G/TBT/W/449  
 
12 April 2017  
(17-1968) Page: 1/3 
Committee on Technical Barriers to Trade  Original: E nglish  
 
EUROPEAN UNION — DIRECTIVE 2014/40/EU  ON THE APPROXIMATION  OF THE LAWS, 
REGULATIONS AND ADMI NISTRATIVE PROVISION S OF THE MEMBER STAT ES 
CONCERNING THE MANUF ACTURE, PRESENTATION  AND SALE OF TOBACCO AND 
RELATED PRODUCTS AND  REPEALING DIRECTIVE 2001/37/EC  
STATEMENT BY INDONESIA TO THE COMMITTEE ON TECHNICAL BARRIERS T O TRADE ,  
29-30 MARCH 2017   
The following communication, dated 11 April 2017 , is being circulated at the request of the 
delegation of Indonesia . 
 
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1.  Again, we raise th is issue in this meeting because  of its importance to Indonesia and we would 
like to receive clarification and understanding from the E uropean Union.  
2.   In the TBT Committee on June 2016 , Indonesia raised this issue in particular Article 7(14) of 
the EU Tobacco Directive which stipulates tobacco products with a characterising flavour whose 
EU-wide sales volumes represented 3% or more in a particular product category are only subject 
to application of the Article 7(1) prohibition from 20 May 2020. Indonesia's interpretation  was that, 
if menthol cigarettes consumed in the EU (the vast majority of which were also produced within 
the EU) were determined to have a "characterising flavour", they should also be prohibited under 
Article 7(1). Instead these products benefit from the  delay in prohibition pursuant to Article 7(14). 
Indonesia thus believed that Article 7(14) of the Tobacco Directive is inconsistent with Article 2.1 
of the TBT Agreement because, in practice, it accords to imported Kretek  cigarettes a treatment 
less favou rable than that accorded to domestic menthol cigarettes. Similarly, Indonesia is of the 
view Article 9 of Commission Implementing Decision (EU) 2016/786 of 18 May 2016 is also 
inconsistent with Article 2.1 of the TBT Agreement. Article 9 imposes a specific  methodology to 
determine "characterising flavour", which is to be based on a comparison of the smelling 
properties of the test product with those of reference products. Indonesia considered that by 
restricting the methodology to smelling properties, and b y, as a result, excluding tasting 
methodology properties, this provision inherently discriminated against Kretek , which uses 
distinctive Indonesia -grown tobacco leaf. Conversely, cigarettes manufactured in the EU are 
largely made using one or both of the t wo internationally most commonly used tobacco leaves.  
3.   The European Union responded that the Tobacco Products Directive was applicable as of 20 
May 2016. This measure was a result of thorough consultations with all stakeholders involved and 
an in-depth ana lysis. It provides for measures that were non -discriminatory and proportionate to 
the legitimate health objectives pursued. According to the European Union, during the preparation 
of the measure, the European Commission had carefully balanced the need to p ut in place a 
comprehensive tobacco control policy, including, on the one hand, the implementation of the WHO 
Framework Convention on Tobacco Control (FCTC) commitments with, on the other hand, various 
economic and trade considerations. The European Union was fully convinced that the Directive is 
consistent with the EU's international commitments, including its obligations under the TBT 
Agreement. With regard to Indonesia's specific question concerning Kretek , the EU said that it was 
available for bilateral  contacts.1 
                                                
1 See Minutes of the meeting of the Committee on Technical Barriers to trade of 15 to 16 June 2016, 
G/TBT/M/69 of 26 September 2016.  G/TBT/W/449  
 
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  4.   During the TBT meeting  in November 2016, Indonesia referred to Article 7(14) of the Tobacco 
Products Directive as being in violation with Article 2.1 of the TBT Agreement. Indonesia noted 
that in Dispute DS406 (United States — Measures Affecti ng the Production and Sale of Clove 
Cigarettes) the WTO Dispute Settlement Body ruled that a similar measure introduced in the US 
legislation was found inconsistent with the no less favourable treatment obligation of Article 2.1 of 
the TBT Agreement becaus e it prohibited imported clove cigarettes from Indonesia, while at the 
same time it did not prohibit "like" domestic menthol cigarettes.  
5.   Indonesia has now received a response from the European Union in a document dated 10 
February 20172 in which the Euro pean Union inter alia addresses Indonesia 's arguments with 
regard to Articles 9 and 7.14.  Indonesia notes that pursuant to Article 2(25) of the Tobacco 
Products Directive, regarding the definition of a characterising flavour. Indonesia believes that this 
must be read in combination with Article 2(24) which defines a flavouring as "an additive that 
imparts smell and/or taste ". In any event, to the extent that taste would not be taken into 
account, Indonesia submits that it is of the opinion that restricting the methodology to smelling 
properties and so excluding taste properties will inherently discriminate against Kretek, which uses 
distinctive Indonesian grown tobacco leaf rather than cigarettes manufactured in the European 
Union, which largely are made usi ng one or both of the two internationally most commonly used 
tobacco leaves.  Kretek cigarettes are a specific tobacco product characterised by the presence of a 
very high concentration of clove, which should not be considered in any case as an additive but  the 
fundamental constituent material of the clove cigarette. This accords less favourable treatment to 
imported Kretek than it accords to like domestic tobacco products.  As such the Indonesian 
Government is of the opinion that Article 2.1 of the TBT Agree ment applies to Articles 2(25) of the 
Tobacco Products Directive and Article 9 of Commission Implementing Decision (EU) 2016/786 of 
18 May 2016.  
6.   In addition, the methodology for sensory analysis to be applied by an advisory panel shall be 
based on a comp arison of the smelling properties of the test product with those of reference 
products. However, Kretek cigarettes contain between 15 and 40% of cloves. There are no 
flavoured conventional cigarettes that contain 40% of a single ingredient (other than the tobacco 
leaf).  In addition, Kretek cigarettes are made predominantly from Indonesia tobaccos. Most of 
them are from Java, Sumatra, Bali, and Lombok, supplying the industry with virtually hundreds of 
types of tobacco, different in variety and grades, with t he result that Kretek cigarettes typically 
comprise a blend of more than 20 tobacc o varieties. As a result of these unique aspects, the 
principal challenge in an objective evaluation of Kretek is the identification of a suitable reference 
product because a  Kretek cigarette would not be a Kretek without the addition of cloves. There 
exists no "un -cloved" Kretek cigarette to use as a reference product. That renders it all the more 
necessary to apply a reasonable approach in determining whether a Kretek cigare tte is a tobacco 
product with a characterising flavour, lest Indonesia reiterates Article 2.1 of the TBT Agreement 
could be infringed.  
7.   With regard to the European Union 's response to Indonesia 's arguments on Article 7.14 of the 
Tobacco Products Directive,  Indonesia notes that in fact no response was provided. The need to 
introduce a transitional period aimed at giving both the tobacco industry and consumers time to 
adapt, therefore limiting the negative economic and social consequences of the prohibition o n the 
placing on the market of tobacco products with a characterising flavour does not address the issue 
as to why some products and especially menthol cigarettes would benefit from a transition period 
and other like products would not. For all the product s and consumers there are negative 
economic and social consequences from a prohibition to put these products on the market.  
8.   Indonesia understands that the vast majority of menthol cigarettes sold in the European Union 
are produced in the European Union an d in fact this is emphasized by the EU Court of Justice when 
it refers to the economic consequences of the prohibition of placing menthol cigarettes on the 
market. On the basis of this understanding the Indonesian government is of the opinion that TBT 
Article 2.1 (no less favourable treatment) applies to Article 7(14) of the Tobacco Directive because 
the practical effect of Article 7(14) is to exempt menthol cigarettes from the prohibition for a 
material period of time. This accords less favorable treatment  to imported Kretek than it accords to 
like domestic menthol cigarettes especially as several EU Member States have already prohibited 
the placement on the market of Kretek cigarettes.  
                                                
2 See Ref. Ares(2017)755249 of 10 February 2017 . G/TBT/W/449  
 
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  9.   Indonesia looks forward to a constructive exchange with the European Union on the issues it 
brought forward. Thank you . 
 
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