United States

Indonesia brought a claim against the United States regarding a statutory ban on the production or sale in the United States of cigarettes containing certain additives including clove. Indonesia alleged that the measure is inconsistent with various provisions of the General Agreement on Tariffs and Trade 1994 (GATT), the Agreement on Sanitary and Phytosanitary Measures (SPS) and Agreement on Technical Barriers to Trade (TBT), as the United States excluded from the restriction the production and sale of menthol-flavored cigarettes. Indonesia claimed that the ban on clove cigarettes was discriminatory and unnecessary. The WTO Panel found the menthol-flavored and clove-flavored products similar and held that the ban was contrary to the TBT Agreement because it treated clove cigarettes less favorably than menthol-flavored cigarettes. Nonetheless, the WTO Panel held that restriction was consistent with the TBT Agreement as far as it was not more trade-restrictive than necessary to satisfy the legitimate objective of reducing youth smoking. Finding that the United States had acted inconsistently with the TBT Agreement, the Panel recommended that the United States bring its actions into conformity with its obligations under the TBT Agreement.

The Parties settled the case while negotiating appropriate remedies. In addition to other commitments, the United States agreed to not arbitrarily or unjustifiably discriminate against cigars or cigarillos from Indonesia.