The focal point of this article is the US determination to implement the “ Family Smoking Prevention Tobacco Control Act of 2009 ” , which contains a proviso that bans the “ sale or distribution ” of all flavored coffin nails except menthol. A bird ‘s oculus position of the “ Family Smoking Prevention Tobacco Control Act of 2009 ” gives the feeling that it is good intentioned. If you look at it, maintaining a stopping point oculus on baccy merchandise makers seems like a good step for society as a whole. However this statute law is profoundly flawed. Furthermore it has far reaching deductions for the Indonesian baccy industry and for Indonesia as a whole. Now how does this impact Indonesia? The bulk of coffin nails produced and exported by Indonesia contain clove, so the US has more or less prohibited Indonesian presence in the US baccy industry. What is even more surprising is that the statute law contains no limitation on menthol coffin nails which straight benefits the local industry of the US where a high bulk of coffin nails produced contain menthol. The name of Phillip Morris Inc. can non travel unmentioned in this respect sing the fact that they are the largest shapers of menthol coffin nails and strongly back up this measure[ 1 ], taking to this act being nicknamed as the “ Marlboro Monopoly Act of 2009 ” . The chief intent of this article is to educate the readers about the current difference in visible radiation of the GATT regulations and ordinances. It will concentrate non merely on the Indonesian position but besides on the US response to the Indonesian allegations.
WTO DISPUTE SETTLEMENT PROCEDURE
Dispute colony in the WTO occurs through the DSU ( Dispute Settlement Unit ) whereby a difference colony board ( DSB ) is set up which consists of a representative from both WTO members. The WTO difference colony mechanism is a 2 measure procedure viz.
Dutch east indies can foremost exert its rights under article 22 and 23 of the GATT and do its concerns known to the US governments. The US will so hold to stay by the WTO regulations and under article 22 of the GATT, give “ sympathetic consideration ” , to the concerns of Indonesia and enter into audiences with them. The US is so bound by WTO Torahs to answer to a petition for audience within 10 yearss of having the petition and get down the audience procedure within 30 yearss of the reception. Consultations would take topographic point in conformity with article 4 of the DSU.[ 2 ]In the event the issue could non be resolved through audience within 60 yearss of the reception of the petition, the kicking party may bespeak the constitution of a panel and therefore traveling to the panel proceedings measure. The kicking party may bespeak a panel even within the 60 yearss if both parties agree that the difference can non be resolved through audiences ( Art 4.7 ) .
The panel proceedings phase is based on a 2 grade construction ( 1 ) Panel & A ; ( 2 ) Appellate Body. In this phase, as mentioned before, the plaintiff, in this instance Indonesia, can inquire the DSB to name a Dispute Resolution Panel which assists the DSB in doing a determination. The panel so investigates the issue and is required to subject its concluding study to the DSB within 6 months. First merely the interim study is distributed to the parties and if none of the concerned parties have any remark on the study, the study is considered concluding. If any party feels the demand to add something so their positions are included in the study before finalising and so submitted to the DSB for consideration and within 60 yearss would be adopted officially unless the DSB decides by consensus non to follow the study or either party chooses to appeal against the study ( Art 16.4 ) .
BREACH OF GATT ( INDONESIAN ARGUMENT )
Article 3.4 of the General Agreement on Tariffs and Trade ( GATT ) understanding states that “ The merchandises of the district of any undertaking party imported into the district of any other undertaking party shall be accorded intervention no less favorable than that accorded to wish merchandises of national beginning in regard of all Torahs, ordinances and demands impacting their internal sale, offering for sale, purchase, transit, distribution or usage. ”
Harmonizing to Indonesia all flavored coffin nails should be considered as “ like ” merchandises irrespective of whether they are from Indonesia or the US. The Family Smoking Prevention and Tobacco Control Act restricts the ‘sale or distribution ‘ of clove flavored coffin nails – made in Indonesia – but non the menthol flavored coffin nails manufactured in the U.S. As long as clove coffin nails and menthol coffin nails are considered to be “ similar merchandises ” because both are included in the class of flavored coffin nails under the Bill ‘s flavored coffin nail commissariats, so the Act clearly violates Article 3.4. This peculiar difference can associate to the Thai – Cigarette Case[ 3 ]which is slightly similar in nature. The US Cigarette Exporters Association ( CEA ) brought up a instance against Thailand. The sale of coffin nails in the US was traveling down due to increased wellness and environmental consciousness among people. Therefore the US baccy makers wanted to do up for it by spread outing to other International markets, which in this instance was the Thai market. The CEA, appealing through the office of the United States Trade Representative ( USTR ) , alleged that the mark states ‘ restrictive trade policies with regard to tobacco constitute unjust trade patterns, which warrant the infliction of relatiative countenances. The U.S. authorities appealed the instance to the GATT and finally Thailand was forced to open its coffin nail import market in order to avoid U.S. countenances.
Another breach could be Art 11 of the GATT which states “ No prohibitions or limitations other than responsibilities, revenue enhancements or other charges, whether made effectual through quotas, import or export licences or other steps, shall be instituted or maintained by any undertaking party on the importing of any merchandise of the district of any other undertaking party or on the exportation or sale for export of any merchandise destined for the district of any other undertaking party. ” The US has wholly banned the “ sale or distribution ” of clove coffin nails in the US which is thereby a breach of the above said article.
Article 1 of GATT outlines the construct of Most-Favoured-Nation ( MFN ) intervention and provinces that trade grants granted to one Member are applied instantly and without conditions to all other Members. If Indonesia can turn out that the US is importing split coffin nails from another state and at the same clip banned Indonesia from exporting them to the US, so the US will besides be in breach of Article 1. Here once more the statement of “ like merchandise ” comes to the bow. As discussed before both Article 1 & A ; 3 require that both clove and menthol coffin nails are considered to be “ similar merchandises ” . GATT commissariats do n’t precisely specify “ similar merchandises ” but the undermentioned points are taken into history when make up one’s minding if it ‘s a similar merchandise.
Are the merchandises indistinguishable?
Are the merchandises substitutable[ 4 ]?
Are the merchandises “ straight competitory ” ?
Another proviso which does non use here but is highly of import is that “ method of production[ 5 ]“ can non be used to distinguish between two merchandises.
THE US DEFENSE
Article 20 & A ; SPS ( Sanitary and Phytosanitary Measures )
The US defence to the above allegations lies with Art 20 of the GATT and the SPS understanding ‘ Article 20 of GATT provides exclusions to the article 3.4. Those exclusions include steps “ necessary to protect human, animate being or works life or wellness ” ( Art 20 ( B ) ) . The US can reason that the measure is in conformity with international wellness steps and besides follows the GATT exclusions under article 20 ( B ) . They do non nevertheless include any relevant political or economic exclusions. Therefore it would be really hard for the U.S. to credibly argue that the Act is non in misdemeanor of GATT. Hence, the step consequences in arbitrary and indefensible favoritism, a cloaked limitation on trade, and is more trade restrictive than necessary to accomplish a legitimate aim, if one were to be.
If nevertheless the US succeeds in converting the panel that they have fulfilled the conditions for article 20 to use here so the SPS understanding comes into drama. Harmonizing to the SPS understanding “ Members have the right to take healthful and phytosanitary steps necessary for the protection of homo, animate being or works life or wellness, provided that such steps are non inconsistent with the commissariats of this Agreement ” ( Art 2.1 ) . The US can reason that their measure is in conformity with the SPS understanding and therefore a breach has non been made. However the SPS understanding requires that such steps be taken merely when there is sufficient scientific grounds of international criterion to warrant those actions, hence a hazard appraisal is necessary. Article 5.2 explains what kinds of information shall be taken into history when set abouting a hazard appraisal:
available scientific grounds ;
relevant procedures and production methods ;
relevant review, trying and proving protocols ;
prevalence of specific diseases or plagues ;
being of pest- or disease-free countries ;
relevant ecological and environmental conditions ; and
quarantine or other intervention.
The US “ Family Smoking Prevention Tobacco Control Act of 2009 ” has restricted Indonesian presence in the local US baccy industry thereby transgressing Articles 3 & A ; 11 of the GATT. There could besides be a breach of Article 1 but that depends on factors that have already been discussed above. The US defence in this instance is slightly weak. Article 20 ( B ) is non applicable because either status for Article 20 ( B ) to come into drama has non been fulfilled. That is, the steps taken by the US are a agency of “ arbitrary or indefensible favoritism ” and are besides a “ cloaked limitation on international trade ” . Hence if Art 20 ( B ) does n’t use so there ‘s no footing for an exclusion utilizing SPS because solid scientific grounds would be required. In add-on soon there is no scientific cogent evidence bespeaking that clove coffin nails pose a greater wellness hazard than menthol coffin nails. On the reverse a survey[ 6 ]was carried out in which the venous plasma nicotine and C monoxide degrees from 10 tobacco users were tested after smoking clove coffin nails and were found to be similar to non-clove trade names of coffin nails, such as Marlboro. Another fact to observe here is that while this measure was introduced to cut down on young person smoke, it overlooked the fact that harmonizing to US studies[ 7 ]more than 43 per centum of immature tobacco users smoke menthol coffin nails doing up about a one-fourth of all coffin nails sold in the US. While clove coffin nails comprise less than 1 per centum of the entire figure of coffin nails consumed by immature tobacco users and less than 1 per centum the entire figure of coffin nails sold in the US. Furthermore harmonizing to the National Survey on Drug Use and Health, 62 per centum of middle-school pupils who smoke Begin with menthol coffin nails, whose minty gustatory sensation can dissemble the abrasiveness of baccy.
Harmonizing to the process laid down by DSU the claimant, in this instance Indonesia should show its concerns to the US and demand that the limitation on clove coffin nails be removed. If the respondent, that is the US, garbage to raise the limitations, the claimant can so bespeak that a panel be set up and make up one’s mind in Indonesia ‘s favour thereby teaching the US to raise its prohibition on clove coffin nails in line with articles 19 & A ; 22 of the DSU.