia last month took the ban which had been imposed since September 2009 to the Dispute Settlement Body of the WTO asking the WTO to form a panel to settle the problem.

Jakarta asked the panel to investigate the violation by the US against Article III of the GATT of 1994 and the use of Article XX of GATT 1994 without providing scientific evidence. It also failed to meet the provisions in a number of articles in the technical Barriers to Trade (TBT) and Sanitary and Phythosanitary Act (SPS). Finally, on July 2, the DSB fulfilled Indonesia`s request to form the panel.

"Indonesia for the second time tabled its concerns at the DSB session over the US Tobacco Act 2009 which bans the importation of aromatic cigarettes, including clove cigarettes," Director General of International Trade Cooperation Gusmardi Bustami said on Wednesday.

He said that at the second session of the DSB, the Indonesian request for the establishment of the panel was fulfilled. The session also accepted the requests of Brazil, Guatemala, Turkey, European Union and Norway to serve as the third parties in the dispute settlement. "The United States could not reject it but accept the DSB decision," he said.

He explained that in a not-too-distance time, the DSB secretariat would work out a framework and select names for panel members who would be proposed for acceptance by all parties.

The United States has imposed the ban since September 2009.

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