Tobacco Dispute Settlements In The Wto
International Law Essay
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The focus of this article is the US decision to implement the “Family Smoking Prevention Tobacco
Control Act of 2009”, which contains a provision that bans the “sale or distribution” of all flavored
cigarettes except menthol. A bird’s eye view of the “Family Smoking Prevention Tobacco Control Act of
2009” gives the impression that it is well intentioned. Keeping a close eye on tobacco product
manufacturers seems like a good measure for society as a whole. However this legislation is deeply
flawed. Furthermore it has far reaching implications for the Indonesian tobacco industry and for
Indonesia as a whole. Now how does this affect Indonesia? The majority of cigarettes produced and
exported by Indonesia contain clove, so the US has more or less banned Indonesian presence in the
US tobacco industry. What is even more surprising is that the legislation contains no restriction on
menthol cigarettes which directly benefits the local industry of the US where a high majority of
cigarettes produced contain menthol. The name of Phillip Morris Inc. cannot go unmentioned in this
regard considering the fact that they are the largest makers of menthol cigarettes and strongly support
this bill , leading to this act being nicknamed as the “Marlboro Monopoly Act of 2009”. The main
purpose of this article is to educate the readers about the current dispute in light of the GATT rules and
regulations. It will focus not only on the Indonesian perspective but also on the US response to the
Indonesian allegations.
WTO DISPUTE SETTLEMENT PROCEDURE
Dispute settlement in the WTO occurs through the DSU (Dispute Settlement Unit) whereby a dispute
settlement board (DSB) is set up which consists of a representative from both WTO members. The
WTO dispute settlement mechanism is a 2 step process namely
Consultation
Panel Proceedings
Indonesia can firstly exercise its rights under article 22 and 23 of the GATT and make its concerns
known to the US authorities. The US will then have to abide by the WTO rules and under article 22 of
the GATT, give “sympathetic consideration”, to the concerns of Indonesia and enter into consultations
with them. The US is then bound by WTO laws to reply to a request for consultation within 10 days of
receiving the request and start the consultation process within 30 days of the receipt. Consultations
would take place in accordance with article 4 of the DSU. In the event the issue could not be resolved
through consultation within 60 days of the receipt of the request, the complaining party may request the
establishment of a panel and thus moving to the panel proceedings step. The complaining party may
request a panel even within the 60 days if both parties agree that the dispute cannot be resolved
through consultations (Art 4.7).
The panel proceedings stage is based on a 2 tier structure (1) Panel & (2) Appellate Body. In this
stage, as mentioned before, the complainant, in this case Indonesia, can ask the DSB to appoint a
Dispute Resolution Panel which assists the DSB in making a decision. The panel then investigates the
issue and is required to submit its final report to the DSB within 6 months. Firstly only the interim report
is distributed to the parties and if none of the concerned parties have any comment on the report, the
report is considered final. If any party feels the need to add something then their views are included in
the report before finalizing and then submitted to the DSB for consideration and within 60 days would
be adopted formally unless the DSB decides by consensus not to adopt the report or either party
chooses to appeal against the report (Art 16.4).
BREACH OF GATT
Article 3
Article 3.4 of the General Agreement on Tariffs and Trade (GATT) agreement states that "The products
of the territory of any contracting party imported into the territory of any other contracting party shall be
accorded treatment no less favourable than that accorded to like products of national origin in respect
of all laws, regulations and requirements affecting their internal sale, offering for sale, purchase,
transportation, distribution or use."
According to Indonesia flavored cigarettes represent a "like" product manufactured in Indonesia and
the U.S. The Family Smoking Prevention and Tobacco Control Act restricts the ‘sale or distribution’ of
clove flavored cigarettes - made in Indonesia - but not the menthol flavored cigarettes manufactured in
the U.S. As long as clove cigarettes and menthol cigarettes are considered to be "like products"
because both are included in the category of flavored cigarettes under