Friday, August 02, 2013

Indonesia to Seek Compensation for Lost Sales Due to U.S. Clove Cigarettes Ban

According to an article in the Jakarta Globe, Indonesia will seek compensation from the United States for sales losses due to its ban on clove cigarettes, which was found to be a discriminatory trade practice without health justification by the World Trade Organization.

According to the article: "Indonesia will seek compensation from the United States for pulling its clove cigarettes from shelves despite a World Trade Organization (WTO) ruling that deemed the ban discriminatory. Indonesia’s trade ministry said it had lost between $200 million and $300 million annually from the 2009 ban, aimed at helping prevent youths from taking up smoking. The WTO found that the US had flouted trade rules in its health act — under which cinnamon, coffee, grape and strawberry-flavored cigarettes were also banned — because it allowed menthol-laced tobacco to stay on the market. The WTO found in favor of Indonesia’s claims that allowing domestically made menthol cigarettes and not its clove-laced cigarettes was discriminatory. ...

“It’s baffling how the US, which is always demanding other countries to abide by WTO disciplines and regulations, is now unable to correct its policy, which is clearly in violation of WTO provisions,” Pambagyo [trade ministry director general of international trade cooperation] said in a statement."

The Rest of the Story

The Family Smoking Prevention and Tobacco Control Act's ban on the sale of clove cigarettes is clearly a discriminatory trade practice, as it treats one flavoring - which is primarily manufactured outside the U.S. - differently than a like product (menthol cigarettes) that is domestically produced. Moreover, the reason for the exemption given to menthol cigarettes was specifically to protect domestic cigarette companies that sell menthol cigarettes. And the icing on the cake is that the flavorings ban advances no public health purpose because it exempts specifically those cigarettes which are actually smoked by youth, and the ban doesn't apply to any cigarette brand that had any substantial market share among youth smokers prior to the implementation of the policy.

Given that the U.S. has failed to respond definitively to the WTO's decision, it certainly seems to this observer that Indonesia is entitled to some compensation.

But I guess $200 to $300 million is a small price to pay to protect the annual sale of 62 billion menthol cigarettes in the U.S.

While it is understandable why politicians wanted to protect this domestic revenue, it is not clear why the Campaign for Tobacco-Free Kids, American Cancer Society, American Heart Association, and American Lung Association lobbied so vigorously to protect the cigarette companies' domestic revenue, at the expense of a higher burden of disease and death among their so-called constituents.

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