United States - Measures Affecting the Production and Sale of Clove Cigarettes (WT/DS406):Report of the Appellate Body

Summary

INTRODUCTION

The United States appeals certain issues of law and legal interpretations developed in the Panel Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes (the “Panel Report”). The Panel was established on 20 July 2010 to consider a complaint by Indonesia with respect to a measure adopted by the United States that prohibits cigarettes with characterizing flavours, other than tobacco or menthol.

Before the Panel, Indonesia claimed that the United States acted inconsistently with its substantive and procedural obligations under the Agreement on Technical Barriers to Trade (the “TBT Agreement”) and the General Agreement on Tariffs and Trade 1994 (the “GATT 1994”). In particular, Indonesia claimed that Section 907(a)(1)(A) of the United States Federal Food, Drug and Cosmetic Act (the “FFDCA”)—as amended by the Family Smoking Prevention and Tobacco Control Act (the “FSPTCA”)—was inconsistent with Articles 2.1, 2.2, 2.5, 2.8, 2.9, 2.10, 2.12, and 12.3 of the TBT Agreement. Alternatively, Indonesia claimed that Section 907(a)(1)(A) was inconsistent with Article III:4 of the GATT 1994, and could not be justified under Article XX(b) thereof.

The Panel Report was circulated to Members of the World Trade Organization (the “WTO”) on 2 September 2011. The Panel found that Section 907(a)(1)(A) was inconsistent with Article 2.1 of the TBT Agreement because it accorded to imported clove cigarettes less favourable treatment than that accorded to like menthol cigarettes of national origin. Having found that Section 907(a)(1)(A) was inconsistent with Article 2.1 of the TBT Agreement, the Panel declined to rule on Indonesia's alternative claim under Article III:4 of the GATT 1994 and on the United States’ related defence under Article XX(b) of the GATT 1994.

The Panel further found that the United States acted inconsistently with Article 2.9.2 of the TBT Agreement by failing to notify to WTO Members, through the Secretariat, the products to be covered by the proposed Section 907(a)(1)(A), together with a brief indication of its objective and rationale, at an appropriate early stage when amendments and comments were still possible. The Panel also found that the United States acted inconsistently with Article 2.12 of the TBT Agreement by not allowing an interval of no less than six months between the publication and the entry into force of Section 907(a)(1)(A).