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Trade Dispute - Cigarettes


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Trade Dispute - Cigarettes, WTO dispute between US Vs Indonesia (regarding cloves cigarettes) and Australia Vs Other countries (regarding plain packaging)

Published in: Economy & Finance
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Trade Dispute - Cigarettes

  1. 1. United States Vs Indonesia Clove Cigarettes • On 7 April 2010, Indonesia requested consultations with the United States with respect to a provision of the Family Smoking Prevention Tobacco Control Act of 2009 that bans clove cigarettes. • This measure bans the production and sale of clove cigarettes, as well as most other flavoured cigarettes, in the United States. However, the measure excludes menthol-flavoured cigarettes from the ban. • Indonesia is the world's main producer of clove cigarettes, and the vast majority of clove cigarettes consumed in the United States prior to the ban were imported from Indonesia.
  2. 2. Indonesia cloves cigarettes
  3. 3. AUSTRALIA Vs UKRAINE, HONDURAS, DOMINICAN REPUBLIC, AND INDONESIA Plain Packaging  Ukraine (On 13 March 2012), Honduras (On 4 April 2012), the Dominican Republic (On 18 July 2012), Cuba (On 3 May 2013) and Indonesia (On 20 September 2013) requested consultations with Australia concerning certain Australian laws and regulations that impose trademark restrictions and other plain packaging requirements on tobacco products and packaging.
  5. 5. Why do we have to discuss it? The dispute underlines broader concerns about trade provisions that enable foreign companies to challenge health, labor and environmental standards. If a country's regulations are found to impose unreasonable restrictions on trade, it must amend the rules or compensate the nation or foreign corporation that brought the complaint.
  6. 6. Clove cigarettes are more dangerous than other conventional cigarettes  Clove cigarettes are more dangerous because of the strong addictive effect that the clove cigarettes have, especially for teenagers.  Unlike fruit-flavored cigarettes, cloves release a sweet aroma that contains eugenol, which is a topical anesthetic. Many dentists use eugenol to numb part of a patient's mouth.  When smoking a clove flavored cigarette, the eugenol makes the upper airways of a smoker's lungs numb, allowing the smoker to inhale very dense cigarette smoke into the deepest part of their lungs. Dr. Richard Hurt, A professor of medicine and director of the Nicotine Dependence Center at the Mayo Clinic in Minnesota
  7. 7. Article 3.4 of the General Agreement on Tariffs and Trade (GATT) agreement  The products of the territory of any contracting party imported into the territory of any other contracting party shall be accorded treatment no less favorable 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.
  8. 8. Why Clove cigarettes are different from menthol cigarettes?  There are a wide range of the cigarettes, strawberry, grape, orange, clove, vanilla, coconut, cocoa, chocolate, cherry.  The jurisdiction of the decision whether the clove cigarettes more similar to fruit-flavored cigarette than menthol cigarettes is on US government.  Even though clove cigarettes are more similar to the menthol cigarettes, it is too difficult for US government to ban on the menthol cigarette.  As all things considered, US government reached the conclusion that fruit- flavored cigarettes and clove cigarettes which are more similar to fruit- flavored cigarettes and have relatively small users should be prohibited.
  9. 9. National Survey on Drug Use and Health 62% 38% Middle School Student who Smoke Menthol Cigarette Other
  10. 10. Universal Declaration of Human Rights Article 2 Everyone is entitled to all the rights and freedoms set forth in this Declaration, without distinction of any kind, such as race, colour, sex, language, religion, political or other opinion, national or social origin, property, birth or other status. Furthermore, no distinction shall be made on the basis of the political, jurisdictional or international status of the country or territory to which a person belongs, whether it be independent, trust, non-self-governing or under any other limitation of sovereignty.
  11. 11. 1) smoking is completely personal freedom 2) causation between the cigarettes and the diseases are not proved : there could be statistical correlation but in terms of personal health, too many elements could impact personal health.
  12. 12. Tobacco smoking status, people aged 14 years or older, 1991–2013 (per cent) Among people aged 14 and older, daily smoking declined significantly between 2010 and 2013 (from 15.1% to 12.8%). Daily smoking rates have almost halved since 1991 (24.3%).
  13. 13. Trade-Related Aspects of Intellectual Property Rights (TRIPS)  Article 3 National Treatment  1. Each Member shall accord to the nationals of other Members treatment no less favourable than that it accords to its own nationals with regard to the protection (3) of intellectual property, subject to the exceptions already provided in, respectively, the Paris Convention (1967), the Berne Convention (1971), the Rome Convention or the Treaty on Intellectual Property in Respect of Integrated Circuits. In respect of performers, producers of phonograms and broadcasting organizations, this obligation only applies in respect of the rights provided under this Agreement. Any Member availing itself of the possibilities provided in Article 6 of the Berne Convention (1971) or paragraph 1(b) of Article 16 of the Rome Convention shall make a notification as foreseen in those provisions to the Council for TRIPS.  2. Members may avail themselves of the exceptions permitted under paragraph 1 in relation to judicial and administrative procedures, including the designation of an address for service or the appointment of an agent within the jurisdiction of a Member, only where such exceptions are necessary to secure compliance with laws and regulations which are not inconsistent with the provisions of this Agreement and where such practices are not applied in a manner which would constitute a disguised restriction on trade.
  14. 14. The Result : United States Vs Indonesia Case  Consultation Result  WTO Panel decided that clove and menthol cigarettes are “like products” (Both types of cigarettes are flavoured and appeal to youth) -> The ban is against the NT obligation in Article 2.1 of the TBT Agreement  However, the Panel rejected Indonesia's claim that the ban is unnecessary -> Indonesia had failed to demonstrate that the ban is more trade-restrictive -> Ban on clove cigarettes could contribute to reducing youth smoking
  15. 15. The Result : United States Vs Indonesia Case  Case Status  On Oct 2014, Indonesia and the United States reached a mutual agreement -> Indonesia had withdrawn its request under Article 22.2 of the DSU -> U.S withdrew its objection to that request  Indonesia and U.S. decided to strengthen mutual trade and Investment on behalf of the retaliation of 55 mil dollars worth -> no ban on Indonesian cigars and cigarillos / long-terms Investment
  16. 16. The Result : AUSTRALIA Vs UKRAINE, HONDURAS, INDONESIA  Consultation result  The outcome of the case will not be known until sometime between late 2014 and early 2015.  Case Status  A panel for the disputes was composed on 5 May 2014.