WORLD TRADE  
ORGANIZATION   
WT/DS406/R 
2 September 2011 
 (11-4166) 
 Original:   English 
 
 
 
 
  
 
 
UNITED STATES – MEAS URES AFFECTING THE 
PRODUCTION AND SALE OF CLOVE CIGARETTES 
 
 
Report of the Panel 
 
 
   WT/DS406/R 
 Page i 
 
 
  TABLE OF CONTENTS 
 
Page 
I.  INTRODUCTION .................................................................................................................. .. 1 
II.  FACTUAL ASPECTS .............................................................................................................. 1 
A.  INTRODUCTION  ........................................................................................................................... 1  
B.  THE MEASURE AT ISSUE  .............................................................................................................. 2  
C.  FACTUAL CONTEXT  .................................................................................................................... 4  
1.  The United States' legislative regime for tobacco control ..................................................... 4  
(a)  History of tobacco–control measures in the United States ......................................................... 4  
(b)  The scope of  the FSPTCA ....................................................................................................... ... 6 
2.  The market for cigarettes in  the United States ....................................................................... 7  
3.  International efforts to curb smoking:  The Framework Convention on Tobacco 
Control  .............................................................................................................................. .......... 8 
III. PARTIES' REQUESTS FOR FIND INGS AND RECOMMENDATIONS......................... 9  
IV.  ARGUMENTS OF THE PARTIES ...................................................................................... 10  
V.  ARGUMENTS OF THE THIRD PARTIES ........................................................................ 10  
VI.  INTERIM REVIEW ............................................................................................................... 10 
A.  GENERAL  .............................................................................................................................. ..... 10 
B.  UNITED  STATES ' COMMENTS ON THE INTERIM REPORT  ............................................................ 11  
1.  Factual aspects ............................................................................................................... ......... 11 
2.  Whether Section 907(a)(1)(A) is inconsistent with Article 2.1 of the TBT Agreement  ......... 13 
3.  Whether Section 907(a)(1)(A) is inconsistent with Article 2.2 of the 
TBT Agreement  ........................................................................................................................ 18  
4.  Whether the United States has acted inconsistently with Article 12.3 of the 
TBT Agreement  ........................................................................................................................ 22  
5.  Miscellaneous ................................................................................................................. ......... 23 
VII. FINDINGS ...................................................................................................................... ......... 23 
A.  INTRODUCTION  ......................................................................................................................... 23  
B.  ORDER OF ANALYSIS  ................................................................................................................. 24  
C.  WHETHER SECTION  907( A)(1)(A)  IS A "TECHNICAL REGULATION " WITHIN THE 
MEANING OF ANNEX  1.1 OF THE TBT A GREEMENT  ................................................................... 27  
1.  Arguments of the parties ...................................................................................................... .. 27 
2.  Analysis by the Panel ......................................................................................................... ..... 27 
(a)  Introduction .................................................................................................................. ............. 27  
(b)  The legal provision at issue .................................................................................................. ..... 28 
(c)  Elements of the definition of a technical regulation ................................................................. 28  WT/DS406/R 
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  (i)  First element:  Whether Section 907(a)(1)(A) applies to an "identifiable product or 
group of products" ............................................................................................................ ........ 28 
(ii)  Second element: Whether Section 907(a)(1)(A) lays down one or more "product 
characteristics" .............................................................................................................. ........... 29  
(iii) Third element:  Whether compliance with th e product characteris tics is mandatory .............. 31  
(d)  Conclusion .................................................................................................................... ............ 32  
D.  WHETHER SECTION  907( A)(1)(A)  IS INCONSISTENT WITH ARTICLE  2.1 OF THE 
TBT A GREEMENT  ....................................................................................................................... 32  
1.  Arguments of the parties ...................................................................................................... .. 32 
2.  Analysis by the Panel ......................................................................................................... ..... 39 
(a)  Introduction .................................................................................................................. ............. 39  
(b)  The legal provision at issue .................................................................................................. ..... 39 
(c)  Whether imported clove cigarettes and the domestic cigarettes at issue are "like 
products" within the meaning of Article 2.1 of the TBT Agreement  ......................................... 41  
(i)  Interpreting likeness under Article 2.1 of the TBT Agreement ................................................. 41  
Parties' arguments on the interpretation of "like products" in the context of Article 2.1 of the 
TBT Agreement  .............................................................................................................................. .......... 41 
The Panel's approach to interpreting "like products" in the context of Article 2.1 of the 
TBT Agreement  .............................................................................................................................. .......... 44 
(ii)  The traditional li keness criteria ............................................................................................. ... 51 
(iii) Likeness analysis of the pr oducts concerned ............................................................................ 52  
Relevant domestic and imported products for the pur pose of the likeness analysis in this case ............. 52  
The properties, nature and quality  of the products concerned ................................................................. 57 
The end-uses of the products .................................................................................................. ................. 67  
Consumers' tastes and habits in respect of the produ cts ....................................................................... ... 69 
The tariff classificati on of the products ..................................................................................... .............. 77  
(iv)  Conclusion on likeness ........................................................................................................ ...... 78 
(d)  Whether imported clove cigarettes are accord ed less favourable treatment than that 
accorded to like products of national origin .............................................................................. 79  
(i)  Introduction .................................................................................................................. ............ 79  
(ii)  The Panel's approach to interpreting th e less favourable treatment test under 
Article 2.1 of the TBT Agreement ............................................................................................. 80 
(iii) De jure versus de facto discrimination ..................................................................................... 80  
(iv)  The less favourable treatment test under Article 2.1 of the TBT Agreement ............................ 81  
Which are the products to be compared ......................................................................................... ......... 83 
Whether the products at issu e are treated differently ......................................................................... ..... 85 
Whether the different treatment is to the detriment of im ported products .............................................. 85  
Whether that less favourable treatment is rela ted to the national orig in of the imports .......................... 85  
(v)  Conclusion on less favourable treatment .................................................................................. 89   WT/DS406/R 
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  (e)  Overall conclusion on Indonesia's claim under Article 2.1 of the TBT Agreement  .................. 89  
E.  WHETHER SECTION  907( A)(1)(A)  IS JUSTIFIED UNDER ARTICLE  XX( B) OF THE 
GATT 1994 ..................................................................................................................... .......... 89 
1.  Arguments of the parties ...................................................................................................... .. 89 
2.  Analysis by the Panel ......................................................................................................... ..... 91 
(a)  Introduction .................................................................................................................. ............. 91  
(b)  The legal provision at issue .................................................................................................. ..... 91 
(c)  Whether it is necessary for the Panel to de termine whether Section 907(a)(1)(A) is 
justified under Article XX (b) of the GATT 1994 ..................................................................... 91  
(d)  Conclusion .................................................................................................................... ............ 92  
F.  WHETHER SECTION  907( A)(1)(A)  IS INCONSISTENT WITH ARTICLE  2.2 OF THE 
TBT A GREEMENT  ....................................................................................................................... 92  
1.  Arguments of the parties ...................................................................................................... .. 92 
2.  Analysis by the Panel ......................................................................................................... ..... 97 
(a)  Introduction .................................................................................................................. ............. 97  
(b)  The legal provision at issue .................................................................................................. ..... 98 
(c)  Whether the ban on clove cigarettes pursues a legitimate objective ....................................... 100  
(i)  Whether Indonesia has correctly identified the objective of the ban ...................................... 100  
(ii)  Whether the objective of the ban on clove cigarettes is "legitimate" ...................................... 103  
(d)  Whether the ban on clove cigarettes is "more trade-restrictive than necessary" to fulfil 
the legitimate objective of reducing youth smoking ............................................................... 104  
(i)  Whether jurisprudence developed under Article XX(b) of the GATT 1994 is relevant 
to the interpretation of the "more tr ade-restrictive than necessary" standard in 
Article 2.2 of the TBT Agreement ........................................................................................... 10 5 
(ii)  Whether Indonesia has demonstrated that the ban on clove ci garettes exceeds the 
level of protection sought by the United States ....................................................................... 109  
(iii) Whether Indonesia has demonstrated that  the ban on clove cigarettes makes no 
"material contribution" to the objective of reducing youth smoking ...................................... 111  
Introduc tion .................................................................................................................. ......................... 111  
Whether clove cigarettes pose a greater h ealth risk than ot her cigarettes ............................................. 112  
Whether youth smoke clove cigarette s in insignificant numbers .......................................................... 113  
Whether the United States' failure to ban other flavoured tobacco produc ts most popular with 
youth demonstrates that banning clove cigarettes makes no "material contribution" to reducing 
youth sm oking ................................................................................................................. ...................... 114  
Whether the available scientific evidence shows that banning clove cigarettes will do little to 
deter youth from smoking ...................................................................................................... ............... 115  
Conclu sion .................................................................................................................... ......................... 121  
(iv)  Whether Indonesia has demonstrated that th ere are less-trade restrictive alternative 
measures that would make an equivalent contribution to the achievement of the 
objective at the level of protection sought by the United States ............................................. 121  
(e)  Overall conclusion on Indonesia's claim under Article 2.2 of the TBT Agreement  ................ 125  WT/DS406/R 
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  G.  WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.5 OF 
THE TBT A GREEMENT  .............................................................................................................. 126  
1.  Arguments of the parties ......................................................................................................  126 
2.  Analysis by the Panel ......................................................................................................... ... 130 
(a)  Introduction .................................................................................................................. ........... 130  
(b)  The legal provision at issue .................................................................................................. ... 130 
(c)  Whether Indonesia requested the United States to provide an explanation for 
Section 907(a)(1)(A) pursuant to Article 2.5, first sentence, of the TBT Agreement  .............. 131  
(d)  Conclusion .................................................................................................................... .......... 133  
H.  WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.8 OF 
THE TBT A GREEMENT  .............................................................................................................. 133  
1.  Arguments of the parties ......................................................................................................  133 
2.  Analysis by the Panel ......................................................................................................... ... 134 
(a)  Introduction .................................................................................................................. ........... 134  
(b)  The legal provision at issue .................................................................................................. ... 135 
(c)  First issue: whether Article 2.8 obliges Members to provide "a certain level of 
specificity" in their technical regulations ................................................................................ 13 5 
(d)  Second issue: whether it would be "appropria te" to specify the ban on clove cigarettes 
in terms of performance, rather than on design or descriptive characteristics ........................ 138  
(e)  Conclusion .................................................................................................................... .......... 141  
I.  WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.10  OF 
THE TBT AGREEMENT  .............................................................................................................. 141  
1.  Arguments of the parties ......................................................................................................  141 
2.  Analysis by the Panel ......................................................................................................... ... 142 
(a)  Introduction .................................................................................................................. ........... 142  
(b)  The legal provision at issue .................................................................................................. ... 142 
(c)  Conclusion .................................................................................................................... .......... 143  
J.  WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLES  2.9.2  
AND 2.9.3  OF THE TBT AGREEMENT  ......................................................................................... 143  
1.  Arguments of the parties ......................................................................................................  143 
2.  Analysis by the Panel ......................................................................................................... ... 145 
(a)  Introduction .................................................................................................................. ........... 145  
(b)  The legal provisions at issue ................................................................................................. .. 145 
(c)  Conditions for the application of Article 2.9 of the TBT Agreement  ...................................... 146  
(i)  First condition: absence of a relevant inter national standard, or a proposed technical 
regulation not in accordance with a relevant international standard .................................... 146  
(ii)  Second condition:  whether the technical regulation may have a significant effect on 
trade of other Members ........................................................................................................ ... 147 
(d)  Article 2.9.2:  Obligation to notify the proposed technical regulation .................................... 148   WT/DS406/R 
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  (e)  Article 2.9.3:  Obligation to provide partic ulars or copies of the proposed technical 
regulation .................................................................................................................... ............ 149  
(f)  Conclusion .................................................................................................................... .......... 150  
K.  WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.12  OF 
THE TBT A GREEMENT  .............................................................................................................. 151  
1.  Arguments of the parties ......................................................................................................  151 
2.  Analysis by the Panel ......................................................................................................... ... 153 
(a)  Introduction .................................................................................................................. ........... 153  
(b)  The legal provision at issue .................................................................................................. ... 153 
(c)  Conclusion .................................................................................................................... .......... 160  
L.  WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  12.3  OF 
THE TBT A GREEMENT  .............................................................................................................. 160  
1.  Arguments of the parties ......................................................................................................  160 
2.  Analysis by the Panel ......................................................................................................... ... 163 
(a)  Introduction .................................................................................................................. ........... 163  
(b)  The legal provision at issue .................................................................................................. ... 164 
(c)  Scope of the obligation in Article 12.3 of the TBT Agreement  ............................................... 164  
(d)  Elements of the obligation in Article 12.3 of the TBT Agreement  .......................................... 166  
(i)  First element: whether Indonesia is a "developing country" .................................................. 166  
(ii)  Second element: whether Indonesia has "special development, financial and trade 
needs" that are affected by Section 907(a)(1)(A) .................................................................... 166  
(iii) Third element: whether the United States failed to "take account of" Indonesia's 
special financial, development and trade needs ..................................................................... 167  
(e)  Conclusion .................................................................................................................... .......... 171  
VIII. CONCLUSIONS AND RECOMMENDATIONS .............................................................. 171  
 WT/DS406/R 
Page vi 
 
 
  TABLE OF CASES CITED IN THIS REPORT 
 
Short Title Full Case Title and Citation 
Argentina – Hides and 
Leather Panel Report, Argentina – Measures Affecting the Export of Bovine Hides and 
Import of Finished Leather , WT/DS155/R and Corr.1, adopted 16 February 
2001, DSR 2001:V, 1779 
Argentina – Poultry 
Anti-Dumping Duties Panel Report, Argentina – Definitive Anti-Dumping Duties on Poultry from 
Brazil , WT/DS241/R, adopted 19 May 2003, DSR 2003:V, 1727 
Border Tax Adjustments Report of the Wo rking Party on Border Tax Adjustments , L/3464, adopted on 
2 December 1970, BISD 18S/97 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of 
Salmon , WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Australia – Salmon Panel Report, Australia – Measures Affecting Importation of Salmon , 
WT/DS18/R and Corr.1, adopted 6 November 1998, as modified by Appellate 
Body Report WT/DS18/AB/R, DSR 1998:VIII, 3407 
Brazil – Aircraft Appellate Body Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/AB/R, adopted 20 August 1999, DSR 1999:III, 1161 
Brazil – Aircraft Panel Report, Brazil – Export Financing Programme for Aircraft , 
WT/DS46/R, adopted 20 August 1999, as modified by Appellate Body Report 
WT/DS46/AB/R, DSR 1999:III, 1221 
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded 
Tyres , WT/DS332/AB/R, adopted 17 D ecember 2007, DSR 2007:IV, 1527 
Brazil – Retreaded Tyres Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres , 
WT/DS332/R, adopted 17 December 2007, as modified by Appellate Body 
Report WT/DS332/AB/R, DSR 2007:V, 1649 
Canada – Autos Appellate Body Report, Canada – Certain Measures Affecting the Automotive 
Industry , WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000, DSR 
2000:VI, 2985 
Canada – Autos Panel Report, Canada – Certain Measures Affecting the Automotive Industry , 
WT/DS139/R, WT/DS142/R, adopted 19 June 2000, as modified by Appellate 
Body Report WT/DS139/AB/R, WT/DS142/AB/R, DSR 2000:VII, 3043 
Canada – Continued 
Suspension Appellate Body Report, Canada – Continued Suspension of Obligations in the 
EC – Hormones Dispute , WT/DS321/AB/R, adopted 14 November 2008 
Canada – Continued 
Suspension Panel Report, Canada – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS321/R, adopted 14 November 2008, as modified by 
Appellate Body Report WT/DS321/AB/R 
Canada – Pharmaceutical 
Patents Panel Report, Canada – Patent Protection of Pharmaceutical Products , 
WT/DS114/R, adopted 7 April 2000, DSR 2000:V, 2289 
Canada – Wheat Exports and 
Grain Imports Appellate Body Report, Canada – Measures Relating to Exports of Wheat and 
Treatment of Imported Grain , WT/DS276/AB/R, adopted 27 September 2004, 
DSR 2004:VI, 2739 
Canada – Wheat Exports and 
Grain Imports Panel Report, Canada – Measures Relating to Exports of Wheat and Treatment 
of Imported Grain , WT/DS276/R, adopted 27 September 2004, as upheld by 
Appellate Body Report WT/DS276/AB/R, DSR 2004:VI, 2817 
Chile – Alcoholic Beverages Appellate Body Report, Chile – Taxes on Alcoholic Beverages , 
WT/DS87/AB/R, WT/DS110/AB/R, adopted 12 January 2000, DSR 2000:I, 
281  WT/DS406/R 
 Page vii 
 
 
  Short Title Full Case Title and Citation 
Chile – Alcoholic Beverages Panel Report, Chile – Taxes on Alcoholic Beverages , WT/DS87/R, 
WT/DS110/R, adopted 12 January 2000, as modified by Appellate Body 
Report WT/DS87/AB/R, WT/DS1 10/AB/R, DSR 2000:I, 303 
China – Publications and 
Audiovisual Products Appellate Body Report, China –  Measures Affecting Trading Rights and 
Distribution Services for Certain Publications and Audiovisual Entertainment 
Products , WT/DS363/AB/R, adopted 19 January 2010 
China – Publications and 
Audiovisual Products Panel Report, China –  Measures Affecting Trading Rights and Distribution 
Services for Certain Publications and Audiovisual Entertainment Products , 
WT/DS363/R and Corr.1, adopted 19 January 2010, as modified by Appellate 
Body Report WT/DS363/AB/R 
Colombia – Ports of Entry Panel Report, Colombia – Indicative Prices and Restrictions on Ports of Entry , 
WT/DS366/R and Corr.1, adopted 20 May 2009 
Dominican Republic – Import 
and Sale of Cigarettes Appellate Body Report, Dominican Republic – Measures Affecting the 
Importation and Internal Sale of Cigarettes , WT/DS302/AB/R, adopted 
19 May 2005, DSR 2005:XV, 7367 
Dominican Republic – Import 
and Sale of Cigarettes Panel Report, Dominican Republic – Measures Affecting the Importation and 
Internal Sale of Cigarettes , WT/DS302/R, adopted 19 May 2005, as modified 
by Appellate Body Report WT/DS302/AB/R, DSR 2005:XV, 7425 
EC – Approval and Marketing 
of Biotech Products Panel Report, European Communities – Measures Affecting the Approval and 
Marketing of Biotech Products , WT/DS291/R, WT/DS292/R, WT/DS293/R, 
Add.1 to Add.9, and Corr.1, adopted 21 November 2006, DSR 2006:III-VIII, 
847 
EC – Asbestos Appellate Body Report, European Communities – Measures Affecting Asbestos 
and Asbestos-Containing Products , WT/DS135/AB/R, adopted 5 April 2001, 
DSR 2001:VII, 3243 
EC – Asbestos Panel Report, European Communities – Measures Affecting Asbestos and 
Asbestos-Containing Products , WT/DS135/R and Add.1, adopted 
5 April 2001, as modified by Appellate Body Report WT/DS135/AB/R, 
DSR 2001:VIII, 3305 
EC – Bananas III Appellate Body Report, European Communities – Regime for the Importation, 
Sale and Distribution of Bananas , WT/DS27/AB/R, adopted 25 September 
1997, DSR 1997:II, 591 
EC – Bananas III (Ecuador) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas, Complaint by Ecuador , WT/DS27/R/ECU, adopted 
25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, 
DSR 1997:III, 1085 
EC – Bananas III (Guatemala 
and Honduras) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas, Complaint by Guatemala and Honduras , 
WT/DS27/R/GTM, WT/DS27/R/HND, adopted 25 September 1997, as 
modified by Appellate Body Report WT/DS27/AB/R, DSR 1997:II, 695 
EC – Bananas III (Mexico) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Banana s, Complaint by Mexico , WT/DS27/R/MEX, adopted 25 
September 1997, as modified by Appellate Body Report WT/DS27/AB/R, 
DSR 1997:II, 803 
EC – Bananas III (US) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas, Complaint by the United States , WT/DS27/R/USA, 
adopted 25 September 1997, as modified by Appellate Body Report 
WT/DS27/AB/R, DSR 1997:II, 943 WT/DS406/R 
Page viii 
 
 
  Short Title Full Case Title and Citation 
EC – Bananas III 
(Article 21.5 – Ecuador II) / 
EC – Bananas III 
(Article 21.5 – US) Appellate Body Reports, European Communities – Regime for the 
Importation, Sale and Distribution of Bananas – Second Recourse to 
Article 21.5 of the DSU by Ecuador , WT/DS27/AB/RW2/ECU, adopted 
11 December 2008, and Corr.1 / European Communities – Regime for the 
Importation, Sale and Distribution of Bananas – Recourse to Article 21.5 of 
the DSU by the United States , WT/DS27/AB/RW/USA and Corr.1, adopted 22 
December 2008 
EC – Bananas III 
(Article 21.5 – Ecuador II) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas – Second Recourse to Article 21.5 of the DSU by 
Ecuador , WT/DS27/RW2/ECU, adopted 11 December 2008, as modified by 
Appellate Body Report WT/DS27/AB/RW2/ECU 
EC – Bananas III 
(Article 21.5 – US) Panel Report, European Communities – Regime for the Importation, Sale and 
Distribution of Bananas – Recourse to Article 21.5 of the DSU by the 
United States , WT/DS27/RW/USA and Corr.1, adopted 22 December 2008, as 
upheld by Appellate Body Report WT/DS27/AB/RW/USA 
EC – Chicken Cuts Appellate Body Report, European  Communities – Customs Classification of 
Frozen Boneless Chicken Cuts , WT/DS269/AB/R, WT/DS286/AB/R, adopted 
27 September 2005, and Corr.1, DSR 2005:XIX, 9157 
EC – Chicken Cuts (Brazil) Panel Report, European  Communities – Customs Classification of Frozen 
Boneless Chicken Cuts, Complaint by Brazil , WT/DS269/R, adopted 27 
September 2005, as modified by Appellate Body Report WT/DS269/AB/R, 
WT/DS286/AB/R, DSR 2005:XIX, 9295 
EC – Chicken Cuts (Thailand) Panel Report, European  Communities – Customs Classification of Frozen 
Boneless Chicken Cuts, Complaint by Thailand , WT/DS286/R, adopted  
27 September 2005, as modified by Appellate Body Report WT/DS269/AB/R, 
WT/DS286/AB/R, DSR 2005:XX, 9721 
EC – Computer Equipment Appellate Body Report, European Communities – Customs Classification of 
Certain Computer Equipment , WT/DS62/AB/R, WT/DS67/AB/R, 
WT/DS68/AB/R, adopted 22 June 1998, DSR 1998:V, 1851 
EC – Computer Equipment Panel Report, European Communities – Customs Classification of Certain 
Computer Equipment , WT/DS62/R, WT/DS67/R, WT/DS68/R, adopted 
22 June 1998, as modified by Appellate Body Report WT/DS62/AB/R, 
WT/DS67/AB/R, WT/DS68/AB/R, DSR 1998:V, 1891 
EC – Hormones Appellate Body Report, EC Measures Concerning Meat and Meat Products 
(Hormones) , WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998, 
DSR 1998:I, 135 
EC – Hormones (Canada) Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), 
Complaint by Canada , WT/DS48/R/CAN, adopted 13 February 1998, as 
modified by Appellate Body Report WT/DS26/AB/R, WT/DS48/AB/R, DSR 
1998:II, 235 
EC – Hormones (US) Panel Report, EC Measures Concerning Meat and Meat Products (Hormones), 
Complaint by the United States , WT/DS26/R/USA, adopted  
13 February 1998, as modified by Appellate Body Report WT/DS26/AB/R, 
WT/DS48/AB/R, DSR 1998:III, 699 
EC – IT Products Panel Report, European Communities and its member States – Tariff Treatment 
of Certain Information Technology Products , WT/DS375/R, WT/DS376/R, 
WT/DS377/R, adopted 21 September 2010 
EC – Sardines Appellate Body Report, European Communities – Trade Description of 
Sardines , WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359  WT/DS406/R 
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  Short Title Full Case Title and Citation 
EC – Sardines Panel Report, European Communities – Trade Description of Sardines , 
WT/DS231/R and Corr.1, adopted 23 October 2002, as modified by Appellate 
Body Report WT/DS231/AB/R, DSR 2002:VIII, 3451 
EC – Tariff Preferences Appellate Body Report, European Communities – Conditions for the Granting 
of Tariff Preferences to Developing Countries , WT/DS246/AB/R, adopted 20 
April 2004, DSR 2004:III, 925 
EC – Tariff Preferences Panel Report, European Communities – Conditions for the Granting of Tariff 
Preferences to Developing Countries , WT/DS246/R, adopted 20 April 2004, as 
modified by Appellate Body Report WT/DS/246/AB/R, DSR 2004:III, 1009 
EC – Trademarks and 
Geographical Indications 
(Australia) Panel Report,  European Communities – Protection of Trademarks and 
Geographical Indications for Agricultural Products and Foodstuffs, Complaint 
by Australia , WT/DS290/R, adopted 20 April 2005, DSR 2005:X, 4603 
EC – Trademarks and 
Geographical Indications 
(US) Panel Report,  European Communities – Protection of Trademarks and 
Geographical Indications for Agricultural Products and Foodstuffs, Complaint 
by the United States , WT/DS174/R, adopted 20 April 2005, DSR 2005:VIII, 
3499 
EC – Tube or Pipe Fittings Appellate Body Report, European Communities – Anti-Dumping Duties on 
Malleable Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/AB/R, 
adopted 18 August 2003, DSR 2003:VI, 2613 
EC – Tube or Pipe Fittings Panel Report, European Communities – Anti-Dumping Duties on Malleable 
Cast Iron Tube or Pipe Fittings from Brazil , WT/DS219/R, adopted 18 August 
2003, as modified by Appellate Body Report WT/DS219/AB/R, 
DSR 2003:VII, 2701 
EC and certain member 
States – Large Civil Aircraft Appellate Body Report, European Communities and Certain Member States – 
Measures Affecting Trade in Large Civil Aircraft , WT/DS316/AB/R, adopted 
1 June 2011 
EC and certain member 
States – Large Civil Aircraft Panel Report, European Communities and Certain Member States – Measures 
Affecting Trade in Large Civil Aircraft , WT/DS316/R, adopted 1 June 2011, as 
modified by Appellate Body Report, WT/DS316/AB/R 
EEC – Animal Feed Proteins GATT Panel Report, EEC – Measures on Animal Feed Proteins , L/4599, 
adopted 14 March 1978, BISD 25S/49 
Egypt – Steel Rebar Panel Report, Egypt – Definitive Anti-Dumping Measures on Steel Rebar from 
Turkey , WT/DS211/R, adopted 1 October 2002, DSR 2002:VII, 2667 
Guatemala – Cement I Appellate Body Report, Guatemala – Anti-Dumping Investigation Regarding 
Portland Cement from Mexico , WT/DS60/AB/R, adopted 25 November 1998, 
DSR 1998:IX, 3767 
Guatemala – Cement I Panel Report, Guatemala – Anti-Dumping Investigation Regarding Portland 
Cement from Mexico , WT/DS60/R, adopted 25 November 1998, as reversed by 
Appellate Body Report WT/DS60/AB/R, DSR 1998:IX, 3797 
India – Additional Import 
Duties Appellate Body Report, India – Additional and Extra-Additional Duties on 
Imports from the United States , WT/DS360/AB/R, adopted 17 November 2008
India – Additional Import 
Duties Panel Report, India – Additional and Extra-Add itional Duties on Imports from 
the United States , WT/DS360/R, adopted 17 November 2008, as reversed by 
Appellate Body Report WT/DS360/AB/R 
India – Autos Appellate Body Report, India – Measures Affecting the Automotive Sector , 
WT/DS146/AB/R, WT/DS175/AB/R, adopted 5 April 2002, DSR 2002:V, 
1821 WT/DS406/R 
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  Short Title Full Case Title and Citation 
India – Autos Panel Report, India – Measures Affecting the Automotive Sector , 
WT/DS146/R, WT/DS175/R and Corr.1, adopted 5 April 2002, DSR 2002:V, 
1827 
India – Patents (US) Appellate Body Report, India – Patent Protection for Pharmaceutical and 
Agricultural Chemical Products , WT/DS50/AB/R, adopted 16 January 1998, 
DSR 1998:I, 9 
India – Patents (US) Panel Report, India – Patent Protection for Pharmaceutical and Agricultural 
Chemical Products, Complaint by the United States , WT/DS50/R, adopted 
16 January  1998, as modified by Appellate Body Report WT/DS50/AB/R, 
DSR 1998:I, 41 
Indonesia – Autos Panel Report, Indonesia – Certain Measures Affecting the Automobile 
Industry , WT/DS54/R, WT/DS55/R, WT/DS59/R, WT/DS64/R and Corr.1 and 
2, adopted 23 July 1998, and Corr. 3 and 4, DSR 1998:VI, 2201 
Japan – Agricultural 
Products II Appellate Body Report, Japan – Measures Affecting Agricultural Products , 
WT/DS76/AB/R, adopted 19 March 1999, DSR 1999:I, 277 
Japan – Agricultural 
Products II Panel Report, Japan – Measures Affecting Agricultural Products , WT/DS76/R, 
adopted 19 March 1999, as modified by Appellate Body Report 
WT/DS76/AB/R, DSR 1999:I, 315 
Japan – Alcoholic 
Beverages I GATT Panel Report, Japan – Customs Duties, Taxes and Labelling Practices 
on Imported Wines and Alcoholic Beverages , L/6216, adopted 
10 November 1987, BISD 34S/83 
Japan – Alcoholic 
Beverages II Appellate Body Report, Japan – Taxes on Alcoholic Beverages , 
WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, adopted 
1 November 1996, DSR 1996:I, 97 
Japan – Alcoholic 
Beverages II Panel Report, Japan – Taxes on Alcoholic Beverages , WT/DS8/R, 
WT/DS10/R, WT/DS11/R, adopted 1 November 1996, as modified by 
Appellate Body Report WT/DS8/AB/R, WT/DS10/AB/R, WT/DS11/AB/R, 
DSR 1996:I, 125 
Japan – Film Panel Report, Japan – Measures Affecting Consumer Photographic Film and 
Paper , WT/DS44/R, adopted 22 April 1998, DSR 1998:IV, 1179 
Japan – Apples Appellate Body Report, Japan – Measures Affecting the Importation of Apples , 
WT/DS245/AB/R, adop ted 10 December 2003,  DSR 2003:IX, 4391 
Japan – Apples Panel Report, Japan – Measures Affecting the Importation of Apples , 
WT/DS245/R, adopted 10 December 2003, as upheld by Appellate Body 
Report WT/DS245/AB/R, DSR 2003:IX, 4481  
Korea – Various Measures on 
Beef Appellate Body Report, Korea – Measures Affecting Imports of Fresh, Chilled 
and Frozen Beef , WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 
2001, DSR 2001:I, 5 
Korea – Various Measures on 
Beef Panel Report, Korea – Measures Affecting Imports of Fresh, Chilled and 
Frozen Beef , WT/DS161/R, WT/DS169/R, adopted 10 January 2001, as 
modified by Appellate Body Report  WT/DS161/AB/R, WT/DS169/AB/R, 
DSR 2001:I, 59 
Mexico – Taxes on Soft 
Drinks Appellate Body Report, Mexico – Tax Measures on Soft Drinks and Other 
Beverages , WT/DS308/AB/R, adopted 24 March 2006, DSR 2006:I, 3 
Mexico – Taxes on Soft 
Drinks Panel Report, Mexico – Tax Measures on Soft Drinks and Other Beverages , 
WT/DS308/R, adopted 24 March 2006, as modified by Appellate Body Report 
WT/DS308/AB/R, DSR 2006:I, 43  WT/DS406/R 
 Page xi 
 
 
  Short Title Full Case Title and Citation 
Mexico – Telecoms Panel Report, Mexico – Measures Affecting Telecommunications Services , 
WT/DS204/R, adopted 1 June 2004, DSR 2004:IV, 1537 
Thailand – Cigarettes GATT Panel Report, Thailand – Restrictions on Importation of and Internal 
Taxes on Cigarettes , DS10/R, adopted 7 November 1990, BISD 37S/200  
Thailand – Cigarettes 
(Philippines) Appellate Body Report, Thailand – Customs and Fiscal Measures on 
Cigarettes from the Philippines , WT/DS371/AB/R, adopted 15 July 2011  
Thailand – Cigarettes 
(Philippines) Panel Report, Thailand – Customs and Fiscal Measures on Cigarettes from the 
Philippines , WT/DS371/R, adopted 15 July 2011, as modified by Appellate 
Body Report WT/DS371/AB/R  
US – 1916 Act Appellate Body Report, United States – Anti-Dumping Act of 1916 , 
WT/DS136/AB/R, WT/DS162/AB/R, adopted 26 September 2000, 
DSR 2000:X, 4793 
US – 1916 Act (EC) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by the 
European Communities , WT/DS136/R and Corr.1, adopted 
26 September 2000, as upheld by Appellate Body Report WT/DS136/AB/R, 
WT/DS162/AB/R, DSR 2000:X, 4593 
US – 1916 Act (Japan) Panel Report, United States – Anti-Dumping Act of 1916, Complaint by Japan , 
WT/DS162/R and Add.1, adopted 26 September 2000, as upheld by Appellate 
Body Report WT/DS136/AB/R, WT/DS162/AB/R, DSR 2000:X, 4831 
US – Anti-Dumping and 
Countervailing Duties (China) Appellate Body Report, United States – Definitive Anti-Dumping and 
Countervailing Duties on Certain Products from China , WT/DS379/AB/R, 
adopted 25 March 2011 
US – Anti-Dumping and 
Countervailing Duties (China) Panel Report, United States – Definitive Anti-Dumping and Countervailing 
Duties on Certain Products from China , WT/DS379/R, adopted 25 March 2011, 
as modified by Appellate Body Report WT/DS379/AB/R 
US – Carbon Steel Appellate Body Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , 
WT/DS213/AB/R and Corr.1, adopted 19 December 2002, DSR 2002:IX, 
3779 
US – Carbon Steel Panel Report, United States – Countervailing Duties on Certain 
Corrosion-Resistant Carbon Steel Flat Products from Germany , WT/DS213/R 
and Corr.1, adopted 19 December 2002, as modified by Appellate Body Report 
WT/DS213/AB/R, DSR 2002:IX, 3833 
US – Continued Suspension Appellate Body Report, United States – Continued Suspension of Obligations 
in the EC – Hormones Dispute , WT/DS320/AB/R, adopted 14 November 
2008, DSR 2008:X, 3507 
US – Continued Suspension Panel Report, United States – Continued Suspension of Obligations in the EC – 
Hormones Dispute , WT/DS320/R, adopted 14 November 2008, as modified by 
Appellate Body Report WT/DS320/AB/R, DSR 2008:XI, 3891 
US – COOL (Canada) 
US – COOL (Mexico) United States – Certain Country of Origin Labelling (COOL) Requirements , 
WT/DS384, WT/DS386 
US – Corrosion-Resistant 
Steel Sunset Review Appellate Body Report, United States – Sunset R eview of Anti-Dumping Duties 
on Corrosion-Resistant Carbon Steel Flat Products from Japan , 
WT/DS244/AB/R, adopted 9 January 2004, DSR 2004:I, 3  WT/DS406/R 
Page xii 
 
 
  Short Title Full Case Title and Citation 
US – Corrosion-Resistant 
Steel Sunset Review Panel Report, United States – Sunset Review of Anti-Dumping Duties on 
Corrosion-Resistant Carbon Steel Flat Products from Japan , WT/DS244/R, 
adopted 9 January 2004, as modified by Appellate Body Report 
WTDS244/AB/R, DSR 2004:I, 85  
US – DRAMS Panel Report, United States – Anti-Dumping Duty on Dynamic Random Access 
Memory Semiconductors (DRAMS) of One Megabit or Above from Korea , 
WT/DS99/R, adopted 19 March 1999, DSR 1999:II, 521 
US – FSC 
(Article 21.5 – EC) Appellate Body Report, United States – Tax Treatment for "Foreign Sales 
Corporations" – Recourse to Article 21.5 of the DSU by the European 
Communities , WT/DS108/AB/RW, adopted 29 January 2002, DSR 2002:I, 55 
US – FSC 
(Article 21.5 – EC) Panel Report, United States – Tax Treatment for "Foreign Sales Corporations" 
– Recourse to Article 21.5 of the DSU by the European Communities , 
WT/DS108/RW, adopted 29 January 2002, as modified by Appellate Body 
Report WT/DS108/AB/RW, DSR 2002:I, 119 
US – Gambling Appellate Body Report, United States – Measures Affecting the Cross-Border 
Supply of Gambling and Betting Services , WT/DS285/AB/R, adopted 
20 April 2005, DSR 2005:XII, 5663 (Corr.1, DSR 2006:XII, 5475) 
US – Gambling Panel Report, United States – Measures Affecting the Cross-Border Supply of 
Gambling and Betting Services , WT/DS285/R, adopted 20 April 2005, as 
modified by Appellate Body Report WT/DS285/AB/R, DSR 2005:XII, 5797 
US – Gasoline Appellate Body Report, United States – Standards for Reformulated and 
Conventional Gasoline , WT/DS2/AB/R, adopted 20 May 1996, DSR 1996:I, 3 
US – Gasoline Panel Report, United States – Standards for Reformulated and Conventional 
Gasoline , WT/DS2/R, adopted 20 May 1996, as modified by Appellate Body 
Report WT/DS2/AB/ R, DSR 1996:I, 29 
US – Lead and Bismuth II Appellate Body Report, United States – Imposition of Countervailing Duties 
on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating 
in the United Kingdom , WT/DS138/AB/R, adopted 7 June 2000, DSR 2000:V, 
2595 
US – Lead and Bismuth II Panel Report, United States – Imposition of Countervailing Duties on Certain 
Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United 
Kingdom , WT/DS138/R and Corr.2, adopted 7 June 2000, as upheld by 
Appellate Body Report WT/DS138/AB/R, DSR 2000:VI, 2623 
US – Section 337 Tariff Act GATT Panel Report, United States Section 337 of the Tariff Act of 1930 , 
L/6439, adopted 7 November 1989, BISD 36S/345 
US – Shrimp Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products , WT/DS58/AB/R, adopted 6 November 1998, DSR 
1998:VII, 2755 
US – Shrimp Panel Report, United States – Import Prohibition of Certain Shrimp and 
Shrimp Products , WT/DS58/R and Corr.1, adopted 6 November 1998, as 
modified by Appellate Body Report WT/DS58/AB/R, DSR 1998:VII, 2821 
US – Shrimp 
(Article 21.5 – Malaysia) Appellate Body Report, United States – Import Prohibition of Certain Shrimp 
and Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia , 
WT/DS58/AB/RW, adopted 21 November 2001, DSR 2001:XIII, 6481  WT/DS406/R 
 Page xiii 
 
 
  Short Title Full Case Title and Citation 
US – Shrimp 
(Article 21.5 – Malaysia) Panel Report, United States – Import Prohibition of Certain Shrimp and 
Shrimp Products – Recourse to Article 21.5 of the DSU by Malaysia , 
WT/DS58/RW, adopted 21 November 2001, as upheld by Appellate Body 
Report WT/DS58/AB/RW, DSR 2001:XIII, 6529 
US – Steel Plate Panel Report, United States – Anti-Dumping and Countervailing Measures on 
Steel Plate from India , WT/DS206/R and Corr.1, adopted 29 July 2002, 
DSR 2002:VI, 2073 
US – Superfund GATT Panel Report, United States – Taxes on Petroleum and Certain 
Imported Substances , L/6175, adopted 17 June 1987, BISD 34S/136  
US – Tuna II (Mexico) United Stat es – Measures Concerning the Impo rtation, Marketing and Sale of 
Tuna and Tuna Products , WT/DS381 
US – Tyres (China) Panel Report, United States – Measures Affecting Imports of Certain 
Passenger Vehicle and Light Truck Tyres from China , WT/DS399/R, 
circulated 13 December 2010 [appeal pending] 
US – Wool Shirts and Blouses Appellate Body Report, United States – Measure Affecting Imports of Woven 
Wool Shirts and Blouses from India , WT/DS33/AB/R, adopted 23 May 1997, 
and Corr.1, DSR 1997:I, 323 
US – Wool Shirts and Blouses Panel Report, United States – Measure Affecting Imports of Woven Wool Shirts 
and Blouses from India , WT/DS33/R, adopted 23 May 1997, as upheld by 
Appellate Body Report WT/DS33/AB/R, DSR 1997:I, 343 
US – Zeroing (EC)  
(Article 21.5 – EC) Appellate Body Report, United States – Laws, Regulations and Methodology 
for Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of 
the DSU by the European Communities , WT/DS294/AB/RW and Corr.1, 
adopted 11 June 2009 
US – Zeroing (EC)  
(Article 21.5 – EC) Panel Report, United States – Laws, Regulations and Methodology for 
Calculating Dumping Margins ("Zeroing") – Recourse to Article 21.5 of the 
DSU by the European Communities , WT/DS294/RW, adopted 11 June 2009, 
as modified by Appellate Body Report WT/DS294/AB/RW 
US – Zeroing (Japan)  
(Article 21.5 – Japan) Appellate Body Report, United States – Measures Relating to Zeroing and 
Sunset Reviews – Recourse to Article 21.5 of the DSU by Japan , 
WT/DS322/AB/RW, adopted 31 August 2009 
US – Zeroing (Japan)  
(Article 21.5 – Japan) Panel Report, United States – Measures Relating to Zeroing and Sunset 
Reviews – Recourse to Article 21.5 of the DSU by Japan , WT/DS322/RW, 
adopted 31 August 2009, as upheld by Appellate Body Report 
WT/DS322/AB/RW 
 WT/DS406/R 
Page xiv 
 
 
  LIST OF ABBREVIATIONS 
 
COP WHO Conference of Parties 
CTP Center for Tobacco Products 
FCTC Framework Convention on Tobacco Control 
FDA Food and Drug Administration 
FDA Guidance Guidance for Indu stry and FDA Staff, General Questions and Answers on the 
Ban of Cigarettes that Co ntain Characterizing Flavors 
FFDCA Federal Food, Drug and Cosmetic Act 
FSPTCA Family Smoking Prevention and Tobacco Control Act 
GATT 1994 General Agreement on Tariffs and Trade 1994 
House Report House Energy and Commerce Committee Report, H.R. No. 111-58, Pt. 1 (2009) 
NSDUH National Survey on Drug Use and Health 
NYTS National Yout h Tobacco Survey 
SPS Agreement Agreement on Sanitary and Phytosanitary Measures 
TBT Agreement Agreement on Technical Barriers to Trade 
TPSAC Tobacco Products Scie ntific Advisory Committee 
VLCT Vienna Convention on the Law of Treaties 
WHO World Health Organization 
WHO Partial Guidelines WHO Partial Guidelines for implementation of Articles 9 and 10 of the 
[FCTC] Convention  
WTO World Trade Organization 
 
  WT/DS406/R 
 Page xv 
 
 
  LIST OF ANNEXES 
 
ANNEX A 
 
EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSIONS 
OF THE PARTIES 
 
Contents Page 
Annex A-1 Executive summary of the fi rst written submission of Indonesia A-2 
Annex A-2 Executive summary of the first written submission of the United States A-11 
 
 
ANNEX B 
 
EXECUTIVE SUMMARIES OF THE THIRD PARTY SUBMISSIONS 
 
Contents Page 
Annex B-1 Executive summary of the third party submission of Brazil B-2 
Annex B-2 Executive summary of the oral statement of Brazil at the first substantive meeting B-5 
Annex B-3 Executive summary of the oral stat ement of Colombia at the first substantive 
meeting B-6 
Annex B-4 Executive summary of the third party submission and oral statement of the 
European Union B-10 
Annex B-5 Oral statement of Guatemala at the first substantive meeting B-13 
Annex B-6 Oral statement of Mexico at the first substantive meeting B-16 
Annex B-7 Executive summary of the oral statement of Norway at the first substantive meeting B-20 
Annex B-8 Executive summary of the third party submission of Turkey B-24 
 
 
ANNEX C 
 
EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSIONS 
OF THE PARTIES 
 
Contents Page 
Annex C-1 Executive summary of the second written submission of Indonesia C-2 
Annex C-2 Executive summary of the second written submission of the United States C-12 
 
 WT/DS406/R 
Page xvi 
 
 
  ANNEX D 
 
EXECUTIVE SUMMARIES OF THE ORAL STATEMENTS BY THE PARTIES 
AT THE FIRST AND SECOND SUBSTANTIVE MEETINGS 
 
Contents Page 
Annex D-1 Executive summary of the opening oral statement of Indonesia at the first 
substantive meeting D-2 
Annex D-2 Executive summary of the opening oral  statement of the United States at the first 
substantive meeting D-7 
Annex D-3 Closing oral statement of Indonesia at the first substantive meeting D-12 
Annex D-4 Closing oral statement of the United States at the first substantive meeting D-13 
Annex D-5 Executive summary of the opening or al statement of Indonesia at the second 
substantive meeting D-15 
Annex D-6 Executive summary of the opening oral statement of the United States at the second 
substantive meeting D-21 
Annex D-7 Closing oral statement of Indone sia at the second substantive meeting D-26 
 
 
ANNEX E 
 
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY INDONESIA 
 
Contents Page 
Annex E Request for the establishment of a Panel by Indonesia E-1 
 
  WT/DS406/R 
 Page 1 
 
 
 I. INTRODUCTION 
1.1 On 7 April 2010, Indonesia requested consulta tions with the United States pursuant to 
Article 4 of the Understanding on Rules and Pro cedures Governing the Settlement of Disputes 
("DSU"), Article XXII of the General Agreement on Tariffs and Trade  1994 ("GATT 1994"), 
Article 11 of the Agreement on the Application of Sanitary and Phytosanitary Measures 
("SPS Agreement ") and Article 14 of the Agreement on Technical Barriers to Trade  
("TBT Agreement ") with respect to "the measure applied by the Government of the United States 
regarding the ban of clove cigarettes".1  Indonesia and the United States held consultations on 
13 May 2010.  However, no mutually agreed solution was found. 
1.2 On 9 June 2010, Indonesia requested the establis hment of a panel pursuant to Article 6 of the 
DSU.2 
1.3 At its meeting on 20 July 2010, the DSB established a panel pursuant to the request of 
Indonesia in document WT/DS406/2, in accordance with Article 6 of the DSU. 
1.4 The Panel's terms of reference are the following:  
"To examine, in the light of the relevant provisions of the covered agreements cited 
by the parties to the dispute, the matter re ferred to the DSB by Indonesia in document 
WT/DS406/2 and to make such findings as will assist the DSB in making the recommendations or in giving the rulings provided for in those agreements." 
1.5 On 9 September 2010, the parties agreed to  the following composition of the Panel: 
 Chairman: Mr Ronald Saborío Soto 
 
 Members: Mr Ichiro Araki 
   Mr Hugo Cayrús  
1.6 Brazil, Colombia, Dominican Republic, the Euro pean Union, Guatemala, Mexico, Norway 
and Turkey have reserved their rights to particip ate in the Panel proceedings as third parties. 
1.7 The Panel held its first substantive meeting w ith the parties on 13 and 14 December 2010.  
The session with the third parties was held on 14 December 2010.  The second substantive meeting 
was held on 15 February 2011. 
1.8 On 13 April 2011, the Panel issued the descriptive se ction of its draft report to the parties. The 
Panel issued its Interim Report to the parties on 27  May 2011. The Panel issued its Final Report on 
24 June 2011. 
II. FACTUAL ASPECTS 
A. I
NTRODUCTION  
2.1 This dispute concerns a tobacco-control measure3 adopted by the United States that prohibits 
cigarettes with characterizing flavours, other than tobacco or menthol.   
                                                      
1 WT/DS406/1. 
2 WT/DS406/2. 
3 Article 1(d) of the WHO Framework Convention on Tobacco Control  (see Section II.C.3 below) 
defines "tobacco control" to mean "a  range of supply, demand and harm reduc tion strategies that aim to improve WT/DS406/R 
Page 2 
 
 
 2.2 In this section of the Report, the Panel will descr ibe the measure at issue as well as its broader 
factual context, including the United States' legal regi me for tobacco control, the market for cigarettes 
in the United States, and the WHO Framework Convention on Tobacco Control .  
2.3 The parties disagree on a number of factual issues.   To the extent it is necessary for the Panel 
to resolve those disputed factual issu es, it will do so in its Findings.   
B. THE MEASURE AT ISSUE  
2.4 The measure at issue is Section 907(a)(1)(A) of the Federal Food, Drug and Cosmetic Act  
("FFDCA"), which was added to the FFDCA by Section 101(b) of the Family Smoking Prevention 
and Tobacco Control Act  ("FSPTCA").4  Section 907(a)(1)(A) reads as follows: 
"SEC. 907. TOBACCO PRODUCT STANDARDS. 
(a) IN GENERAL.— (1) SPECIAL RULES.— 
(A) SPECIAL RULE FOR CIGARETTES.—Beginning 3 months after the date of 
enactment of the Family Smoking Prevention and Tobacco Control Act, a cigarette or 
any of its component parts (including the t obacco, filter, or paper) shall not contain, 
as a constituent (including a smoke constituent)  or additive, an artificial or natural 
flavor (other than tobacco or menthol) or  an herb or spice, including strawberry, 
grape, orange, clove, cinnamon, pineappl e, vanilla, coconut, licorice, cocoa, 
chocolate, cherry, or coffee, that is a char acterizing flavor of the tobacco product or 
tobacco smoke. Nothing in this subparagraph shall be construed to limit the 
Secretary's authority to take action under this section or other sections of this Act 
applicable to menthol or any artificial or na tural flavor, herb, or spice not specified in 
this subparagraph."
5  
2.5 The FSPTCA became law in the United States on 22 June 2009.6  As its text provides, 
Section 907(a)(1)(A) entered into force three mont hs after the enactment of the FSPTCA, i.e., on 
22 September 2009.   
2.6 The Panel notes that the objective of Section 907(a)(1)(A) is not set forth in the FSPTCA 
itself.  However, both parties have referred the Pa nel to a report prepared by the House Energy and 
Commerce Committee ("House Report") after favour ably reporting the legislation out of that 
Committee.7  The House Report explains the meaning of each section of the FSPTCA and articulates 
both the objectives of the FSPTCA overall, and of Sec tion 907(a)(1)(A) in particular.  According to 
the House Report:  
                                                                                                                                                                     
the health of a population by elimin ating or reducing their consumption of  tobacco products and exposure to 
tobacco smoke". 
4 In response to Panel question No. 9, the parties ha ve clarified that the measure at issue is properly 
referred to as "Section 907(a)(1)(A) of the Federal Food, Drug, and Cosmetic Act  (as amended by the Family 
Smoking Prevention and Tobacco Control Act )" or, as shorthand, "Section 907(a)(1)(A) of the FFDCA".  It can 
also be referred to as "21 U.S.C. § 387g(a)(1)(A)" (which is section 387g(a)(1)(A) of title  21 of the U.S. Code). 
5 H.R. 1256, Section 907 (a)(1)(A) (Exhibit IND-1). 
6 Indonesia's first written submission, footnote 1. 
7 H.R. Rep. No. 111-58, Pt. 1 (2009).  Indonesia submitted the House Report as Exhibit IND-2; the 
United States submitted the same Ho use Report as Exhibit US-67.  WT/DS406/R 
 Page 3 
 
 
 "The objectives of [the FSPTCA] are to provide the Secretary with the proper 
authority over tobacco products in order to protect the public health and to reduce the 
number of individuals under 18 years of age who use tobacco products."8 
2.7 The House Report explains the purpose of Section 907(a)(1) in particular:  
"Consistent with the overall intent of the b ill to protect the public health, including by 
reducing the number of children and adolescents who smoke cigarettes, 
section 907(a)(1) is intended to prohibit the manufacture and sale of cigarettes with 
certain 'characterizing flavors' that appeal to youth."9 
2.8 In addition, the Food and Drug Administration ("FDA"), which as explained in 
Section II.C.1(b) below is the U.S. agency empower ed with tobacco control and regulation, issued a 
document entitled "Guidance for Industry and FDA St aff, General Questions and Answers on the Ban 
of Cigarettes that Contain Characterizing Flavors" ("FDA Guidance") on 23 December 2009.  This 
FDA Guidance is non-binding, although it represen ts the FDA's "current thinking on the topic".10  
According to the FDA Guidance, the rationale for the prohibition of cigarettes with characterizing 
flavours imposed by Section 907(a)(1)(A) is the following: 
"Smoking is the leading cause of preventa ble death in the United States, claiming 
over 400,000 lives each year.  An import ant way to reduce the death and disease 
caused by smoking is to prevent children and adolescents from starting to smoke.  
Studies have shown that 17 year old smokers are three times as likely to use flavored 
cigarettes as are smokers over the age of 25.  In addition to being more attractive to 
young people, flavored produc ts make it easier for new smokers to start smoking by 
masking the unpleasant flavor of tobacco.  St udies have also demonstrated that young 
people believe that flavored tobacco pr oducts are safer than unflavored tobacco 
products.   
Flavored cigarettes are just as addictive and have the same types of harmful effects as 
regular cigarettes.  Removing these flavored products from the market is important 
because it removes an avenue that young peopl e can use to begin regular tobacco use.  
Congress specifically enacted the ban on sale of cigarettes and their component parts, such as filters and papers, which contain cer tain characterizing flavors.  The removal 
from the market of cigarettes that contain certain characterizing flavors is an 
important step in the Nation's efforts to reduce the burden of illness and death caused 
by tobacco products as authorized by the FSPTCA, signed by President Obama on 
June 22, 2009."
11  
2.9 According to the FDA Guidance, Section 907( a)(1)(A) applies to all flavoured tobacco 
products that meet the definition of a cigarette in Section 900(3) of the FFDCA, even if they are not 
labelled as cigarettes.12  Section 900(3) of the FFDCA defines the term "cigarette" as follows: 
"(3) Cigarette  
The term 'cigarette'—  
                                                      
8 Exhibit US-67, p. 14. 
9 Exhibit US-67, p. 37. 
10 Guidance, disclaimer (Exhibit IND-41). 
11 Guidance. answer to question No. 1 (Exh ibit IND-41).  See also FDA Advisory – Flavored Tobacco 
Products;   What you need to know  (Exhibit IND-25). 
12 Guidance, answer to question No. 2 (Exhibit IND-41). WT/DS406/R 
Page 4 
 
 
 (A) means a product that—  
(i) is a tobacco product; and  
(ii) meets the definition of the term 'cigarette ' in section 3(1) of the Federal Cigarette 
Labeling and Advertising Act; and  
(B) includes tobacco, in any form, that is f unctional in the product, which, because of 
its appearance, the type of tobacco used in the filler, or its packaging and labeling, is 
likely to be offered to, or purchased by, c onsumers as a cigarette or as roll-your-own 
tobacco.  
(4) Cigarette tobacco  
The term 'cigarette tobacco' means any produc t that consists of loose tobacco that is 
intended for use by consumers in a ci garette. Unless otherwise stated, the 
requirements applicable to cigarettes under this subchapter shall also apply to 
cigarette tobacco."13 
2.10 Subsection (ii) refers to a provision of the Federal Cigarette Labeling and Advertising Act , 
which defines the term "cigarette" as follows:  
"(1) The term "cigarette" means—  
(A) any roll of tobacco wrapped in paper or  in any substance not containing tobacco, 
and  
(B) any roll of tobacco wrapped in any s ubstance containing tobacco which, because 
of its appearance, the type of tobacco used in the filler, or its packaging and labeling, 
is likely to be offered to, or purchased by, consumers as a cigarette described in 
subparagraph (A)."14  
2.11 The FDA clarifies in its FDA Guidance that the ban contained in Section 907(a)(1)(A) also 
applies to flavoured loose tobacco and rolling papers and filters intended to be used in roll-your-own 
cigarettes.15   
C. FACTUAL CONTEXT  
1. The United States' legislativ e regime for tobacco control  
(a) History of tobacco–control measures in the United States 
2.12 The marketing and selling of tobacco products in the United States was not extensively 
regulated during the first half of the 20th century.  In 1957, the U.S. Su rgeon General declared that 
there was a causal relationship between smoking and lung cancer.  A subsequent report prepared in 
1964 by the Advisory Committee to the Surgeon Gene ral quantified the health damages caused by 
cigarette smoking and submitted that smoking in creased the possibilities of developing three 
particular diseases: lung cancer, emphysema and coronary heart disease.16  
                                                      
13 Guidance, answer to question No. 2 (Exhibit IND-41). 
14 Guidance, answer to question No. 2 (Exhibit IND-41). 
15 Guidance, answer to question Nos. 3 and 4 (Exhibit IND-41). 
16 United States' first written submission, para. 79.  WT/DS406/R 
 Page 5 
 
 
 2.13 As a result of the findings of the above-mentioned Report, the United States enacted its first 
major federal legislation for tobacco products: the Federal Cigarette Labeling and Advertising Act .  
This piece of legislation mandated, for the first tim e, the inclusion of a health warning label on 
cigarettes.17  The United States further regulated tobacco pr oducts over the follow ing decades.  In the 
1990s, the FDA and the U.S. Congress investigated  the U.S. tobacco industry "concerning the 
industry's knowledge of, and efforts to conceal, the dangers of cigarettes, as well as their efforts to 
market cigarettes to children".18 
2.14 These investigations led to private litigation agai nst tobacco companies, as well as lawsuits by 
several states initiated to recover the tobacco-relate d costs incurred by the public health system.  By 
the mid-1990s, nearly every state in the United St ates had brought a lawsuit against the tobacco 
industry.  To settle the litigation, the five larg est U.S. tobacco companies (Brown and Williamson 
Tobacco Corporation, Lorillard Tobacco Compan y, Phillip Morris Incorporated, RJ Reynolds 
Tobacco Company and Commonwealth  Tobacco Company) signed a Master Settlement Agreement 
("MSA") with the states.  Among other things, this  Agreement: (i) established annual payments to the 
States totalling USD 206 billion through 2025; ( ii) prohibited brand-na me sponsorships and 
advertising that target young pe ople; and (iii) dissolved certain tobacco industry promoting 
organizations.19  This MSA did not ban any type of cigare ttes and did not address flavoured cigarettes 
in particular.20 
2.15 In the early 2000s, several companies, and in pa rticular RJ Reynolds, began to market a new 
variety of cigarettes with characterizing flavours , such as vanilla, chocolate/mint, lime, spice, 
watermelon, toffee and liquor.21  Illinois and New York considered that this contravened the MSA's 
prohibition against marketing cigarettes to youth.  Th is led RJ Reynolds to sign a Consent Agreement 
with the MSA-signatory states (the "2006 Consent Agreement"), in which it committed to remove 
from the market those flavoured cigarettes it sold at the time.  The 2006 Consent Agreement still 
allowed RJ Reynolds the possibility of developing ne w brands of flavoured cigarettes in the future.22 
2.16 The FSPTCA was the result of years of legisla tive effort by the U.S. federal government.23  In 
1996, the FDA asserted authority to regulate tobacco products and issued regulations (later adopted in 
large part as part of the FSPTCA), including one establishing 18 as the national minimum age to purchase tobacco products and another banning free samp les of tobacco products except in adult-only 
venues.
24  In 1997, before the regulations were fully implemented, U.S. tobacco companies challenged 
the FDA's regulatory authority and in 2000 the U.S.  Supreme Court invalidated the FDA's rules, 
finding that the U.S. Congress had not granted th e FDA the authority to regulate cigarettes and 
smokeless tobacco as customarily marketed.25   
2.17 The U.S. Supreme Court reasoned that the FDA's statutory charge was to ensure that drugs 
are "safe and effective" for the market, and if  tobacco products were to fall under the FDA's 
jurisdiction, the FDA would be forced to ban a ll tobacco products based on the FDA's findings that 
the products were unsafe and dangerous; therefore,  the U.S. Supreme Court concluded that because 
                                                      
17 United States' first written submission, para. 80. 
18 United States' first written submission, para. 81. 
19 United States' first written submission, paras. 83-84. 
20 United States' first written submission, paras. 85-88. 
21 United States' first written submission, para. 48 (Exhibit US-35). 
22 United States' first written submission, paras. 89-92. 
23 United States' first written submission, paras. 103-110. 
24 United States' first written submission, para. 103. 
25 United States' first written submission, paras. 103-105. WT/DS406/R 
Page 6 
 
 
 the U.S. Congress had foreclosed a ban on all t obacco products, it could not have intended that the 
products would fall under FDA regulatory authority.26   
2.18 In response, the U.S. Congress developed legislation specifically to grant authority to the 
FDA, and directed the FDA to apply a different standa rd to tobacco products fr om that applied to any 
other product or device that it regulates.  Following the 2000 Supreme Court ruling that the "safe and 
effective" standard could not be applied to tob acco products without requiring their removal from the 
market, the U.S. Congress authorized the FDA to regulate tobacco products "as appropriate for the 
protection of the public health".27  A bill containing a ban on cigarettes with characterizing flavours 
other than tobacco or menthol was introduced for consideration in the U.S. Senate and House of 
Representatives in 2004.28  The legislation went through vari ous iterations over the period 2004-2009, 
prior to the final version of the legislation being enacted into U.S. law in 2009.29   
(b) The scope of the FSPTCA  
2.19 The FSPTCA was enacted in 2009 with a view to  protecting public health by providing the 
FDA with authority to regulate tobacco products.30  In addition to being the first piece of U.S. federal 
legislation31 banning the production and sale of cigarettes with certain characterizing flavours, the 
FSPTCA imposes significant restrictions and requirements on how tobacco products are 
manufactured, marketed, distributed and sold, and it also empowers the FDA to adopt additional regulations as appropriate.
32   
2.20 The FSPTCA regulates the manufacture of tobacco  products by, for example, empowering the 
FDA to set new product standards to reduce or eliminate harmful ingredients and additives or 
otherwise modify the design and characteristics of tobacco products if it is determined that such 
regulation is appropriate to protect the public health.33   
2.21 In addition, the FSPTCA regulates marketing by, for example, establishing a range of 
advertising restrictions and requirements34, requiring graphic warning la bels and other disclosures35, 
and by authorizing the FDA to establish additional st andards and restrictions related to the labelling, 
advertising, and promotion of tobacco products.36   
2.22 The FSPTCA also regulates the distribution and sale of tobacco products by, for example, 
establishing a federal minimum age of 18 for the sale of cigarettes37, and generally banning free 
samples.38  The legislative history of the FSPTCA explains that: 
                                                      
26 United States' first written submission, footnote 134. 
27 United States' first written submission, paras. 106-110. 
28 United States' first written submission, para. 308.   
29 United States' first written submission, paras. 90, 308. 
30 H.R.1256, Heading of the Act (Exhibit IND-1). 
31 Prior to the entry into force of the FSPTCA, several U.S. states (inc luding Maine, Hawaii, 
Massachusetts, New Jersey, New York and Minnesota) had considered the possibility of prohibiting the 
production and sale of tobacco products with certain characterizing flavours.  Indonesia's response to Panel 
question No. 15, para. 46;  United States' comments on Indonesia's response to Panel question No. 110, para. 72.   
32 United States' first written submission, para. 113. 
33 Section 907(a)(4)(A)-(D) of the FFDCA (Exhibit US-7). 
34 FSPTCA Section 102(a) (Exhibit US-7). 
35 For example, FSPTCA Section 201 and Sec tion 915(b) of the FF DCA (Exhibit US-7). 
36 Sections 906, 910, 911 of the FFDCA (Exhibit US-7).    
37 Section 906(d)(3)(A)(ii) of the FFDCA (Exhibit US-7). 
38 FSPTCA Section 102(a)(2)(G) (Exhibit US-7).  WT/DS406/R 
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 "Past efforts to restrict the advertising and marketing of tob acco products to youth 
have failed to adequately curb tobacco use by adolescents. [The FSPTCA] provides 
the FDA with the authority it needs to promulgate comprehensive restrictions on the sale, promotion, and distribution of tobacco products, actions that most public health 
experts agree can significantly reduce the num ber of people who start to use tobacco 
and significantly increase the number of people who quit using tobacco."
39 
2.23 The FSPTCA directed the FDA to establish tw o new entities: the Center for Tobacco 
Products ("CTP") in the FDA, which is responsib le for implementing the FSPTCA, and the Tobacco 
Products Scientific Advisory Committee ("TPSAC"),  a 12-member body charged with advising the 
CTP on issues related to nicotine yields and other safety, dependence, or health issues related to 
tobacco products.40  As regards menthol cigarettes, which are specifically excluded from the 
prohibition imposed by Section 907(a)(1)(A), the FSPTCA directed the TPSAC "to deliver a report to 
FDA on the public health impact of menthol in ciga rettes within a year of the committee's formation 
establishment".41  The March 2011 TPSAC Report, which was delivered to the FDA on 18 March 
201142, recommends to the FDA that the "[r]emoval of menthol cigarettes from the marketplace 
would benefit public health in the United States".43  The TPSAC Report also made suggestions for 
further assessment in respect of the contraband of  menthol cigarettes and recommended research to 
address gaps in understanding of me nthol cigarettes and public health.  The FDA will further consider 
the recommendations given by the TPSAC.44 
2. The market for cigarettes in the United States 
2.24 Tobacco consumption in the United States is significant.  Around 2045 to 2646 per cent of the 
U.S. adult population and 1247 to 1948 per cent of the U.S. youth population are smokers.  Sales of 
cigarettes in the United States amounted to  approximately 360 billion units in 200749, 346 billion units 
in 2008 and 317 billion units in 2009.50   
2.25 From the data submitted by the parties, the Panel understands that the vast majority of 
U.S. smokers use two types of cigarettes:  regular cigarettes and menthol cigarettes.51  In particular, 
approximately one-quarter of the smoking population smokes menthol cigarettes.52  Clove cigarette 
consumption accounted for approximately 0.1 per cent of the U.S. market between 2000 and 2009.53   
                                                      
39 H.R. Rep. No. 111-58, Pt. 1 (2009) (Exhibit US-67). 
40 Section 917 of the FFDCA (Exhibit US-7). 
41 March 2011 TPSAC Report, p. 1.  http://www.fda.gov/downloads/AdvisoryCommittees/Committees 
MeetingMaterials/TobaccoProductsScien tificAdvisoryCommittee/UCM247689.pdf. 
42 http://www.fda.gov/AdvisoryCommittees/Committees MeetingMaterials/TobaccoProductsScientific 
AdvisoryCommittee/ucm247617.htm. 
43 March 2011 TPSAC Report, p. 208.  http ://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
44 United States' response to Panel question No. 63. 
45 United States' first written submission, para. 13. 
46 Indonesia's response to Panel question No. 106. 
47 Indonesia's response to Panel question No. 106. 
48 United States' first written submission, para. 13. 
49 Indonesia's first written submission, para . 18;  Exhibit IND-10;  Exhibit US-100. 
50 Exhibit US-100.   
51 United States' first written submission, para. 27. 
52 United States' first written submission, para. 32; Indonesia's second written submission, para. 32 
(Exhibit IND-75). 
53 Indonesia's first written submission, para. 13;  Indonesia's response to Panel question No. 16;  
United States' response to Panel question No. 16. WT/DS406/R 
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 2.26 Imports of clove cigarettes into the United States accounted for approximately 470 million 
cigarettes in 2007, 430 million cigarettes in  2008 and 220 million cigarettes in 2009.54  The value of 
these imports was approximately USD 16.2 milli on in 2007, USD 14.8 million in 2008 and 
USD 7.5 million in 2009.55  During these three years virtually all clove cigarettes were imported from 
Indonesia.56  
2.27 The Panel understands that, although the vast majo rity of clove cigarettes consumed in the 
United States appears to come from Indonesia, ther e was at least one U.S. company, Nat Sherman, 
that manufactured a clove-flavoured cigarette prior to the entry into force of the FSPTCA.57 
2.28 As regards cigarettes with other characteriz ing flavours covered by Section 907(a)(1)(A), 
there is no evidence of any sizeable market share in the United States prior to the implementation of 
the ban in 2009.58  
3. International efforts to curb smoking:  The Framework Convention on Tobacco Control  
2.29 During the proceedings the parties have referred to the Framework Convention on Tobacco 
Control  ("FCTC"), an international treaty administered  by the World Health Organization ("WHO"), 
as part of the current international efforts to curb smoking.59  The FCTC was negotiated in response to 
concerns about a globalized tobacco epidemic, ex acerbated by increasing international trade in 
tobacco and foreign direct investment.60  The treaty aims to reduce demand and supply of tobacco.  It 
contains national reporting requireme nts and strategies to facilitate structural adjustment for people 
whose livelihoods depend on tobacco production.  The FC TC entered into force in 2005.  At present, 
there are 172 parties.  The United States is a signatory61 to the FCTC62 but Indonesia is not.63 
2.30 A Conference of Parties (COP) is held bie nnially, which negotiates implementation of the 
articles of the Convention through the development of guidelines documents or additional Protocols.  
At the fourth COP held from 15 to 20 Novemb er 2010 in Punta del Este, a FCTC Working Group 
presented a draft document entitled Partial Guidelines for implementation of Articles 9 and 10 of the 
Convention  with a view to promoting implementation of  Articles 9 ("Regulation of the contents of 
                                                      
54 Exhibits US-100 and IND-68.  Indonesia submits  in response to Panel question No. 80 that it 
understands the import data for HS 24022010 reported by the U.S. International Trade Commission in 
Exhibits US-100 and IND-68 to be an accurate representation of clove cigarette exports from Indonesia to the 
United States.  We note that Exhibit IND-68 only contains information on the value of imports expressed in 
U.S. dollars, while Exhibit US-100 contains information on both the value and number of cigarettes.  We are 
therefore reflecting the figures rega rding the number of U.S. imports of clove cigarettes presented in 
Exhibit US-100. 
55 Exhibits US-100 and US-134. 
56 Indonesia's first written submission, para. 18;  United States' first written submission, para. 35;  
Exhibits US-100 and US-134. 
57 United States' first written submission, para. 35. 
58 Indonesia's response to Panel question No. 17.  The United States, in response to Panel question 
No. 17, submits that it has been unable to attain market share data for all non-clove products banned under 
Section 907(a)(1)(A). 
59 Indonesia's first written submission, paras. 110-111;  Indonesia's response to Panel question Nos. 19 
and 97;  United States' first written submission, paras.  140-143;  United States' second written submission, 
paras. 7, 13, 20, 143;  United States' response to Panel question Nos. 19 and 97. 
60 http://whqlibdoc.who.int/publications/2003/9241591013.pdf. 
61 Indonesia submits in para. 110 of its first written submission that the FCTC has been signed but not 
ratified by the United States. 
62 United States' first written submission, para. 141 and footnote 178;  United States' response to Panel 
question No. 19;  Indonesia's first written submission, para. 110. 
63 United States' first written submission, footnote 178.  WT/DS406/R 
 Page 9 
 
 
 tobacco products") and 10 ("Regulation of tobacco products disclosures") of the FCTC.64  The fourth 
COP adopted the "WHO Partial Guidelines ", which are non-binding on parties. 
2.31 The Partial Guidelines  provide, among other things, that "[f]rom the perspective of public 
health, there is no justification for permitting the u se of ingredients, such as flavouring agents, which 
help make tobacco products attractive".65  The WHO  Partial Guidelines  define "attractiveness" in 
terms of "factors such as taste, smell or other senso ry attributes, ease of use, flexibility of the dosing 
system, cost, reputation or image, assumed risks and benefits, and other characteristics of a product 
designed to stimulate use".66  By way of background to this recommendation, the WHO  Partial 
Guidelines  state that: "[r]egulating ingredients aimed at reducing tobacco product attractiveness can 
contribute to reducing the prevalence of tobacco  use and dependence among new and continuing 
users", and that the WHO  Partial Guidelines "recommend that restrictions apply to as many as 
possible of the features that make tobacco products more attractive to consumers".67 
2.32 These WHO  Partial Guidelines recommend, among other things, that the "[p]arties should 
regulate, by prohibiting or restricting, ingredients that may be used to incr ease palatability in tobacco 
products".68  Targeted ingredients include those:  (i) th at are used to increase palatability;  (ii) that 
have colouring properties;  (iii) that are used to create the impression that products have health 
benefits; and (iv) those associated with energy and vitality.  Among the ingredients that increase 
palatability listed in the WHO  Partial Guidelines  are sweeteners (e.g. glucose, molasses, honey and 
sorbitol), masking agents (e.g. benzaldehyde, malto l, menthol and vanillin),  and spices and herbs 
(e.g. cinnamon, ginger and mint). 
III. PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS  
3.1 In its Panel Request, Indonesia requests the Panel to find that Section 907(a)(1)(A) is 
inconsistent with69: 
(a) Article 2.1 of the TBT Agreement and, alternatively, Article III:4 of the 
GATT 199470, because it results in treatment that is less favourable to imported clove 
cigarettes than that accorded to a like do mestic product, menthol cigarettes;    
(b) Article 2.2 of the TBT Agreement  because it is more trade-restrictive than necessary 
to fulfil a legitimate objective;   
(c) Article 2.5 of the TBT Agreement  because the United States did not respond to 
questions from Indonesia seeking an explan ation and justification for the ban 
                                                      
64 The text of the draft Guideline, which was adopted without change at the COP,  is available online at 
http://apps.who.int/gb/fctc/PDF/c op4/FCTC_COP4_28draft-en.pdf. 
65 Section 1.2.1.1 ("Attractiveness"). 
66 Section 1.3 ("Use of Terms"). 
67 Section 3.1.2.1 ("Ingr edients - Background"). 
68 The text of the draft Guidelines, which was adopted without change at the COP, is available online at 
http://apps.who.int/gb/fctc/PDF/c op4/FCTC_COP4_28draft-en.pdf. 
69 In its Panel Request, Indonesia presented claims under Article XX of the GATT 1994 and Articles 2, 
3, 5 and 7 of the SPS Agreement .  However, in response to Panel question Nos. 1 and 20, Indonesia clarified that 
it was not claiming a violation of Article XX of the GATT 1994 and that the meas ure at issue is not an 
SPS measure and is thus not subject to the  SPS Agreement .  
70 In its Panel Request, Indonesia presented the claim under Article III:4 of the GATT 1994 as a main 
claim.  However, in paragraph 69 of its first writte n submission and in response  to Panel question No. 25, 
Indonesia clarified that its claim unde r Article III:4 of the GATT 1994 is as an alternative to its national 
treatment claim under Article 2.1 of the TBT Agreement . WT/DS406/R 
Page 10 
 
 
 submitted during bilateral discussions held 27 August 2009 and through the 
TBT Committee on 20 August 2009 (G/TBT/W/323); 
(d) Article 2.8 of the TBT Agreement  because the ban on cigarettes with characterizing 
flavours is based on descriptive characteristics; 
(e) Article 2.9 of the TBT Agreement  because the United States did not comply with the 
requirements of Articles 2.9.1, 2.9.2, 2.9.3, and 2.9.4 of the TBT Agreement  when 
adopting a technical regulation that has a significant effect on the trade of Indonesia;   
(f) Article 2.10 of the TBT Agreement  because, in the event the United States believed 
there was a justification for not following the procedures in Article 2.9 of the 
TBT Agreement , it did not provide the Secretariat with notification of the measure and 
the urgent nature of the problem; 
(g) Article 2.12 of the TBT Agreement  because the United States failed to allow for a 
reasonable interval of time between the date  of publication of the measure and the 
date that the measure went into effect; and 
(h) Article 12.3 of the TBT Agreement  because the ban on cigarettes with characterizing 
flavours created an unnecessary barrier to exports from Indonesia, a developing 
country. 
3.2 The United States requests that the Panel re ject Indonesia's claims in their entirety.71 
IV. ARGUMENTS OF THE PARTIES  
4.1 The arguments of the parties, as set out in their submissions provided to the Panel, are 
attached to this Report in Annexes A, C and D (S ee List of Annexes, at pages xv and xvi of this 
Report). 
V. ARGUMENTS OF THE THIRD PARTIES  
5.1 The arguments of the third parties, as set out in  their submissions provided to the Panel, are 
attached to this Report in Annex B (See List of  Annexes, at pages xv and xvi of this Report). 
VI. INTERIM REVIEW 
A. GENERAL  
6.1 On 27 May 2011, the Panel issued its Interim Report to the parties.  On 10 June 2011, 
Indonesia informed the Panel that it did not intend to request a review of any precise aspects of the 
Interim Report.  The United States did submit a written  request for the review of precise aspects of the 
Interim Report.  On 17 June 2011, Indonesia submitt ed comments on a number of requests for review 
presented by the United States.  Neither part y requested an interim review meeting. 
6.2 In accordance with Article 15.3 of the DSU, this section of the Panel Report sets out a 
discussion of the arguments made at the interim revi ew stage.  The Panel has modified certain aspects 
of its Report in the light of the parties' comment s wherever it considered appropriate.  Finally, the 
Panel has made a limited number of editorial correcti ons to the Report for the purposes of clarity and 
accuracy.  References to sections, paragraph numbers and footnotes in this Section VI relate to the 
                                                      
71 United States' first written submission, para. 344.  WT/DS406/R 
 Page 11 
 
 
 Interim Report.  Where appropriate , references to paragraphs and footnotes to the Final Report are 
included. 
B. UNITED  STATES ' COMMENTS ON THE INTERIM REPORT  
1. Factual aspects  
6.3 The Panel notes that the United States put fo rward a number of requests for review of the 
language in Section II of this Report which had alread y been subject to the parties' review as part of 
the Descriptive Part.  We note that the United States  did not take advantage of the two-week period 
provided by the Panel to comment on the Descriptive Part  in order to suggest those particular changes.  
Nevertheless, the Panel has decided to accept some  of the United States' requests for changes in 
Section II of this Report in order to ensure the accur acy of the description of the facts in this Report. 
6.4 Regarding paragraph 2.13 of the Interim Report, the United States suggests to the Panel that 
the third and fourth sentences be amended to read:  
"The United States further regulated  Ttobacco  products were further regulated over 
the following decades., but it was not until In  the 1990s that the United States 
intensified its efforts to battle tobacco-relate d diseases.  With that objective in mind, 
the FDA and the U.S. Congress investigated the U.S. tobacco industry 'concerning the 
industry's knowledge of, and efforts to con ceal, the dangers of cigarettes, as well as 
their efforts to market cigarettes to children'.[18]" 
6.5 The United States submits that this change provi des greater clarity and accuracy regarding the 
history of U.S. tobacco regulation.  According to  the United States, support for such changes may be 
found in paragraphs 80 and 81 of the Un ited States' first written submission. 
6.6 Indonesia does not object to the change pr oposed by the United States.   
6.7 The Panel accepts the United States' suggesti on and has accordingly amended the language in 
paragraph 2.13 of the Final Report. 
6.8 Regarding paragraph 2.14 of the Interim Report, the United States suggests to the Panel that 
the first two sentences be amended to read: 
"These investigations led to private litiga tion against tobacco companies, as well as 
lawsuits by several states initiated by several U.S. states against the tobacco industry 
with a view to recovering the tobacco-rel ated costs incurred by the public health 
system.  The outcome of these proceedings was the signature of a By the mid-1990s 
nearly every state in the United States had brought a lawsuit against the tobacco 
industry.  To settle the litigation, the five largest U.S. tobacco companies (Brown and 
Williamson Tobacco Corporation, Lorilla rd Tobacco Company, Phillip Morris 
Incorporated, RJ Reynolds Tobacco Company and Commonwealth Tobacco 
Company) signed a Master Settlement Agreement ('MSA') with the states between 
these States and the five largest U.S. tobacco companies (B rown and Williamson 
Tobacco Corporation, Lorillard Tobacco Company, Phillip Morris Incorporated, RJ 
Reynolds Tobacco Company and Commonwealth Tobacco Company)." 
6.9 The United States submits that this change provi des greater clarity and accuracy regarding the 
history of U.S. tobacco regulation.  According to  the United States, support for this change may be 
found in paragraphs 82 and 83 of the Un ited States' first written submission. WT/DS406/R 
Page 12 
 
 
 6.10 Indonesia does not object to the change pr oposed by the United States.   
6.11 The Panel accepts the United States' suggesti on and has accordingly amended the language in 
paragraph 2.14 of the Final Report. 
6.12 Regarding paragraph 2.16 of the Interim Report, the United States suggests to the Panel that 
the final sentence be amended to read:  
"In 1997, before the regulations were fu lly implemented, U.S. tobacco companies 
challenged the FDA's regulatory authority and in 2000 the U.S. Supreme Court 
invalidated the FDA's rules, finding that the U.S. Congress had not granted the FDA 
the authority to regulate cigarettes and smokeless tobacco as customarily 
marketed. [25]" 
6.13 The United States submits that this change ensu res consistency with ot her references to the 
U.S. Congress in the Interim Report. 
6.14 Indonesia does not object to the change pr oposed by the United States.   
6.15 The Panel accepts the United States' suggesti on and has accordingly amended the language in 
paragraph 2.16 of the Final Report. 
6.16 Regarding paragraph 2.21 of the Interim Report, the United States suggests to the Panel that 
the paragraph be amended to read: 
"In addition, the FSPTCA regulates marketing by, for example, establishing a range 
of advertising restrictions and requireme nts [34], requiring graphic warning labels 
and other disclosures [35], and by author izing the FDA to establish additional 
standards and restrictions related to the labelling, advertising,  and promotion of 
tobacco products. [36]" 
6.17 The United States submits that legislation a dopted prior to the FSPTCA required certain 
warning labels on tobacco produc ts and that this change clarifies that the FSPTCA specifically 
required graphic warning labelling. 
6.18 Indonesia does not object to the change pr oposed by the United States.   
6.19 The Panel accepts the United States' suggesti on and has accordingly amended the language in 
paragraph 2.21 of the Final Report. 
6.20 Regarding paragraph 2.23 of the Interim Report, the United States suggests to the Panel that 
the paragraph be amended to read:  
"The March 2011 TPSAC Report, which was delivered to the FDA on 
18 March 2011 [42], recommends to the FDA that the '[r]emoval of menthol 
cigarettes from the marketplace would benefit pub lic health in the United States'. [43] 
The TPSAC Report also made suggestions for further assessment.  The FDA will 
further consider the recommendations given by the TPSAC. [44]" 
6.21 The United States argues that the TPSAC Report linked its recommendation to a discussion of 
specific areas for further assessment.  The United St ates submits that this change provides greater 
accuracy and completeness.  The United States argues that support for this change may be found in 
paragraph 12 of the United States' response to Panel question No. 115(a) and in Chapter 8 of the  WT/DS406/R 
 Page 13 
 
 
 TPSAC Report (Contraband, Evasion, Illegal production and importation of menthol cigarettes, After 
Market Mentholation, Potential Menthol Bl ack Market, and Other Considerations). 
6.22 Indonesia  objects to the addition proposed by the United States.  In particular, Indonesia 
argues that the United States could be suggesting that the "further assess ment" includes the TPSAC's 
recommendation to ban menthol.  In its view, how ever, Chapter 8 of the TPSAC Report suggests two 
areas where further assessment was suggested: (i) the development of a black market for menthol 
cigarettes depending on what action the FDA pursues in response to the report; and (ii) "gaps in 
understanding of menthol cigarettes and public hea lth".  Indonesia suggests amending the text of 
paragraph 2.23 as follows: 
"The TPSAC Report also made suggestedions for further assessment of the potential 
development of a black market and further research to address gaps in understanding 
of menthol cigarettes and public health." 
6.23 Having considered the comments of both parties,  the Panel has inserted in paragraph 2.23 of 
the Final Report the sentence proposed by the United States and completed the reference in line with 
Indonesia's comments, following the language used in the TPSAC Report.  The sentence in question 
reads as follows:  "The TPSAC Report also made s uggestions for further assessment in respect of the 
contraband of menthol cigarettes and recommende d research to address gaps in understanding of 
menthol cigarettes and public health." 
2. Whether Section 907(a)(1)(A) is inconsistent with Article 2.1 of the TBT Agreement  
6.24 Regarding paragraph 7.60 of the Interim Report, the United States suggests to the Panel that 
the final sentence be amended to read:  
"In its second written submission, the United States argues that the relevant physical 
characteristics that differentiate clove cigarettes from menthol and regular cigarettes are: (i) the nearly equal mixture of tobacco and clove; (ii) the 'special sauce' contained 
in them; and (iii) the existe nce presence of eugenol.[169]" 
6.25 The United States submits that this change provides greater clarity. 
6.26 Indonesia  does not object to the change pr oposed by the United States.   
6.27 The Panel accepts the United States' suggesti on and has accordingly amended the language in 
paragraph 7.60 of the Final Report. 
6.28 Regarding paragraph 7.64 of the Interim Report, the United States suggests to the Panel that 
the paragraph be amended to read:  
"The United States accuses Indonesia of failing to prove that Indonesian clove 
cigarettes and regular or menthol cigarett es are viewed as 'interchangeable' in the 
market, and of presenting unreliable data to  suggest that clove cigarettes have a 
pattern of use similar to tobacco or menthol  cigarettes, just on a smaller scale.[183]  
In fact, in contrastcontrary to clove cigarettes, menthol cigarettes are not 
predominantly a starter cigarette for youth in  the United States be cause they are used 
by adults in large numbers. [84]" 
6.29 The United States submits that this change reflects the nuance in its argument.  The 
United States contends that support for this change  may be found in paragraphs 38 and 39 of the 
United States' response to Panel question No. 91.  A ccording to the United States, it maintained that WT/DS406/R 
Page 14 
 
 
 menthol cigarettes are not "starter" cigarettes in th e same way as clove and other flavoured cigarettes 
given that clove and other flavours are used far more prevalently during the period of initiation than at 
any other time, while menthol cigarettes are used h eavily by adults.  The United States argues that it 
maintained that, notwithstanding, menthol cigarettes,  like all cigarettes, can be starter cigarettes for 
any particular individual.  
6.30 Indonesia  argues that the paragraphs to which the United States refers focus more on the use 
of clove cigarettes by youth and indicate only with r espect to menthol cigarettes that the pattern of use 
is different, concluding that "rates of use am ong young people and older adults are much more 
even."  Accordingly, Indonesia requests that the new language proposed by the United States be 
revised to read: 
"In contrast to clove cigarettes, menthol cigarettes are not predominantly a starter 
cigarette for youth in the United States because rates of use among young people and 
older adults are much more even ." 
6.31 Having considered the comments of both par ties, the Panel has am ended the language in 
paragraph 7.64 of the Final Report as follows:  "In co ntrast to clove cigarettes, menthol cigarettes are 
not predominantly a starter cigarette for youth in th e United States.  Accordi ng to the United States, 
rates of use of regular and menthol cigarettes am ong young people and older adults are much more 
even.72" 
6.32 Concerning paragraph 7.139 of the Interim Report, the United States suggests to the Panel 
that the first sentence be amended to read:  
"However, we disagree with the United Stat es in that the identification of the like 
domestic product in a panel request merely  amounts in all cases to argumentation in 
this dispute."  
6.33 The United States argues that this change cl arifies its position.  According to the 
United States, it had argued that the identification of the domestic "like product" is an aspect of the 
argumentation in support of (or in opposition to) a national treatment claim of a party.  The 
United States contends that it does not consider that "in all cases" the identification of the like 
domestic product is, necessarily, an aspect of argumentation and not an aspect of the claim itself.  The United States argues that support for such a clarification may be found in paragraph 7 of the 
United States' response to Panel question No. 83. 
6.34 Indonesia  objects to the change suggested by the United States on the grounds that 
paragraph 7 of the United States' response to Panel question No. 83 does not na rrow the United States' 
contention only to the facts of this dispute.   
6.35 Having considered the United States' suggesti on and Indonesia's comments thereon, the Panel 
agrees with Indonesia that paragraph 7 of the response
73 of the United States to Panel question No. 83 
does not appear to support the United States' request.  On the contrary, the language of the relevant 
paragraph indicates that the United States was making a general statement that applies in all cases.  
The Panel therefore declines to incl ude the words "in this dispute" at the end of the relevant sentence.  
                                                      
72 United States' response to Panel question No. 91, para. 39. 
73 The relevant paragraph reads:  
"The domestic products to be considered in th e Article III like product analysis are elements 
of the disputing parties argumentation in support of (and in opposition to) the national 
treatment claim, and should be set up in the pa rties' written and oral submission to the panel. 
The domestic products being used as the basis for the argument would thus not constitute part 
of the panel's terms of reference."  WT/DS406/R 
 Page 15 
 
 
 Nevertheless, the Panel has deleted the words "in a ll cases" in order to better reflect the language in 
paragraph 7 of the relevant response.  The releva nt sentence of paragraph 7.139 of the Final Report 
reads as follows: "However, we disagree with the Un ited States in that the identification of the like 
domestic product in a panel request merely amounts to argumentation". 
6.36 Regarding paragraph 7.170 of the Interim Report, the United States suggests to the Panel that 
the second sentence be amended to read: 
"Indonesia submits that menthol cigarettes also have their own flavouring agents, 
which are referred to as 'sauce' or 'casing' .[366]  In this regard, the United States 
argues that the special sau ce used by Indonesian clove cigarettes is not the same 
'casing' used in all cigarettes, includi ng menthol cigarettes [367], because clove 
cigarette manufacturers specifically design and market the sauce for its unique appeal 
whereas manufacturers of menthol and regular cigarettes do not." 
6.37 The United States submits that this change clar ifies that it had argued that the differences 
between the "casing" of regular or menthol cigare ttes and the "special sauce" in clove cigarette 
include the "special sauce" that is part of the mark eting and unique appeal of clove cigarettes.  The 
United States argues that support for this change ma y be found in paragraph 19 of the United States' 
response to Panel question No. 87. 
6.38 Indonesia  objects to the change proposed by the United States.  In its view, paragraph 19 
says nothing about marketing and nothing about menthol or regular cigarettes.  Indonesia contends 
that there is no evidence in the record to support the United States' claim th at menthol and regular 
cigarette manufacturers do not market the taste or flavour achieved by the casing or flavourings used 
in regular and menthol cigarettes.  To more accu rately reflect paragraph 19 of the United States' 
response to Panel question No. 87, Indonesia sugg ests the following language replacing that proposed 
by the United States: "because clove cigarette manuf actures use a special recipe essential to the 
specific flavor of clove cigarettes." 
6.39 Having considered the United States' suggesti on and Indonesia's comments thereon, the Panel 
is of the view that paragraph 19 of the Un ited States' response to Panel question No. 8774 does not 
contain the language proposed by the United States.  The Panel therefore declines to make the change 
suggested by the United States, but has neverthel ess added the following language from that response 
to the text of paragraph 7.170 of the Final Report:   "The United States explains that the flavour 
imparted by the sauce is part of the essential flavour and identity of the products."   
6.40 Regarding paragraph 7.183 of the Interim Report, the United States suggests to the Panel that 
the paragraph be amended to read:  
"As regards the toxicity, both parties agree that all of these cigarettes are harmful to 
health and may cause death.  Both parties initia lly agreed that their relative toxicity is 
not an issue in this dispute.  However, tI n addition, the United States appears to have 
changed its position in its second written s ubmission, where it has maintained that 
certain additives contained in clove cigare ttes, such as eugenol and coumarin, are 
uniquely harmful to health. [386]"  
                                                      
74 Paragraph 19 reads as follows: 
"The sauce used in clove cigarettes is not a generi c 'casing' – it is a special recipe essential to 
the specific flavor of clove cigarettes.  Nor is there any evidence that the description of the 
special sauce added to clove cigarettes is merely  a transient or temporary marketing strategy;74 
rather, the flavor imparted by the sauce is part of the essential flavor and identity of the 
products.  Indonesia has not presented evidence as to the ingredients and flavor of the sauce to 
rebut what its own industry contends." WT/DS406/R 
Page 16 
 
 
 6.41 The United States submits that this change cl arifies its position throughout the proceedings.  
The United States argues that support for this change  may be found in paragr aphs 164 and 166 of the 
United States' first written submission.  According to the United States, it consistently argued, 
including in its first submission, that all cigare ttes are harmful and may cause death but that clove 
cigarettes also pose unique risks for health.  The United States contends that it elaborated upon the 
unique risks for health of clove cigarettes in rebutta l to the arguments of Indonesia and in response to 
questions from the Panel.  According to the United St ates, in doing so, it did not change its position. 
6.42 Indonesia  objects to the change sugg ested by the United States.  In particular, Indonesia 
notes that the addition of the word "uniquely" is not supported by the text referenced in the 
United States' first written submission.  For Indonesia, evidence provided by both parties 
demonstrates that the effect of numbing the throat is not unique to the eugenol in clove cigarettes as 
menthol has this same property and coumarin is not specifically banned as an additive from 
cigarettes.  Indonesia refers to footnote 210 of the United States' first written submission, 
Exhibit US-73 at 705 and 708, and Exhi bit IND-21, as support for its position. 
6.43 Having considered the United States' suggesti ons and Indonesia's comments thereon, the 
Panel declines to make the changes proposed by the United States.  Th e Panel is of the view that the 
language in paragraph 7.18 3 of the Final Report correctly refl ects the argumentation presented by the 
United States. 
6.44 Regarding paragraph 7.203 of the Interim Report, the United States suggests to the Panel that 
the paragraph be amended to read:  
"The United States considers that the rele vant consumers are all the potential and 
current smokers in the United States a nd defines 'potential' consumers as young 
people within the age of initiation.  The United States defines 'current' smokers as 
including older adults.  The United States submits that patterns of use by both young 
people within the age window of initiation and older adults should be evaluated and 
considered in the 'consumer tastes and ha bits' criterion of the like product analysis, 
and in relationship to the public  health basis for the measure." 
6.45 The United States argues that this change provides a more complete summary of its argument 
related to relevant consumers for purposes of the an alysis of the like product.  The United States 
submits that support for this change may be found in paragraph 42 of the United States' response to 
Panel question No. 92 and paragraph 17 of in th e United States' comments on Indonesia's response to 
Panel question No. 92.  According to the United States, its argument concerning the relevance of 
"current" consumers, including adults, in the an alysis of the like product is as important as its 
argument concerning "potential consumers". 
6.46 Indonesia objects to the change proposed by the Un ited States.  In particular, Indonesia 
contends that the paragraphs cited by the United States in support of the suggested change do not 
contain the definition of "current" smokers proposed by the United States. In its view, both the initial 
response from the United States and its comments on Indonesia's response emphasized the need to 
include "potential" consumers, as reflected in the Panel's Report.    
6.47 Having considered the United States' suggesti on and Indonesia's comments thereon, the Panel 
agrees with Indonesia that the paragraphs referenc ed by the United States do not include a definition 
of "current smokers".  We do however agree with th e United States in that it has argued the relevance 
of the patterns of use in the likeness analysis, in  particular, under the 'consumer tastes and habits' 
criterion.  The Panel has therefore added the followi ng sentence to the text of paragraph 7.203 of the 
Final Report:  "The United States submits that th e patterns of use as between young people in the 
window of initiation and older, regul ar smokers should be evaluated a nd considered in the consumer  WT/DS406/R 
 Page 17 
 
 
 tastes and habits criterion of the like product analysis, and in relation to the public health basis for the 
measure." 
6.48 Regarding paragraph 7.272 of the Interim Report, the United States suggests to the Panel that 
the paragraph be divided into two pa ragraphs and be amended to read:  
"According to the United States, the Panel should compare the treatment accorded to 
all imported cigarettes (to the extent that th ey are like), and not just clove cigarettes, 
with the treatment accorded to all domestica lly-produced cigarettes (to the extent that 
they are like).  From this point of view, the United States emphasizes that 
Section 907(a)(1)(A) applies to both im ported and domestic cigarettes with 
characterizing flavours, which comprise a sma ll category of cigarettes in general.  At 
the same time, the ban does not apply to re gular and menthol cigarettes of any origin, 
including regular cigarettes imported from Indonesia, and both imported and 
domestic menthol cigarettes. 
[New Paragraph 7.273] 
In itsthe United States' view, Indonesia is  incorrect that Section 907(a)(1)(A) accords 
less favourable treatment 'if one Indonesi an import is included among the prohibited 
characterizing flavours and one U.S. produced cigarette is not'.[494]   For the United States, the "best treatment" approach advocated by Indonesia is inconsistent 
with the language of Article III:4 of  the GATT 1994 and Article 2.1 of the 
TBT Agreement.  Rather, it submits, as established by the Appellate Body in 
EC - Asbestos , the relevant comparison is betw een the group of 'like' imported 
products and the group of 'like' domes tic products. [495] According to the 
United States, the Appellate Body recognized that a Member may draw distinctions between products determined to be 'like'  without affording protection to domestic 
production or according less favourable tr eatment to imported products. [496]" 
6.49 The United States submits that this change cl arifies its position.  The United States submits 
that support for this change may be found in pa ragraphs 54-56 of the United States' opening oral 
statement at the second substantive meeting of the Panel.  According to the United States, it argued 
that the treatment of all products determined to be  "like" – including both imported and domestic – 
provides relevant evidence to the less favourable treat ment analysis.  The United States contends that 
it argued that the Panel should consider regular t obacco cigarettes imported from Indonesia, as well as 
menthol cigarettes which are imported, and other flavoured cigarettes from any origin. 
6.50 Indonesia  does not object to the change suggested by the United States. 
6.51 The Panel accepts the change proposed by th e United States and has amended the language in 
paragraph 7.272 of the Final Report accordingly.  The Panel however prefers to keep one single 
paragraph.   
6.52 Regarding paragraph 7.289 of the Interim Report, the United States suggests to the Panel that 
the second sentence be amended to read:  
"The United States has told this Panel that it was not including menthol cigarettes, 
which we have found to be like to clove ci garettes for the purpose of Article 2.1 of 
the TBT Agreement, because of doing so  without further assessment would not be 
appropriate for the public health, because of issues including the potential impact on 
itsthe health care system and the potential development of a black market and 
smuggling onf menthol cigarettes. [518]" WT/DS406/R 
Page 18 
 
 
 6.53 The United States argues that this change re flects more accurately its position.  The 
United States argues that support this change may be found in paragraphs 107-110 of the 
United States' first written submission, paragra phs 9 to 32 of the United States' second written 
submission, and paragraphs 34 and 35 of the Unite d States' response to Panel question No. 92(b).  
According to the United States, it argued that it woul d be inappropriate to ban menthol without further 
assessment, given that banning such a heavily used, addictive product could have negative 
consequences for the public health and be  unachievable, unfeasible or ineffective. 
6.54 Indonesia  objects to the change suggested by the United States.  Indonesia first points out 
that the United States' citation in support of its vi ew is incorrect as it believes that the relevant 
question on this subject is Panel question No. 90(b) , not 92(b).  Second, Indonesia contends that none 
of the sources to which the United States refers the Panel in support of its proposed new language 
discusses the possibility of banning menthol cigarett es subject to "any further assessment."  In its 
view, the sections of the U.S. submissions referre d to by the United States defend the approach 
contained in Section 907 and attempt to provide a ju stification for exempting menthol cigarettes.  The 
United States' response to Panel question No. 90(b)  indicates that this decision was the result of 
"pragmatic, reasonable weighing."  For Indonesia, n one of the U.S. statements referenced by the 
United States, including its response to Panel ques tion No. 90(b), paragraph 34, give any indication 
that the ban on flavourings would be re-evaluated and potentially expanded to  include menthol after 
"further assessment."  In fact, it submits, paragraph 53 indicates that it was "not feasible" and there 
was no intention of banning most cigarettes.  As a result, the Panel should not accept the addition of 
the phrase, "doing so without further assessment w ould not be appropriate for the public health, 
because of issues including."  
6.55 Having considered the United States' suggesti on and Indonesia's comments thereon, the Panel 
accepts the change proposed by the United Stat es and accordingly amends paragraph 7.289 of the 
Final Report.  In the Panel's view, Indonesia is not  correct in arguing that the United States has not 
referred to the need for further assessment in respect of menthol cigarettes in its submissions.  In 
particular, we note that paragraph 34 of the Un ited States' first written submission reads: "The 
United States further argued that "[a]lthough ment hol cigarettes are not banned, they are, like all 
cigarettes, unquestionably harmful products.  The ge neral public's use of menthol cigarettes, and the 
methods of advertising and marke ting of the product by cigarette companies, rema in a significant 
concern of Congress, FDA, as well as health advocat es, and continues to be the subject of intense 
study in the United States.  In particular, Congr ess, in Section 907(e) of the FSPTCA, instructed a 
statutorily-created committee, the Tobacco Products  Scientific Advisory Committee ("TPSAC"), to 
'issue a report and recommendation on the issue of the impact of the use of menthol in cigarettes on the public health, including such use among children,  African-Americans, Hispanics, and other racial 
and ethnic minorities.'  TPSAC's review of the issu e is ongoing." Furthermore, in paragraphs 21 and 
23 of its second written submission, the United States ar gues that "the prohibition of the heavily-used 
tobacco and menthol flavoured products may cause  negative consequences" and that it "assign[ed] 
menthol-flavored cigarettes to intensive study by  the TPSAC to better understand the public health 
issues related to possible future restrictions".  Ho wever, Indonesia is correct that the United States 
wrongly referred to paragraphs 34 and 35 of the United  States' response to Panel question No. 92(b).  
It should be paragraphs 34 and 35 of the United States' response to Panel question No. 90(b).  
3. Whether Section 907(a)(1)(A) is inconsistent with Article 2.2 of the TBT Agreement  
6.56
 Regarding paragraph 7.319 of the Interim Report, the United States suggests to the Panel that 
footnote 584 be amended to read:  
"The Panel notes that the United States has argued that its position that the objective 
of Section 907(a)(1)(A) includes the consid eration of negative consequences for the 
public health is supported by the text of  section 907(a)(1)(A) itself, as well as other  WT/DS406/R 
 Page 19 
 
 
 provisions of section 907, including section 907(b)(2).  As the United States has 
discussed, section 907(b)(2) requires FDA to consider the negative consequences of 
any proposed new tobacco product standard, or  proposed revision to or revocation of 
an existing standard, prior to approving, revising, or revoking such a standard.  
United States' response to Panel question Nos. 60, 100." 
6.57 The United States argues that this  change summarizes more accu rately its position regarding 
the objective of Section 907(a)(1)(A).  According to the United States, not only the text of 
Section 907(a)(1)(A), but also other provisions of Section 907 support its position whereby the 
objective includes the consideration of negative consequences. 
6.58 Indonesia does not object to the change pr oposed by the United States.   
6.59 The Panel agrees that the additional text propo sed by the United States would more accurately 
summarize its position on what the objective of Secti on 907(a)(1)(A) is. Accordingly, the Panel has 
made this change to footnote 588 of the Final Report. 
6.60 Regarding paragraph 7.321 of the Interim Report, the United States suggests to the Panel that 
footnote 590 be amended to read: 
"The United States understands that the complaining party does not establish a breach 
of Article 2.2 by proving the existence of  an alternative measure that fulfills the 
importing Member's legitimate objective at the level the Member considers 
appropriate that is less trade restrictive, but only by a de minimis amount.  See U.S. 
First Written Submission, para. 263 (citing to Letter from Peter D. Sutherland, 
Director-General of the GATT, to Ambassa dor John Schmidt, Chief U.S. Negotiator 
(December 15, 1993), Exhibit US-79).  Howe ver, as all of the alternative measures 
that Indonesia has offered do not ban trade in any flavoured cigarettes, the 
United States considers that the issue of whether Article 2.2 embodies a 'significantly 
less trade-restrictive' standard would 'not  appear to arise in this dispute.'  
United States' response to Panel question No. 57, para. 130." 
6.61 The United States argues that this change summarizes more accurately its argument. 
6.62 Indonesia does not object to the change pr oposed by the United States.   
6.63 The Panel agrees that the additional text propo sed by the United States would more accurately 
summarize its argument.  Accordingly, the Panel has made this change to footnote 594 of the 
Final Report.   
6.64 Regarding paragraphs 7.362 and 7. 363 of the Interim Report, the United States suggests to 
the Panel that the following language be inserte d following the second sentence of paragraph 7.363:  
"The United States further notes that while Article XX(b) focuses on whether a 
measure is necessary to protect human, animal, or plant life or health, Article 2.2 
applies more broadly to any legitimate obj ective, and focuses on whether the degree 
of trade restriction is necessary rather than  whether the measure is necessary to fulfill 
an objective.  One way in which these exam ples are significant is that not only those 
technical regulations that can be consider ed 'necessary' are consistent with the 
requirements of Article 2.2.  In the U.S. view, Article 2.2 does not limit a Member's 
ability to apply technical regulations that th e Member considers desirable rather than 
necessary.  In addition, and we noted above , [Interim Report, paragraph 7.323] the 
United States argued that these differences mean that the 'material contribution' WT/DS406/R 
Page 20 
 
 
 element of the Article XX(b) jurisprudence is not part of the Article 2.2 analysis.  
Rather, the test of Article 2.2 is different – whether the measure is more trade 
restrictive than necessary to achieve the leg itimate objective at the level sought by the 
Member." 
6.65 The United States argues that this change ensur es that its argument is accurately presented.  
The United States submits that support for this change  may be found in the United States' response to 
Panel question No. 103(a), paragraphs 78-79,  the United States' second written submission, 
paragraphs 181-182 and the United States' respon se to Panel question No. 55, paragraphs 121-125. 
6.66 The United States disagrees with the Panel's st atement, in paragraph 7.362, that "the 
United States has not actually identified any signifi cant differences between the tests that have been 
developed under Article XX(b) of the GATT 1994 and Article 5.6 of the SPS Agreement , or any 
aspect of the Article XX(b) jurisprudence relating to  the interpretation of the term ‘necessary' that 
would be inapplicable to Article 2.2 of the TBT Agreement."  The United States argues that it has.  
For example, while both Articles XX(b) of the GATT 1994 and 2.2 of the TBT Agreement  use the 
term "necessary", the remainder of the two prov isions are very different.  According to the 
United States, the use of one word in common is not enough to indicate that it is appropriate to apply 
interpretative concepts which are used in one cont ext in the other one.  The United States contends 
that Article XX(b) of the GATT 1994 focuses on whet her a measure is necessary to protect human, 
animal, or plant life or health.  Article 2.2 of the TBT Agreement  applies more broadly to any 
legitimate objective, and focuses on whether the degr ee of trade restriction is necessary rather than 
whether the measure is necessary to fulfil an objectiv e.  According to the Unite d States, not only those 
technical regulations that can be considered "n ecessary" are consistent with the requirements of 
Article 2.2 of the TBT Agreement .  The United States argues that Article 2.2 of the TBT Agreement  
does not limit the ability of a Member to apply technical regulations that it holds desirable rather than 
necessary.  Additionally, and as acknowledged in  paragraph 7.323 of the Interim Report, the 
United States submits that it argued that such di fferences mean that the "material contribution" 
element of the jurisprudence on Article XX(b) of the GATT 1994 is not part of the analysis 
concerning Article 2.2 of the TBT Agreement .  Instead, according to the Un ited States, the test of 
Article 2.2 of the TBT Agreement is different: whether a measure is more trade restrictive than 
necessary to achieve the le gitimate objective at the level sought by the Member. 
6.67 Indonesia does not object to the change pr oposed by the United States.   
6.68 The Panel understands the United States to be  requesting the addition of new language in 
paragraph 7.363 to reflect its argument that the question under Article XX(b) of the GATT 1994 is 
whether the measure  itself  is necessary, whereas under Article 2.2 the question is whether the degree 
of trade-restrictiveness  is necessary.  The Panel agrees with th e United States that this U.S. argument 
could be more clearly reflected in the Report.  However, the Panel considers that inserting the 
additional text suggested by the United States follo wing the first sentence of paragraph 7.363 could 
create some confusion as to which argument the Pane l is responding to in the remaining part of 
paragraph 7.363.  Accordingly, the Panel has added the following new text to existing footnote 662 of 
the Final Report in order to reflect and respond to this U.S. argument: 
"Based on this difference in wording betw een Article XX(b) of the GATT 1994 and 
Article 2.2 of the TBT Agreement , the United States further argues that there is 
another significant difference between these provisions, which is that the question 
under Article XX(b) is whether the measure  itself  is necessary, whereas under 
Article 2.2 the question is whether the degree of trade-restrictiveness  is necessary 
(United States' second written submission, pa ra. 181; United States' response to Panel 
question No. 55, para. 123).  We agree with  the United States that Article XX(b) is 
drafted in terms of whether the trade-rest rictive measure is necessary to fulfil its  WT/DS406/R 
 Page 21 
 
 
 objective, whereas Article 2.2 is drafted in terms of whether the degree of trade-
restrictiveness of that measure is necessar y to fulfil its objective.  However, the 
United States has not explained why or how an analysis framed in terms of the necessity of the 'trade-restrictiveness' of a trade-restrictive measure would be 
significantly different from an analysis frame d in terms of the necessity of that trade-
restrictive measure. For example, the Unite d States' arguments in this case suggest 
that a Panel analysing the necessity of the degree of trade-restrictiveness  of a trade-
restrictive measure under Article 2.2 (as opposed  to the necessity of a trade-restrictive 
measure ) would still need to consider the extent to which that measure  makes a 
'contribution' to its objective.  In this regard, we recall that the United States 
recognizes that '[w]hile Article 2.2 does not require that the measure fulfill its objective, it is difficult to believe that a measure fails to fulfill its objective 
completely – that is to say, a  measur e that does not even make a marginal 
contribution to its objective – could be found consistent with Article 2.2.'  
(United States' response to Panel question No. 103(a))." 
6.69 Regarding paragraph 7.365 of the Interim Report, the United States suggests to the Panel that 
a new footnote at the end of the first sentence be added to read: 
"New footnote 661: 
The Panel notes that the United States further contends that the 1993 letter from 
Peter D. Sutherland, Director-General of the GATT, to Ambassador John Schmidt, 
Chief U.S. Negotiator, Exhibit US-79, pr ovides additional support, as a supplemental 
means of interpretation under Article 32 of the Vienna Convention, that TBT 
Article 2.2 should be interpreted similarly to SPS Article 5.6, specifically that a 
measure cannot be considered more trade-r estrictive than necessar y in the absences of 
a reasonably available alternative measure th at is significantly less-trade restrictive." 
6.70 The United States argues that this change summa rizes more accurately its argument.  The 
United States contends that support for such ch anges may be found in the United States' second 
written submission, paragraph 178. 
6.71 According to the United States, the le tter of the 1993 GATT Director-General 
(Exhibit US-79) offers additional support, as suppl ementary means of interpretation under Article 32 
of the VCLT, that Article 2.2 of the TBT Agreement  should be interpreted similarly to Article 5.6 of 
the SPS Agreement , and, more in detail, that a measure ca nnot be considered more trade-restrictive 
than necessary without a reasonably available alte rnative measure that is significantly less-trade 
restrictive. 
6.72 Indonesia does not object to the change pr oposed by the United States.   
6.73 The Panel agrees that the additional text propo sed by the United States would more accurately 
summarize its argument.  Accordingly, the Panel has added a new footnote 665 at the end of the first 
sentence of paragraph 7.365 of the Final Report cont aining the text proposed by the United States.   
6.74 Regarding paragraph 7.392 of the Interim Report, the United States suggests to the Panel that 
the paragraph be amended to read: 
"Accordingly, we do not consider that the survey data numbers provided by Indonesia 
offer a sufficient very solid basis for determining that whether the ban on clove 
cigarettes does not makes a material contribution to the objective of reducing youth 
smoking." WT/DS406/R 
Page 22 
 
 
 6.75 The United States submits that this change is  needed because the Panel found that Indonesia's 
own evidence establishes that clove cigarettes ar e disproportionally used by people aged 17 and 
younger (see e.g. paragraphs 7.390-7. 391 of the Interim Report) and to ensure that the statement of 
the Panel is not misread on this point. 
6.76 Indonesia does not object to the change pr oposed by the United States.   
6.77 The Panel agrees with the United States that the statement contained in paragraph 7.392 of the 
Interim Report could be misread.  For the sake of greater clarity, the Panel has amended the language 
in paragraph 7.392 of the Final Report in the manner proposed by the United States. 
6.78 Regarding paragraph 7.426 of the Interim Report, the United States suggests to the Panel that 
the final sentence be amended to read: 
"More importantly, however, is that it is not  clear that the laws implemented to date 
by other countries should serve as some kind of benchmark for the United States or 
any other sovereign WTO Member, particular ly where Indonesia has not established 
the objectives of these foreign measures and at  what level those measures fulfill their 
respective objectives, and whether the objec tives of the foreign measures are the same 
as the U.S. objective and that the foreign countries seek to achie ve that objective at 
the same level the United States does." 
6.79 The United States argues that Panel's argumentati on in paragraph 7.426 is well founded.  The 
United States submits that this change improv es the argumentation by offering a more explicit 
explanation concerning why this is so in this case. 
6.80 Indonesia does not object to the change pr oposed by the United States.   
6.81 The Panel considers that the additional language  proposed by the United States is helpful in 
explaining the point being made in the final sentence of paragraph 7.426.  Accordingly, the Panel has 
amended paragraph 7.426 of the Final Report as proposed by the United States.  
4. Whether the United States has acted inconsistently with Article 12.3 of the 
TBT Agreement  
6.82 Regarding paragraph 7.608 of the Interim Report, the United States suggests to the Panel that 
the first sentence be amended to read: 
"As to The United States submits that the as  regards the legal standard at issue, the 
United States submits that it is not sufficient for Indonesia to simply say that "something" 
more than what the United States has done is required Indonesia will only say that 
"something" more than what the United States has done is required, without explaining what 
that "something" more is exactly. [993]  It is not sufficient to simply say that "something" 
more than what the United States has done is required. [994]" 
6.83 The United States argues that this change correct s a possible mistake in the first sentence and 
more effectively reflects its argument. 
6.84 Indonesia does not object to the change pr oposed by the United States.   
6.85 The Panel agrees with the United States' drafting suggestion.  Accordingly, the Panel has 
made this change to paragra ph 7.608 of the Final Report.   WT/DS406/R 
 Page 23 
 
 
 6.86 Also regarding paragraph 7.608 of the Interim Report, the United States suggests to the Panel 
that footnotes 993 and 994 be combined to read: 
"Footnote 993 
United States' oral statement at the second substantive meeting of the Panel, 
para. 106;  United States' response to  Panel question No. 112, para. 118. 
Footnote 994 
United States' response to Panel question No. 112, para. 118." 
6.87 The United States argues that this change is  needed in connection with the suggested 
modification to paragraph 7.608. 
6.88 Indonesia does not object to the change proposed by the United States. 
6.89 The Panel accepts the change proposed by the United States and has combined both footnotes 
into footnote 998 to paragraph 7.608 of the Final Report. 
5. Miscellaneous 
6.90 In addition to the substantive comments pr esented above, the United States offered two 
typographical suggestions.  The Panel has accommodated the United States' suggestions. 
VII. FINDINGS 
A. INTRODUCTION  
7.1 This dispute concerns Section 907(a)(1)(A)75, a tobacco-control measure adopted by the 
United States for reasons of public health.  Ciga rettes are inherently harmful to human health, as 
recognized by the WHO, the scientific community and both parties to this dispute. 
7.2 At the outset, this Panel would like to emphasize that measures to protect public health are of 
the utmost importance, and that the WTO Agreemen ts fully recognize and respect the sovereign right 
of Members to regulate in response to  legitimate public health concerns. 
7.3 We note that the WTO seeks to promote general well-being through trade liberalization and 
recognizes the right of WTO Members to adopt measures to protect public health.  In fact, WTO 
Members have a large measure of autonomy to determ ine their own policies to protect human health.  
This autonomy is only circumscribed by the need to ensure that the means  chosen for realizing those 
policies are consistent with WTO ru les.  These rules require Members to ensure that those means be 
non-discriminatory, and otherwise in accordance with  the provisions of the WTO Agreements.  The 
sixth preambular recital of the TBT Agreement  is explicit in this regard: 
"Recognizing  that no country should be prevented from taking measures necessary to 
ensure the quality of its exports, or for the protection of human, animal or plant life or 
health, of the environment, or for the preven tion of deceptive practices, at the levels it 
considers appropriate, subject to the requirement that they are not applied in a manner 
which would constitute a means of arbitrary or unjustifiable discrimination between 
                                                      
75 See Section II.B above. WT/DS406/R 
Page 24 
 
 
 countries where the same conditions prevail or  a disguised restriction on international 
trade, and are otherwise in accordance with  the provisions of this Agreement".  
7.4 The importance of public health was also high lighted by WTO Members in the Ministerial 
Declaration launching the Doha Round, in which Ministers underscored that  WTO rules do not 
prevent Members from taking measures for the protecti on of human health subject to complying with 
the WTO Agreements .76 
7.5 Furthermore, we are aware of the important in ternational efforts to curb smoking within the 
context of the WHO FCTC and its WHO  Partial Guidelines .77 
7.6 The task before us is to objectively assess whethe r Section 907(a)(1)(A) is in conformity with 
U.S. obligations pursuant to the provisions of the WTO Agreements within our terms of reference.  
We recall the words of the Appellate Body wh en it acknowledged that the objective of preserving 
human life and health "is both vital and important in the highest degree"78, and that "few interests are 
more 'vital' and 'important' than prot ecting human beings from health risks".79 
B. ORDER OF ANALYSIS  
7.7 Before commencing our analysis of Indonesia's legal claims, we would like to explain our 
decision to follow a certain order of analysis. 
7.8 If we examine Indonesia's Panel Request, we observe that Indonesia puts forward claims 
under Articles III:4 and XX of the GATT 1994, Articles 2.1,  2.2, 2.5, 2.8, 2.9 (including 2.9.1, 2.9.2, 
2.9.3, and 2.9.4), 2.10, 2.12 and 12.3 of the TBT Agreement  and, conditionally upon the United States 
asserting that Section 907(a)(1)(A) is an SPS measure, Articles 2, 3, 5 and 7 of the SPS Agreement.80 
7.9 In its first written submission, though, Indonesia clarified that its claim under Article III:4 of 
the GATT 1994 is an alternative claim to that under Article 2.1 of the TBT Agreement.81  It further 
explained that its claim under Article XX of th e GATT 1994 was a rebuttal of a potential defence by 
the United States.82  In addition, no analysis or request for findings was made in respect of its 
conditional SPS claims. 
7.10 In response to a number of questions posed by th is Panel aimed at clarifying the scope of its 
mandate, and in later submissions, Indonesia confir med that: (i) its claim under Article III:4 of the 
GATT 1994 is as an alternative to its nationa l treatment claim under Article 2.1 of the 
TBT Agreement;  (ii) it is not claiming a violation of Article XX of the GATT 1994 by the 
United States; and (iii) it believes the measure  is a technical regulation subject to the TBT Agreement , 
not an SPS measure subject to the SPS Agreement.83  
7.11 Additionally, we also observed that while in its Panel Request Indonesia brought claims under 
Articles 2.9.1, 2.9.2, 2.9.3 and 2.9.4 of the TBT Agreement , subsequently it only presented arguments 
and evidence with respect to its claims under Articles 2.9.2 and 2.9.3 of the TBT Agreement .  We 
                                                      
76 Doha Ministerial Declaration of 14 November 2001, WT/MIN(01)/DEC/1, para. 6. 
77 See Section II.C.3 above. 
78 Appellate Body Report, EC – Asbestos , para. 172. 
79 Appellate Body Report, Brazil – Retreaded Tyres , para. 144 (footnotes omitted). 
80 WT/DS406/2. 
81 Indonesia's first written submission, para. 69. 
82 Indonesia's first written submission, paras. 114-127, and, in particular, para. 115.  
83 Indonesia's responses to Panel question Nos. 1, 20 and 25.  WT/DS406/R 
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 therefore understand Indonesia to have abandoned it s claims under Articles 2.9.1 and 2.9.4 of the 
TBT Agreement  and we will thus not examine them.84 
7.12 The question before us therefore is whether there is a particular sequencing of the legal claims 
that should be followed in examining Indonesia's cl aims.  Further to the Appellate Body Report in 
US – Zeroing (EC) (Article 21.5 – EC) , we understand that panels are not bound by the order of 
claims made by the complainant.  As put by the Appellate Body, "in fulfilling its duties under 
Article 11 of the DSU, a panel may depart from th e sequential order suggested by the complaining 
party, in particular, when this is required by th e correct interpretation or application of the legal 
provisions at issue".85  Nevertheless, it is customary for panels to follow the order of the claims 
presented by the complainant, unless they believe it inappropriate.   
7.13 We recall that the panel in India – Autos  explained that it is important to first consider if a 
particular order is compelled by principles of valid interpretative methodology, which, if not 
followed, might constitute an error of law.86  That panel also pointed out that the order selected for 
examination of the claims may also have an im pact on the potential to apply judicial economy.87  For 
the Appellate Body, it is the nature of the relati onship between the provisions that will determine in 
each case whether there is a prescribed order of analysis.88 
7.14 As the United States has not asserted that Section 907(a)(1)(A) is an SPS measure and 
Indonesia refrained from arguing its SPS claims, we w ill not examine them.  Hence, we do not need to 
decide between Indonesia's SPS and TBT claims as the starting point of our analysis.89  In addition, 
given that Indonesia's claim under Article III:4 of the GATT 1994 is an alternative claim to that under 
Article 2.1 of the TBT Agreement , there is no issue as to which covered agreement, the 
TBT Agreement or the GATT 1994, must be addressed first.  
                                                      
84 We note that previous panels have followed a similar approach in respect of abandoned claims.  See 
e.g. Panel Report, India – Additional Import Duties , paras. 7.402-7.405;  Panel Report, Egypt – Steel Rebar , 
para. 7.30; Panel Report; US – Zeroing (Japan) (Article 21.5 – Japan) , fn 16. 
85 Appellate Body Report, US – Zeroing (EC) (Article 21.5 – EC) , para. 277. 
86 Panel Report, India – Autos , para. 7.154.  Panel Report, EC – Sardines , paras. 7.17-7.18. 
87 Panel Report, India – Autos , para. 7.161. 
88 The Appellate Body found: 
"Thus, in each case it is the nature of the relationship between two provisions that will 
determine whether there exists a mandatory sequence of analysis which, if not followed, 
would amount to an error of law. In some cases, this relationship is such that a failure to 
structure the analysis in the proper logical sequence will have repercussions for the substance 
of the analysis itself."   
Appellate Body Report in  Canada – Wheat Exports and Grain Imports, para. 109.   
The Appellate Body further stated:  
"At the same time, panels must ensure that they proceed on the basis of a properly structured 
analysis to interpret the substantive provisions at issue. As the Appellate Body found in US – 
Shrimp  and Canada – Autos , panels that ignore or jump over a prior logical step of the 
analysis run the risk of compromising or invalidating later findings. This risk is compounded 
in the case of two legally interrelated provisi ons, where one of those provisions must, as a 
matter of logic and analytical coherence, be anal yzed before the other, as is the case with 
subparagraphs (a) and (b) of Article XVII:1 of the GATT 1994."   
Appellate Body Report, Canada – Wheat Exports and Grain Imports , para. 127. 
89 If Indonesia's SPS claims were to be examined by  this Panel, the first threshold issue would have 
been whether the Panel should start its analysis by Indo nesia's conditional SPS claims or rather by Indonesia's 
TBT claims.  Indeed, whether the measure at issue is an SPS measure would have been of particular relevance in 
deciding the order of analysis in th is dispute because Article 1.5 of the TBT Agreement specifically provides that 
SPS measures, as defined in Annex A of the SPS Agreement , are excluded from the scope of the 
TBT Agreement. Panel Report, EC – Asbestos , para. 8.29.   WT/DS406/R 
Page 26 
 
 
 7.15 There is nevertheless a threshold issue that we must address before entering into an 
examination of Indonesia's claims under the TBT Agreement .  Indeed, we need to consider whether 
the TBT Agreement  applies to Section 907(a)(1)(A).  We note that Indonesia argued that 
Section 907(a)(1)(A) is a technical regulation.  We shall therefore begin by examining whether 
Section 907(a)(1)(A) is a "technical regulation"  within the meaning of Annex 1.1 of the 
TBT Agreement  and thus whether the obligations embodied in Indonesia's claims under the 
TBT Agreement apply.   
7.16 If we find that Section 907(a)(1)(A) is a techni cal regulation, we will proceed to examine the 
claims presented by Indonesia under the TBT Agreement , starting with Indonesia's claim under 
Article 2.1 of the TBT Agreement .  If we do not make a finding of violation under that provision, we 
shall examine the alternative claim pur suant to Article III:4 of the GATT 1994.90  If we do make a 
finding of violation, we will proceed with our ex amination of the remainder of Indonesia's claims 
under the TBT Agreement  in numerical order. 
7.17 We will however make an exception to that numerical order with our examination of 
Articles 2.9.2 and 2.9.3, and 2.10 of the TBT Agreement , as we will first examine Indonesia's claim 
pursuant to Article 2.10 of the TBT Agreement .  As we will explain in more detail in Section VII.I.2 
below, Article 2.10 of the TBT Agreement applies only when a Member is departing from the general 
obligations established in Article 2.9 of the TBT Agreement.   We will therefore first examine whether 
the conditions of urgency described in Article 2.10 are present in this dispute and, if we find that these 
conditions are not present, we will continue and examine Indonesia's claims under Articles 2.9.2 and 
2.9.3 of the TBT Agreement . 
7.18 Finally, we note that Indonesia made certain stat ements to the effect that Section 907(a)(1)(A) 
violates the above-mentioned provisions of the TBT Agreement and the GATT 1994 "both on its face 
and as applied".91  The Panel attempted to clarify Indonesi a's position in this respect as those 
statements could be understood to mean that Indon esia is advancing both " as such" and "as applied" 
claims in respect of Section 907(a)(1)(A).92  Notwithstanding, Indonesia has not clearly explained to 
us how its "as applied" claims would differ, if at all, from its "as such" claims.93  Indeed, we are 
unable to identify anything in Indonesia's argument ation that relates to Section 907(a)(1)(A) "as 
applied", as distinguished from its "as such" claims  pertaining to Section 907(a)(1)(A).  We ourselves 
are unable to see how the "as such"/"as applied" distinction is of importance in the present case.94  
                                                      
90 We note that both parties have followed different approaches to the order of analysis of Indonesia's 
claims under Article 2.1 of the TBT Agreement  and Article III:4 of the GATT 1994.  Indonesia first addressed 
Article 2.1 of the TBT Agreement , followed by, in the alternative, Article III:4 of the GATT 1994; the 
United States commenced its argumentation in its first written submission by looking at Article III:4 of the 
GATT 1994, without referring to the fact that Indonesia is  presenting this claim as an  alternative to that under 
Article 2.1 of the TBT Agreement .  The United States' reasoning was that Article III:4 has been more fully 
elaborated by previous panels and the Appellate Body than Article 2.1 of the TBT Agreement .  It did analyse 
Article 2.1 of the TBT Agreement briefly thereafter and had a common conclusion on "the national treatment 
claims".  To follow suit, Indonesia's second written submission, although it commences with Article 2.1 of the 
TBT Agreement, nevertheless rebuts most of the U.S. arguments w ithin the section dedicated to Article III:4.  In 
its second written submission, though, the United States addresses both claims at the same time.   
91 See, for example, Indonesia' first wr itten submission, paras. 43, 127 and 149. 
92 Panel question Nos. 2, 3 and 82. 
93 The Panel put two questions to Indonesia asking it to explain how its "as applied" claims differ from 
its "as such" claims.  In its responses, Indonesia explained how an "as applied" claim differs from an "as such" 
claim. Indonesia's responses to Panel question Nos. 2 and 82. However, we are still unclear on whether and if so 
how its "as applied" claims differ from its "as such" claims in this dispute. 
94 The Appellate Body has explained that "the import of the 'mandatory/discretionary distinction' may 
vary from case to case".  Appellate Body Report, US – Zeroing (EC) (Article 21.5-EC) , para. 214, citing 
Appellate Body Report, US – Corrosion-Resistant Steel Sunset Review , para. 93.  The panel in US – Tyres 
(China)  explained that "[i]n practice, the import of the ma ndatory/discretionary distinction is most pronounced  WT/DS406/R 
 Page 27 
 
 
 Accordingly, we have decided not rely on the "as such"/"as applied" distinction in analysing 
Indonesia's claims, and we thus do not present any separate analyses of, or findings on, 
Section 907(a)(1)(A) "as applied". 
7.19 We shall therefore commence our analysis by  examining whether Section 907(a)(1)(A) is a 
technical regulation within the meaning of Annex 1.1 of the TBT Agreement . 
C. WHETHER SECTION  907( A)(1)(A)  IS A "TECHNICAL REGULATION " WITHIN THE MEANING OF 
ANNEX  1.1 OF THE TBT A GREEMENT   
1. Arguments of the parties  
7.20 Indonesia  submits that Section 907(a)(1)(A) is a "technical regulation" as defined in 
Annex 1.1 of the TBT Agreement .95  Recalling the Appellate Body's guidance in EC – Asbestos , 
Indonesia submits that Section 907(a)(1)(A) applies to  an "identifiable group of products" (i.e., certain 
flavoured cigarettes, and especially clove cigarette s), lays down "product characteristics" (i.e., it 
prohibits the addition of characterizing flavou rs, except menthol), and compliance with the 
prohibition is "mandatory".96  Indonesia observes that the Un ited States does not dispute that 
Section 907 is a "technical regulation".97   
7.21 The United States  acknowledges that "the measure is a technical regulation"98.  However, the 
United States submits that its view as to the nature  of Section 907(a)(1)(A) as a technical regulation 
should not change the standard of review of the Panel, which is to make an objective assessment 
based on the facts presented as to whether the measure at issue is a technical regulation.99  
2. Analysis by the Panel  
(a) Introduction 
7.22 Indonesia claims that the United St ates has acted inconsistently with Articles 2.1, 2.2, 2.5, 
2.8, 2.9, 2.10, 2.12, and 12.3 of the TBT Agreement .  We note that, by their own terms, these 
provisions apply to "technical regulations".100  This means that, if Section 907(a)(1)(A) is not  a 
"technical regulation" within the meaning of the TBT Agreement , these provisions would not apply to 
that measure.  Thus, a threshold issue in our  examination of Indonesia's claims under the 
TBT Agreement is whether Section 907(a)(1)(A) is a "technical regulation".   
                                                                                                                                                                     
in cases where, although a Member's law appears to be WTO-inconsis tent on its face, there is sufficient 
discretion to allow national authorities to apply the law in a WTO-consistent manner."  Panel Report,  US – 
Tyres (China) , para. 7.118. In this case, Indonesia's claims relate to the ban on clove cigarettes mandated by 
Section 907(a)(1)(A).  The United States does not disput e that Section 907(a)(1)(A)  mandates a ban on clove 
cigarettes (along with certain other cigarettes with a ch aracterizing flavour).  More over, the United States has 
never suggested that its national authorities have any disc retion to apply Section 907(a)(1)(A) in such a way as 
to exclude clove cigarettes from the scope of the ban. 
95 Indonesia's first written submission, para. 44. 
96 Indonesia's first written submission, paras. 46-47. 
97 Indonesia's oral statement at the first substantive meeting of the Panel, para. 128.  
98 United States' oral statement at the first substan tive meeting of the Panel, paras. 26 and 60.   
99 United States' first written submission, para. 213; United States' response to Panel question No. 22, 
para. 58. 
100 Article 12.3 of the TBT Agreement applies not only to "technical regulations", but also to "standards 
and conformity assessment procedures".  However, Indone sia does not allege that the measure at issue in this 
dispute is either a "standard" or a "conformity assessment procedure". WT/DS406/R 
Page 28 
 
 
 (b) The legal provision at issue 
7.23 Article 1.2 of the TBT Agreement provides that "for the purposes of this Agreement the 
meaning of the terms given in Anne x 1 applies".  Annex 1.1 of the TBT Agreement  defines a 
"technical regulation" as follows:  
"Document which lays down product characteristics or their related processes and 
production methods, including the applicable  administrative provisions, with which 
compliance is mandatory. It may also include or deal exclusively with terminology, 
symbols, packaging, marking or labelling requirements as they apply to a product, process or production method." 
7.24 We note that the definition of the term "technical regulation" in Annex 1.1 of the 
TBT Agreement  has already been examined by  the Appellate Body: first in EC – Asbestos , and then 
again in EC – Sardines .
101  In those cases, the Appellate Body set out three criteria that a document 
must meet to fall within the definition of "technical regulation" in Annex 1.1:   
"... First ,  the document must apply to an identifiable product or group of products.  
The  identifiable   product or group of products need not, however, be 
expressly  identified   in the document.  Second ,  the document must lay down one or 
more characteristics of the product.  These product characteristics may be intrinsic, or they may be related to the product.  They  may be prescribed or imposed in either a 
positive or a negative form.  Third ,  compliance with the product characteristics must 
be mandatory.  As we stressed in  EC – Asbestos ,  these three criteria are derived 
from the wording of the definition in Annex 1.1. ..."
102 
7.25 The Panel will therefore proceed to analy se whether Section 907(a)(1)(A) constitutes a 
"technical regulation" within the meaning of Annex 1.1 of the TBT Agreement by examining these 
three criteria.   
(c) Elements of the definition of a technical regulation 
(i) First element:  Whether Section 907(a)(1)(A) applies to an "identifiable product or group of 
products" 
7.26 In EC – Asbestos , the Appellate Body elaborated on the first element of the definition of a 
"technical regulation": 
"A 'technical regulation' must, of course, be applicable to an identifiable  product, or 
group of products. Otherwise, enforcement of  the regulation will, in practical terms, 
be impossible. This consideration also under lies the formal obligation, in Article 2.9.2 
of the TBT Agreement , for Members to notify other Members, through the WTO 
Secretariat, of 'the products to be covered'  by a proposed 'technical regulation'. 
(emphasis added) Clearly, compliance with this obligation requires identification of 
the product coverage of a technical regulation.  However, in contrast to what the Panel 
suggested, this does not mean that a 't echnical regulation' must apply to ' given ' 
products which are actually named, identified  or specified  in the regulation. (emphasis 
                                                      
101 Appellate Body Report, EC – Asbestos , paras. 59-77;  Appellate Body Report, EC – Sardines , 
paras. 171-195.  See also Panel Report, EC – Trademarks and Geographical Indications  (Australia) , 
paras. 7.426-7.459; Panel Report, EC – Trademarks and Geographical Indications (US) , paras. 492-515. 
102 Appellate Body Report, EC – Sardines , para. 176 (emphasis original, footnote omitted), citing 
Appellate Body Report, EC – Asbestos , paras. 66-70.  WT/DS406/R 
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 added) Although the TBT Agreement  clearly applies to 'products' generally, nothing in 
the text of that Agreement suggests that those products need be named or otherwise 
expressly  identified in a 'technical regulation' . Moreover, there may be perfectly 
sound administrative reasons for formulating a 'technical regulation' in a way that 
does not expressly identify products by name, but simply makes them identifiable – 
for instance, through the 'characteristic ' that is the subject of regulation."103  
7.27 We observe that the measure at issue in this  case, Section 907(a)(1)(A), explicitly identifies 
the products it covers: cigarettes and any of their co mponent parts.  In our view, the products covered 
by Section 907(a)(1)(A) are not merely "identifiable", as was apparently the case in EC – Asbestos.   
Rather, they are "expressly  identified".  In this respect, we not e that Section 907 is entitled "Tobacco 
Product Standards", and Section 907(a)(1)(A) is entitle d "Special Rule for Cigarettes".  We further 
note that Section 907(a)(1)(A) provides in relevant pa rt that "a cigarette or any of its component parts 
(including the tobacco, filter, or paper)" shall not  contain any characterizing flavour other than 
tobacco or menthol.  In addition, the FDA Guidance104 explains, under the heading "What products 
are covered", that Section 907(a)(1)(A) "applies to a ll tobacco products that meet the definition of a 
cigarette" set forth in Section 900(3) of the FFDCA.105 
7.28 We therefore find that Section 907(a)(1)(A) a pplies to an "identifiable product or group of 
products" and it thus meets the first element of the definition of a "technical regulation".   
(ii) Second element: Whether Section 907(a)(1)(A) lays down one or more "product 
characteristics"  
7.29 In EC – Asbestos , the Appellate Body stated that "[t]he heart of the definition of a 'technical 
regulation' is that a 'document' must 'lay down'  – that is, set forth, stipulate or provide – 
'product  characteristics '".106  The Appellate Body explained that th e term "product characteristics" in 
Annex 1.1 of the TBT Agreement  should be interpreted in accordance with its ordinary meaning: 
"... The word 'characteristic' has a num ber of synonyms that are helpful in 
understanding the ordinary meaning of that word, in this context.  Thus, the 
'characteristics' of a product include, in our  view, any objectively definable 'features', 
'qualities', 'attributes', or other 'disti nguishing mark' of a product.  Such 
'characteristics' might relate, inter alia , to a product's composition, size, shape, 
colour, texture, hardness, tensile strengt h, flammability, conduc tivity, density, or 
viscosity.  In the definition of a 'technical regulation' in Annex 1.1, the  TBT Agreement  itself gives certain examples of 'product characteristics' – 
'terminology, symbols, packaging, marking or labelling requirements'.  These 
examples indicate that 'product characteristics' include, not only features and qualities intrinsic to the product itself, but also rela ted 'characteristics', such as the means of 
identification, the presentation and the appearance of a product.  ..."
 107 
                                                      
103 Appellate Body Report, EC – Asbestos , para. 70.  In EC – Asbestos , the Appellate Body concluded 
that the measure at issue in that case was applicable to an identifiable product or group of products.  Appellate 
Body Report, EC – Asbestos , para. 74. 
104 See paras.  2.8-2.11 above. 
105 FDA Guidance, answer to question No. 2 (Exhibit IND-41). 
106 Appellate Body Report, EC – Asbestos , para. 67 (emphasis original). 
107 Appellate Body Report, EC – Asbestos , para. 67.  In EC – Asbestos , the Appellate Body concluded 
that the measure at issue laid down one or more "product characteristics".  Appellate Body Report, EC – 
Asbestos , para. 74. WT/DS406/R 
Page 30 
 
 
 7.30 In EC – Sardines , the Appellate Body recalled the above- quoted passage, and emphasized that  
product characteristics include not only "features a nd qualities intrinsic to the product", but also those 
that are related to it, such as means of identification.108  
7.31 Section 907(a)(1)(A) lays down "product characteristics".  Indeed, a measure that prohibits 
cigarettes from containing certain constituents or additives with a "characterizing flavour" is by 
definition a measure that lays down one or more  "product characteristics".  Among other things, the 
flavour of a cigarette is not only a "feature" (and probably also a "quality" and "attribute") of that 
product, but a feature that is "intrinsic to the product itself".  Section 907(a)(1)(A) also clearly "relate[s] ... to a product's composition", as it states that no cigarette may contain, as a constituent or 
additive, any artificial or natural flavour that is  a characterizing flavour (other than tobacco or 
menthol).  In other words, the "composition" of a cigarette cannot be such as to give rise to a characterizing flavour (other than tobacco or menthol).   
7.32 In our view, the fact that Section 907(a)(1)(A) lays down product characteristics in the 
negative form ("a cigarette ... shall not c ontain") does not alter the conclusion that 
Section 907(a)(1)(A) lays down product characteristics.   We find support for our conclusion in the 
fact that the measures at issue in EC – Asbestos  and EC – Sardines  both laid down product 
characteristics in negative form, and both were found to be "technical regulations" within the meaning 
of Annex 1.1 of the TBT Agreement .   
7.33 We recall that, in EC – Asbestos , the Appellate Body found that the measure at issue was 
"formulated negatively  – products containing asbestos are prohib ited", and that "in effect, the measure 
provides that  all  products must  not  contain asbestos fibres".
109  The Appellate Body explained that: 
"Product characteristics' may, in our view, be prescribed or imposed with respect to 
products in either a positive or a negative form.  That is, the document may provide, 
positively, that products must possess  certain 'characteristic s', or the document may 
require, negatively, that products  must not possess  certain 'characteristics'."110   
7.34 We also recall that the panel in EC – Sardines found that by requiring the use of only the 
species  Sardina pilchardus  as preserved sardines, the measure at issue "in effect lays down product 
characteristics in a negative form".111  The panel in EC – Sardines  considered that a technical 
regulation within the meaning of Annex 1.1 of the TBT Agreement  "may prescribe or impose product 
characteristics in either a positive or negative form". 
7.35 In our view, the fact that Section 907(a)(1)(A) does not expressly define what constitutes a 
"characterizing flavour" does not alter the conclusion that the measure regulates product 
characteristics.112  In the passage from EC – Asbestos  quoted above, the Appellate Body indicated that 
the "characteristics" of a product include "any objectiv ely definable" features, qualities, attributes, or 
                                                      
108 Appellate Body Report, EC – Sardines , para. 189, quoting Appellate Body Report, EC – Asbestos , 
para. 67.  In EC – Sardines , the Appellate Body agreed with the panel's conclusion that the measure at issue laid 
down one or more "product charact eristics".  Appellate Body Report, EC – Sardines , para. 193. 
109 Appellate Body Report, EC – Asbestos , para. 72 (emphasis original).    
110 Appellate Body Report, EC – Asbestos , para. 69 (emphasis original).  Panel Report, EC – Sardines , 
para. 7.44.  
111 Panel Report, EC – Sardines , para. 7.45, quoted at paragraph 179 of the Appellate Body Report in 
EC – Sardines.  
112 In the context of its claim under Article 2.8 of the TBT Agreement , Indonesia states that: "... the 
Special Rule imposes a ban on cigarettes with a 'characterizing flavor'. However, the Act provides no definition 
of 'characterizing flavor' for purp oses of the Special Rule. Moreover,  the FDA has not provided further 
specification on what constitutes a 'characterizing flavor' in  either its guidance on the Special Rule or in the 
public notice announcing its enforcement of the Special Ru le."  Indonesia's first written submission, para. 135.  WT/DS406/R 
 Page 31 
 
 
 other distinguishing mark of a product.  The absence of any express definition of "characterizing 
flavour" in the measure does not mean that the characteristic at issue is not "objectively definable ".   
In addition, while Section 907(a)(1)(A) does not de fine the terms "characterizing flavour", it does 
provide a number of illustrative examples of charact erizing flavours that are prohibited – including 
strawberry,  grape, orange, clove, cinnamon, pinea pple, vanilla, coconut, licorice, cocoa, chocolate, 
cherry or coffee.   
7.36 We therefore find that Section 907(a)(1)(A) la ys down one or more "product characteristics" 
and it thus meets the second element of the definition of a "technical regulation".    
(iii) Third element:  Whether compliance with the product characteristics is mandatory 
7.37 The third element of the definition of a "technical  regulation" is that the measure lays down 
product characteristics with whic h compliance is "mandatory".113  In EC – Asbestos , the Appellate 
Body made the following observations about th e requirement that a document lay down product 
characteristics with which compliance is "mandatory": 
"The definition of a 'technical regulation' in Annex 1.1 of the  TBT Agreement   also 
states that ' compliance  ' with the 'product characteristic s' laid down in the 'document' 
must be ' mandatory  '.  A 'technical regulation' must, in other words, regulate the 
'characteristics' of products in a binding or compulsory fashion ..."114 
7.38 In EC – Sardines , both the panel and the Appellate Body concluded that the measure at issue 
set forth product characteristics that were "mandatory ".  The conclusion was based on the fact that the 
measure at issue stated that the requirements cont ained therein were "binding in its entirety and 
directly applicable in all Member States".115  In this regard, the panel in EC – Trademarks and 
Geographical Indications (Australia)  noted that the word "manda tory" means "obligatory in 
consequence of a command, compulsory".116   
7.39 We are of the view that Section 907(a)(1)(A ) lays down product characteristics with which 
compliance is "mandatory".  The mandatory nature of Section 907(a)(1)(A) is apparent to us from the 
language of that provision, which provides that a ci garette or any component part "shall not" contain 
as a constituent or additive, any artificial or natural fl avour (other than tobacco or menthol) or an herb 
or spice that is a characterizing flavour.  In addition, the effect of the law is "to prohibit the manufacture and sale" of cigarettes w ith certain characterizing flavours.
117  The FDA Guidance 
explains how "this ban [will] be enforced".118  There also are specific provisions contained in the 
                                                      
113 The TBT Agreement  distinguishes "technical regulations" from "standards".  The essential 
distinction between the two types of measures is that th e former is mandatory, whereas the latter is voluntary.  
Annex 1.1 of the TBT Agreement , already quoted above, provides the definition of a "technical regulation".  It 
provides in relevant part that a technical regulation is  a document that lays down product characteristics "with 
which compliance is mandatory".  Annex 1.2 of the TBT Agreement defines the term "standard".  The definition 
provides in relevant part that a "standard" is a "[d]ocum ent ... that provides, for common and repeated use, rules, 
guidelines or characteristics for products or related processes and production methods, with which compliance is 
not mandatory".  The Explanatory note  in Annex 1.2 reiterates that "[f]or the purpose of this Agreement 
standards are defined as voluntary and tech nical regulations as mandatory documents". 
114 Appellate Body Report, EC – Asbestos , para. 68 (emphasis original).  In EC – Asbestos , the 
Appellate Body found that the measure at issue in that case laid down product characteristics with which 
compliance was "mandatory".  Appellate Body Report, EC – Asbestos , para. 74. 
115 Panel Report, EC – Sardines , para. 7.30; Appellate Body Report, EC – Sardines , para. 194. 
116 Panel Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.453. 
117 See e.g. H.R. Rep. No. 111-58, Pt. 1 (2009) (Exhibit IND-2) p. 37. 
118 FDA, Guidance for Industry and FDA Staff, General Questions and Answers on the Ban of 
Cigarettes that Contain Characterizing Flavors (2d ed., 23 December 2009), 74 Fed. Reg. 48,974 (25 September 
2009) (Exhibit IND-41) p. 4 ("As of September 22, 2009, cigarettes and their component parts that contain WT/DS406/R 
Page 32 
 
 
 Tobacco Control Act  to address non-compliance with Section 907(a)(1)(A); inter alia,  (i) products 
that fail to comply with Section 907(a)(1)(A) are deemed "adulterated" under Section 902(5) of the 
FFDCA;  (ii) under the FFDCA, adulte rated products sold or held for sale in the United States may be 
subject to seizure under Section 304 of the FFDCA ; (iii) under Sections 301, 302, and 303 of the 
FFDCA, the FDA has the authority to initiate, amo ng other actions, injunctio n actions and criminal 
prosecution to address violations of Section 9 07(a)(1)(A) and other provisions of the FFDCA.119   
7.40 We therefore find that Section 907(a)(1)(A) la ys down product characteristics with which 
compliance is "mandatory" and it thus meets the third element of the definition of a "technical 
regulation".    
(d) Conclusion  
7.41 For these reasons, the Panel finds that Section 907(a)(1)(A) is a "technical regulation" within 
the meaning of Annex 1.1 of the TBT Agreement .  The Panel will now turn to examine Indonesia's 
claims under Articles 2.1, 2.2, 2.5, 2.8, 2.9, 2.10, 2.12, and 12.3 of the TBT Agreement .   
D. WHETHER SECTION  907( A)(1)(A)  IS INCONSISTENT WITH ARTICLE  2.1 OF THE 
TBT A GREEMENT  
1. Arguments of the parties 
7.42 Indonesia claims that  Section 907(a)(1)(A) is inconsiste nt with Article 2.1 of the 
TBT Agreement "because the measure results in treatment th at is 'less favourable' to imported clove 
cigarettes than that accorded to a like domestic product, menthol cigarettes".120  In its first submission, 
though, Indonesia submits that Section 907(a)(1)(A ), "both on its face and as applied", violates 
Article 2.1 because it accords 'less favorable' treatment to imports of clove cigarettes than it accords to 
a like domestic product – that is, regular and menthol cigarettes."121  Indonesia argues that clove 
cigarettes are "like" "all other domestically produced cigarettes, generally, and menthol cigarettes, in 
particular"122, because they share the same physical properties, end-uses, consumer preferences and 
tariff classification.  In response to a question fro m the Panel, Indonesia clarified that it requests the 
Panel first to conduct a like product analysis of clove cigarettes vis-à-vis  menthol and tobacco-
flavoured cigarettes produced in the United States.  In the event that the Panel decides to limit the 
likeness analysis to cigarettes with a particular "characterizing flavour", Indonesia argues, clove 
cigarettes are "like" domestic menthol cigarettes.123   
7.43 Indonesia argues that, in the context of Article 2.1 of the TBT Agreement , a determination of 
likeness is fundamentally a determination about the nature and extent of a competitive relationship 
among products, as established by jurisprudence on  Article III:4 of the GATT 1994.  Indonesia's 
reasoning is based on the fact that the GATT 1994 and the TBT Agreement  are each context for the 
interpretation of the other.124  At the same time, Indonesia suggests that "a case-by-case analysis of 
                                                                                                                                                                     
characterizing flavors (o ther than tobacco or menthol) or an herb or spice are illegal.  FDA has a range of 
enforcement and regulatory tools to address violations of the ban by, among others, manufacturers, importers, 
distributors, and retailers.  Before taking enforcement ac tion, it is the agency's general practice to issue Warning 
Letters to firms to notify them that their products are in violation of the law and to give them the opportunity to 
come into compliance.  As always, when circumstances are appropriate, FDA may take enforcement action to 
protect the public health without first issuing a Warning Letter.") 
119 See the parties' responses to Panel question Nos. 10 and 24.  
120 Indonesia's Panel Request, WT/DS406/2, p. 2. 
121 Indonesia's first written submission, para. 43. 
122 Indonesia's first written submission, para. 65. 
123 Indonesia's first written submission, para. 65;  Indonesia's response to Panel question No. 27. 
124 Indonesia's response to Panel question No. 26.  WT/DS406/R 
 Page 33 
 
 
 likeness in the context of a different measure reasona bly could conclude that all cigarettes are not like 
for the purpose of that particular measure ".125    
7.44 As regards the Border Tax Adjustments  criteria126, Indonesia first submits that clove cigarettes 
and domestically-produced cigarettes, including menthol cigarettes, have the same physical 
characteristics.127  According to Indonesia, both types of cigarettes contain cured and blended tobacco 
in a paper wrapper with a filter and are consider ed "class A" cigarettes for U.S. tax purposes.  
Indonesia further adds that clove and menthol cigarettes share more properties because they contain 
tobacco and an added ingredient (i.e., herb or spice).  Finally, Indonesia argues that there is no 
evidence that clove cigarettes are more toxic or pos e greater health risks than domestically-produced 
regular or menthol cigarettes and, thus, there is no difference in their physical characteristics.128  In 
fact, Indonesia argues that in the present dispute, "the relative toxicity of clove and domestic cigarettes is not an issue".
129   
7.45 Furthermore, Indonesia clarifies that the so-called "candy flavour" cigarettes (e.g., chocolate, 
strawberry) may not be "like" regular, menthol or clove cigarettes, because they may pose greater health risks as they encourage youth to start smoking.
130  Indonesia has indicated that it "is not asking 
the Panel to include candy-flavoured cigarettes in its like product analysis".131  
7.46 Second, Indonesia submits that clove cigarett es have the same end-uses as domestically 
produced cigarettes, especially menthol cigarettes,  because they are all used to smoke tobacco.132  
Indonesia disagrees with the United States that cigarettes have two other end-uses: (i) satisfying the 
addiction to nicotine; and (ii) creating a pleasu rable experience associated with the taste of the 
cigarette and aroma of the smoke.  On the contrary , argues Indonesia, the delivery of nicotine is a 
consequence of smoking tobacco, a nd "providing a pleasurable experience"  does not qualify as an 
end-use, but is rather a consumer behaviour.133 
7.47 Third, with respect to "consumer preferen ces", Indonesia argues that most consumers 
perceive regular, menthol and clove ciga rettes as alternative means of smoking.134  Indonesia also 
points out that smokers most frequently choose regul ar or menthol cigarettes and use clove cigarettes 
as a "special occasion" cigarette.135  In its second written submission, "Indonesia disputes that clove 
cigarettes are used only as an occasional cigarette"136, as certain adults ha ve reported smoking them 
more than other cigarettes.  In essence, Indonesia contends that smokers are willing to substitute 
clove, menthol and tobacco cigarettes to achieve the same end-use of smoking.137  In fact, "[t]he 
relative proportion of time that consumers use clove  versus menthol or regular cigarettes does not 
have to be equal".138   
                                                      
125 Indonesia's response to Panel question No. 47 (emphasis added). 
126 This is explained in Sec tion VII.D.2(c)(ii) below. 
127 Indonesia's first written submission, para. 54. 
128 Indonesia's first written submission, paras. 55 , 57;  Indonesia's responses to Panel question 
Nos. 36-40; Indonesia's second written submission, paras. 70-74. 
129 Indonesia's second written submission, para. 71. 
130 Indonesia's first written submission, para. 63. 
131 Indonesia's response to Panel question No. 27, para. 71. 
132 Indonesia's first written submission, para. 59. 
133 Indonesia's second written submission, paras. 78-80. 
134 Indonesia's first written submission, para. 60. 
135 Indonesia's first written submission, para. 60. 
136 Indonesia's second written submission, para. 82. 
137 Indonesia's second written submission, para. 82. 
138 Indonesia's response to Panel question No. 42. WT/DS406/R 
Page 34 
 
 
 7.48 For Indonesia, all cigarettes are in a compe titive relationship with one another for access to 
channels of distribution, shelf space, and market share.139  Indonesia clarifies that the Panel should 
confine its evaluation of consumers' tastes and habits to U.S. consumers.140  Indonesia further clarifies 
that the relevant consumers for the likeness anal ysis are smokers, with no analysis by age group.141  In 
case the Panel decides to proceed w ith an analysis by age group, Indonesia contends that the proper 
groups should be "youth" (under 18) and "adults" (18 and over).142  Indonesia also contends that the 
"pre-smoking" youth population should not be in cluded among the relevant consumers for the 
likeness analysis.143  As regards the smoking preferences of youth, Indonesia c oncludes that clove 
cigarettes are not "overwhelmingly" used by youn g smokers, as menthol cigarettes are much more 
popular with youth.144  For Indonesia, the relevant evidence demonstrates that clove cigarettes do not 
appeal to youth.145  
7.49 Finally, Indonesia submits that clove cigarettes and domestically-produced cigarettes have the 
same international tariff classification at the 6-digit level.146  The tariff classification of cigarettes 
containing tobacco, which covers both clove ciga rettes and U.S. cigarettes, is HS07 24.02.20.  
Moreover, the United States' 8-digit level tariff classi fication is irrelevant for the present dispute, as 
comparisons among countries are done only at the 6-digit level.147  
7.50 Regarding the "less favourable treatment" elem ent, Indonesia argues that the treatment 
accorded to imported clove cigarettes is less favour able than that accorded to domestically-produced 
cigarettes.148  Indonesia submits that a ban on clove cigarettes, which are mainly imported from 
Indonesia, but not on regular or menthol cigarettes, which are mainly locally produced, creates unequal conditions of competition in the U.S. market.
149  Indonesia clarifies that, although facially 
neutral, Section 907(a)(1)(A) results in de facto  discrimination against imported products.150  
Additionally, Indonesia argues that a violation can  be established "by showing that there are some 
imported products that are treated less favourably  than the most favourably treated domestic like 
product".151  
7.51 According to Indonesia, while menthol- and tob acco-flavoured cigarettes are mainly produced 
in the United States, clove cigarettes were mainly imported from Indonesia.  Thus, Indonesia explains 
that "the treatment accorded to all cigarettes im ported from all countries is irrelevant to this 
dispute".152   
7.52 Indonesia notes that it has not argued that if a single imported product is restricted by a 
measure and a single domestic product is not, less fa vourable treatment may be identified.  According 
to Indonesia, in the case at hand almost all the clove  cigarettes subject to the ban were imported, while 
                                                      
139 Indonesia's first written submission, para. 60. 
140 Indonesia's response to Panel question No. 44. 
141 Indonesia's response to Panel question No. 92, para. 22. 
142 Indonesia's response to Panel question No. 92, para. 23. 
143 Indonesia's response to Panel question No. 92, para. 24. 
144 Indonesia's second written submission, paras. 84-85;   Indonesia's response to Panel question No. 43. 
145 Indonesia's response to Panel question No. 85, para. 20. 
146 Indonesia's first written submission, para. 64. 
147 Indonesia's second written submission, para. 90;  Indonesia's response to Panel question No. 45 
(Exhibit IND-67). 
148 Indonesia's first written submission, para. 69;  Indon esia's oral statement at the second substantive 
meeting of the Panel, para. 57. 
149 Indonesia's oral statement at the second substantive meeting of the Panel, para. 58. 
150 Indonesia's second written submission, para. 94;  Indonesia's response to Panel question No. 48. 
151 Indonesia's second written submission, para. 100; I ndonesia's response to Panel question Nos. 49 
and 51. 
152 Indonesia's comments on the United States' response to Panel question No. 95, para. 42.  WT/DS406/R 
 Page 35 
 
 
 the vast majority of cigarettes not subject to th e ban were "like" cigarettes produced domestically.  
Indonesia argues that this is, in particular, the case of menthol cigarettes, given that only a negligible 
part of those cigarettes is imported in the United States.153 
7.53 Indonesia argues that the fact that Section 907(a )(1)(A) may also affect cigarettes produced in 
the United States "does not save the measure".  In fact, Indon esia contends that, as such, 
Section 907(a)(1)(A) applies almost exclusiv ely with regard to imported cigarettes.154  Indonesia also 
contends that the allegation of the United States, according to which the vast majority of cigarettes 
imported are still allowed under Sec tion 907(a)(1)(A), is not relevant.  Indonesia argues that the 
treatment of products imported from other c ountries is not an issue before the Panel.155  
7.54 Indonesia posits that, contrary to the positi on of the United States whereby Indonesia must 
demonstrate that cigarettes containing clove are subj ect to different treatment on the basis of their 
national or foreign origin, no pane l or Appellate Body report "has ever required both a 'less favorable 
treatment' test and a second 'based on national origin' test".156  Indonesia argues that, contrary to the 
position of the United States, the "less favourable treatment" analysis under Articles 2.1 of the 
TBT Agreement and III:4 of the GATT 1994 does not require a separate analysis focused on whether a 
measure is applied "so as to afford  protection to domestic production".157   
7.55 The United States  submits that Indonesia's claim under Article 2.1 of the TBT Agreement is 
based on a flawed analysis  and insufficient evidence.158  The United States contends that the national 
treatment obligation contained in Article 2.1 "[is] not intended to prevent legitimate measures, such as 
section 907(a)(1)(A), that establish neutral product standards based on public health criteria".159   
7.56 According to the United States, Section 907(a)(1 )(A) is intended to eliminate the availability 
of the types of cigarette used primarily by youth, often as a "starter cigarette."160  It further contends 
that the most credible evidence de monstrates that cigarettes with a characterizing flavour other than 
tobacco or menthol (and including clove), are ove rwhelmingly smoked by youth and are not smoked 
by adults in appreciable numbers.161  The United States does not disagree with Indonesia's general 
assertion that clove cigarettes are smoked by a sm all fraction of the population while menthol 
cigarettes are smoked in much larger  numbers.  However, in its view, the relevant point with respect 
to Section 907(a)(1)(A) is that of the small amount of the population that smokes cloves, it is especially youth to whom they appeal.
162   
7.57 The United States explains that banning clove cigarettes and other flavoured cigarettes does 
not present the same public health risk in th e United States as banning regular or menthol 
cigarettes.163  It argues that the public health effects of  removing precipitously a cigarette which tens 
of millions of people smoke regularly have not been sufficiently evaluated to justify a ban and that is 
why Section 907(a)(1)(A) does not ban regular or menthol cigarettes.164  The United States explains 
that precipitously banning tobacco and ment hol cigarettes would risk producing negative 
                                                      
153 Indonesia's oral statement at the second substantive meeting of the Panel, para. 60. 
154 Indonesia's oral statement at the second substantive meeting of the Panel, para. 61. 
155 Indonesia's oral statement at the second substantive meeting of the Panel, para. 62;  Indonesia's 
response to Panel question No. 95, para. 28. 
156 Indonesia's oral statement at the second substantive meeting of the Panel, para. 63. 
157 Indonesia's oral statement at the second substantive meeting of the Panel, para. 65. 
158 United States' first written submission, para. 144. 
159 United States' second written submission, para. 87. 
160 United States' first written submission, para. 146. 
161 United States' first written submission, para. 147. 
162 United States' first written submission, para. 149. 
163 United States' first written submission, para. 148. 
164 United States' first written submission, para. 150. WT/DS406/R 
Page 36 
 
 
 consequences for the smokers, the U.S. health care system, or society as a whole through an 
expansion of the black market for cigarettes.165   
7.58 The United States argues that Indonesian clove  cigarettes are not like U.S.-manufactured 
tobacco or menthol cigarettes as clove cigarettes are not in a competitive relationship with tobacco or 
menthol cigarettes and are not substitutable or interchangeable among re tailers or consumers.166  The 
United States submits that, even though the TBT Agreement  does not contain an equivalent to 
Article III:1 of the GATT 1994, it is still possible to  base the "likeness" analys is on the nature and 
extent of the competitive relationship between the products at issue.167  According to the 
United States, in the case at hand, like in EC – Asbestos , the dissimilarities between clove, tobacco 
and menthol cigarettes are directly related to the di verse perceptions of the product by consumers and 
the public health risk involved.168 
7.59 The United States notes that Section 907(a)(1)(A) makes distinctions among a group of 
broadly similar products – cigarettes – based on f actors relevant to the legitimate objective of 
protecting public health.  Accordingly, a "likeness"  determination, in addition to focusing on the 
competitive relationship of the products, will need caref ully to parse the significance of traits that are 
generally shared among all cigarettes and traits that are significant with respect to the public health 
provision at issue.169  The United States specifies that the pub lic health basis of Section 907(a)(1)(A) 
should be considered for the "likeness" analysis under both the GATT 1994 and the TBT Agreement , 
as there are certain "contextual principles" that inform the national treatment obligation under both 
agreements.170   
7.60 Accordingly, the Panel should accord weight to the physical characteristics of the products at 
issue and the consumer tastes and preferences that ar e relevant to the public health basis upon which 
Section 907(a)(1)(A) differentiates among products.171  In its second written submission, the 
United States argues that the relevant physical char acteristics that differentiate clove cigarettes from 
menthol and regular cigarettes are: (i) the nearly equal mixture of tobacco and clove; (ii) the "special 
sauce" contained in them; and (iii) the presence of eugenol.172   
7.61 The United States further argues that the unique taste and physical properties of menthol 
influence consumer choices.  Whereas clove ciga rette smokers enjoy the unique experience of cloves 
as a starter cigarette or "from time to time," smoke rs of menthol cigarettes tend to choose menthols as 
their daily cigarette.173  Additionally, with respect to the toxi city and addictiveness of the cigarettes at 
issue, the United States makes two main clarificati ons.  First, in the present dispute the relative 
toxicity of cigarettes is not the basis for the publ ic health distinctions made between them, even 
though, in general terms, the toxicity of cigarettes is an aspect of their physical properties.174  Second, 
despite the fact that all cigarettes contain nicotine a nd are thus addictive, the health effects must be 
analysed on the basis of both the health effects of  an individual smoker and the overall public health 
consideration.  This last aspect focuses on the possibility that certain types of cigarettes might 
increase the use of cigarettes and tobacco products by the population as a whole.  Accordingly, the 
United States argues that clove cigarettes are diffe rent because they are used  disproportionately by 
                                                      
165 United States' first written submission, para. 22;  United States' response to Panel question No.  89. 
166 United States' first written submission, para. 154. 
167 United States' response to Panel question No. 26. 
168 United States' oral statement at the second substantive meeting of the Panel, para. 45. 
169 United States' first written submission, para. 159. 
170 United States' second written submission, para. 111. 
171 United States' second written submission, para. 112. 
172 United States' second written submission, para. 113. 
173 United States' first written submission, para. 172. 
174 United States' response to Panel question No. 36.  WT/DS406/R 
 Page 37 
 
 
 youth and therefore, serve as "trainer cigarettes".175  The United States contends that Indonesia 
appears to agree with the United States that ciga rettes which are specifically appealing to youth 
involve a particular health risk and can be regulat ed in a more restrictive manner than tobacco and 
menthol cigarettes.176 
7.62 Contrary to Indonesia's conclusion on end-use, the United States submits that cigarettes have 
a number of end-uses and are not just used to "smoke  tobacco."  In its view, cigarettes have at least 
two other end-uses in the United States, which clove, menthol and tobacco cigarettes serve in 
differing degrees:177 (i) the end-use of satisfying an addiction to nicotine178, and (ii) the end-use of 
creating a pleasurable experience associated with the taste of the cigarette and the aroma of the 
smoke.179  The United States further submits that the fi rst end-use – delivering nicotine to the body – 
is not the most relevant one, because if that we re the case, all cigars, pipes and cigarettes would be 
like products.180 
7.63 Regarding the criterion of consumer tastes and habits, the United States argues that Indonesia 
presented no evidence to demonstrate that clove ciga rettes seek to compete with tobacco or menthol 
cigarettes, or that consumers view them as substitutable.181  The United States clarifies that the 
relevant consumers are all the "potential and current smokers in the United States".  The United States 
contends that the potential consumers are young peop le within the age of initiation and that such 
persons, more likely than adults, find clove cigarettes appealing.182  For the United States, consumers 
clearly differentiate between the products at issue in this case:183  clove cigarettes are marketed, sold 
and used as a "special occasion" tobacco product, while tobacco and menthol cigarettes are marketed, 
sold and used as a daily, regular cigarette;  clove cigarettes are smoke d overwhelmingly by young 
people, who tend to be novice smokers, and tobacco and menthol cigarettes are used regularly by a 
large population of young people, but especially adults, who smoke them regularly.184  In fact, the 
United States submits, rather than competition among products, there is in fact an overlap and likely 
symbiosis since clove cigarettes not only attract new users to tobacco, but are used as a supplemental, 
special occasion cigarette among those who already smoke.185   
7.64 The United States accuses Indonesia of failing to prove that Indonesian clove cigarettes and 
regular or menthol cigarettes are viewed as "int erchangeable" in the market, and of presenting 
unreliable data to suggest that clove cigarettes have  a pattern of use similar to tobacco or menthol 
cigarettes, just on a smaller scale.186  In fact, in contrast to clove cigarettes, menthol cigarettes are not 
predominantly a starter cigarette for youth in the Un ited States.  According to the United States, rates 
of use of regular and menthol cigarettes among you ng people and older adults are much more even.187  
The United States further clarifies that the consumers' tastes and habits analysis should be confined to 
                                                      
175 United States' response to Panel question No. 37. 
176 United States' comments on the Indonesia's response to Panel question No. 85, paras. 9 and 12. 
177 United States' first written submission, para. 179. 
178 United States' first written submission, para. 180. 
179 United States' first written submission, para. 181. 
180 United States' response to Panel question No. 41. 
181 United States' first written submission, para. 184;  United States' oral statement at the second 
substantive meeting of the Panel, paras. 24 and 26. 
182 United States' response to Panel question No. 92, para. 42. 
183 United States' first written submission, para. 184. 
184 United States' first written submission, para. 185. 
185 United States' first written submission, para. 186. 
186 United States' first written submission, para. 189. 
187 United States' response to Panel question No. 43.  United States' response to Panel question No. 91, 
paragraph. 39. WT/DS406/R 
Page 38 
 
 
 the U.S. market, as consumers outside the United St ates are not relevant for deciding any of the 
factual or legal issues in this dispute.188 
7.65 As regards the tariff classification, the United St ates argues that "clove cigarettes are treated 
differently than all 'other' cigarettes at the 8-digit level under the U.S. GATT 1994 Schedule".189   
7.66 As regards the less favourable treatment an alysis, the United States submits that 
Section 907(a)(1)(A) on its face is "origin-neutral" an d that Indonesia does not appear to dispute this 
fact.190  According to the United States, Section 90 7(a)(1)(A) does not draw a line between imported 
and domestic products, but between products on the basi s of the patterns of use of different cigarettes 
by consumers in the United States and related public health considerations.191  For the United States, 
Indonesia has not met its burden to prove de facto discrimination.  Indonesia, it argues, asserts without 
analysis that "there is no question that a ba n on one product but not other like products creates 
unequal conditions of competition and is 'less favorable' treatment" and that "a ban on clove cigarettes 
but not menthol or tobacco cigarettes creates unequa l conditions of competition in the U.S. market 
and is, accordingly, 'less favorable' treatment."  Indonesia does not, however, demonstrate that the 
allegedly different treatment is based on  the national origin of clove cigarettes.192   
7.67 According to the United States, Indonesia is  incorrect when insinuating that the "less 
favourable treatment" analysis is simply an issue of looking at which cigarettes are banned and which ones are not banned.  The United States submits th at all relevant evidence should be examined, 
including the objective aim of the measure and whet her the alleged detrimental effects to imported 
products depend on their national origin.
193 
7.68 Moreover, the United States argues that Indo nesia is incorrect when it states that 
Section 907(a)(1)(A) accords less favourable treatment  if one Indonesian import is included among 
the prohibited characterizing flavours and one U.S.-p roduced cigarette is not.  In fact, argues the 
United States, the "best treatment" approach advocated by Indonesia is  inconsistent with the language 
of GATT Article III:4 and Article 2.1 of the TBT Agreement .  Rather, as established by the Appellate 
Body in EC – Asbestos , the relevant comparison is between the group  of "like" imported products and 
the group  of "like" domestic products.194  This is so because the Appellate Body recognized that a 
Member may draw distinctions between products dete rmined to be "like" without affording protection 
to domestic production or according less favourable treatment to imported products.195  The 
United States also refers to the findings of the Appellate Body in Dominican Republic – Import and 
Sale of Cigarettes  and of the panel in EC – Approval and Marketing of Biotech Products .  According 
to the United States, the Appellate Body and the pane l in those reports found that "where an alleged 
detrimental effect on an imported product is not attr ibutable to its foreign origin, but to some other 
factor, that effect is not evidence of less favourable treatment".196 
7.69 The United States points out that Indonesia has failed to prove that Section 907(a)(1)(A) 
accords less favourable treatment to Indonesian pr oducts because: (i) it ignores the fact that this 
                                                      
188 United States' response to Panel question No. 44. 
189 United States' second written submission, para. 116. 
190 United States' first written submission, para. 199. 
191 United States' oral statement at the second subs tantive meeting of the Panel, paras. 21 and 59. 
192 United States' first written submission, para. 202. 
193 United States' oral statement at the second substantive meeting of the Panel, para. 50. 
194 United States' second written submission, paras. 119-123. 
195 United States' first written submission, para. 204. 
196 United States' oral statement at th e second substantive meeting of the Panel, para. 50;  United States' 
response to Panel question No. 95, para. 49.  WT/DS406/R 
 Page 39 
 
 
 regulation affects U.S.-produced cigarettes and (ii)  it has not adduced any evidence to demonstrate 
that any detriment to clove cigarettes is de pendent on the foreign origin of the product.197 
2. Analysis by the Panel 
(a) Introduction 
7.70 The question before the Panel therefore is whet her Section 907(a)(1)(A) is inconsistent with 
the national treatment obligation under Article 2.1 of the TBT Agreement .  In particular, Indonesia is 
claiming that Section 907(a)(1)(A) violates Article 2. 1 because it accords less favourable treatment to 
imports of clove cigarettes than it accords to a li ke domestic product, which it defines in its Panel 
Request as menthol cigarettes.198 
7.71 As we observe in several instances throughout this Report, we face an issue of first 
impression.  Indeed, the only report that has addr essed Article 2.1 thus far is the panel report in EC – 
Trademarks and Geographical Indications (Australia) , which briefly examined this provision .199  
7.72 We shall commence by examining the legal provision  at issue to ascertain the applicable legal 
test. 
(b) The legal provision at issue 
7.73 Article 2.1 of the TBT Agreement  provides that: 
"Members shall ensure that in respect of  technical regulations, products imported 
from the territory of any Member shall be  accorded treatment no less favourable than 
that accorded to like products of national or igin and to like pro ducts originating in 
any other country."   
7.74 Hence, Article 2.1 of the TBT Agreement  requires WTO Members to provide imported 
products with "treatment no less favourable than that  accorded to like products of national origin".  
We note that Article 2.1 also includes an MFN obligation, but in this dispute there is no claim in respect of this element of Article 2.1. 
7.75 We recall that in Korea – Various Measures on Beef , when interpreting Article III:4 of the 
GATT 1994
200, the Appellate Body established a three-tier test for a finding of violation under that 
provision: 
                                                      
197 United States' second written submission, para. 130. 
198 In its subsequent submissions to the Panel, Indonesia asks the Panel to find that clove cigarettes are 
like both menthol and regular cigarettes.  We examine the issue of which products to compare for the purpose of 
the likeness and less favourable treatment te sts in paragraphs 7.124-7.148 below.   
199 Panel Report, EC – Trademarks and Geographical Indications (Australia) , paras. 7.464-7.476.  The 
Panel is aware that there are other on-going panel pr oceedings in which claims under Article 2.1 of the 
TBT Agreement have been raised. See US — Tuna II (Mexico) , WT/DS381/4; US – COOL (Canada) , 
WT/DS384/8 and US — COOL (Mexico) , WT/DS386/7.  However, at the time of the issuance of the interim 
report in this dispute, the panel reports in these other cases had not yet been circulated. 
200 Article III:4 of the GATT 1994 reads: 
"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 la ws, regulations and requirements affecting their 
internal sale, offering for sale, purchase, transportation, distribution or use. The provisions of 
this paragraph shall not prevent the application of differential internal transportation charges WT/DS406/R 
Page 40 
 
 
 "For a violation of Article III:4 to be estab lished, three elements must be satisfied: 
that the imported and domestic products at issue are 'like products', that the measure 
at issue is a 'law, regulation or requirement  affecting the internal sale, offering for 
sale, purchase, transportation, distribution, or  use'; and that the imported products are 
accorded 'less favourable' treatment th an accorded to like domestic products."201  
7.76 The language of Article 2.1 of the TBT Agreement  is very similar to that of Article III:4 of the 
GATT 1994,  the difference being that under the former, th e national treatment obligation is restricted 
to a particular type of measure, i.e., technical  regulations, while Article III:4 of the GATT 1994 
encompasses a larger group of measures, i.e., "laws, regulations and requirements affecting their 
internal sale, offering for sale, purchase, transportation, distribution or use". 
7.77 The panel in EC – Trademarks and Geographical Indications (Australia)  followed a similar 
approach to that of the Appellate Body wit hout referring to the existing jurisprudence under 
Article III:4 of the GATT 1994.  The panel reasoned as follows: 
"The Panel considers that the essential elemen ts of an inconsistency with Article 2.1 
of the TBT Agreement are, as a minimum, th at the measure at issue is a 'technical 
regulation'; that the imported and domestic pr oducts at issue are 'like products' within 
the meaning of that provision; and that the imported products are accorded 'less favourable' treatment than that acco rded to like domestic products."
202 
7.78 We also note that both parties appear to foll ow this line of analysis as regards the main 
elements of a violation under Article 2.1 of the TBT Agreement .203   
7.79 With respect to the second element in the analysis , we recall that we have already found that 
Section 907(a)(1)(A) is a technical regulation within the meaning of Annex 1.1 of the 
TBT Agreement .204  We shall thus proceed to examine the two remaining elements of the test in turn.   
                                                                                                                                                                     
which are based exclusively on the economic operation of the means of transport and not on 
the nationality of the product." 
201 Appellate Body Report, Korea – Various Measures on Beef , para. 133. 
202 Panel Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.444.  A possible 
reading of the panel's use of the words "as a minimum" to qualify the "essential elements of an inconsistency 
with Article 2.1" coul d be that there are more essential elements than those present in the three-tier test.  
Another possible reading is that the panel was saying "at le ast this much is clear", without suggesting more.  We 
do not find in the text of Article 2.1 of the TBT Agreement  justification for the first approach and the panel did 
not explain what it meant by its words.  Under the circum stances, we prefer to analys e the issue before us along 
the lines of the second approach.   
203 Indonesia refers to the above three-tier test for a finding of violation under Article III:4 of the 
GATT 1994 in Korea – Various Measures on Beef  and adapts it to Article 2.1 of the TBT Agreement  
(Indonesia's first written submission, para. 42).  In its  second written submission, Indonesia specifies that the 
elements for establishing a violation are the same for Arti cles III:4 and 2.1, "except that Article III:4 does not 
require that a measure be a technical regulation, but instead 'a law, regulation, or requirement affecting the 
internal sale, offering for sale, purc hase, transportation, distribution, or use of the imported and domestic like 
products'." (Indonesia's second written submission, para. 59).   The United States follows the same test in its first 
written submission in respect of Article III:4 of the GATT 1994 without examining the type of measure at issue.  
Having done so, the United States briefly examines Article 2.1 of the TBT Agreement , indicating that it is 
Indonesia's burden to prove that Sec tion 907(a)(1)(A) is a technical regula tion and pointing out the relevance of 
the words "in respect of", which qualify "technical regula tions", in the interpretation of both likeness and less 
favourable treatment.  In its second written submission, the United States presents the arguments on Articles 2.1 
of the TBT Agreement  and III:4 of the GATT 1994 together, with the caveat that an interpreter must give due 
consideration to the particular context and requirements of each claim, "as they info rm and mutually reinforce 
the other." (United States' second written submission, para. 101).  WT/DS406/R 
 Page 41 
 
 
 (c) Whether imported clove cigarettes and the domestic cigarettes at issue are "like products" 
within the meaning of Article 2.1 of the TBT Agreement  
(i) Interpreting likeness under Article 2.1 of the TBT Agreement 
7.80 As indicated above, at the time of writing th is Report, examining the concept of likeness 
under Article 2.1 of the TBT Agreement  remains an issue of first impression, as the only report that 
has addressed this provision un til now,-- the panel report in EC – Trademarks and Geographical 
Indications (Australia)  -- did not enter into an analysis of likeness given its findings that the 
complainant had not made a prima facie case of "less favourable treatment" .205 
7.81 The Panel is therefore tasked with interpreti ng for the first time the concept of likeness under 
Article 2.1 of the TBT Agreement .  There seem to be two alternativ e approaches to interpreting this 
provision: on the hand, it could be argued that th e jurisprudence under Article III:4 of the GATT 1994 
is directly transposable to Article 2.1 of the TBT Agreement , based on the similarity of their respective 
language;  on the other hand, it could be argued that the concept of likeness must be interpreted in the 
context of the TBT Agreement  without directly transposing the jurisprudence on Article III:4 of the 
GATT 1994. 
7.82 We sought the parties' views on this and they s uggested that, in order to interpret Article 2.1 
of the TBT Agreement , we should take into account both the ju risprudence under Article III:4 of the 
GATT 1994 and the context of the TBT Agreement .  The United States, in particular, asks the Panel to 
take into account the "public health objectives" of Section 907(a)(1)(A) when interpreting likeness 
under Article 2.1 of the TBT Agreement .  We note, however, that in their submissions, the parties rely 
heavily on the jurisprudence under Article III:4 of th e GATT 1994.  We also note that parties suggest 
that we incorporate the traditional liken ess criteria of the GATT Working Party on Border Tax 
Adjustments.206 
7.83 The central interpretative issue for us in this regard is whether a determination of "likeness" 
under Article 2.1 of the TBT Agreement  is fundamentally about the natu re and extent of a competitive 
relationship between the products bei ng compared, as is the case with a determination of "likeness" in 
the context of Article III:4 of the GATT 1994.  This  issue has important consequences in this case.  
Accordingly, we shall set out the arguments of the parties, followed by our own reasoning on this 
issue, in detail. 
Parties' arguments on the interpretation of "like products" in the context of Article 2.1 of the 
TBT Agreement  
7.84 The parties' position on the interpretation of this provision has evolved during the 
proceedings. It is thus worth explaining the parcours  followed by each party in this respect. 
7.85 We recall that Indonesia put forward in its Panel Request  national treatment claims under 
both Article 2.1 of the TBT Agreement  and Article III:4 of the GATT 1994.  In its first written 
submission, Indonesia appears to adjust its approach  and declares that its claim under Article III:4 of 
the GATT 1994 is an alternative claim to that under Article 2.1 of the TBT Agreement.  Accordingly, 
Indonesia first addresses the claim under Article 2.1 of the TBT Agreement , being the provision more 
                                                                                                                                                                     
204 See Section VII.C.2(d) above.  
205 Panel Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.475. 
206 Indonesia's first written submission, paras. 48-5 2, referring to the Appellate Body Report in EC – 
Asbestos  (para. 103), the panel report in Dominican Republic – Import and Sale of Cigarettes  (para. 7.165) and 
the GATT panel report in Thailand – Cigarettes (para. 42);  Indonesia's second written submission, 
paras. 87-91;  United States' first written submission, para. 157, referring to the Appellate Body Report in EC – 
Asbestos  (paras. 99, 101);  United States' response to Panel question No. 26. WT/DS406/R 
Page 42 
 
 
 specific to the dispute.  However, after explaining that the obligation to accord national treatment has 
been addressed by various WTO panels and the A ppellate Body on a number of occasions in the 
context of Article III:4 of the GATT 1994207, Indonesia bases its argumentation under Article 2.1 of 
the TBT Agreement  almost exclusively on Article III:4 jurisprudence.208  
7.86 In response to a question from the Panel209, Indonesia contends that, although it is possible to 
address the claims under Articles 2.1 of the TBT Agreement  and III:4 of the GATT 1994 together, the 
Panel should be cautious if it chooses that appr oach because "these claims/provisions are not 
identical".210  For example, it explains that claims under Article III:4 of the GATT 1994 need not 
establish that the measure at issue is a technical regulation.211  However, Indonesia submits that the 
analysis of "likeness" under Article 2.1 of the TBT Agreement  is a determination about the nature and 
extent of a competitive relationship betw een and among products, as established by the 
Appellate Body in EC – Asbestos  in respect of Article III:4.  Also responding to a question from the 
Panel212, Indonesia submits that, although Article 2.1 of the TBT Agreement  does not contain a 
specific reference to a "general pr inciple" similar to the one found in Article III:1 of the GATT 1994, 
"the GATT 1994 and the TBT Agreement  are each context for the interpretation of the other".  
Accordingly, "Indonesia believes the Panel should consider the competitive relationship between the 
products at issue as relevant in its lik eness analysis under Article 2.1 of the TBT Agreement ".213  Thus 
while seemingly endorsing the idea that what ma tters is a "competitive relationship" between the 
products at issue, Indonesia at the same times sugg ests that "a case-by-case anal ysis of likeness in the 
context of a different measure re asonably could conclude that all cigarettes are not like for the 
purpose of that particular measure".214   
7.87 In its second written submission, Indonesia points out that "[t]he United States agrees with 
Indonesia that TBT Article 2.1 should be in terpreted similarly to GATT Article III:4".215  
Nevertheless, Indonesia stresses that "these are tw o separate claims grounded in separate agreements 
and separate treaty obligations, and giving rise to separate rights".216  Specifically, Indonesia argues 
that the elements for establishing a breach of these provisions are the same, except that Article III:4 
                                                      
207 Indonesia's first written submission, para. 42. 
208 Indonesia's first written submission, paras. 48-69. 
209 Panel question No. 21(b) reads:  
"Indonesia has made claims under Articles 2.1, 2.2, 2.5, 2.8, 2.9, 2.10, 2.12, and 12.3 of the 
TBT Agreement .  Indonesia has also made a claim under Article III:4 of the GATT 1994, and 
the United States has invoked Article XX(b) of the GATT 1994:  
  ... 
(b) Can one or more of these claims/provisions be addressed together, e.g. Article 2.1 
of the TBT Agreement  / Article III:4 of the GATT 1994?" 
210 Indonesia's response to Panel question No. 21(b). 
211 Indonesia's response to Panel question No. 21(b). 
212 Panel question No. 26 reads:  
"The Appellate Body has explained that 'a determination of 'likeness' under Article III:4 is, 
fundamentally, a determination about the nature and extent of a competitive relationship 
between and among products'.   
(a) Is the same true of a determination of 'likeness' under Article 2.1 of the 
TBT Agreement ? 
(b) If yes , must the Panel consider the competitive relationship between the products 
at issue as relevant in its likeness analysis under Article 2.1 of the TBT Agreement  in 
the absence of a reference to a similar general principle as imbedded in Article III:1 
of the GATT 1994?"   
213 Indonesia's response to Panel question No. 26(b). 
214 Indonesia's response to Panel question No. 47. 
215 Indonesia's second written submission, para. 58. 
216 Indonesia's second written submission, para. 58;  Indonesia's oral statement at the second 
substantive meeting of the Panel, paras. 12 and 14.  WT/DS406/R 
 Page 43 
 
 
 "does not require that a measure be a technical regulation, but instead 'a law, regulation or 
requirement affecting the internal sale, offering fo r sale, purchase, transportation, distribution or use 
of the imported and domestic products'".217  According to Indonesia, as stated by many panels and the 
Appellate Body, claims under the more specific of  the two agreements should be analysed first.218 
7.88 In its first written submission, the United States  does not acknowledge that Indonesia 
indicated in its first written submission that its claim under Article III:4 of the GATT 1994 is an 
alternative claim to that under Article 2.1 of the TBT Agreement  and commences its argumentation 
with Article III:4 of the GATT 1994 "for analytic clarity".219  The United States, however, notes that 
"certain textual and contextual differences should be  taken into account in the Panel's analysis of 
'likeness' and 'less favourable treatment' under Article 2.1 of the TBT Agreement".220  In particular, 
the United States refers to thr ee specific differences between the TBT Agreement and the GATT 1994:  
first, the language in the preamble of the TBT Agreement , which establishes that "no country should 
be prevented from taking measures necessary ... for the protection of human ... life or health":221  
second, the fact that the obligation contained in Article 2.1 applies "in respect of" a technical 
regulation:222 and finally, the "like product" analysis should "distinguish between characteristics that 
make a product or group of products identifiable fo r purposes of the regulation, and characteristics 
that demonstrate a competitive relationship or substitutability in the marketplace".223 
7.89 In its oral statement at the first substantive meeting, the United States submits that "[t]he 
national treatment obligation contained in Article 2.1 of the TBT Agreement  should be interpreted 
similarly to Article III:4 of the GATT 1994".  The United States further argu es that "each Agreement 
provides context for the other, and the analyses de veloped under Article III are relevant to an 
interpretation of Article 2.1".224  However, in its oral statement, the United States also submits that in 
the context of analysing whether the products at issue in this case are "like products", a relevant factor 
in this case "is the degree to which differe nces among the regulated products directly relate to the 
public health objectives  of Section 907(a)(1)(A)".225  The United States reiterates that "those product 
differences that relate to these public health objectives  are relevant to the 'like product' analysis".226 
7.90 In response to a question from the Panel, the United States argues that, although it is possible 
for the Panel to address the national treatment cl aims together, "each claim is separate and the 
individual elements of each particular claim must be satisfied".227  It says however in response to 
another question from the Panel that a determ ination of likeness under Article 2.1 of the 
TBT Agreement  is "fundamentally a determination about the nature and extent of a competitive 
relationship between and among products".  Accordi ngly, the United States does not consider the 
absence of "an Article III:1 analog in the TBT Agreement  to be a basis for adopting a fundamentally 
different view of 'likeness' in the TBT Agreement ".228  Finally, the "likeness" analysis under both 
Agreements should be informed by the specific context of the TBT Agreement  by considering "not 
                                                      
217 Indonesia's second written submission, para. 59. 
218 Indonesia's oral statement at the second substantive meeting of the Panel, para. 12. 
219 United States' first written submission, para. 145. 
220 United States' first written submission, para. 214. 
221 United States' first written submission, para. 215. 
222 United States' first written submission, para. 216. 
223 United States' first written submission, para. 217. 
224 United States' oral statement at the first substantive meeting of the Panel, para. 58. 
225 United States' oral statement at th e first substantive meeting of the Panel, para. 24 (emphasis added).   
226 United States' oral statement at th e first substantive meeting of the Panel, para. 27 (emphasis added).   
227 United States' response to Panel question 21(b).  This was confirmed as well in its second written 
submission where the United States cont ended that that the Panel can consider together the national treatment 
claims under the GATT 1994 and the TBT Agreement , taking into account the particular context and 
requirements of each claim. United States' second written submission, para. 95. 
228 United States' response to Panel question 26. WT/DS406/R 
Page 44 
 
 
 only the nature of the competitive relationship among a nd between products but also the nature of the 
public health basis upon which the technical regulation at issue is based".229 
The Panel's approach to interpreting "like prod ucts" in the context of Article 2.1 of the 
TBT Agreement  
7.91 We must decide how we will approach the inte rpretation of the national treatment component 
of Article 2.1 of the TBT Agreement , in particular with respect to our "likeness" analysis.  We see 
several options open to us.  First, we could interpret Article 2.1 of the TBT Agreement  following 
Article III:4 of the GATT 1994 jurisprudence.  Under this approach, the jurisprudence under 
Article III:4 of the GATT 1994, which is mainly fo cussed on the nature and extent of a competitive 
relationship between the domestic a nd imported products at issue, would be directly transposable in 
its entirety to Article 2.1 of the TBT Agreement , based on the similarity of their respective language.   
7.92 Second, we could interpret Article 2.1 of the TBT Agreement  in the context of the provision 
itself and that of the TBT Agreement , without transposing any of the jurisprudence on Article III:4 of 
the GATT 1994, as this is but one of the concepts of "like products" found in the WTO Agreement.  
Under this approach, one would not focus on the co mpetition-based approach that has been developed 
in the jurisprudence on Article III:4 of the GATT 1994. 
7.93 Third, we could follow the approach suggested by  the parties, which consists of interpreting 
Article 2.1 of the TBT Agreement  taking into account both the jurisprudence under Article III:4 of the 
GATT 1994 and the context of the TBT Agreement .  We could also follow the United States' 
suggestion to take into account the "public hea lth objectives" of Section 907(a)(1)(A) when 
interpreting likeness under Article 2.1 of the TBT Agreement . 
7.94 The starting point in any interpretation of a legal provision in a treaty is, as directed by 
Article 31(1) of the Vienna Conven tion on the Law of Treaties ("VCLT")230, the ordinary meaning of 
the terms.231  Accordingly, we commence our examination by examining the terms of Article 2.1 of 
the TBT Agreement .   
7.95 We recall that the first option we envisaged a bove favours an interpretation of the terms of 
Article 2.1 of the TBT Agreement  following Article III:4 of the GATT 1994 jurisprudence.  The extent 
to which the interpretations devel oped in the context of Article III:4 of the GATT 1994 may be simply 
transposed to Article 2.1 of the TBT Agreement is not clear to us, especially since the latter provision 
has not yet been interpreted in depth by panels or the Appellate Body.  Certainly, Article 2.1 of the 
TBT Agreement  appears to be modelled on Article III:4 of GATT 1994.232  Indeed, both refer to 
                                                      
229 United States' response to Panel question No. 26.  See also United States' second written 
submission, para. 111. 
230 The Vienna Convention on the Law of Treaties, done at Vienna, 23 May 1969, 1155 U.N.T.S. 331; 
8 International Legal Materials 679. 
231 Article 3.2 of the DSU indicates that Members recognise that the WTO dispute settlement system 
serves to clarify the provisions of the covered agreemen ts "in accordance with custom ary rules of interpretation 
of public international law".  Articles 31 and 32 of the VCLT are recognized as codify ing such rules.  Appellate 
Body Report, US – Gasoline , p. 17, DSR 1996:I, 3 at  15-16.  See also Appellate Body Report, India – 
Patents (US) , paras. 43-46;  Appellate Body Report, Japan – Alcoholic Beverages II , pp. 10-12, DSR 1996:I, 
97; and Panel Report, US – DRAMS , para. 6.13. 
232 The Appellate Body in EC – Asbestos examined the ordinary meani ng of the word "like" when 
examining the concept of "like products" in Article III:4.  It  looked into its dictionary meaning to find that "like" 
means "[h]aving the same characteristics or qualities as so me other … thing; of approximately identical shape, 
size, etc., with something else; similar." (The Appella te Body referred to the de finition in The New Shorter 
Oxford English Dictionary, Lesley Brown (ed.) (Clarendon Press, 1993), Vol. I, p. 1588.)  Appellate Body  WT/DS406/R 
 Page 45 
 
 
 imported products: "The products of the territory of any contracting party imported into the territory 
of any other contracting party" in the case of Ar ticle III:4 of the GATT 1994, and "products imported 
from the territory of any Member" in the case of Article 2.1 of the TBT Agreement .  They both also 
impose an identically worded obligation on Members to  provide in respect of those imports "treatment 
no less favourable than that accorded to like products of national origin".   
7.96 However, we observe that both provisions differ in respect of the kinds of measures regulated 
by each provision.  While Article 2.1 of the TBT Agreement applies only to technical regulations; 
Article III:4 of the GATT 1994 applies to a broader group of measures that would subsume technical 
regulations.233  As we will discuss below, such difference should certainly be accorded some 
significance. 
7.97 Given the similarity, and in some instances,  identity, of the language of both national 
treatment provisions, the use of interpretations de veloped in the context of Article III:4 may seem 
relatively straightforward with respect to  the likeness aspect of Article 2.1 of the TBT Agreement .  In 
fact, as we indicated above, the parties generally appear to be persuaded that the jurisprudence 
developed under Article III:4 of the GATT 1994, in  particular that relating to the competition 
approach to analysing likeness, is directly transp osable to an analysis under Article 2.1 of the 
TBT Agreement .  Indonesia defends the position whereby the analysis of "likeness" under Article 2.1 
of the TBT Agreement  is a determination about the nature and extent of a competitive relationship 
between and among products, as estab lished by the Appellate Body in EC – Asbestos  in respect of 
Article III:4.234  The United States is also of the view that the national treatment obligation contained 
in Article 2.1 of the TBT Agreement is to be interpreted similarly to Article III:4 of the GATT 1994.235   
7.98 While we agree with the parties that the similar ity in wording must be given weight, we do so 
cautiously because, as noted by the Appellate Body in EC – Asbestos , even to the extent that the terms 
used are identical, they "must be interpreted in light  of the context and of the object and purpose, of 
the provision at issue, and of the object and purpose of the covered agreement in which the provision 
appears".236  The Appellate Body further said that "while  the meaning attributed to the term 'like 
products' in other provisions of the GATT 1994, or in other covered agreem ents, may be relevant 
context in interpreting Article III:4 of the GATT 1994, the interpretation of 'like products' in 
Article III:4 need not be identical, in all respects, to those other meanings."237  The same may be said 
of the term "like product" under Article 2.1 of the TBT Agreement  in relation to Article III:4 
jurisprudence.   
7.99 In our view, it is far from clear that it is alwa ys appropriate to transpose automatically the 
competition-oriented approach to likeness under Article III:4 of the GATT 1994 to Article 2.1 of the 
TBT Agreement because that approach was developed by the Appellate Body in EC – Asbestos on the 
basis of the general principle in Article III:1 of the GATT 1994, which does not have an equivalent in 
                                                                                                                                                                     
Report, EC – Asbestos , para. 90. Such dictionary definition would stand even if the Panel decides not to rely on 
jurisprudence under Article III:4 of the GATT 1994. 
233 Article III:4 of the GATT 1994 applies to "all laws, regulations and requirements affecting their 
internal sale, offering for sale, purchase,  transportation, distribution or use".   
234 Panel question No. 26 reads: "[t]he Appellate Body has explained that "a determination of 'likeness' 
under Article III:4 is, fundamentally, a determination ab out the nature and extent of a competitive relationship 
between and among products".   
(a) Is the same true of a determination of "likeness" under Article 2.1 of the TBT Agreement ?  
(b) If yes, must the Panel consider the competitive relationship between the products at issue as 
relevant in its likeness analysis under Article 2.1 of the TBT Agreement  in the absence of a reference to a similar 
general principle as imbedded in Article III:1 of the GATT 1994?" 
235 United States' oral statement at the first substantive meeting of the Panel, para. 59. 
236 Appellate Body Report, EC – Asbestos , paras. 88-89.    
237 Appellate Body Report, EC – Asbestos , para. 89. WT/DS406/R 
Page 46 
 
 
 the TBT Agreement .  In EC – Asbestos , the Appellate Body stressed the relevance of the "general 
principle" articulated in Article III:1 as expressed in  Article III:4 and how it informs the interpretation 
of the concept of like products in Articl e III:4.  According to the Appellate Body238, "the term 'like 
product' in Article III:4 of the GATT 1994 must be in terpreted to give proper scope and meaning to" 
the "general principle" articulated in Article III:1 of the GATT 1994, enunciated by the Appellate 
Body in Japan – Alcoholic Beverages II  as follows: 
"The broad and fundamental purpose of Article III is to avoid protectionism in the 
application of internal tax and regulatory measures. More specifically, the purpose of 
Article III 'is to ensure that internal measures 'not be applied to imported and 
domestic products so as to afford protecti on to domestic production'. Toward this end, 
Article III obliges Members of the WTO to provide equality of competitive conditions for imported products in relati on to domestic products . … Article III 
protects expectations not of any particul ar trade volume but rather of the equal 
competitive relationship between im ported and domestic products. …".
239  
7.100  As observed by the Appellate Body in EC – Asbestos , "there must be consonance between the 
objective pursued by Article III, as enunciated in the 'g eneral principle' articulated in Article III:1, and 
the interpretation of the specific expression of this principle in the text of Article III:4."240  For the 
Appellate Body, this interpretation "must, therefore, reflect that, in endeavouring to ensure 'equality of 
competitive conditions', the 'general  principle' in Article III seeks to prevent Members from applying 
internal taxes and regulations in a manner whic h affects the competitive relationship, in the 
marketplace, between the domestic and imported products involved , 'so as to afford protection to 
domestic production.'"241  
7.101  The Appellate Body thus explai ned that "a determination of 'likeness' under Article III:4 is, 
fundamentally, a determination about the nature a nd extent of a competitive relationship between and 
among products."242  However, as the Appellate Body acknowle dged, "there is a spectrum of degrees 
of 'competitiveness' or 'substitutabilit y' of products in the marketplace, and … it is difficult, if not 
impossible, in the abstract, to indicate precisely wher e on this spectrum the word 'like' in Article III:4 
of the GATT 1994 falls."243  It further clarified that "[it is] not saying that all products which are 
in  some  competitive relationship are 'like products' under Article III:4."244 
                                                      
238 Appellate Body Report, EC – Asbestos , para. 98. 
239 Appellate Body Report, Japan – Alcoholic Beverages II , p. 15.  See also Appellate Body Report, 
EC – Asbestos , para. 97. 
240 Appellate Body Report, EC – Asbestos , para. 98. 
241 Appellate Body Report, EC – Asbestos , para. 98 (emphasis original). 
242 Appellate Body Report, EC – Asbestos, para. 99. 
243 Appellate Body Report, EC – Asbestos, para. 99. 
244 Appellate Body Report, EC – Asbestos, para. 99 (emphasis original).  We note that this discussion 
must be situated in the context of the Appellate Body 's accordion image aimed at di fferentiating the concept of 
"like product" in the first sentence of Article III:2 of the GATT 1994 from that in Article III:4 of the 
GATT 1994.  (See below where we discuss the Appellate  Body's accordion approach .)  In a nutshell, the 
Appellate Body considered that the concept of "like product" under Article III:4 of the GATT 1994 must be 
interpreted in a broader manner than the same concept und er Article III:2 of the GATT 1994, because the latter 
includes a different obligation in respect of directly co mpetitive or substitutable products, and this second type 
of product is not reflected in Article III:4 of the GATT 1994.  Immediately following the passage cited above, 
the Appellate Body indicated in particular that: 
"In ruling on the measure at issue, we also do not attempt to define the precise scope of the 
word 'like' in Article III:4.  Nor do we wish to decide if the scope of 'like products' in 
Article III:4 is co-extensive with the combined  scope of 'like' and 'directly competitive or 
substitutable' products in Article III:2.  However, we recognize that the relationship between 
these two provisions is important, because th ere is no sharp distinction between fiscal  WT/DS406/R 
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 7.102  When asked by the Panel about this issue, bot h parties considered that it is not necessary to 
have similar language to that of Ar ticle III:1 of the GATT 1994 within the TBT Agreement  in order to 
transpose the competition-driven jurisprudence under Article III:4 of the GATT 1994 into Article 2.1 
of the TBT Agreement .245  The United States goes further and contends that it does not consider the 
absence of "an Article III:1 analog in the TBT Agreement  to be a basis for adopting a fundamentally 
different view of 'likeness' in the TBT Agreement ".246 
7.103  In our view, the absence in the TBT Agreement  of language such as that in Article III:1 of the 
GATT 1994 has meaning for our interpretive exercise .  Even if the GATT 1994 were considered to 
serve as context for Article 2.1 of the TBT Agreement , it would not be the immediate context of that 
provision.  As we will discuss below, we consider that an interpreter should first asses the immediate 
context of the provision subject to interpretation be fore reaching for an interpretative aid that is 
further removed. 
7.104  We also find support in the Appellate Body's  accordion image of likeness. The Appellate 
Body in Japan – Alcoholic Beverages II  cautioned the interpreter on the use of the four general 
criteria of the Border Tax Adjustment  Working Group and did so by illustrating likeness as an 
accordion that "stretches and squeezes" depending on the context and the covered agreement in which 
it appears: 
"No one approach to exercising judgment will be appropriate for all cases. The 
criteria in Border Tax Adjustments  should be examined, but there can be no one 
precise and absolute definition of what is ' like'. The concept of 'likeness' is a relative 
one that evokes the image of an accordion.  The accordion of 'likeness' stretches and 
squeezes in different places as different provisions of the WTO Agreements are 
applied. The width of the accordion in any one of those places must be determined by 
the particular provision in which the term 'like' is encountered as well as by the 
context and the circumstances that prevail in any given case to which that provision 
may apply."247 
7.105  Accordingly, the "accordion" of like products as envisaged by the Appellate Body allows, and 
potentially mandates, different interpretations of the term "like products" under Article III:4 of the 
GATT 1994 and Article 2.1 of the TBT Agreement .248 
                                                                                                                                                                     
regulation, covered by Article III:2, and non-fis cal regulation, covered by Article III:4.  Both 
forms of regulation can often be used to achieve the same ends.  It would be incongruous if, 
due to a significant difference in the product scope of these two provisions, Members were 
prevented from using one form of regulation – for instance, fiscal – to protect domestic 
production of certain products, but were able to use another form of regulation – for instance, 
non-fiscal – to achieve those ends.  This wo uld frustrate a consistent application of the 
'general principle' in Article III:1.  For these r easons, we conclude that the scope of 'like' in 
Article III:4 is broader than the sc ope of 'like' in Article III:2, first sentence.  Nonetheless, we 
note, once more, that Article III:2 extends not only to 'like products', but also to products 
which are 'directly competitive or substitutable' , and that Article III:4 extends only to 'like 
products'.  In view of this di fferent language, and although we need not rule, and do not rule, 
on the precise product scope of Article III:4, we do conclude that the product scope of 
Article III:4, although broader than the  first  sentence of Article III:2, is 
certainly  not  broader than the  combined   product scope of the  two  sentences of Article III:2 
of the GATT 1994."     
245 Indonesia's response to Panel question No. 26(b). 
246 United States' response to Panel question No. 26. 
247 Appellate Body Report, Japan – Alcoholic Beverages II , p. 21. 
248 See footnote 244 above. WT/DS406/R 
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 7.106  We also emphasize, as we pointed out before , that despite the similarity in wording, 
Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994 differ in that the former only 
applies to technical regulations, whereas the latter a pplies to a much broader range of instruments.  
This is relevant in interpreting this provision.  In particular, the obligation in Article 2.1 of the 
TBT Agreement  applies "in respect of" a technical regulation.  As the United States argues, the 
ordinary meaning of the term "in respect of" is "be directed to; refer to; relate to; deal with; be 
concerned with."  We recall that the United States h as asked the Panel to take into account this textual 
difference with Article III:4 of the GATT 1994 in analysing Article 2.1 of the TBT Agreement .249 
7.107  Recalling the Appellate Body findings in EC – Asbestos  whereby, even to the extent that the 
terms used are identical, they "must be interprete d in light of the context … of the provision at 
issue"250, and Article 31(2) of the VCLT, which provides that the context  for the purpose of 
interpreting a treaty comprises the text of the Agreemen t, including its preamble and annexes, we turn 
to the immediate context of the national tr eatment obligation in Article 2.1 of the TBT Agreement , 
namely Article 2.1 of the TBT Agreement  itself, as well as the TBT Agreement  as a whole. 
7.108  Annex 1 of the TBT Agreement  sets out the definition of tec hnical regulation for the purposes 
of the TBT Agreement  and thus serves as context for the interpretation of Article 2.1 of that 
Agreement .  We recall that a technical regulation is defined as a "[d]ocument which lays down 
product characteristics ... with which complian ce is mandatory".  Section 907(a)(1)(A)251 does lay 
down, in negative form252, a product characteristic with which compliance is mandatory: cigarettes 
cannot have a characterizing flavour.  An exception is made for those cigarettes with tobacco or 
menthol as a characterizing flavour.253 
7.109  The fact that Section 907(a)(1)(A) is a technical regulation and has as its immediate purpose 
to regulate product characteristics (characterizing fla vours) for certain types of products (cigarettes) 
should have some weight, and potentially great wei ght, in the determination of whether the products 
at issue are like.  Indeed, cigarettes with characterizing flavours are regulated by Section 907(a)(1)(A) 
as a single group of products. 
7.110  In response to a question from the Panel, th e United States explained that a Senate 
commentary in the legislative record of Section 907(a)(1)(A) clarifies that "[w]hile the term 
'characterizing flavor' is undefined in the legislati on, it is intended to capture those additives that 
produce a distinguishing flavor, taste, or aroma imparted by the product."254  Therefore, for the 
purpose of being regulated and thus prohibited unde r Section 907(a)(1)(A), a cigarette must have an 
additive that produces a distinguishing flavour, taste or  aroma.  Under this interpretative approach, the 
fact that cigarettes contain such additives should fi gure in the likeness determ ination more so than  
competition-related or other criteria, as it is that  precise feature that determines whether or not a 
cigarette falls within the scope of applica tion of the technical regulation at issue, 
i.e., Section 907(a)(1)(A). 
                                                      
249 United States' first written submission, para. 216. 
250 Appellate Body Report, EC – Asbestos , para. 88.   
251 As explained above, both partie s agree that Section 907(a)(1)(A)  is a technical regulation.   
252 We refer to Section VII.C where the definition of  technical regulation is examined, including the 
Appellate Body Report in EC – Sardines , where it found that technical regu lations "may be prescribed or 
imposed in either a positive or a nega tive form".  Appellate Body Report, EC – Sardines , para. 176. 
253 We will address the issue of whether it could be said  that a cigarette has a tobacco flavour, since all 
cigarettes are mainly composed of and thus taste of toba cco, in the section dedicated  to physical characteristics 
(see para. 7.131below). 
254 United States' response to Panel question No. 14, para. 32.  The United States provides the 
following reference: 155 Cong. Rec. S64111 (June 10, 2009) (Exhibit US-98).  WT/DS406/R 
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 7.111  We recall that Article 31(1) of the VCLT directs an interpreter to look into the object and 
purpose of the treaty, in this case the TBT Agreement .  As the United States explains255, the Preamble 
to the TBT Agreement sets out its object and purpose.  In par ticular, the second preambular recital of 
the TBT Agreement  indicates the purpose of the Members as "[ d]esiring  to further the objectives of 
GATT 1994".  The United States reads this as meani ng that the Members contemplated that the  
TBT Agreement is consistent with the GATT 1994, and its pr ovisions should be read in the context of 
furthering the objectives of the GATT 1994. 
7.112  We note that "to further" means to "help the progress or development of (something); 
promote".256  This may be interpreted as meaning th at jurisprudence on Article III:4 of the 
GATT 1994 cannot simply be trans posed to Article 2.1 of the TBT Agreement , as the latter is meant to 
be a development - a step forward - from the disciplines of the GATT 1994, including Article III:4.  However, it may also suggest that the TBT Agreement  serves to "promote" the GATT 1994 and in that 
sense it could be argued that Article III:4 jurispru dence could be transposed to Article 2.1. 
7.113  The Preamble further provides in its sixth recital that Members " recogniz[e] that no country 
should be prevented from taking measures necessary  for the protection of human, animal or plant 
life or health, of the environment, or for the prev ention of deceptive practices, at the level it considers 
appropriate[ ]."
257  For the United States, this statement confirms the general right of Members to 
take measures for legitimate objectives, including to protect human health, even when those measures 
affect or even restrict international trade, so long  as certain conditions are met.  In its view, this 
statement recognizes the legitimacy and WTO-consistenc y of technical regulations that are adopted to 
meet objectives such as to protect human health or the environment.258   
7.114  In our view, the sixth preambular recital combined with the necessity requirement in 
Article 2.2 of the TBT Agreement259 could justify a different in terpretation of likeness under 
Article 2.1 of the TBT Agreement from that developed under Article  III:4 of the GATT 1994, given 
the nature of the measures contemplated under the TBT Agreement .   
7.115  The United States also argues that  this means that the "liken ess" analysis under both the 
GATT 1994 and the TBT Agreement  should be informed by the specific context of the 
TBT Agreement  by considering "not only the nature  of the competitive relationship among and 
between products but also the nature of the public health basis upon which the technical regulation at 
issue is based".260  In particular, the United States has asked the Panel to "carefully parse the 
significance of traits that are generally shared among all cigarettes and traits that are significant with respect to the public health objec tive of the measure at issue."
261  The United States tells us that the 
public health basis of Section 907(a)(1)(A) shoul d be considered for the "likeness" analysis under 
Article 2.1 of the TBT Agreement , "as there are certain 'contextual pr inciples' that inform the national 
treatment obligation".262  We note that this position goes further than that explained above about 
taking into account the immediate purpose of Section 907(a)(1)(A) as a technical regulation, which is 
to regulate cigarettes with characterizing flavours.   
                                                      
255 United States' second written submission, paras. 96-101. 
256 Oxford English Dictiona ry on-line, accessed on 30  April 2011.  See also Shorter Oxford English 
Dictionary , 5th edn., W.R. Trumble, A. Stevenson (eds.) (Oxford University Press, 2002), Vol. I, p. 1053, 
defining "further" to mean, among other things, "Help on, assist;  promote, favour";  Webster's Online 
Dictionary , assessed on 30 April 2011, defining "further" to mean "to help forward". 
257 For full citation, see para. 7.3 above. 
258 United States' second written submission, para. 98. 
259 We examine Indonesia's claim under Article 2.2 of the TBT Agreement  in Section VII.F below.  
260 United States' response to Panel question No. 26.  See also United States' second written 
submission, para. 111. 
261 United States' first written submission, para. 159. 
262 United States' second written submission, para. 111. WT/DS406/R 
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 7.116  We agree that, in the context of the TBT Agreement  and in the light of its object and purpose 
expressed by the preambular recitals referred to above, we must bear in mind the significance of the 
public health objective of a technical regulation a nd how certain features of the relevant products, 
their end-uses as well as the perception consumers have about them, must be evaluated in the light of 
that objective.  In the present case, the de clared legitimate public health objective of 
Section 907(a)(1)(A), i.e., the reduction of youth sm oking, must permeate and inform our likeness 
analysis.    
7.117  On the basis of the considera tions above, we conclude that our approach to interpreting 
Article 2.1 of the TBT Agreement must ensure that the TBT Agreement  is addressed first as immediate 
context of Article 2.1 of the TBT Agreement.  The jurisprudence under Article III:4 of the 
GATT 1994, which provision also serves as context albeit not immediate, may also be considered.  In our view, such jurisprudence is relevant b ecause Article III:4 of the GATT 1994 shares almost 
identical wording with Article 2.1 of the TBT Agreement .    
7.118  As put by the Appellate Body in EC – Asbestos , however, we acknowledge that even to the 
extent that the terms used are identical, they "must be interpreted in light of the context and of the 
object and purpose, of the provision at issue, a nd of the object and purpose of the covered agreement 
in which the provision appears".
263  Paraphrasing the Appellate Body, while the meaning attributed to 
the term "like products" in other provisions of th e WTO Agreements may be relevant in interpreting 
Article 2.1 of the TBT Agreement , the interpretation of like produc ts in Article 2.1 need not be 
identical, in all respects, to those other meanings.  This approach to interpreting Article 2.1 finds 
support in the Appellate Body's accordion image described above.   
7.119  From our considerations above, we do not believe  that the interpretation of Article 2.1 of the 
TBT Agreement , in the circumstances of this case where we  are dealing with a technical regulation 
which has a legitimate public health objective, should be approached primarily from a competition 
perspective.  We rather think that the weighing of  the evidence relating to the likeness criteria should 
be influenced by the fact that Section 907(a)(1 )(A) is a technical regulation having the immediate 
purpose of regulating cigarettes with a characterizing flavour for public health reasons.  As explained 
above, we must pay special notice to the significance of the public health objective of a technical 
regulation and how certain features of the releva nt products, their end-uses as well as the perception 
consumers have about them, must be evaluated in light of that objective.  In the present case, the 
declared legitimate public health objective of S ection 907(a)(1)(A), i.e., the reduction of youth 
smoking, must permeate and inform our likeness analys is.  As we will explain in more detail below, 
this is particularly relevant in the consideration of the physical characteristics that are important for 
the immediate purpose of Section 907(a)(1)(A) of re gulating cigarettes with characterizing flavours, 
as well as the consumer tastes and habits criterion where the perception of consumers, or rather 
potential consumers, can only be assessed with refe rence to the health protection objective of the 
technical regulation at issue.  
7.120  We shall therefore proceed with our likeness analysis bearing in mind our considerations 
above.  We start by setting out the traditional likeness criteria. 
                                                      
263 Appellate Body Report, EC – Asbestos , paras. 88-89.     WT/DS406/R 
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 (ii) The traditional likeness criteria 
7.121  The Report of the GATT Working Party on Bord er Tax Adjustments outlines an approach for 
analysing "likeness" that has sin ce been followed and developed by panels and the Appellate Body.264  
This approach consists, essentially, of employing fo ur general criteria in analysing "likeness":   
(a) the properties, nature and quality of the products;   
(b) the end-uses of the products;   
(c) consumers' tastes and habits – more compre hensively termed consumers' perceptions 
and behaviour – in respect of the products;  and  
(d) the tariff classification265 of the products.266 
7.122  We recall that, in EC – Asbestos , the Appellate Body asserted that  the four general criteria 
"provide a framework for analysing the 'likeness'  of particular products on a case-by-case basis".267  
The Appellate Body further clarified that these criteria are "simply tools to assist in the task of sorting 
and examining the relevant evidence" and that they are "neither a treaty-mandated nor a closed list of 
criteria".268  The Appellate Body also warned that, even  though each criterion addresses, in principle, 
a different aspect of the products at issue to be  examined separately, these criteria are interrelated.269   
7.123  In this regard, we acknowledge our duty to examine, in each case, all  of the pertinent 
evidence before us.270  We recall that the Appellate Body en joined panels to, once all the relevant 
evidence has been examined, determine whether "that evidence, as a whole, indicates that the 
products in question are 'like' in terms of the legal provision at issue."271  Consequently, it would be 
                                                      
264 Appellate Body Report, Japan – Alcoholic Beverages II , p. 19;  Panel Report, US – Gasoline , 
para. 6.8, where the approach set forth in the  Border Tax Adjustment   case was adopted by a panel in a dispute 
concerning Article III:4 of the GATT 1994.  This point was not appealed.  Appellate Body Report, EC – 
Asbestos , para. 101.   
265 The fourth criterion, tariff classification, was not mentioned by the Working Party on Border Tax 
Adjustments , but was included by subsequent panels (see, for instance, GATT panel reports, EEC – Animal Feed 
Proteins , para. 4.2, and  Japan – Alcoholic Beverages I , para. 5.6). 
266 The Appellate Body in EC – Asbestos  asserted: 
"We note that these four criteria comprise four categories of 'cha racteristics' that the products 
involved might share:  (i) the phy sical properties of the products;  (ii) the extent to which the 
products are capable of serving the same or similar end-uses;  (iii) the extent to which 
consumers perceive and treat the products as alternative means of performing particular 
functions in order to satisfy a particular want or demand;  and (iv) the international 
classification of the products for tariff purposes." 
Appellate Body Report, EC – Asbestos , para. 101. 
267 Appellate Body Report, EC – Asbestos , para. 102. 
268 Appellate Body Report, EC – Asbestos , para. 102. 
269 The Appellate Body explained: 
"... the adoption of a particular framework to aid in the examination of evidence does not 
dissolve the duty or the need to examine, in each case,  all  of the pertinent evidence.  In 
addition, although each criterion ad dresses, in principle, a diffe rent aspect of the products 
involved, which should be examined separately , the different criteria are interrelated.  For 
instance, the physical propertie s of a product shape and limit the end-uses to which the 
products can be devoted.  Consumer perceptions may similarly influence – modify or even 
render obsolete – traditional uses of the product s.  Tariff classification clearly reflects the 
physical properties of a product."  
Appellate Body Report, EC – Asbestos , para. 102. 
270 Appellate Body Report, EC – Asbestos , para. 102. 
271 Appellate Body Report, EC – Asbestos , para. 103. WT/DS406/R 
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 for us, once we have examined all the evidence pr esented by the parties, to determine whether the 
products at issue are "like" in terms of Article 2.1 of the TBT Agreement .   
(iii) Likeness analysis of the products concerned 
Relevant domestic and imported products for the purpose of the likeness analysis in this case 
7.124  The first step in a likeness examination is to identify the domestic and imported products that 
must be compared.  We note that this issue arises  both in the "likeness" step of the national treatment 
analysis, and then again in the "less favourab le treatment" step of such an analysis. 
7.125  The identification of the products which the Pa nel needs to compare for the purpose of its 
likeness analysis under Article 2.1 of the TBT Agreement is an issue that, in the present case, appears 
to touch upon our terms of reference.  Indeed, if  we examine Indonesia's Panel Request, which, as we 
explain below, demarcates our terms of reference,  we observe that it defines the domestic like product 
as "menthol cigarettes".  In fact, we see no refe rence in Indonesia's Panel Request to a type of 
cigarette other than clove or menthol cigarettes.   
7.126  In particular, Indonesia's Panel Request st ates that "banning clove cigarettes in the 
United States while exempting menthol cigarettes  from the ban is inconsistent", inter alia , with 
"Article III:4 of the GATT 1994 because the measur e provides treatment to an imported product, 
clove cigarettes, that is 'less favourable' th an that accorded to a like domestic product, menthol 
cigarettes " (emphasis added).272  
7.127  Likewise, Indonesia's Panel Request claims that the measure at issue273 is inconsistent with 
"TBT Article 2.1 because the measure results in tr eatment that is 'less favourable' to imported clove 
cigarettes than that accorded to a like domestic product, menthol cigarettes ".274 (emphasis added)   
7.128  In its first written submission, however, Indonesia introduces a new category of domestic 
cigarettes in its national treatment claims argumentati on.  While, at first, Indonesia refers to this new 
category of domestic cigarettes mostly as "regular" cigarettes,275  from its second written submission 
onwards, Indonesia mainly u ses the term "tobacco-flavoured"276 cigarettes, and on occasion, "regular-
flavoured"277 cigarettes or "regular tobacco flavour".278 
                                                      
272 Indonesia's Panel Request, WT/DS406/2, p. 1. 
273 Indonesia's Panel Request refers to Section 907 of the Family Smoking Prevention and Tobacco 
Control Act , but Indonesia's first written submissi on refers to Section 101 of the same Act.  In response to Panel 
question No. 9, the parties clarified that the measure at issue is properly referred to as "Section 907(a)(1)(A) of 
the Federal Food, Drug, and Cosmetic Act  (as amended by the Family Smoking Prevention and Tobacco 
Control Act )".  See para. 2.4 above. 
274 Indonesia's Panel Request, WT/DS406/2, p. 2. 
275 See e.g. Indonesia's first written submission, paras. 40 (and related footnote 50), 43, 57, 60, 62, 63, 
72; Indonesia's oral statement at the first substantive meeting of the Panel, paras. 93, 94, 95, 96, 97, 98, 102, 
104, 105, 106, 107, 113, 118, 119, 120, 123. 
276 See e.g. Indonesia's second written submission, para s. 65-74, 77-78, 81-82, 84, 87-90, 92-93, 96, 
100 and 104;  Indonesia's oral statement at the second substantive meeting of the Panel, paras. 48-50, 52, 54, 
56-58, 61 and 66. 
277 See e.g. Indonesia's response to Panel question No . 83, paras. 13-14; Indonesia's response to Panel 
question No.  88;  Indonesia's response to Panel questi on No. 92, paras. 22, 24; Indonesia's response to Panel 
question No.  93; Indonesia's response to Panel question No. 94, paras. 26-27;  Indonesia's comments on the 
United States' response to Panel question No. 87, paras.  25;  Indonesia's response to Panel question No. 89, 
paras. 29-30;  Indonesia's response to Panel question Nos. 95-96. 
278 See e.g. Indonesia's first written submission, para. 54.  WT/DS406/R 
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 7.129  We note that Indonesia's argumentation also e volved in parallel to the use of different 
terminology for this new category of domestic ciga rettes.  While in its first written submission, the 
domestic product for the purpose of comparison presented by Indonesia were both regular and 
menthol cigarettes, its likeness argumentation was mainly focused on a comparison between clove 
and menthol cigarettes.279  However, in response to a question from the Panel, Indonesia requested us 
to first conduct a like product analysis of clove cigarettes, on the one hand, and menthol- and 
"tobacco-flavoured" cigarettes, i.e., regular cigarette s, produced in the United States, on the other 
hand.  And, "only if  that analysis does not lead to a determination of likeness, would it be necessary 
for the Panel to analyse the likeness of clove ci garettes, on the one hand, and menthol-flavoured 
cigarettes produced in the United States, on the other hand".280  
7.130  Indonesia was not alone in the use of different terminology to refer to the new category of 
domestic cigarettes.  The United States also followed a mixed approach, using both "regular"281 and 
"tobacco-flavoured"282 cigarettes, although it used the term "regular" more often.  The United States 
used the terms "regular tobacco"283 and "regular tobacco-flavoured"284 cigarettes as well. 
7.131  The parties have therefore often used the te rms "regular" and "tobacco-flavoured" cigarettes 
interchangeably in this dispute.  We find this to be susceptible of causing confusion as to which 
product is being addressed.  Indeed, referring to toba cco-flavoured cigarettes may confuse the reader 
into believing that cigarettes such as clove-flavoured or menthol-flavoured cigarettes do not contain 
tobacco.  In fact, all cigarettes contain tobacco, but  flavoured cigarettes such as menthol cigarettes, 
kreteks, bidis, etc., contain, as well, an add itive that imparts the characterizing flavour that 
Section 907(a)(1)(A) speaks of or, as the international community argues285, that which increases 
palatability.  As put by Indonesia, "cigarettes may c ontain a variety of ingredients and flavors that are 
added to the tobacco …".286  We have therefore decided to use the term "regular" cigarettes as we 
think it better describes the fact that they do not include additional characterizing flavours.     
                                                      
279 Indonesia's first written submission, paras. 48-52; Indonesia's oral statement at the first substantive 
meeting of the Panel, para. 123. 
280 Indonesia's response to Panel question No. 27, para. 71  
281 See e.g. United States' first written submissi on, paras. 148, 164, 165, 167, 174, 185, 189, 
footnote 246 to para. 192, footnote 254 to para. 203;  United States' response to Panel question No. 30, 
footnote 59 to para. 68;  31;  33, para. 75;  34, para. 79;  37, paras. 85, 86;  38, paras. 91, 94, 96;  41, para. 105;  
United States' second written submission, para. 116;  United States' response to Panel question No. 86, 
paras. 14, 15, 16;  Indonesia's response to Panel question No. 87, para. 18;  Indonesia's response to Panel 
question No. 88, para. 23; Indonesia's response to Panel question No. 91, paras. 38, 39, 40;  Indonesia's response 
to Panel question No. 92, para. 44;  United States' comments on Indonesia's response to Panel question No. 92, 
para. 17;  United States' comments on Indonesia's response to Panel question No. 93, paras. 22, 23; 
United States' comments on Indonesia's response to Panel question No.  94, footnote 22 to para. 27. 
282 See e.g. United States' first writte n submission, paras. 148, 209;  United States' oral statement at the 
first substantive meeting of the Panel, paras. 24, 31-32, 47;  United States' oral statement at the second 
substantive meeting of the Panel, paras. 22, 32, 45,55;  United States' response to Panel question No. 84, 
paras. 10;  United States' response to Panel question No. 86, paras. 13;  United States' response to Panel question 
No. 90, paras. 31, 35;  United States' comments on Indonesia's response to Panel question No. 85, paras. 9-10, 
13; United States' comments on Indonesia's response to Panel question No.  93, para. 23;  United States' 
comments on Indonesia's response to Panel question No. 94, paras. 25-26. 
283 See e.g. United States' response to Panel question No. 30, para. 69. 
284 See e.g. United States' response to Panel question No. 88, paras. 23 and  91, para. 38. 
285 See Descriptive Part, paras. 2.29-2.32. 
286 Indonesia's first written submission, para. 4; footnote 7 to para. 4 (making reference to 
Exhibit IND-5, which contains the following document: Richard R. Baker, Eian D. Massey, and Graham Smith, 
"An overview of the effects of tobacco ingredients on smoke chemistry and toxicology," Food and Chemical 
Toxicity 42S (2004) at S57-S64 (" Baker Study ")). WT/DS406/R 
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 7.132  When we asked the parties whether we would be exceeding our terms of reference if we 
conducted a likeness analysis between, on the one hand,  clove cigarettes and, on the other hand, both 
menthol and regular cigarettes produced in the United States, Indonesia  said we would not.287  
Indonesia explains that it referred to menthol cigare ttes in its Panel Request as an example of a like 
product produced domestically.288  Indonesia however also explains that, at the beginning of the 
proceedings, it was convinced that clove cigarette s produced in Indonesia were "like" cigarettes 
containing menthol produced in the United States but that, later on, it realised that imported cigarettes 
containing clove are like both menthol and regular cigarettes.289  Indonesia further argues that 
referring only to domestic menthol cigarettes in  its Panel Request did not prejudice the 
United States.290   
7.133  The United States  agrees with Indonesia in that the Panel could include domestic regular 
cigarettes in the likeness analysis without exceeding its  terms of reference.  For the United States, a 
panel request must identify the relevant measure or measures and the claims which are raised.  The 
United States contends that the Appellate Body  has made a distinction between "claims" and 
"arguments" in reviewing a panel request  according to Article 6.2 of the DSU.291  The United States 
argues that the domestic products to be considered in the likeness analysis are elements related to the 
argumentation of the disputing parties in support of  or opposition to the national treatment claim and 
should be set out in the written and oral submissi ons of the parties.  Hence, according to the 
United States, the domestic products which are used as the basis of the argument would not be part of 
the terms of reference of a panel.292 
7.134  In spite of the parties' views, we consider that it is necessary for us to examine this issue as it 
touches upon our jurisdiction.  In this respect, the Appellate Body has cautioned panels that there are 
certain inherent powers to their adjudicative functi on and that "panels have the right to determine 
whether they have jurisdiction in a given case,  as well as to determine the scope of their 
jurisdiction ."293  The Appellate Body has also clarified th at "it is a widely accepted rule that an 
international tribunal is entitled to consider the i ssue of its own jurisdiction on its own initiative".294  
We shall therefore examine whether we would be exceeding our terms of reference if we include 
regular cigarettes in the likeness analysis. 
7.135  We start by looking at the wording of Article 6.2 of the DSU which reads as follows: 
"The request for the establishment of a pane l shall be made in writing.  It shall 
indicate whether consultations were held, identify the specific me asures at issue and 
provide a brief summary of the legal basis of the complainant sufficient to present the 
problem clearly." 
7.136  Article 6.2 of the DSU thus provides, inter alia , that a panel request must identify the specific 
measures at issue and provide a brief summary of th e legal basis of the complaint sufficient to present 
the problem clearly.  As found by the Appellate Body in Guatemala – Cement I , these requirements: 
"together … constitute the 'matter referred to the DSB', which forms the basis for a panel's terms of 
reference" under Article 7 of the DSU.295  As further explained by the panel in Colombia – Ports of 
                                                      
287 Indonesia's response to Panel question No. 83, para. 6. 
288 Indonesia's response to Panel question No. 83, para. 12. 
289 Indonesia's response to Panel question No. 83, para. 14. 
290 Indonesia's response to Panel question No. 83, para. 12. 
291 United States' response to Panel question No. 83, para. 7. 
292 United States' response to Panel question No. 83, para. 7. 
293 Appellate Body Report, Mexico – Taxes on Soft Drinks , para. 45. 
294 Appellate Body Report, US – 1916 Act , footnote 30 to para. 54. 
295 Appellate Body Report, Guatemala – Cement I , para. 73;  Panel Report, Colombia – Ports of Entry , 
paras. 7.22 and 7.26.  WT/DS406/R 
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 Entry , the request for establishment of a panel "defines and limits the scope of the dispute and thereby 
the extent of a panel's jurisdiction".296  
7.137  The Panel acknowledges that Article 6.2 of the DSU does not mention the need to specify the 
products concerned in a panel request.  We do however think that the absence of such an obligation 
should not be taken to mean that, when the particul ar products affected by the measure at issue are 
specified in a panel request, such specification is depr ived of all relevance.  We note that prior panels 
share our understanding. 297 
7.138  We are well aware that, as argued by the United States, the Appellate Body has made a 
distinction between "claims" and "arguments" in re viewing a panel request pursuant to Article 6.2 of 
the DSU.298  Indeed, as explained by the Appellate Body, "Article 6.2 of the DSU requires that the 
claims , but not the arguments  must all be specified sufficiently in  the request for the establishment of 
a panel".299 
7.139  However, we disagree with the United States in  that the identification of the like domestic 
product in a panel request merely amounts to argumenta tion.  It seems to us that in certain instances, 
such as the present one, the identification of the speci fic products at issue in a panel request pertains 
to the claim at issue, i.e., providing "a brief summary  of the legal basis of the complaint", rather than 
to the arguments relating to that claim.  Indeed, Article 2.1 of the TBT Agreement  defines the national 
treatment obligation it embodies in direct refere nce to the imported product and the like domestic 
product; both concepts serve to orient the determinati on of the scope of such an obligation.  Therefore, 
the identification of those two types of products in the panel request rather pertains to the realm of 
"providing a brief summary of the legal basis to the complaint" than purely to argumentation.   
7.140  The Panel acknowledges that, as explained by the Appellate Body in EC – Computer 
Equipment , "Article 6.2 of the DSU does not explicitly require that the products to which the 'specific 
measures at issue' apply be identified".300  Furthermore, the Appellate Body in EC – Chicken Cuts  
noted that "the identification of the product at issu e is generally not a separate and distinct element of 
a panel's terms of reference".301   
                                                      
296 Panel Report, Colombia – Ports of Entry, para. 7.30. 
297 In China – Publications and Audiovisual Products , the complainant (the United States) had 
specified in its panel request a particular list of relevant products (i.e. books, newspapers and periodicals).  The 
panel examined whether the use by the United States of such a limited list of publications in its panel request 
had been sufficient to put the respondent (China) on noti ce that it was making a claim with respect to a certain 
product (i.e. electronic publications).  The panel found that, given that the United States "expressly limited the 
scope of its claim to 'books, newspaper, and periodicals' and did not refer to the broader category of 
'publications'", China "could reasonably conclude, in good faith, that the United States was not including the 
treatment of electronic publications  in its claim".  Panel Report, China – Publications and Audiovisual Products , 
paras. 7.145 – 7.147.  In EC – IT Products, the panel found that the complainants (the United States, Japan and 
Chinese Taipei) had, inter alia , defined the multifunctional digital machines (the "MFMs") products in 
footnote 15 of their joint panel request.  According to the panel, as a result, the complainants had informed the 
European Union that their complaints were limited to the products defined in the footnote.  The panel thus found 
that the claim of inconsistency with Article II of th e GATT 1994 with reference to products other than the 
MFMs illustrated in footnote 15 of the joint panel request was outside the terms of reference of the panel.  Panel 
Report, EC – IT Products , paras. 7.1204-7.1205.   
298 United States' response to Panel question No. 83, para. 7. 
299 Appellate Body Report, EC – Bananas III , para. 143. 
300 However, as also explained by the Appellate Body in relation to certain WTO obligations, "in order 
to identify 'the specific measures at  issue', it may also be necessary to identify the products subject to the 
measures in dispute".  Appellate Body Report, EC – Computer Equipment , para. 67.  See also, Appellate Body 
Report, EC – Chicken Cuts , para. 165. 
301 Appellate Body Report, EC – Chicken Cuts , para. 165. WT/DS406/R 
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 7.141  We do not disagree with these prior findings and we should not be misinterpreted as saying 
that a complainant must in all cases identify the products to which the meas ure at issue applies in 
order to comply with Article 6.2.  We are saying that when the complainant has specified the products 
in its panel request, as in the present case, and when  the claim pertains to a WTO obligation that 
requires a comparison of particular products, as in the present case, such id entification becomes an 
integral part of the panel's terms of referen ce, and cannot be "cured" through argumentation.302 
7.142  Indonesia has argued that its reference to menthol  cigarettes in its Panel Request is just an 
example.  The wording of its Panel Request does not  seem to coincide with that view.  Indeed, as 
explained above, Indonesia's Panel Request states that "banning clove cigarettes in the United States 
while exempting menthol cigarettes  from the ban is inconsistent", inter alia , with "Article III:4 of the 
GATT 1994 because the measure provides treatment to an  imported product, clove cigarettes, that is 
'less favourable' than that accord ed to a like domestic product, menthol cigarettes " (emphasis 
added).303  Similarly, Indonesia's Panel Request claims th at the measure at issue is inconsistent with 
"TBT Article 2.1 because the measure results in tr eatment that is 'less favourable' to imported clove 
cigarettes than that accorded to a like domestic product, menthol cigarettes "304 (emphasis added).  
This wording does not seem to us to be referring to menthol cigarettes simply as an example, but 
rather as identifying menthol cigarettes as the domestic like product at issue.  If  it were to serve only 
as an example, we would have expected Indonesia to say so or at least include language implying it.  
Moreover, if the domestic product identified in Ind onesia's Panel Request should be treated as a mere 
example, then given how the claim is phrased, it would necessarily follow that the imported product identified in the Panel Request (i.e., clove cigare ttes) should also be treated as a mere example, 
meaning that Indonesia would have been in principl e free to expand the scope of its national treatment 
claim in its subsequent submissions to include not only clove cigarettes, but also one or more other 
types of imported products.  
7.143  Indonesia also tells us that the mere fact that in the request for the establishment of a panel it 
referred only to menthol cigarettes did not prejudice the United States 
305, and points out that the 
United States concurs that the Panel would not ex ceed its terms of reference should it include both 
menthol and regular cigarettes in its likeness analysis.306   
7.144  Indonesia is right to point to the important due  process role that a panel request plays in 
delimiting a panel's terms of reference.  In fact , "[d]ue process consider ations … caution against 
allowing measures and products into the Panel's terms of referen ce that a respondent party had not 
received notice of".307 (emphasis added) 
7.145  But due process concerns are of relevance not onl y to the right of a respondent to know the 
extent of the claims against it; but also in respect  of other WTO Members with an interest in the 
dispute.  In this respect, the Appellate Body in US – Carbon Steel  clarifies that "the terms of reference 
and the request for the establishment of a panel on which they are based, serve the due process  
                                                      
302 Recently, the Appellate Body has reiterated that: "a  party's submissions du ring panel proceedings 
cannot cure a defect in a panel request.  We consider this principle paramount in the assessment of a panel's 
jurisdiction.  Although subsequent events in panel proceedings, including submissions by a party, may be of 
some assistance in confirming the mean ing of the words used in the panel request, those events cannot have the 
effect of curing the failings of a deficient panel request.  In every dispute, the panel's terms of reference must be 
objectively determined on the basis of the panel request as it existed at the time of filing."  Appellate Body 
Report, EC and certain member States – Large Civil Aircraft , para. 642 (citing Appellate Body Report, EC – 
Bananas III , para. 143;  Appellate Body Report, US – Carbon Steel , para. 127). 
303 Indonesia's Panel Request, WT/DS406/2, p. 1. 
304 Indonesia's Panel Request, WT/DS406/2, p. 2. 
305 Indonesia's response to Panel question No. 83, para. 12. 
306 Indonesia's response to Panel question No. 83, para. 14. 
307 Panel Report , EC – IT Products , para. 7.1202.  WT/DS406/R 
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 objective of notifying the parties and third parties of the nature of a complainant's case" (emphasis 
added).308   
7.146  We would go further and include the rights of  all WTO Members who have a right to make 
their interest in a particular dispute known and to re quest to join the proceedings as third parties.  We 
could easily contemplate the possibility that a WTO Member may have decided not to join as a third 
party to this dispute in the belief that the dispute only concerned clove and menthol cigarettes.  It is 
thus not unthinkable that there might have b een a different reaction among tobacco-producing WTO 
Members if Indonesia had either included regular ciga rettes in its Panel Request or simply referred to 
domestic cigarettes instead of just to menthol. 
7.147  In light of the above, we feel compelled to conclude that we are bound by Indonesia's 
summary of the legal basis of its national treatment complaint, which identifies the products at issue 
as imported clove cigarettes versus  domestic menthol cigarettes.  In our view, we would be exceeding 
our terms of reference if we were to expand th e scope of Indonesia's national treatment claim by 
including domestic regular cigarettes in our examination.   
7.148  With that in mind, we will examine each of the four criteria of the traditional likeness analysis 
in turn.  We recall that the Appellate Body has ruled that panels which decide to follow this path must 
examine "the evidence relating to each  of those four criteria and, then, weigh …  all  of that 
evidence, along with any other relevant evidence, in making an  overall   determination of whether the 
products at issue could be characterized as 'like'".309  We also recall that the Panel, once all the 
relevant evidence has been examin ed, must determine whether "that evidence, as a whole, indicates 
that the products in question are 'like' in terms of the legal provision at issue"310, i.e., in terms of 
Article  2.1 of the TBT Agreement .   
The properties, nature and qualit y of the products concerned   
7.149  The Report of the GATT Working Party on Border Tax Adjustments  established that the first 
criterion that should be analysed when assessing "likeness" is the properties, nature and quality  of the 
products.  In EC – Asbestos , the Appellate Body clarified that this first criterion covers the physical 
qualities and characteristics of the products.311  In that same dispute, the Appellate Body instructed 
panels to "examine fully the physi cal properties of products" and, in particular, as it was in the context 
of an Article III:4 of the GATT 1994 analysis, to "exa mine those physical properties of products that 
are likely to influence the competitive relationship between products in the marketplace".312 
7.150  As we explained before, we are bound to  examine likeness under Article 2.1 of the 
TBT Agreement  in its own context and that of the TBT Agreement.  As we also explained, the absence 
of similar wording to that of the general pr inciple in Article III:1 of the GATT 1994 in the 
TBT Agreement makes us reluctant to import a competition-a pproach analysis in our interpretation.  
We do however transpose the above conclusions fr om the Appellate Body in our analysis under 
Article 2.1 of the TBT Agreement  as the Panel's duty to examine those physical properties that are of 
relevance to the immediate purpose of Section 907( a)(1)(A), namely the presence of a characterizing 
flavour in the cigarettes. 
                                                      
308 Appellate Body Report, US – Carbon Steel, para. 126;  Panel Report, Colombia – Ports of Entry , 
para. 7.23.   
309 Appellate Body Report, EC – Asbestos, para. 109.   
310 Appellate Body Report, EC – Asbestos , para. 103. 
311 Appellate Body Report, EC – Asbestos, para. 110.   
312 Appellate Body Report, EC – Asbestos, para. 114.   WT/DS406/R 
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 7.151  The Appellate Body further explained that the different "likeness" criteria are interrelated.  
For example, as regards the physical properties of a product, the Appellate Body observed that they 
shape and limit the end-uses to which the products can be devoted, and that tariff classification clearly 
reflects the physical properties of a product.313 
7.152  Nevertheless, the Appellate Body called fo r a separate and thorough examination of each 
criterion and thus underscored the importance of a full examination of the physical characteristics of a 
product by the panel: 
"Although not decisive, the extent to which products share common physical 
properties may be a useful indicator of 'likeness'.  Furthermore, the physical 
properties of a product may also influence how the product can be used, consumer 
attitudes about the product, and tariff classifica tion.  It is, therefore, important for a 
panel to examine fully the physical character  of a product.  We are also concerned 
that it will be difficult for a panel to draw the appropriate conclusions from the 
evidence examined under each criterion if a panel's approach does not clearly address 
each criterion separately, but rather entwin es different, and distinct, elements of the 
analysis along the way."314 
7.153  The Appellate Body insisted that the separate an alysis of the physical characteristics criterion 
must not be intermingled with the examination of end-uses.315  It is also worth noting that products 
with quite different physical properties may, in some  situations, be capable of performing similar or 
identical end-uses, but this does not mean that they are equivalent.  In the view of the Appellate Body, 
although the end-uses may be "equivalent ", the physical properties of the products may not be thereby 
affected and the products w ould thus remain different.316 
7.154  It is worth emphasizing the relevance of th e health risk-related features in a likeness 
examination317, which the Appellate Body has situated with in the realm of the physical properties of 
the products at issue.318  In our case, though, it is medically prov en and conceded by the parties that 
all cigarettes are toxic.  In general terms, both par ties agree that the relative toxicity of clove, menthol 
and regular cigarettes is not an issue in this dispute.319  The United States confirms this view but 
appears to suggest that clove cigarettes may be more  dangerous than other ci garettes.  We will cover 
this in more detail when concluding on the co mparison of the various products at issue. 
                                                      
313 Appellate Body Report, EC – Asbestos , para. 102. 
314 Appellate Body Report, EC – Asbestos, para. 111.   
315 Appellate Body Report, EC – Asbestos, para. 111.   
316 This was the Appellate Body's response to a panel's conviction that when two products can be used 
for the same end-use, their " properties   are then  equivalent , if not identical."  The Appellate Body 
disagreed.  Appellate Body Report, EC – Asbestos, paras. 111-112.   
317 The Appellate Body in EC – Asbestos  indicated that "[w]e are very much of the view that evidence 
relating to the health risks associated with a product ma y be pertinent in an examination of 'likeness' under 
Article III:4 of the GATT 1994." Appellate Body Report, EC – Asbestos, para. 113. 
318 In EC – Asbestos , the Appellate Body found that the carcinogenic properties of chrysotile asbestos 
fibres were not shared to the same extent with PCG fibres.  The Appellate Body observed that  
"Panels must examine fully the physical properties of products.  In particular, … those 
physical properties of products that are likely to influence the competitive relationship 
between products in the market place.  In th e cases of chrysotile asbestos fibres, their 
molecular structure, chemical composition, and fibrillation capacity are important because the 
microscopic particles and filaments of chrysotile asbestos fibres are carcinogenic in humans, 
following inhalation."   
The Appellate Body referred to carcinogenicity as "a defining aspect of the physical properties of 
chrysotile asbestos fibres"  Appellate Body Report, EC – Asbestos, para. 114. 
319 Indonesia's first written submission, para. 57; Indonesia's second written submission, para. 71.  WT/DS406/R 
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 7.155  Accordingly, we will proceed to examine the ph ysical properties of imported clove cigarettes 
and domestic menthol cigarettes on the basis of the evidence provided by the parties.  We recall that 
the parties to this dispute have framed the nati onal treatment analysis in terms of categories of 
cigarettes (i.e., clove, menthol and regular  cigarettes), instead of individual cigarette brands.320  
Accordingly, the evidence that they have submitted  focuses on general features attributable to each 
category, rather than the exact ingredients that a gi ven cigarette brand may contain.  Such information 
is, in fact, proprietary to the manufacturer.321 
7.156  The question before the Panel is, in  line with the Appellate Body in EC – Asbestos , "the 
degree or extent to which products must share qualities or characteristics in order to be 'like 
products'".322  We recall that Section 907(a)(1)(A) is a technical regulation that regulates cigarettes 
having a characterizing flavour, which may be understood as having an additive that produces a 
distinguishing flavour, taste or aroma.  The presence of such an additive should therefore be part of 
the characteristics that a cigarette must have to  be "like" for the purpose of this dispute. 
Properties, nature and qua lity of clove cigarettes 
7.157  From the evidence presented by the parties, we can conclude that clove cigarettes are 
composed of tobacco combined w ith flavouring substances, which is  presented to the consumer in a 
paper wrapper with a filter.323  Clove cigarettes are, as is the case of menthol cigarettes, "Class A" 
cigarettes for U.S. tax purposes and comply with the U.S. definition324 of cigarette.325 
7.158  Clove cigarettes are generally manufactured with 60 per cent to 80 per cent tobacco 
content.326  Additionally, clove cigarettes usually cont ain a blend of different types of tobacco.327  In 
terms of the types of tobacco that compose the bl end, Indonesia submits that the tobacco composition 
is usually the following: (i) Virginia/bright tobacco , which is flue cured, accounts for approximately 
25 per cent to 50 per cent; (ii) Oriental tobacco, which is sun-cured, ranges from 25 per cent to 35 per cent; (iii) Burley tobacco, which is air-cur ed, accounts between 0 per cent and 10 per cent; and 
(iv) Java tobacco (the local Indonesian tobacco), wh ich is sun-cured, is present from 20 per cent to 
30 per cent.
328  Indonesia further explains that Java tob acco is similar to Burley tobacco, but the 
former is sun-cured instead of air-cured.329  The United States, by contrast, submits that clove 
cigarettes usually contain Virginia and Java tob acco, each making up approximately 30 per cent of the 
content of the cigarette.330 
                                                      
320 Indonesia's first written submission, para. 54; Indonesia's response to Panel question No. 27; 
United States' first written submission, para. 154. 
321 Indonesia's second written submission, para. 69; Un ited States' responses to Panel question Nos. 32 
and 33. 
322 United States' second written submission, para. 109. 
323 Indonesia's first written submission, para. 54; Indon esia's second written submission, para. 67.  We 
note that Exhibit IND-29 (p. 2) describes clove cigarettes as usually machine rolled, available with or without 
the filters, and sold in brightly coloured packages. 
324 The definition of cigarette contained in 26 U.S.C. §5702(b) provides as follows:  
"(1) any roll of tobacco wrapped in paper or in  any substance not containing tobacco, and (2) 
any roll of tobacco wrapped in any substan ce containing tobacco which, because of its 
appearance, the type of tobacco used in the filler,  or its packaging and labeling, is likely to be 
offered to, or purchased by, consumers as a cigarette described in paragraph (1)." 
325 Indonesia's first written submission, para. 55. 
326 Exhibit IND-29; United States' first written submission, para. 163. 
327 Indonesia's response to Panel question No. 33; United States' response to Panel question No. 33. 
328 Indonesia's response to Panel question No. 33. 
329 Indonesia's response to Panel question No. 33. 
330 United States' response to Panel question No. 33. WT/DS406/R 
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 7.159  As regards additives, clove cigarettes cont ain approximately 20 per cent to 40 per cent 
cloves331, either in the form of clove buds or ground/minced332 cloves.  As the United States argues, it 
seems that the clove additive can also be clove oil, or any combination of the three (i.e., clove buds, 
minced cloves and clove oil).333  We also understand that ground cloves contain about 20 per cent 
clove oil.334 
7.160  Clove cigarettes generally include a "sauce" as part of the flavouring ingredients chosen by 
each manufacturer.335  In fact, the United States submits, this  "sauce" is touted by manufacturers as a 
distinguishing physical feature of clove cigarettes.336  Indonesia clarifies that  this "sauce" contains 
"vanilla, sugars, mint, licorice, fruit concentrates and liquors".337 
7.161  We note that the parties have extensively ar gued about the presence of eugenol in clove 
cigarettes and the resulting toxicity of clove cigarettes.  The United States points out that eugenol is one of the active ingredients in clove oil and defines it as "a common topical anesthetic used in dental 
procedures".
338  The United States contends that clove cigarettes are sweetly aromatic, and smoking 
the product may cause some numbing of the mouth to occur.339  The United States reasons that 
eugenol has the effect of removing much of the unpleasantness of cigarette smoking for new 
smokers340, which makes "[t]he clove cigarette ... nearly ideal in design as a 'trainer' cigarette for 
capturing young people as smokers."341  The United States argues that  evidence shows that clove 
                                                      
331 Indonesia provides in Exhibit IND-29 that the clove additive ranges around 20 per cent to 
40 per cent. Subsequently, in response to Panel question No. 28, Indonesia lowers the minimum clove content to 
15 per cent.  The United States submits in paragraph 36  of its first written submission that cloves account for 
30 per cent to 40 per cent of the content of clove cigarettes. 
332 We note that Indonesia uses the term "ground cl oves", while the United States refers to "minced 
cloves".  They appear to be referring to the same thing. 
333 United States' response to Panel question No. 28. 
334 Indonesia's response to Panel question No. 28. 
335 United States' first written submission, para. 165. 
336 United States' second written submission, para. 113. 
337 Indonesia's response to Panel question No. 29. The United States provides in its first submission an 
excerpt from PT Djarum's website, which describes cl ove cigarettes and mentions a "secret sauce":   
"It is not just the cloves that make kretek special, but also the secret sauce that adds to its 
enjoyment.  Blending the unique taste of tobacc o, fruit and herb extracts, and other natural 
flavorings, some say the kretek sauce recipe is more closely guarded than that of Coca Cola.  
Known only by two or three members of each  kretek company, the sauce is used to soften  the 
bite of tobacco and the pungency of clove.  And, to further enhance the flavor, the tip of the 
kretek is sweetened .  All adds to a richer and fruity taste, sweet-scented  aroma and pleasant  
aftertaste than any regular cigarettes, and well-appreciated by kretek connoisseurs." 
United States' first written submission, para. 36 .  Demirtas, "Djarum Cigarettes & Cigars," 
http://www.demirtas.com.tr /Djarum.htm (emphasis added) (Exhibit US-39). 
338 United States' first written submission, para. 38; citing Guidotti & Laing, "Clove Cigarettes," The 
Western Journal of Medicine, at 538 (August 1992) ("Clove Cigarettes") (Exhibit US-41); CDC 
Article Regarding Epidemiology and Illnesses Possibly Associated with Cloves (Exhibit US-37). 
339 The United States refers to Clove Cigarettes  (Exhibit US-41), at 537; Clove Cigarettes: the Basis 
for Concern  (Exhibit US-38) at 222. 
340 Clove Cigarettes  (Exhibit US-41) at 537. 
341 United States' first written submission, para. 38; citing Clove Cigarettes: the Basis for Concern  
(Exhibit US-38) at 226; Susan Farr er, "Alternative Cigarettes May Deliver More Nicotine Than Conventional 
Cigarettes," National Institute on Drug Abuse ("NIDA"), Vol. 18, No. 2 (August 2003) ("Alternative Cigarettes 
May Deliver More Nicotine Than Conventional Cigarettes ") ("Clove cigarettes are sometimes referred to as 
'trainer cigarettes' and may serve as 'gateway' products that introduce young people to smoking.") 
(Exhibit US-42);  CDC Article Regarding Epidemiology and I llnesses Possibly Associated with Cloves  ("Use of 
clove cigarettes may be changing the smoking patterns of American teenagers.  Some researchers have 
suggested that eugenol anaesthetizes the backs of sm okers' throats and tracheas, permitting deeper inhalation 
and possibly encouraging smoking in person who might otherwise be dissuaded by the harshness of regular  WT/DS406/R 
 Page 61 
 
 
 cigarettes involve unique health risks to individual users.342  According to the United States, eugenol 
is suspected of causing aspiration pneumonia or direct lung toxicity.343 
7.162  Indonesia does not deny that clove cigarettes cont ain eugenol and explains that clove oil is 
known chemically as eugenol344, and that eugenol can be found in clove buds.345  With respect to the 
allegations by the United States on the numbing effect s of eugenol, Indonesia specifies that there is no 
scientific research on humans to prove that euge nol in clove smoke numbs the throat.  Rather, 
Indonesia argues, more recent studies cast doubt on the proposition that eugenol desensitizes the 
throat.  Further, Indonesia submits that the same allegation of numbing the throat has been made 
regarding the use of menthol in cigarettes.346 
7.163  We note that both parties agree that the Polzin paper347, a study on certain ingredients of 
Indonesian clove cigarettes, shows that 19 of 33  clove cigarette brands analysed contained 
coumarin.348  According to the United States, coumarin is a chemical linked to hepatoxicity in humans 
which is no longer found in most cigarettes.  In one study, the United States explains, 64 per cent of 
clove cigarette brands tested contained coumarin at levels between 9.2 and 215 μg per cigarette.  By 
contrast, only a single brand of 68 conventiona l cigarettes available in the United States had 
detectable levels of coumarin.  The United St ates stresses that coumarin is banned as a food-
flavouring agent in the United States, and is currently listed by the FDA among "Substances 
Generally Prohibited from Direct Addition or Use as Human Food".349  It does however admit that 
coumarin has not been banned as an additive in cigarettes.350  Indonesia puts forward a number of 
arguments on the toxicity and presence of coumarin in the cigarettes at issue.  First, it notes that not 
all clove cigarettes contain coumarin, while some U. S. menthol and regular cigarettes do contain this 
ingredient.  Second, coumarin is simply a natural constituent of many types of tobacco.  Finally, 
Indonesia stresses that the United States itself a llows coumarin as an additive in cigarettes.351  
                                                                                                                                                                     
cigarettes.") (Exhibit US-37); Clove Cigarettes , at 538 ("Of equal concern has been the potential for 
conditioning smoking behaviour among adolescents.  Clove cigarettes are a less noxious smoking habit because 
of their acceptable taste and an aesthetic effect on mu cous membranes that lessening discomfort.  The habit has 
been associated with many social tre nds important among adolescent peer groups . . . . As such, clove cigarettes 
may represent a dangerous potential for initiating pr eviously inexperienced smokers to the habit.") 
(Exhibit US-41); Committee on Substance Abuse, "Hazards of Clove Cigarettes," Pediatrics, Vol 88, at 395 
(1991) ("Clove cigarettes should be suspected as a gateway drug because of their properties and the manner in 
which they are smoked.  Because the e ugenol in the clove cigarette acts as a topical anesthetic to the posterior 
oropharynx, it reduces the noxious elements of smoki ng.  Thus it may facilitate the learning of smoking 
techniques, both regular inhalation and the deep inhalation toking technique used in marijuana smoking.  In 
addition, the aroma and mystique of the use of clove cigarettes have made them very popular among those 
nondrug-using adolescents who are seekin g to be accepted by and participate in the experiences of a drug-using 
peer group.") (Exhibit US-43). 
342 United States' response to Panel question No. 38(b), paras. 90-94.  See also WHO, "The Scientific 
Basis of Tobacco Product Regulation", at 35 ("Bidis ... and Kreteks (clove-flavoured tobacco cigarettes, often 
imported from Indonesia) are alternativ e tobacco products that have higher co ncentrations of nicotine, tar, and 
carbon monoxide than conventional cigarettes. ... Kretek smoking is associated with increased risk for lung 
damage and abnormal lung function.")  Exhibit US-113; Exhibit US-37, Exhibit US-38, Exhibit US-45, 
Exhibit US-48, Exhibit US-105. 
343 United States' response to Panel question No. 38; Exhibit US-37, US-38 and US-41. 
344 Indonesia's first written submission, para. 55. 
345 Indonesia's response to Panel question Nos. 28 and 30; United States' response to Panel question 
No. 28. 
346 Indonesia's second written submission, para. 45. 
347 Exhibit US-45. 
348 Indonesia's response to Panel question No. 34; United States' response to Panel question No. 34. 
349 21 CFR 189.130.  United States' first written submission, para. 166. 
350 United States' first written submission, para. 166, footnote 210. 
351 Indonesia's second written submission, paras. 73 and 75. WT/DS406/R 
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 Indonesia adds that the U.S. Secretary of Health and Human Services ("HHS") is required to report to 
Congress any ingredient in cigarettes that may pose h ealth risks to smokers, and that the HHS has not 
done so with eugenol nor coumarin.352 
7.164  Finally, Indonesia clarifies that clove cigarette s also contain other components inherent to 
cloves, such as benzyl acetate, methyl salic ylate, trans anethole and methyl eugenol.353 
7.165  The United States argues that evidence shows that clove cigarettes involve unique health risks 
to individual users.354 Indonesia responds that there is no evidence that clove cigarettes are more toxic 
or pose greater health risks355 than domestically-produced regular or menthol cigarettes and thus, 
because there is no difference in toxicity, there is  no difference in their physical characteristics.356 
Properties, nature and quali ty of menthol cigarettes 
7.166  From the evidence presented by the parties, we  can conclude that menthol cigarettes are 
composed of approximately 90 per cent of tobacco  by weight.  As regards the type of tobacco, 
generally menthol cigarettes are made from a blen d of Virginia, Maryland burley, Oriental and 
reconstituted tobacco.357  The March 2011 TPSAC Report specifies that "[m]enthol cigarettes are 
typically blended using more flue-cured and less burley tobacco … because some of the chemicals in 
burley tobaccos create an incompatib le taste character with menthol."358 
7.167  The main additive in menthol cigarettes is menthol oil.  Menthol is a chemical compound 
extracted from the peppermint plant ( Mentha piperita) , the corn mint ( Mentha arvensis ) or produced 
by synthetic or semi-synthetic means.359  According to the March 2011 TPSAC Report, some cigarette 
manufacturers only use natural menthol oil, while others use a mixture of natural and synthetic 
menthol.  The March 2011 TPSAC Report establishes th at menthol is added to cigarettes in the 
following ways:  (a) by spraying th e cut tobacco during blending;  (b) by applying it to the pack foil;  
(c) by injecting it into the tobacco stream;  (d) by injecting it into the filter;  (e) by inserting a 
crushable capsule in the filter;  (f) by placing a ment hol thread in the filter;  (g) any combination of 
the above.  In any event, menthol diffuses throughout the cigarette, irrespective of the original place 
of application.360 
7.168  According to the March 2011 TPSAC Report, menthol is added to cigarettes both as a 
characterizing flavour (higher levels of menthol) and fo r other taste reasons (lower  levels of menthol).  
These other taste reasons include brightening the flav our of tobacco blends and/or smoothing the taste 
                                                      
352 Indonesia's second written submission, paras. 41, 49 and 75;  Indonesia's second oral statement, 
para. 52. 
353 Indonesia's response to Panel question No. 30. 
354 See footnote 342 above. 
355 The Appellate Body has considered that toxicity is  a physical quality that must be considered when 
examining the physical properties of a product as part of a determination of "likeness" under Article III:4 of the 
GATT 1994.  Appellate Body Report, EC – Asbestos, para. 114.   
356 Indonesia's first written submission, paras. 55and 57. 
357 United States' response to Panel question No. 31 .  Indonesia did not provide the Panel with any 
specific information in this regard. 
358 March 2011 TPSAC Report, p. 19.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
359 United States' first written submission, para. 31; March 2011 TPSAC Report, p. 19. 
http://www.fda.gov/downloads/Adviso ryCommittees/CommitteesMeetingMat erials/TobaccoProductsScientific
AdvisoryCommittee/UCM247689.pdf. 
360 March 2011 TPSAC Report, p. 19.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf.  WT/DS406/R 
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 of the blend.361  Further, menthol may have cooling, analgesic or irritating properties362, and is 
reported to reduce sensitivity to noxious chemicals, including nicotine.363  In fact, adds the 
March 2011 TPSAC Report, "smokers report that menthol reduces irritation and that menthol 
cigarettes are less harsh and smoother than non-menthol cigarettes."364 
7.169  This additive amounts to approximately 1 per cent of the ingredients contained in the 
cigarette, although the specific amount varies from brand to brand.  In this regard, Indonesia argues 
that the menthol content is reported to range up to 3 percent365, while the United States specifies that 
some menthol brands may have "slightly more  or less than 1 per cent of menthol oil".366  In terms of 
menthol levels, the United States highlights that such  levels in brands marketed as menthol cigarettes 
range between 0.15-0.58 mg/cigarette.367  The March 2011 TPSAC Report specifies that "[i]n a recent 
survey of 48 U.S. menthol cigarette brands and sub- brands, the average menthol content in cigarettes 
by weight was 2.64 mg/cigarette, with a range from 1.61 to 4.38 mg."368 
7.170  Indonesia submits that menthol cigarettes also have their own flavouring agents, which are 
referred to as "sauce" or "casing".369  In this regard, the United St ates argues that the special sauce 
used by Indonesian clove cigarettes is not the same  "casing" used in all cigarettes, including menthol 
cigarettes.370  The United States explains that the flavou r imparted by the sauce is part of the essential 
flavour and identity of the products.371  Indonesia replies that it has never argued that the "sauce" or 
"casing" in clove cigarettes is identical to that used  in menthol or regular flavoured cigarettes; rather, 
it has submitted that each brand of cigarettes has a unique proprietary blend of ingredients that give 
them a unique taste.372   
7.171  Regarding its health effects, Indonesia argues th at menthol has been claimed to have numbing 
properties.  This seems to be confirmed by th e March 2011 TPSAC Report, which establishes that the 
effects that appear to appeal to menthol smokers include cooling effects, antiseptic effects, numbing and anaesthetic effects.
373  Further, the parties dispute whether menthol cigarettes also contain 
eugenol and coumarin.374  As mentioned before, Indonesia argues that menthol cigarettes also contain 
these additives375, whereas the United States refutes that on the basis of a study conducted in 2010 
showing that none of the "regular" or menthol cigarette brands contained either eugenol or 
coumarin.376  In response to this argument, Indonesia argues that the real reason why eugenol and 
coumarin were not detected in the study conducte d in 2010 is "because the United States 'rigged' the 
                                                      
361 March 2011 TPSAC Report, pp.19-20.  http ://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
362 March 2011 TPSAC Report, p. 18.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
363 March 2011 TPSAC Report, p. 22.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
364March 2011 TPSAC Report, p. 25.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
365 Indonesia's response to Panel question No. 32. 
366 United States' response to Panel question No. 32. 
367 United States' first written submission, para. 171; United States' response to Panel question No. 32. 
368 March 2011 TPSAC Report, p. 20.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
369 Indonesia's second written submission, para. 69. 
370 United States' response to Panel question No. 87. 
371 United States' response to Panel question No. 87, para. 19. 
372 Indonesia's comments to the United States' response to Panel question No. 87. 
373 March 2011 TPSAC Report, p. 103.  http://www.fda.gov/downloads/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tob accoProductsScientificAdviso ryCommittee/UCM247689.pdf. 
374 Indonesia's second written submission, para. 74. 
375 Indonesia's second written submission, para. 72, referencing Exhibit US-71. 
376 United States' response to Panel question No. 86. WT/DS406/R 
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 system so that eugenol and coumarin would not be detected"377 by setting higher limits of detection 
for these ingredients. 
A comparison of the properties, nature a nd quality of clove and menthol cigarettes 
7.172  We proceed now to compare the physical proper ties, nature and qualities of both types of 
relevant cigarettes. 
7.173  We note that Indonesia argues that clove ci garettes and domestically-produced cigarettes, 
including menthol cigarettes, have the same physical characteristics.378  In its second written 
submission, Indonesia nuances this position by asser ting that "[a]lthough Indonesia agrees that the 
ingredients in a clove cigarette differ in some r espects from the ingredients in menthol- and tobacco-
flavoured cigarettes, these differe nce[s] are not determinative".379 
7.174  The United States responds that Indonesia only addresses a few generic characteristics when 
arguing that the cigarettes at issue are alike, and thus ignores the characteristics most relevant to the 
marketplace.380  The United States further submits that "the key interpretive task is to determine which 
similarities and differences are significant and relevant  to determining likeness in this particular case, 
and for this task, the context of the provisions a nd Agreements at issue and the factual circumstances 
of the case are essential".381  Accordingly, for the United States,  the likeness analysis should consider 
not only the nature of the competitive relationship,  but also the basis upon which Section 907(a)(1)(A) 
is based.382 
7.175  Before addressing the comparison between clove  and menthol cigarettes, we consider it 
important to address the definition of "characterizin g flavour", as it is one of the core elements of 
Section 907(a)(1)(A).  As mentioned above, in response to a question from the Panel, the 
United States explained that a Senate commentary in the legislative record of Section 907(a)(1)(A) 
clarifies that "[w]hile the term 'characterizing fla vor' is undefined in the legislation, it is intended to 
capture those additives that prod uce a distinguishing flavor, taste, or aroma imparted by the 
product."383  This, in our view, shows that, for the purpose of being regulated by Section 907(a)(1)(A), 
a cigarette must have an additive that produces a dist inguishing flavour, taste or aroma.  Accordingly, 
as explained in Section VII.D.2(c)(i) above, the Pane l will give greater weight in the likeness analysis 
to the fact that a cigarette contains an additive  which produces a distinguishing flavour, taste or 
aroma. 
7.176  From the arguments and evidence presented by the parties and described above pertaining to 
the description of the properties, nature and quality of clove and menthol cigarettes, we are able to 
reach the following conclusions. 
7.177  First, in general, clove and menthol cigarettes are made of tobacco combined with additives 
contained in a paper wrapper.  The predominant ingred ient in all of them is thus tobacco in quantities 
that range from 60 to 90 per cent.  The exact conten t of tobacco, the types of tobacco used, and the 
additives included change from brand to brand of  cigarettes within each type of cigarette. 
                                                      
377 Indonesia's comments to the United States' resp onse to Panel question No. 86 (Exhibit US-72).  
378 Indonesia's first written submission, para. 54. 
379 Indonesia's second written submission, para. 67. 
380 United States' first written submission, para. 161. 
381 United States' second written submission, para. 110. 
382 United States' second written submission, para. 111. 
383 United States' response to Panel question No. 14, para. 32.  The United States provides the 
following reference: 155 Cong. Rec. S64111 (June 10, 2009), Exhibit US-98.  WT/DS406/R 
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 7.178  Second, although both clove and menthol cigare ttes are predominantly composed of tobacco, 
what appears to differentiate both from regular cigarettes384 is the presence of an additive, which 
results in a distinguishing flavour, taste or aroma, other than plain tobacco.  This additive is, or is 
extracted from, an herb or a spice.   The fact that clove cigarettes  contain a substantial amount of 
clove buds385 and menthol cigarettes only contain approxi mately 1 per cent of menthol oil does not 
change the conclusion that in both instances, what ever brand we may examine, the presence of such 
additives substantially transforms  the flavour of the cigarette. 
7.179  Third, the addition of a "sauce" is not exclusiv e to clove cigarettes, as all cigarettes include a 
different combination of ingredients that give each ci garette brand a particular and distinct taste.  In 
other words, each brand has its own specific composi tion of ingredients and a dditives that is generally 
considered proprietary information. 
7.180  Several differences are however present between clove and menthol cigarettes, namely,  in 
general, clove cigarettes contain Java tobacco, eu genol and coumarin, while menthol cigarettes 
generally do not contain these components in signi ficant quantities or at all.  However, these 
differences appear to us as minor or secondary, becau se the main trait of these types of cigarettes is 
that they contain additives that produce characte rizing flavours to the cigarette and reduce the 
harshness of tobacco. 
7.181  Further, the United States argues that menthol and the clove buds contained in clove 
cigarettes are completely different physical products.386  This is important, argues the United States, 
because dried clove buds impart a sweet and spicy flavour and aroma and are often used in baked 
goods, candies, and beverages.387  Indonesia, in contrast, submits that clove cigarettes and menthol 
cigarettes both contain tobacco and an added ingred ient (i.e., an herb or spice) with soothing 
properties.  Indonesia submits that both clove oil a nd menthol are widely used in consumer products 
and are recognized as having an anaesthetic effect.388 
7.182  This, in our view, demonstrates that regardless of  the specific flavour of the additive (clove or 
menthol), the main trait of these types of cigarett es remains the same: they contain an additive that 
substantially imparts flavour to the cigarette a nd reduces the harshness of to bacco.  This fact is 
reinforced by the alleged numbing properties of bo th clove and menthol.  We consider that these 
similarities are highly significant in the context of this  dispute, in light of the fact that the immediate 
purpose of Section 907(a)(1)(A) is to regulate certain tobacco products with additives that provide 
them with a characterizing flavour with the public health objective of reducing youth smoking.  We find support for this conclu sion in a WHO Study entitled " The Scientific Basis of Tobacco Product 
Regulation"  which establishes the following: 
"Certain additives (menthol in manufactured cigarettes, eugenol in kreteks [i.e. clove 
cigarettes]) are added specifically to reduce the smoke harshness and enable the 
smoker to take in more dependence-caus ing and toxic substances. Many smokers 
smoke kreteks [i.e. clove cigarettes] and me nthol cigarettes, which are often marketed 
                                                      
384 With regard to the use of the term "regular ci garettes" see above, Section B, (iii), para. 7.8. 
385 We note that we are referring to imported clove cigarettes.  Indonesia submits that there was a 
domestic clove-flavoured cigarette ("A Touch of Clove") that had been sold by the U.S. company Nat Sherman 
before the entry into force of Secti on 907(a)(1)(A).  Indonesia argues that Nat Sherman's "Touch of Clove" did 
not contain natural clove; rather, it contained clove cr ystals in the filter to pr oduce an artificial clove 
flavour.  (Indonesia's first written submission, footnote 24).  In response to a question from the Panel, the 
United States explains that this type of cigarette was ma de "with clove flavor in the filter, rather than with 
cloves mixed into the tobacco" (United States' response to Panel question No. 28(a), para. 66).   
386 United States' first written submission, para. 171. 
387 United States' first written submission, para. 162. 
388 Indonesia's first written submission, para. 55. WT/DS406/R 
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 as less toxic; and the added ingredients possibly contribute to the perception that the 
cigarettes are less noxious and harmful".389 
7.183  As regards the toxicity, all of these cigarettes are harmful to health and may cause death.  
Both parties initially agreed that their relative toxicity  is not an issue in this dispute.  However, the 
United States appears to have changed its pos ition in its second written submission, where it 
maintained that certain additives contained in cl ove cigarettes, such as eugenol and coumarin, are 
harmful to health. 
7.184  Nonetheless, the evidence filed by the United St ates suggesting that the presence of eugenol 
and coumarin in clove cigarettes makes them more ha rmful to health does not lead us to a different 
conclusion in terms of toxicity.  Regardless of wh ether eugenol and coumarin might allegedly cause 
further health problems, the principal reason why ci garettes create health risks is the inhalation of 
combusted substances, which may cause different t ypes of cancer, different types of cardiovascular 
disease and various respiratory diseases and harms, among others.390   
7.185  Besides the alleged harmful effects of additives,  the United States argues that "[c]ompared to 
conventional (menthol or regular) cigarettes, clove cigarettes delive r more tar, nicotine, and carbon 
monoxide under machine-smoked conditions".391  Moreover, submits the United States, certain studies 
indicate that people inhale more deeply when smoking clove cigarettes, increasing the amount of 
nicotine extracted from each cigarette, making it possi ble for the smoker to achieve comparable blood 
concentrations of nicotine, even though clove ciga rettes contain less nicotine per cigarette than do 
conventional brands.392  Indonesia contests this by arguing that the Malson study393 acknowledged that 
estimates from machine smoking are not reliable indicat ors of delivery and rather, focused on clinical 
tests on human subjects showing that clove cigarette s produce identical increases in heart rate, blood 
pressure, plasma nicotine leve ls, and exhaled carbon monoxide.394   
7.186  In our view, this debate over the additional e ffects of clove cigarettes does not substantially 
alter the conclusion that clove and menthol cigarettes are harmful to health for the same reason:  the 
inhalation of combusted substances.  As mentioned a bove, the parties agree that, in general, cigarettes 
are harmful to human health and may cause cancer  and several cardiovascular and respiratory 
diseases.395 
7.187  Therefore, we find that, overall, the physical properties of both groups of cigarettes are 
similar.  The main reason is that they share thei r main traits as cigarettes, i.e., having tobacco as a 
main ingredient, and an additive which imparts a ch aracterizing flavour, taste and aroma, and reduces 
the harshness of tobacco.  We find useful guidance in the Appellate Body Report in EC–Asbestos , 
where the Appellate Body held that the degree or extent to which products must share qualities or 
                                                      
389 World Health Organization, "The Scientific Ba sis of Tobacco Product Regulation", WHO Technical 
Report Series 945 (2007) (Exhibit US-113) p. 11. 
390 Indonesia's first written submission, paras. 6, 57;  United States' first written submission, para. 14. 
391 United States' response to Panel question No. 38. 
392 United States' first written submission, para. 40; c iting scientific research, which using conventional 
smoking-machine analysis, has found that clove cigarettes produce more nicotine, tar and carbon monoxide than 
conventional cigarettes .  "Alternative Cigarettes May Deliver More Nicotine Than Conventional Cigarettes", 
(Exhibit US-42); see also "CDC Article Regarding Epidemiology and Illnesses Possibly Associated with 
Cloves" ("Exposure to tar, nicotine and carbon monoxide is higher from clove cigarettes than from regular 
American cigarettes.") (Exhibit US-37); Malston, et al. , "Clove Cigarette Smoking: Biochemical, Physiological, 
and Subjective Effects," Pharmacology Biochemistry and Behavior 74(3): 739-45 (February, 2003), 
http://www.ncbi.nlm.nih.gov/pubm ed/12543240 (Exhibit US-44). 
393 Exhibit US-44, quoted in Indonesia's second written submission, para. 53. 
394 Indonesia's second written submission, para. 54. 
395 Indonesia's first written submission, paras. 6, 57;  United States' first written submission, para. 14.  WT/DS406/R 
 Page 67 
 
 
 characteristics  is a relevant inquiry under the "likeness test".396  Thus, products do not have to be 
identical  in every respect. 
7.188  This conclusion is further reinforced by taking into account the measure at issue, 
Section 907(a)(1)(A), which is a technical regulation with the immediate purpose of regulating 
cigarettes with a characterizing flavour.  In this context, we find relevant  that clove and menthol 
cigarettes share common physical properties to a su bstantial extent as they both contain tobacco and 
an additive that provides them with a characterizing flavour . 
7.189  We recall that the United States has asked us to take into account the health objective of 
Section 907(a)(1)(A) when analysing likeness.  As we  explained before, we agree that the legitimate 
objective of reducing youth smoking that is behind the adoption of Section 907(a)(1)(A) should be 
taken into account in our analysis.  Precisely, Section 907(a)(1)(A) prohibits the presence of characterizing flavours in cigarettes on health grounds .  We find support in this to conclude that the 
presence of additives in both clove and menthol ciga rettes, which provide them with characterizing 
flavours, should weigh heavily in our likeness analysis. 
7.190  Notwithstanding the above conclusion, we will weigh these similarities and differences 
between clove and menthol cigarettes with all the ev idence on the other "likeness" criteria to make an 
overall  determination of whether the products at  issue could be characterized as "like".
397  
Accordingly, we will weigh the evidence under this first criterion with the end-uses  to which the 
products can be devoted and the consumer perceptions  towards these products.  In other words, we 
will examine the evidence on the physical properties of clove and menthol cigarettes with "first, the 
extent to which products are capable of performing the same, or similar, functions (end-uses), and, 
second, the extent to which consumers are willing to use the products to perform these functions 
(consumers' tastes and habits)".398    
The end-uses of the products 
7.191  The Appellate Body has defined this criterion as "t he extent to which products are capable of 
performing the same, or similar, functions (end-uses)".399  In the context of an analysis of Article III:4 
of the GATT 1994, the Appellate Body has ruled that  the end-use criterion involves certain of the key 
elements relating to the competitiv e relationship between products in so far as "the extent to which 
products are capable of performing the same, or si milar, functions (end-uses)".  The Appellate Body 
notes that "evidence of this type is of partic ular importance under Article III of the GATT 1994, 
precisely because that provision is concerned with competitive relationships in the marketplace.  If 
there is – or could be – no competitive relations hip between products, a Member cannot intervene, 
through internal taxation or regulation, to pr otect domestic production."  Accordingly, for the 
Appellate Body, evidence about the extent to whic h products can serve the same end-uses is highly 
relevant in a likeness analysis under Article III:4 of the GATT 1994.400  A question for the Panel is 
whether this is also the case for an  analysis under Article 2.1 of the TBT Agreement .  As we have 
explained before, we are not persuaded that a funda mentally competition-based analysis would always 
be the correct  approach in analysing likeness under Article 2.1 of the TBT Agreement . 
7.192  The Appellate Body warns panels not to confuse the analysis of the end-use criterion with the 
analysis of the physical characteristics of the products401 and that of consumer tastes and habits.  In 
                                                      
396 Appellate Body Report, EC – Asbestos , para. 92. 
397 Appellate Body Report, EC – Asbestos, para. 109. 
398 Appellate Body Report, EC – Asbestos , para. 117. 
399 Appellate Body Report, EC – Asbestos , para. 117. 
400 Appellate Body Report, EC – Asbestos , para. 117. 
401 Appellate Body Report, EC – Asbestos, para. 111.   WT/DS406/R 
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 regard to the latter, the Appellate Body explains that end use deals with the extent to which two 
products are capable of performing the same functi ons, while consumer tastes and habits deals with 
"the extent to which consumers are willing to  use the products to perform these functions".402 
7.193  As the Appellate Body explained, "[i]t is only by forming a complete picture of the various 
end-uses of a product that a panel can assess the sign ificance of the fact that products share a limited 
number of end-uses."403 
7.194  The Appellate Body has ruled that the ev idence on the end-uses (and of consumer 
preferences) of the products is especially relevant  in cases where the eviden ce relating to properties, 
nature and quality of the products indicates that the products at issue are physically quite different. 404  
We do not consider this to be the case in this dispute.   
7.195  Indonesia's argument on the end-use criterion is rather succinct: "[t]he end use of all 
cigarettes, including clove and menthol cigarettes, is the same – that is, they are used to smoke 
tobacco."405  The United States, however, submits that ci garettes actually have a number of end-uses 
and are not just used to "smoke tobacco."  In its view, cigarettes have at least two other end-uses in 
the United States, which clove, menthol and tobacco cigarettes serve in differing degrees:406 (i) the 
end-use of satisfying an addiction to nicotine407, and (ii) the end-use of creating a pleasurable 
experience associated with the taste of the cigarette and the aroma of the smoke.408  The United States 
adds that "[r]egular and occasional use of cigarett es could be described as different "end-uses" in the 
United States".409  Further, argues the United States, their "regular market" has been dominated by 
tobacco-flavoured and menthol cigarettes. In addition to this market, there is an "occasional cigarette 
market" composed of cigarettes that are smoked l ess prevalently, which seek to appeal to novice 
smokers and to regular young smokers by creating the impression of a "special" or "indulgent" 
smoking experience.  
7.196  Indonesia contests that delivery of nicotine is a distinct end-use and considers it a 
consequence of the end-use of smoking tobacco since all tobacco products contain nicotine.410  In any 
event, Indonesia argues, the United States has not de monstrated that the end-uses of clove cigarettes 
and menthol- or tobacco-flavoured cigarettes are di fferent.  With respect to the United States' 
proposed end-use of satisfying an addiction to nicoti ne, Indonesia submits that all three cigarettes at 
issue deliver nicotine when smoked and that the amount of nicotine delivered from a cigarette is 
determined by how much smoke is drawn from a cigarette.411 Indonesia further explains that 
(i) smokers expose themselves to as much smoke as necessary to obtain a specific, satisfying quantity 
of nicotine412, and (ii) the United States itself provided a study showing that subjects' nicotine blood 
levels and heart rates were exactly the same after smoking a clove cigarette and a regular cigarette.   
7.197  As regards the second end-use proposed by th e United States of "providing a pleasurable 
experience", Indonesia argues that this is not an end- use, but a consumer behaviour.  Indonesia refers 
                                                      
402 Appellate Body Report, EC – Asbestos , para. 117. 
403 Appellate Body Report, EC – Asbestos , para. 119. 
404 Appellate Body Report, EC – Asbestos , para. 118. 
405 Indonesia's first written submission, para. 59.  Indonesia's second written submission, para. 78. 
406 United States' first written submission, para. 179. 
407 United States' first written submission, para. 180. 
408 United States' first written submission, para. 181. 
409 United States' response to question No. 41. 
410 Indonesia's second written submission, para. 78. 
411 Indonesia's oral statement at the first substantiv e meeting of the Panel, para. 107.  Indonesia's 
second written submission, paras. 78-79. 
412 Indonesia's second written submission, para. 79, re ferring to CDC, "The H ealth Consequences of 
Smoking – Nicotine Addiction a Report of the Surgeon General", 1988 (Exhibit IND-84).  WT/DS406/R 
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 to the Appellate Body Report in EC – Asbestos413 where it clarified that end use deals with the extent 
to which two products are capable of performing the same functions, while cons umer tastes and habits 
deals with the extent to which consumers are willin g to use products to perform these functions.  For 
Indonesia, the United States' comme nts regarding the appeal of flavours fall more properly into 
consumer tastes and habits than end-use. 
7.198  In our view, Indonesia's succinct and pointed argum ent is correct: the end-use of a cigarette is 
to be smoked.414  We consider that the end-uses the Un ited States presents pertain rather to the 
resulting effects from smoking.  People smoke cigare ttes for many reasons; we could certainly include 
the two mentioned by the United States.  But that do es not mean that cigarettes have several end-uses.  
For example, the end-use proposed by the United Stat es of satisfying an addiction to nicotine is a 
circular proposition.  Indeed, smokers become a ddicted to nicotine as a consequence of smoking 
cigarettes.  As to the second end-use proposed by the United States, "creating a pleasurable 
experience associated with the taste of the ciga rette and the aroma of the smoke", assuming for the 
sake of argument that smoking some types of cigarettes is a more pleasurable experience than smoking other types of cigarettes, this does not alter the fact that the end-use of these products is the 
same, i.e., to be smoked.  In any event, as we said above, both clove and menthol cigarettes contain 
nicotine and both contain additives th at mask the harshness of tobacco. 
7.199  Our conclusion under this criteria therefore is th at both clove and menthol cigarettes have the 
same end-use, i.e.,  to be smoked. 
Consumers' tastes and habits in respect of the products 
7.200  In EC – Asbestos,  the Appellate Body defined "consumer preferences" as the "extent to which 
consumers are – or would be – willing to choose one product instead of a nother to perform those 
end-uses".415  The obvious question would appear to be to  which extent smokers  are, or would be, 
willing to choose clove cigarettes over menthol cigarett es, for the same end-use, i.e., that of smoking. 
7.201  However, if we examine this criterion in the light of the immediate purpose of 
Section 907(a)(1)(A) of regulating the content of ci garettes with the legitimate objective of reducing 
youth smoking, the question may need to be phrased differently.  Indeed, as we will explain in more detail when we examine Indonesia's claim under Article 2.2 of the TBT Agreement , 
Section 907(a)(1)(A) responds to a decision of the United States to reduce youth smoking.  This leads 
to the question of which consumers the tastes and ha bits of we are to examine: all smokers in the 
United States?; only young smokers?; or potential c onsumers, i.e., youth who do not yet smoke and 
those who do so sporadically and have not yet become addicted?
 
7.202  We asked the parties which consumers we need to  take into account in our examination, their 
responses diverge.  Indonesia is of the view that the relevant consumers for the likeness analysis are 
smokers, with no analysis by age group.416  It nevertheless argues that, in case the Panel decides to 
proceed with an analysis by age group, the pr oper groups should be "youth" (under 18), and "adults" 
                                                      
413 Appellate Body Report, EC – Asbestos , para. 117. 
414 We note that the panels in Dominican Republic – Import and Sale of Cigarettes and Thailand – 
Cigarettes (Philippines) also concluded that the end-use of cigarettes is to be smoked/smoking.  Panel Report, 
Dominican Republic – Import and Sale of Cigarettes , para. 7.330.  Panel Report, Thailand – 
Cigarettes (Philippines) , para. 7.441. 
415 Appellate Body Report, EC – Asbestos , para. 117. 
416 Indonesia's response to Panel question No. 92, para. 22.  WT/DS406/R 
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 (18 and over).417  In its view, the "pre-smoking" youth popul ation should not be included between the 
relevant consumers for the likeness analysis.418  
7.203  The United States  considers that the relevant consumers are all the potential and current 
smokers in the United States and defines "potential"  consumers as young people within the age of 
initiation.   The United States submits that the patterns of use as between young people in the window 
of initiation and older, regular smoke rs should be evaluated and consid ered in the consumer tastes and 
habits criterion of the like product analysis, and in relation to the public health basis for the 
measure.419 
7.204  We therefore have as a first option considering that the relevant consumers are smokers.  If 
we choose to follow this option, the next questio n that arises is whether we should consider the 
relevant U.S. market for cigarettes in general, or  whether we should focus on particular segments of 
the market on the basis of age differentiation.  This issue seems to be of particular importance because 
the declared objective of Section 907(a)(1)(A) is reducing youth smoking.   
7.205  The second option is to consider as the rele vant consumers the "pre-smoking" youth 
population -- in other words, the youth that have  not yet taken up smoking but could potentially 
experiment with cigarettes.  This option is in  line with the objective of Section 907(a)(1)(A) –
i.e reducing youth smoking -- because the group that we understand is subject to the regulation are 
youth who are starting or may start to smoke. 
7.206  In our view, the legitimate objective of the tec hnical regulation at issue, Section 907(a)(1)(A), 
i.e., reducing youth smoking, delimits the scope of th e consumers whose tastes and habits we should 
examine under this criterion, all the more so as we are to examine how consumers perceive the 
cigarettes at issue.  The aim of the measure is to stop youth from becoming smokers and dissuade 
those who are currently sporadic smokers of these t ype of more attractive cigarettes from smoking.  It 
is thus obvious to us that we need to consider youth in examining this criterion.  Furthermore, we 
agree with the United States that we should also consider potential consumers, i.e., youth that do not 
as yet smoke or that do so sporadically and thus is not addicted.   
7.207  We recall that, according to the Appellate Body , in reference to the general principle in 
Article III:1 of the GATT 1994, a determination of "likeness" under Article III:4 is an overall 
determination of the extent of a competitive relationship between and among products.  For the 
Appellate Body, to the extent that consumer pref erences affect the "competitive relationship" of the 
products on the marketplace, they should be considered .  As we have said before, we do not think that 
the competition-based jurisprudence should be auto matically transposed onto a likeness analysis of 
Article 2.1 of the TBT Agreement .  However, we believe we can glean some useful guidance from 
previous analyses under Article III of the GATT 1994 when analysing consumer preferences. 
7.208  We recall that, in EC – Asbestos , the Appellate Body rejected Canada's argument that 
consumers' tastes and habits were irrelevant in th at dispute because "the existence of the measure has 
disturbed normal conditions of competition between the products".420  When demand on the market 
has been influenced by regulatory barriers to trade or to competition, a Member  still has to analyse 
consumers' tastes and habits, perhaps by subm itting evidence regarding substitutability from some 
relevant third market, or evidence of latent , or suppressed, consumer demand in that market .421  It 
                                                      
417 Indonesia's response to Panel question No. 92, para. 23. 
418 Indonesia's response to Panel question No. 92, para. 24. 
419 United States' comments on Indonesia's response to Panel question No. 92, para. 17. 
420 Appellate Body Report, EC – Asbestos , para. 123.  
421 The Appellate Body referred to its ruling in Korea – Alcoholic Beverages.  Appellate Body Report, 
EC – Asbestos , para. 123.  WT/DS406/R 
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 therefore appears that, to the extent that the comp etitive relationship is distorted by the measures at 
issue themselves, this could be taken into account, provi ded that it is explained and analysed.  In other 
words, the "likeness" test is intended to ascertain th at the products to be compared would normally be 
expected to be in a strong competitive relationship, and factors that distort this expected relationship 
in reality, such as a measure at issue, may be taken into account (while the subsequent "less 
favourable treatment" test would determine whether this competitive relations hip has in fact been 
adversely affected by the measures, to the detrim ent of the imported products).  The ban imposed 
further to Section 907(a)(1)(A), which removes clove cigarettes from the United States' market, 
obviously constitutes a distortion of the competit ive relations in the market as it eliminates 
competition.   
7.209  Bearing this in mind, we note that the evid ence on consumer preferences submitted by the 
parties may not provide clear guidance in this regard. On the one hand, Indonesia argues that 
"smokers are known to switch among clove, menthol a nd tobacco cigarettes, which shows that they 
are, in fact, willingly substituting the products  to achieve the same end use of smoking".422  
Subsequently, Indonesia asserts that "almost 90 per cent of youth smokers (under 18 years of age) are 
not using clove cigarettes".423  The United States, on the other hand, submits in its first written 
submission that clove cigarettes are especially app ealing to youth, while adults prefer to smoke 
tobacco and menthol cigarettes regularly.424  In its second written submission, the United States 
focuses its argumentation on the fact that "[y]oung people within the window of initiation are enticed 
by the appealing physical characteristics of clove ci garettes, and do not view them as interchangeable 
with tobacco or menthol cigarettes".425 
7.210  We observe that, in order to support these arguments, both parties rely on a series of surveys 
addressing smoking patterns in the United States.426  These surveys, however, do not share the same 
research parameters.  Indeed, they examine different age groups427, pose different questions428 and are 
based on different methodological approaches.429  Therefore, as the information from the different 
surveys presented by the parties is not directly co mparable, we consider that we cannot rely on the 
                                                      
422 Indonesia's second written submission, para. 82. 
423 Indonesia's second written submission, para. 84. 
424 United States' first written submission, para. 185. 
425 United States' second written submission, para. 114. 
426 Indonesia relies on the following  surveys:  a) the 2007 National Survey on Drug Use and Health 
(Exhibit IND-3);  b) the Western Watts Survey (Exhib it IND-26);  c) the Monitoring the Future Survey 
(Exhibit IND-33);  and d) a telephone survey conducted by Opinion Research Corporation (Exhibit IND-34).  
The United States, on the other hand, bases its argument s on the following surveys:  a) the 2002 and 2003 
National Survey on Drug Use and Health (Exhibit US-53);  and b) the National Youth Tobacco Survey 
(Exhibit US-53). 
427 For instance, the 2007 National Survey on Drug Us e and Health used by Indonesia examines the use 
of clove, menthol and regular cigarettes by youth under 18 years of age and adults, while the 2002 and 2003 
National Survey on Drug Use and Health referred to by the United States gathers information on cigarette 
consumption by two main age groups: a) 12-25 years of age and b) over 26 years of age. 
428 For instance, one of the questions contained in the Western Watts survey filed by Indonesia is 
"which type of cigarette do you smoke most frequently ?" (emphasis added), whereas the National Youth 
Tobacco Survey presented by the United States inquires on the use of clove and menthol cigarettes over the past 
30 days. 
429 Exhibit US-55 shows that the methodological differences between the National Survey on Drug Use 
and Health and the Monitoring the Future Survey have had an impact on their results.  The main difference is 
the focus of each survey; while the Monitoring the Future Survey focuses on youth, the National Survey on 
Drug Use and Health covers a broader population.  Further, other differences include: (a) different response 
rates;  (b) sampling error;  (c) the ef fect of different time periods;  (d) the different wording of questions;  (e) 
different data processing;  and (f) different interview setting. WT/DS406/R 
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 information they provide on market shares for th e purposes of analysing the consumers' tastes and 
habits criterion. 430   
7.211  Having said this, we note that the Appellate Body  stated that the "extent to which consumers 
are – or would be – willing to choose one product in stead of another to perform those end-uses, is 
highly relevant evidence in assessing 'likeness' of [] products".431  An analysis of consumer 
preferences would thus involve determining the s ubstitutability of one good with another one.  The 
concept of substitutability  and substitutable  (as contained in Article III:2, 2nd sentence of the 
GATT 1994) is based on the potential of a consumer  substituting something with another.  Thus 
actual or current substitution is not required ; on the contrary, the concept rather seems to reflect "the 
extent to which consumers are ... willing  to use the products to perform these functions"432.  
7.212  We also recall that, as the Appellate Body acknowledged, "there is a spectrum of degrees of 
'competitiveness' or 'substitutability' of products in the marketplace, and ... it is difficult, if not 
impossible, in the abstract, to indicate precisely wher e on this spectrum the word 'like' in Article III:4 
of the GATT 1994 falls."433  The Appellate Body also said, though, that "[it is] not saying 
that  all  products which are in  some   competitive relationship are 'like products' under 
Article III:4."434   
7.213  An example that may serve to illustrate this poi nt is found in the following analogy that builds 
on that proposed by Indonesia435 between Coca-Cola and Pepsi.  In principle, Coca-Cola consumers 
are very loyal to this soft-drink.  However, if a Coca-Cola consumer takes a Virgin flight, it might 
substitute  Coca-Cola  with Virgin Cola, even though it would not be its main choice, as there is only 
Virgin cola on offer.  This means that, for this  consumer, these products are, to some extent, 
substitutable.  A similar situation might be possible in the context of cigarettes.  Smokers are very 
loyal to their brand, but if there is no possibility of  getting cigarettes of that brand, they would likely 
smoke what is available.  We nevertheless asked th e parties about the relevance of brand loyalty in 
our analysis of likeness under this criterion and thei r response was that it is not relevant.  In this 
respect, the United States argues that in the present dispute, brand loyalty is  not significant in the 
likeness analysis.436  According to Indonesia, given that consumers are willing to substitute the 
flavours among clove, menthol and tobacco cigarettes , brand loyalty does not prevent such cigarettes 
from being substitutable.437 
7.214  In our view, it is appropriate to examine the substitutability of clove and menthol cigarettes 
from the perspective of the relevant group of c onsumers which, as we explained above, includes 
young smokers and those ready to become smokers.  For them, arguably, any cigarette would likely 
be fine to start smoking.  We note that, as explai ned further below, the evidence submitted by the 
parties shows that flavoured cigarettes, a category that includes both menthol and clove cigarettes, are 
particularly appealing to youth.  Therefore, for the purpose of determining how youth perceive 
cigarettes and whether they would be willing to repl ace or substitute one or other cigarette to start 
smoking, we find relevant the fact that both types of cigarettes appeal to youth. 
                                                      
430 We note that the information pres ented by Indonesia on market shar es presupposes that the market 
comprises the cigarettes smoked in the United States, wh ich include, at a minimum, clove, menthol and regular 
cigarettes.  Therefore, if we wish to  compare the fluctuations in market sh ares of only clove cigarettes vis-à-vis 
those of menthol cigarettes, this information may be unreliable. 
431 Appellate Body Report, EC – Asbestos , para. 117. 
432 Appellate Body Report, EC–Asbestos , para. 117 (emphasis added). 
433 Appellate Body Report, EC – Asbestos, para. 99. 
434 Appellate Body Report, EC – Asbestos, para. 99.   
435 Indonesia's second written submission, para. 83. 
436 United States' comments on the Indonesia's response to Panel question No. 93, para. 21. 
437 Indonesia's comments on the United States' response to Panel question No. 93, para. 39.   WT/DS406/R 
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 7.215  We recall the explanation for implementing S ection 907(a)(1)(A) found in the House Report 
on the FSPTCA438, which reads "[c]onsistent with the overall intent of the bill to protect the public 
health, including by reducing the number of children and adolescents who smoke cigarettes, 
[Section 907(a)(1)(A)] is intended to prohibit the manufacture and sale of cigarettes with certain 
'characterizing flavors' that appeal to youth".439 
7.216  Furthermore, according to the FDA Guidance440, explaining the rationale for the prohibition 
of cigarettes with characterizing flavours imposed by Section 907(a)(1)(A), flavoured cigarettes "[i]n 
addition to being more attractive to young people, fl avored products make it easier for new smokers to 
start smoking by masking the unpleasant flavor of tobacco.  Studies have also demonstrated that 
young people believe that  flavored tobacco products are safer than unflavored tobacco products."441  
7.217  The evidence submitted by the parties further show s that both types of cigarettes at issue, 
precisely because of their characterizing flavour whic h helps mask the harshness of tobacco, appeal to 
youth and are better vehicles for youth to start smoking than regular cigarettes.   
7.218  For example, the WHO Study entitled "The Scie ntific Basis of Tobacco Product Regulation", 
submitted by the United States, indicates that "[ s]tudies based on the tobacco industry's internal 
documents suggest that flavouring agents may also play  an important role in the industry's targeting of 
young and inexperience smokers". 442  That Study also says that "[m] enthol has been used to target 
new smokers across different ethnic groups".443  
7.219  The Study entitled "Tobacco Policy Tre nd Alert on the Marketing of Candy -Flavored 
Cigarettes", submitted by the United States, concl udes that "… numbers and industry documents 
clearly indicate that flavored cigarettes appeal  to younger smokers and, combined with tobacco-
company advertising for these products, target minors".444 
7.220  We recall that the WHO Study entitled "The Sc ientific Basis of Tobacco Product Regulation " 
explains how menthol and eugenol derived from clov es are added to cigarettes "specifically to reduce 
the smoke harshness and enable the smoker to take in more dependence-causing and toxic 
substances."  This study also stresses the fact that  menthol and clove cigarettes are often marketed as 
less toxic and concludes that "the added ingredie nts possibly contribute to the perception that the 
cigarettes are less noxious and harmful".445 
7.221  Interestingly, the U.S. National Survey on Drug Use and Health Report entitled "Use of 
Menthol Cigarettes", submitted by Indonesia, indicates that: "[m]enthol may mask the harshness of cigarette smoke and thereby make it easier for adolescents to start smoking".
446  This is also the 
conclusion reached by the above-mentioned "Tob acco Policy Trend Alert on the Marketing of 
                                                      
438 See paras. 2.6-2.7 above. 
439 Exhibit US-67. 
440 See paras. 2.8-2.11 above. 
441 Guidance. answer to question No. 1 (Exhibit IN D-41).  See also FDA Advisory – "Flavored 
Tobacco Products;  What you n eed to know" (E xhibit IND-25). 
442 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113) p. 26.  
443 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113) p. 26.  
444 American Lung Association, "T obacco Policy Trend Alert, From Jo e Camel to Kauai Kolada – The 
Marketing of Candy -Flavored Cigarettes" (July 2005, updated May 2006) (Exhibit US-35) p. 7. 
445 For full citation, see para. 7.182 above. 
446 Use of Menthol Cigarettes, "The National Survey on Drug Use and Health Report", 
19 November 2009 (Exhibit IDN-66) p. 1.   WT/DS406/R 
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 Candy-Flavored Cigarettes", submitted by the United St ates, which concludes that "[b]ecause of its 
cooling effect on the mouth and throat, menthol helped mask the harshness of cigarette smoke".447   
7.222  Moreover, an article in a specialized medical journal entitled "Clove Cigarettes: the Basis for 
Concern Regarding Health Effects", submitted by th e United States, states "[c]love cigarettes appeal 
to adolescents experimenting with  smoking practices and may influence the development of later 
smoking habits".448  
7.223  Furthermore, the March 2011 re port from the TPSAC to the FDA449 corroborates our 
understanding that menthol cigarettes are particularly appealing to youth.   
7.224  For example, the March 2011 TPSAC report conc ludes that the industry developed menthol 
marketing to appeal to youth: 
"[T]he section on youthful imagery in ment hol marketing and the studies of industry 
documents described in this section conf irm that the industry developed menthol 
marketing to appeal to youth. This is partic ularly true of the Newport brand, but that 
strategy was also adopted by other tobacco companies. Marketing messages 
positioned menthol cigarettes as an attractiv e starter product for new smokers who are 
unaccustomed to intense tobacco taste and/ or high levels of menthol. Empirical 
studies provide further evidence of targeting:  youth pay attention to and are attracted 
to menthol cigarette advertising. Cigarette advertising, including menthol advertising, 
                                                      
447 American Lung Association, "T obacco Policy Trend Alert, From Jo e Camel to Kauai Kolada – The 
Marketing of Candy -Flavored Cigarettes" (July 2005, updated May 2006) (Exhibit US-35) p. 5.   
448 Guidotti, et al, "Clove Cigarettes: the Basis fo r Concern Regarding Health Effects", The Western 
Journal of Medicine (August 1989) (Exhibit US-38) p. 1.   
449 As explained in paragraph 2.23, the FSPTCA directed the TPSAC to deliver a report to the FDA on 
the public health impact of menthol cigarettes.  The March 2011 TPSAC Report was delivered to the FDA on 
18 March 2011.  The March 2011 TPSAC Report noted, inter alia, that "menthol cigarettes are particularly 
popular among younger smokers" and contained the following overall recommendation to the FDA: "[r]emoval 
of menthol cigarettes from the marketplace would benefit public health in the United States".  
March 2011 TPSAC Report, pp. 36 and 208, ava ilable at http://www.fda.gov/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tobacc oProductsScientificAdvisoryComm ittee/ucm237359.htm, accessed 
10 May 2011.   In light of the conclusions of the March 2011 TPSAC Report, the Panel asked the parties: 
(i) whether the above mentioned recommendation contained in the March 2011 TPSAC Report was relevant to 
the dispute;  (ii) what was the relevance of the March 2011 TPSAC Report to the question of whether menthol-
flavoured cigarettes are "like" clove cigarettes;  (iii) to comment on the significance of the evidence presented 
by the March 2011 TPSAC Report concerning the rate of menthol cigarettes smoked by youth, in relation to the 
dispute;  and (iv) whether the Panel could conduct an "objective assessment" of the matter before it under 
Article 11 of the DSU without taking into considera tion the March 2011 TPSAC Report.  According to the 
United States, (i) the recommendation is, at most, marginally relevant to the issues in the dispute (United States' 
response to Panel question No. 115, para. 10);  (ii) any relevance of the March 2011 TPSAC Report to the "like 
product" comparison in the dispute is very limited (Un ited States' response to Panel question No. 115, para. 16); 
(iii) the data contained in the March 2011 TPSAC Report is of limited relevance to the issues that the Panel 
must decide (United States' response to Panel question No. 115, para. 21); and (iv) the Panel would not be acting 
inconsistently with Article 11 of the DSU if its Report did not take the March 2011 TPSAC Report into 
consideration (United States' response to Panel questio n No. 115, para. 4).  According to Indonesia, (i) the 
recommendation of the TPSAC concerning menthol is not relevant to the dispute (Indonesia's response to Panel 
question No. 115, para. 1);  (ii) the March 2011 TPSAC Report is not particularly relevant to the question of 
whether menthol-flavoured cigarettes are "like" other flavoured cigarettes (Indonesia's response to Panel 
question No. 115, para. 4;  (iii) the evidence and conc lusions of the March 2011 TPSAC Report are consistent 
with facts affirmed by Indonesia in the dispute (Indonesi a's response to Panel question No. 115, para. 5);  and 
(iv) the Panel can make an "objective assessment" of the matter before it without taking into account the 
March 2011 TPSAC Report (Indonesia's response to Panel question No. 115, para. 6).  WT/DS406/R 
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 has a greater impact on the brand choi ce of adolescents than it does for adult 
smokers."450  
7.225  The March 2011 TPSAC report also points out that menthol cigarettes appeal to youth and 
starting smokers because of their sensory effects: 
"[T]he evidence suggests that youth choose menthol cigarettes, particularly at lower 
menthol yields, mainly because of the re lative ease of smoking a menthol cigarette 
for the naive smoker and because they percei ve menthol to be less harmful than non
‐menthol cigarettes… .Taken together, the various lines of evidence support an 
appeal of menthol cigarettes to youth a nd starting smokers because of their sensory 
effects."451  
7.226  The March 2011 TPSAC report also indicates that "[ t]he evidence is sufficient to conclude 
that a relationship is more likely than not that the availability of menthol cigarettes increases the 
likelihood of addiction and the de gree of addiction in youth smokers."452 
7.227  Furthermore, under the chapter "Public H ealth Impact", the March 2011 TPSAC report 
concludes, inter alia , that the availability of menthol ciga rettes increases initiation among youth, i.e., 
the number of smokers, and therefore represents  an adverse impact on public health in the 
United States: 
"TPSAC does conclude that the availability  of menthol cigarettes has led to an 
increase in the number of smokers and that this increase does have adverse public health impact in the United States. TPSA C found evidence that the availability of 
menthol cigarettes increases initiation; of pa rticular concern was the high rate of 
menthol cigarette smoking among youth and the trend over the last decade of 
increasing menthol cigarette smoking among 12 to 17 year olds, even as smoking of 
non‐menthol cigarettes declines. TPSAC also concluded that cessation is less likely 
to be successful among smokers of menthol  cigarettes. Thus, the availability of 
menthol cigarettes increases initiation and reduces cessation, thereby increasing the 
number of people who are smoking. This increase in the number of smokers 
represents an adverse impact of the availability of menthol cigarettes on public 
health."
453 
7.228  We note that, with regard to the March 2011  TPSAC report, the United States recognizes that 
"the report is mentioned in the U.S. legislation; th e parties referred to it in their submissions to the 
Panel; and the issuance of the report was widely reported in the media".454  We are of the view that we 
may rely upon the March 2011 TPSAC report for the purpose of corroborating our findings as this 
would be consistent with Articles 11 and 13 of the DSU. 
                                                      
450 March 2011 TPSAC Report, p. 66, availabl e at http://www.fda.gov/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tobacc oProductsScientificAdvisoryComm ittee/ucm23735 9.htm, accessed 
22 April 2011.  
451 March 2011 TPSAC Report, p. 103, availabl e at http://www.fda.gov/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tobacc oProductsScientificAdvisoryComm ittee/ucm23735 9.htm, accessed 
22 April 2011.  
452 March 2011 TPSAC Report, p. 199, availabl e at http://www.fda.gov/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tobacc oProductsScientificAdvisoryComm ittee/ucm23735 9.htm, accessed 
22 April 2011.  
453 March 2011 TPSAC Report, p. 204, availa ble at http://www.fda.gov/AdvisoryCommittees/ 
CommitteesMeetingMaterials/Tobacc oProductsScientificAdvisoryComm ittee/ucm237359.htm, accessed 
22 April 2011. 
454 United States' response to Panel question No. 115, para. 5. WT/DS406/R 
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 7.229  The WHO  Partial Guidelines  reinforce our understanding.  Indeed, they appear to show that 
the scientific community perceive cigarettes incl uding additives that increase palatability, i.e., those 
which Section 907(a)(1)(A) refers as having a charact erizing flavour, as part of a same basket or 
category of cigarettes that attract consumers.  In this regard, the WHO  Partial Guidelines  argue that 
"[r]egulating ingredients aimed at reducing tob acco product attractiveness can contribute to reducing 
the prevalence of tobacco use and dependence among new and continuing users".  They therefore  
recommend, among other things, that the "[p]arties should regulate, by prohibiting or restricting, 
ingredients that may be used to in crease palatability in tobacco products".455  Targeted ingredients 
include those that are used to increase palatability.  Among the ingr edients that increase palatability 
listed in the WHO  Partial Guidelines  we find masking agents such as menthol as well as spices and 
herbs, which include mint and may cover clove. 
7.230  Both parties seem to agree that the WHO  Partial Guidelines  are potentially relevant to the 
dispute.  Initially, in response to a questi on from the Panel Indonesia argued that the WHO  Partial 
Guidelines were not relevant for the factual and legal matters before the Panel.456  Subsequently, 
however, Indonesia nuanced its position by argui ng that the principal factual findings and 
recommendations contained in both the Guidelines a nd Report apply equally to both clove-flavoured 
and menthol-flavoured cigarettes.457  The United States argued that the WHO Partial Guidelines  
support the U.S. regulatory approach of ba nning characterizing flavours in cigarettes.458  The 
United States subsequently clarified that, although the WHO Partial Guidelines  present general 
factual findings and recommendations relevant to this  dispute, these findings do not specifically take 
into account the particular circumstances in the Un ited States and, thus, should not be viewed as 
applying equally to all flavours or additives.459  We agree with the United States' view that the 
WHO Partial Guidelines  do not necessarily apply directly to th e particular regulatory needs of a 
particular country.  However, these Guidelines, "d rawing on the best available scientific evidence and 
the experience of Parties"460, do show a growing consensus within the international community to 
strengthen tobacco-control policies through regulation of the content of tobacco products, including 
additives that increase the attractiven ess and palatability of cigarettes.   Thus, we consider that the 
WHO  Partial Guidelines  corroborate our understanding. 
7.231  The inevitable conclusion is that both menthol a nd clove cigarettes appeal to youth because of 
the presence of an additive that gives them a charact erizing flavour having the effect of masking the 
harshness of tobacco.  Indeed, the above reports, st udies and academic articles show that additives 
such as clove, menthol, vanilla, chocolate, coffee, et c. which provide a certain characterizing flavour 
to cigarettes are internationally thought to increase palatability and thus attract youth.  We observe 
that the WHO studies and the WHO  Partial Guidelines  support the view that youth are attracted to 
cigarettes with flavours that increase palatability  and the studies do not differentiate between 
categories of flavours in terms of whether they attract more or less youth; rather , they are all put in the 
same basket as appealing to youth.  These studies are therefore based on the premise that youth is 
generally attracted to cigarettes with characterizing flavours or additives that increase palatability.  In 
simple terms, all these flavoured cigarettes are perceived as vehicles to start smoking.  This view is 
shared by the FDA Guidance461 and to a certain extent, by the various explanatory comments on the 
reasons behind the adoption of Section 9 07(a)(1)(A) found in the House Report. 
                                                      
455 The text of the draft Guidelines, which was adopte d without change at the COP, is available online 
at http://apps.who.int/gb/fctc/PDF/cop4/FCTC_COP4_28draft-en.pdf. 
456 Indonesia's response to Panel question No. 19. 
457 Indonesia's response to Panel question No. 97. 
458 United States' response to Panel question No. 19. 
459 United States' response to Panel question No. 97. 
460 WHO Partial Guidelines, Section 1.1. 
461 The FDA Guidance for example indicates:   WT/DS406/R 
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 7.232  It is our view that the various studies mentioned above and their conclusions indicate that in 
the mind of youth, flavoured cigarettes, including tho se flavoured with clove or menthol, are similar.  
Therefore, we conclude that the perception of many  of the consumers at issue in this case, i.e., young 
smokers and potential young smokers, is that ment hol-flavoured and clove-flavoured cigarettes are 
similar for the purpose of starting to smoke.  
The tariff classification of the products  
7.233  The last criterion is that of the tariff classifi cation of the products.  For the Appellate Body in 
EC – Asbestos, "[t]ariff classification clearly reflects the physical properties of a product."462  
However, it did clarify that, even when the customs classification of the products being compared is 
the same, "this indication of 'likeness' cannot, on its own, be decisive."463  
7.234  Indonesia  submits that clove cigarettes and domesti cally-produced cigarettes have the same 
international tariff classification at the 6-digit level464 which, in response to a question, it indicates as 
being 2402.20.465  Further, to rebut an argument presented by the United States, Indonesia clarifies 
that any difference in tariff classification at the 8- digit level is irrelevant , as only the 6-digit level 
classification can be compared internationally.466 
7.235  In its first written submission, the United States has no comment on Indonesia's statement 
that clove cigarettes and domestically-produced cigarettes have the same international tariff 
classification, except to note that the Appellate Body emphasized that tariff classification, on its own, 
cannot be decisive.467  Subsequently, in its second written submission, the United States argues that 
"clove cigarettes are treated differently than all "o ther" cigarettes at the 8-digit level under the U.S. 
GATT 1994 Schedule".468 
7.236  Cigarettes are classifiable under Chapter 24 of  the Harmonised System, in Heading 2402 for 
"Cigars, cheroots, cigarillos and cigarettes, of t obacco or of tobacco substitutes".  We have found 
three relevant HS 6-digit codes for cigarettes, namely:  
"240210  Cigars, Cheroots, Cigarillos (Containing Tobacco) 
240220  Cigarettes (Containing Tobacco) 
240290  Other Cigars, Cheroots, Cigarillos, Cigarettes" 
7.237  Therefore, the 6-digit heading for clove, menthol and regular cigarettes is 2402.20.  
                                                                                                                                                                     
"Studies have also demonstrated that young people believe that flavored tobacco products are 
safer than unflavored tobacco products. 
Flavored cigarettes are just as addictive and have  the same types of harmful effects as regular 
cigarettes. Removing these flavored products from the market is important because it removes 
an avenue that young people can use to begin regular tobacco use." 
FDA Guidance, p.2. 
462 Appellate Body Report, EC – Asbestos,  para. 102. 
463 Appellate Body Report, EC – Asbestos,  para. 146. 
464 Indonesia's first written submission, para. 64. 
465 Indonesia's response to Panel question No. 45, para. 98.  Indonesia's second written submission, 
para. 90. 
466 Indonesia's second written submission, para. 90. 
467 United States' first written submission, para. 168. 
468 United States' second written submission, para. 116. WT/DS406/R 
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 7.238  Under the heading of tariff classification, the United States further submits that the fiscal 
treatment of two different products should have very  little weight in the "like product" analysis when 
the domestic measure under considerat ion is adopted not for fiscal purposes, but in order to protect 
human health.469  However, to the extent it is releva nt, the United States notes that Indonesia 
apparently does not treat clove cigarettes "like" imported tobacco or menthol cigarettes for domestic 
tax purposes.470 
7.239  We do not see the relevance of Indonesia's taxati on policy in the assessment of this criterion.  
We are to examine whether the tariff classification of  these types of cigarettes is similar.  In this 
regard, the Appellate Body has pointed out that in  examining this criterion, panels should normally 
have regard to the tariff nomenclatures based on the Harmonized System.471   In this respect, we find 
that both clove and menthol cigarettes are classified under HS Subheading 2402.20.  
(iv) Conclusion on likeness 
7.240  We have found above that clove and menthol  cigarettes are physically similar and both 
include an additive that provides them with a char acterizing flavour.  We have also said that the 
presence of such an additive is especially relevant  if examined in the context of the immediate 
purpose of Section 907(a)(1)(A), which is a technica l regulation aimed at regulating cigarettes which 
include such additives. 
7.241  We have also found that both clove and me nthol cigarettes share the same end-use of 
smoking. 
7.242  We have further found that the perception of th e consumers at issue in this case, i.e., young 
smokers and potential young smokers, is that flav oured cigarettes are similar for the purpose of 
starting to smoke. 
7.243  Finally, we have found that clove and menthol cigarettes are classified under the same 6-digit 
HS code, namely 2402.20. 
7.244  As we have explained through out our findings, the Panel has reached the above conclusions 
bearing in mind that the measure at issue is a technical regulation with the immediate purpose of 
regulating cigarettes having a characterizing flavour with a view to attaining the legitimate objective 
of reducing youth smoking.  As we have explained, we believe that  such legitimate objective must 
permeate and inform our likeness analysis.  In th e weighing of these criteria, we have therefore 
carefully considered the relevance of those traits that are significant for the public health objective of 
Section 907(a)(1)(A), i.e., to reduce youth smoking.   
7.245  We consider that our basic approach to "likeness"  in this case is consistent with a very helpful 
hypothetical presented by the United States at the second meeting of the Panel, and reiterated in 
response to a question from the Panel: 
"Certain products may be considered like in  certain contexts but not in others.  For 
example, as the United States noted at the Second Substantive Meeting with Panel, 
cups made from paper, plastic and alumin um might be considered 'like' products 
regardless of these physical differences with r espect to a tax or other fiscal measure.  
They all serve the same end-use of holding liquids, and may be viewed as 
interchangeable by consumers in this contex t.  The different materials used in the 
                                                      
469 United States' first written submission, para. 191. 
470 United States' first written submission, para. 192. 
471 Appellate Body Report, Japan - Alcoholic Beverages II,  p. 22.  WT/DS406/R 
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 cups may be considered to be less importa nt in the like product analysis in this 
situation.  However, the same cups might no t be considered 'like' with respect to a 
measure regulating products that can be u sed safely in microwave ovens.  In that 
case, the different materials used to make the cups would be more relevant, as 
aluminum may not be safely used in a mi crowave.  This difference would effect 
whether consumers viewed each cup as suitable for use in a microwave and would be 
relevant to measures regulating which cups could be used in microwaves.  In this 
context, the different materials used would be significant differences among the cups.  
The particular measure at issue is relevant to whether the different physical properties 
of the cup mean that one cup is not 'like' another cup."472 
7.246  We think that clove cigarettes and menthol ciga rettes may be considered "like" in certain 
contexts but not in others.  For example, these two kinds of cigarettes might not be considered "like" 
in the context of a hypothetical measure regulating products on the basis of characteristics that clove 
cigarettes and menthol cigarettes do not have in co mmon, for example whether they contain eugenol 
(clove cigarettes do, and most menthol cigarettes do not).  Along the same lines, they might not be 
considered "like" in the context of a hypothetical tax or fiscal measure based on the type of tobacco 
they contain (clove cigarettes tend to contain Jav a sun-cured tobacco, menthol cigarettes do not).   
However, these same two types of cigarettes might be considered "like" in the context of other 
measures that regulate products on the basis of ch aracteristics that clove and menthol cigarettes do 
have in common, for example a hypothetical measure distinguishing between various tobacco 
products on the basis of whether or not those pr oducts are carcinogenic (which clove cigarettes and 
menthol cigarettes both are). 
7.247  The measure at issue in this case plainly regu lates cigarettes on the basis of a characteristic 
that clove cigarettes and menthol cigarettes have in common, which in the words of 
Section 907(a)(1)(A), is the shared characteristic th at they "contain, as a constituent … or additive, an 
artificial or natural flavor … or an herb or spice … that is a characterizing flavor".  In the context of 
this particular measure, which regulates tobacco prod ucts on the basis of this particular characteristic 
– which may be regarded as perhaps the defining feat ure of each type of product – we find it very 
difficult to see how clove cigarettes and menthol cigare ttes would not be considered to be "like".  As 
discussed in our findings, we are aware that there are certain differences between clove cigarettes and 
menthol cigarettes.  These differences may well lead to the conclusion that these two products are not 
"like" in the context of different measures.  Howeve r, in the context of the measure at issue in this 
dispute, these differences are less significant, and less re levant.  In other words, contrary to what the 
United States argues473, those differences do not relate to the pu blic health objective of the measure at 
issue and therefore, are not relevant to the like product analysis in this case.  In our view, the 
similarities related to the public health objective of  Section 907(a)(1)(A) are highly relevant to the like 
product analysis in the circumstances of this case. 
7.248  Accordingly, given our conclusions above, we find that clove cigarettes and menthol 
cigarettes are like products for the purpose of Article 2.1 of the TBT Agreement.  
(d) Whether imported clove cigarettes are accorded less favourable treatment than that accorded 
to like products of national origin 
(i) Introduction 
7.249  The fact that Section 907(a)(1)(A) differentia tes between like products is not in itself 
sufficient to violate the national treatment obligation embodied in Article 2.1 of the TBT Agreement .  
                                                      
472 United States' response to Panel question No. 96, para. 52. 
473 United States' oral statement at th e first substantive meeting of the Panel, para. 27 (emphasis added).   WT/DS406/R 
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 Indeed, we must also find that Section 907(a )(1)(A) accords to imported clove cigarettes "less 
favourable treatment" than it accords to the lik e domestic product, i.e., menthol cigarettes.474 
7.250  There are two preliminary issues that we need to  clarify before examining this element of the 
national treatment test in detail.  The first is the interpretative approach of the Panel, and the second is 
the nature of Indonesia's allegation of less favourable treatment. 
(ii) The Panel's approach to interpreting the less fa vourable treatment test under Article 2.1 of 
the TBT Agreement 
7.251  As with "likeness", the concept of "less favour able treatment" has been interpreted in the 
context of Article III:4 of the GATT 1994.  This ju risprudence reflects a competition-based analysis 
which rests upon explicit references to the ge neral principle embodied in Article III:1 of the 
GATT 1994.  We are therefore again facing the question of whether we are to follow that jurisprudence, or rather interpret this concept in the context of the TBT Agreement  and in the light of 
the legitimate objective
475 of Section 907(a)(1)(A).  
7.252  The parties have argued their respective positi ons regarding this element of the national 
treatment claim by invoking different aspects of the jurisprudence developed by the Appellate Body 
in the context of Article III:4 of the GATT 1994.476 
7.253  As we explained above, the wording of Article 2.1 of the TBT Agreement  appears to be 
modelled on that of Article III:4 of GATT 1994.  They both impose a similarly worded obligation 
upon Members to provide imported products "treatment  no less favourable than that accorded to like 
products of national origin".  However, this obliga tion applies only to technical regulations, and that, 
as we have also said before, is most significan t to the interpretation of Article 2.1 of the 
TBT Agreement in the present case .  
7.254  While we agree with the parties that the similar ity in wording must be given weight, we do so 
cautiously because, as noted by the Appellate Body in EC – Asbestos , even to the extent that the terms 
used are identical, they "must be interpreted in light  of the context and of the object and purpose, of 
the provision at issue, and of the object and purpose of the covered agreement in which the provision 
appears".477   
7.255  We think that our approach to interp reting "likeness" under Article 2.1 of the TBT Agreement  
should also apply, for the same reasons, to our an alysis of whether imported clove cigarettes were 
accorded "less favourable treatment" than that accord ed to the domestic like product, i.e., menthol 
cigarettes.  We explained before that, in our vi ew, the legitimate objective of reducing youth smoking 
must permeate and inform our likeness analysis .  We will follow a similar approach in our 
examination of this element.   
(iii) De jure versus de facto discrimination 
7.256  We note that there has been a significant evolu tion, or perhaps clarification, in Indonesia's 
argumentation under this test.  Initiall y, Indonesia appeared to allege de jure  discrimination in its first 
written submission, notwithstanding Section 907(a)(1)(a ) being facially origin-neutral.  Indonesia did 
                                                      
474 Appellate Body Report, EC – Asbestos,  para. 100. 
475 We refer to Section VII.F.2(c) where we have concluded that Indonesia has failed to demonstrate 
that the objective of the ban is not "legitimate". 
476 Indonesia's first written submission, paras. 66-68; Indonesia's second written submission, 
paras. 93-104; United States' first written submission, pa ras. 196-212; United States' second written submission, 
paras. 126-144. 
477 Appellate Body Report, EC – Asbestos , paras. 88-89.     WT/DS406/R 
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 not mention de facto discrimination in its first written submi ssion.  The United States responded that 
Indonesia had not met its burden to demonstrate th at clove cigarettes are accorded less favourable 
treatment based on their national origin.478  The United States recalled that Article III:4 forbids 
Members from according less favourable treatment "on a de jure or de facto  basis" to imported 
products as compared to domestic products, and nevertheless proceeded to refute a potential de facto  
discrimination claim in its first written submission.   
7.257  In response to a question from the Panel, and following the third party submissions, Indonesia 
alleged that Section 907(a)(1)(A) results in de facto discrimination against imported products.  
Indonesia emphasized that while menthol cigarettes (and regular cigarettes) are produced domestically 
in the United States, clove cigarettes, which were banned, were predominantly imported from 
Indonesia.  According to Indonesia, this means that virtually all domestically produced cigarettes with 
relevant market shares were unaffected by the ban imposed by Section 907(a)(1)(A).479 
7.258  Indonesia points out (in reference to Brazil's oral statement480) that the panel in Canada – 
Pharmaceutical Patents explained that "[ d]e facto discrimination is a general term describing the 
legal conclusion that an ostensibly neutral measu re transgresses a non-discrimination norm because its 
actual effect is to impose differentially disadvant ageous consequences on certain parties, and because 
those differential effects are found to be wrong or unjustifiable."481 
7.259  Indonesia also refers to Norway's oral statement482 to further elaborate on the existing 
jurisprudence on de facto  discrimination.  It points out that panels and the Appellate Body have 
examined the design, structure and operation of the measure when assessing de facto  
discrimination.483  It also highlights that panels  and the Appellate Body have found de facto  
discrimination if domestically produced products tend ed to be subject to mo re favourable treatment 
than like imported products.484 
7.260  We observe that Section 907(a)(1)(A) does not explicitly ban certain kinds of cigarettes on 
the basis of origin, but rather on the type of characterizing flavour a cigarette has.  De jure less 
favourable treatment would therefore be excluded.  In addition, Indonesia's Panel Request does not 
contain any indication that its claim is limited to de jure  less favourable treatme nt; the Panel Request 
merely states that the measure at issue violates Article 2.1 of the TBT Agreement because it "results in 
treatment that is 'less favorable' to imported clove  cigarettes than that accorded to a like domestic 
product, menthol cigarettes."  In addition, the United States has not argued that it was prejudiced in 
any way by the evolution in Indonesia's argumentation, and addressed the issue of de facto  
discrimination at some length in its first written submission.   
7.261  Under these circumstances, we decide to exam ine Indonesia's claim as consisting of an 
allegation of de facto  less favourable treatment.  
(iv) The less favourable treatment test und er Article 2.1 of the TBT Agreement 
7.262  As explained above, the concept of "less favourab le treatment" has not been interpreted in the 
context of Article 2.1 of the TBT Agreement  except very briefly by the panel in EC – Trademarks and 
                                                      
478 United States' first written submission, para. 174. 
479 Indonesia's response to Panel question No. 48, paras. 100-102. 
480 Brazil's third party oral statement, para. 7. 
481 Panel Report , Canada – Pharmaceutical Patents , para. 7.101. 
482 Norway's third party oral statement, para. 19. 
483 Appellate Body Report, US – FSC (Article 21.5 – EC) , para. 215. 
484 Appellate Body Report, Chile – Alcoholic Beverages , paras. 51-53; Panel Report , Mexico – Taxes 
on Soft Drinks , paras. 8.119 – 8.121.   WT/DS406/R 
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 Geographical Indications (Australia).485  As also explained above, this concept has been interpreted 
in a national treatment context by panels and the Ap pellate Body with respect to Article III:4 of the 
GATT 1994.   
7.263  The concept of "less favourable treatment" with respect to Article III:4 of the GATT 1994 
was first interpreted by the GATT panel in US – Section 337 Tariff Act as calling for "effective 
equality of opportunities"  for imported products486 and this same line of interpretation has been 
followed by later panels and the Appellate Body.487  
7.264  In Korea – Various Measures on Beef , the Appellate Body observed that "whether or not 
imported products are treated 'less favourably' th an like domestic products should be assessed … by 
examining whether a measure modifies the conditions of competition in the relevant market to the 
detriment of imported products."488  
7.265  We note that, as with the concept of " like product", the Appellate Body in EC – Asbestos  
interpreted "less favourable treatment" in Article III:4 of the GATT 1994 in light of the general 
principle in Article III:1, and thus considered that  "[t]he term 'less favourable treatment' expresses the 
general principle, in Article III:1, that internal re gulations 'should not be applied … so as to afford 
protection to domestic production'."   
7.266  The Appellate Body has explained that, "[i]f there is 'less favourable treatment' of the group 
of 'like' imported products, there is, conversely,  'protection' of the group of 'like' domestic 
products."489  As put by the Appellate Body in EC –Asbestos , "a WTO Member may draw distinctions 
between products which have been found to be 'lik e', without, for this reason alone, according to the 
group of 'like' imported  products 'less favourable treatment' than  that accorded to the group of 'like' 
domestic  products."490  Therefore, the fact that distinctions  of treatment are made between different 
products does not necessarily constitute "less favourable " treatment.  Furthermore, there may be cases 
where the application of formally identical  legal provisions would in practice accord less favourable 
treatment to imported product.491  Hence, "less favourable treatment" would seem to exist, at least in 
respect of Article III:4 of the GATT 1994, wher e the imported product is placed at a competitive 
disadvantage on the domestic market as a result of the measure.   
7.267  Accordingly, under Article III:4 of the GATT 1994, whether "treatment less favourable" is 
accorded to imported products compared to like do mestic products rests essentially on an assessment 
of the conditions of competition on the market.  We observe, however, that the examination of 
whether the measure at issue provides for "eff ective equality of competitive opportunities" needs not 
be based on the actual effects of the measure in the market.492   
7.268  Therefore, we understand from the above juri sprudence under Article III:4 of the GATT 1994 
that what should be considered is whether the equality of competitive c onditions between imported 
and domestic products is affected.493  The Appellate Body indicated in Korea – Various Measures on 
                                                      
485 Panel Report, EC – Trademarks and Geographical Indications (Australia) , paras. 7.464-7.476. 
486 GATT Panel Report, US – Section 337 Tariff Act , para. 5.11. 
487 Panel Report, US – Gasoline, para. 6.10; Panel Report, EC – Bananas III , paras. 7.179-7.180;  Panel 
Report, Japan – Film , para. 10.379. 
488 Appellate Body Report, Korea – Various Measures on Beef , para. 137 (emphasis added). 
489 We note that in this case, the Appellate Body was not called upon reviewing the Panel's findings on 
less favourable treatment.  Appellate Body Report, EC – Asbestos,  para. 100. 
490 Appellate Body Report, EC – Asbestos,  para. 100. 
491 Appellate Body Report, Korea – Various Measures on Beef , para. 137. 
492 Appellate Body Report, US – FSC (Article 21.5 – EC) , para. 215. 
493 Appellate Body Report, Japan – Alcoholic Beverages II , p. 16, citing GATT Panel Reports, US – 
Superfund , para. 5.1.9 and Japan – Alcoholic Beverages I , para. 5.5(b).  WT/DS406/R 
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 Beef that imported products are treated less favourably than like products if a measure modifies the 
conditions of competition in the relevant market to the detriment of imported products.494  However, 
as observed by the Appellate Body in Dominican Republic – Import and Sale of Cigarettes , "the 
existence of a detrimental effect on a given imported product resulting from a measure does not 
necessarily imply that this measur e accords less favourable treatment to imports if the detrimental 
effect is explained by factors or circumstances unrelated to the foreign origin of the product , such as 
the market share of the importer in this case."495  Hence, it is not sufficient to find inconsistency with 
Article III:4 solely on the basis that the measure  at issue adversely affects the conditions of 
competition for an imported product.  The complainan t must also show that those adverse effects are 
related to the foreign origin of the product at issue.  
7.269  Overall, the Appellate Body's jurispruden ce on the less favourable treatment element under 
Article III:4 of the GATT 1994 imparts the following guidance: (i) the less favourable treatment test 
relates to the impact of the measure on the competitive relationship of groups of imports versus  
groups of domestic like products; (ii) less fa vourable treatment will exist if the measures modify  these 
conditions of competition to the detriment  of the group of imported like products; (iii) a panel is 
required to consider whether the detrimental effect (s) can be explained by factors or circumstances 
unrelated to the foreign origin of the product , and (iv) no separate demonstration that the measures 
are applied "so as to afford protection" is required.    
Which are the products to be compared 
7.270  Before proceeding further, we must first determine which are the products to be compared for 
the purpose of the analysis of less favourable tr eatment, i.e., which are the domestic products and 
which the imported products for the purpose of the less favourable treatment test.   
7.271  When asked by the Panel, Indonesia  submitted that, for purposes of the "less favourable 
treatment" analysis, the imported product is only cl ove cigarettes and the domestic product(s) would 
only be any type of cigarette not banned by Secti on 907(a)(1)(A) that the Panel found to be "like" 
clove cigarettes (e.g., menthol- or tobacco-flavoured ci garettes).  Indonesia notes that it has not raised 
any claims with respect to the treatment of cl ove cigarettes as compared to "candy"-flavoured 
cigarettes.496 For Indonesia, when arguing in the context of Article III:4 of the GATT 1994, a 
violation can be established by showing that there are some  (i.e., the least favourably treated) 
imported products that are treated less favourably than some  (i.e., the most favourably treated) 
domestic like product.  According to Indonesia, in the present case, the relevant comparison is 
whether imported clove cigarettes are "like" any domestic cigarettes that were not banned, namely 
menthol- or tobacco-flavoured cigarettes.  Accordin g to Indonesia, it is not necessary for the Panel to 
consider whether clove cigarettes are treated less fa vourably than domestic cigarettes that were also 
banned or than imported ciga rettes that were not banned.497 
7.272  According to the United States , the Panel should compare the treatment accorded to all 
imported cigarettes (to the extent that they are like) , and not just clove cigarettes, with the treatment 
accorded to all domestically-produced cigarettes (to the extent that they are like).  From this point of 
view, the United States emphasizes that Section 907(a)(1)(A) applies to both imported and domestic 
cigarettes with characterizing flavours, which compri se a small category of cigarettes in general.  At 
the same time, the ban does not apply to regula r and menthol cigarettes of any origin, including 
regular cigarettes imported from Indonesia, and both imported and domestic menthol cigarettes.  In 
                                                      
494 Appellate Body Report, Korea – Various Measures on Beef , para. 137. 
495 Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 96 (emphasis 
added). 
496 Indonesia's response to Panel question No. 49, paras. 103-105. 
497 Indonesia's second written submission, para. 100. WT/DS406/R 
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 the United States' view, Indonesia is incorrect th at Section 907(a)(1)(A) accords less favourable 
treatment "if one Indonesian import is included among the prohibited characterizing flavours and one 
U.S. produced cigarette is not".498  For the United States, the "best treatment" approach advocated by 
Indonesia is inconsistent with the language of Article III:4 of the GATT 1994 and Article 2.1 of the 
TBT Agreement .  Rather, it submits, as established by the Appellate Body in EC–Asbestos , the 
relevant comparison is between the group  of "like" imported products and the group  of "like" 
domestic products.499  According to the United States, the A ppellate Body recognized that a Member 
may draw distinctions between pr oducts determined to be "like" without affording protection to 
domestic production or according less favourab le treatment to imported products.500   
7.273  In our view, WTO jurisprudence does not support the proposition that "less favourable 
treatment" can be established merely by showing that there are some  imported products that are 
treated less favourably than some  domestic like product.  Indeed, we agree with the United States that 
this is an "extreme view that has been s quarely rejected by the Appellate Body" in EC – Asbestos .501    
7.274  We nonetheless believe that for the purposes of the "less favourable treatment" analysis, 
Indonesia is correct in its conclusion that the comparison should be between: (i) imported clove  
cigarettes (as opposed to all kinds of cigarettes im ported into the United States from all countries); 
and (ii) the domestically produced cigarettes that th e Panel has found to be "like" products, i.e., 
menthol cigarettes.   
7.275  Our reasoning, which is quite different from th e legal argument advanced by Indonesia, is 
fairly simple and straightforward.  Article 2.1 of the TBT Agreement  calls for a comparison of 
"products imported from the territory of any Me mber" with "like products of national origin".502  
These provisions refer to the products  imported from the territory of " any other  Member", and not 
"Members" or "other Members" more generally.  The imported products in this case are the products 
imported from the territory of Indonesia .  And it appears to be common ground between the parties 
that the vast majority  of cigarettes that were imported from Indonesia into the United States were 
clove  cigarettes. 503   
7.276  In our view, it is not the case, as the United States implies, that " one Indonesian import is 
included among the prohibited characterizing flavours and one U.S. produced cigarette is not".  
Rather, the vast majority  of Indonesia exports of cigarettes to the United States are included among 
the characterizing flavours banned by Section 907(a)(1)(A ).  We note that this would be in line with 
the Appellate Body's findings in EC-Asbestos .  In our view, the comparison between the group of like 
imported products with the group of like domestic products encompasses situations when "the vast 
majority of imports" are accorded less favourable treatment. 
7.277  On the domestic side, we recall that we have found that menthol cigarettes are "like" clove 
cigarettes for the purpose of Article 2.1 of the TBT Agreement  because, inter alia , they both contain 
                                                      
498 United States' second written submission, secti on II.A.4.a., paras. 119-125 (emphasis original). 
499 United States' second written submission, paras. 119-123. 
500 United States' first written submission, para. 204. 
501 United States' second written submission, para. 119.   
502 We note that Article III:4 of the GATT 1994 lik ewise calls for a comparison of "products of the 
territory of any contracting party" imported into the territo ry of any other contracting party" with "like products 
of national origin".   
503 In response to an argument by Indonesia that all cigarette imports into the United States were clove 
cigarettes despite the fact that US-91 showed a small pe rcentage of non-clove cigarettes being imported into the 
United States, the United States clarifies that it is unlikely that clove cigarette manufacturers would have 
mistakenly imported their cigarettes under the wrong subheading (the non-clove cigarette subheading), as it 
applies a lower tariff to clove cigarettes than to any other cigarettes (United States' response to Panel question 
No. 81).  WT/DS406/R 
 Page 85 
 
 
 an additive that provides them with a characterizin g flavour which makes them appealing to youth.  
We have not entered into an analysis of whether domestic regular cigarettes are "like" imported clove 
cigarettes as we consider that we woul d be exceeding our terms of reference. 
7.278  We will therefore proceed to examine whethe r the United States accorded imported clove 
cigarettes less favourable treatment than that  accorded to domestic menthol cigarettes.  
Whether the products at issue are treated differently 
7.279  Once we have identified the products which we will compare, the next step should be to 
determine whether the products at issue are treated differently .  In the present dispute, the obvious 
conclusion is that the treatment cannot be more di fferent.  Clove cigarettes are banned while menthol 
cigarettes are excluded from the ban.   
7.280  We therefore conclude that the products at i ssue are treated in a fundamentally different 
manner.   
Whether the different treatment is to  the detriment of imported products 
7.281  We recall that the Appellate Body's jurisprude nce for Article III:4 of the GATT 1994 explains 
that it is not sufficient to find that the treatment is different, but that it must be found that the different 
treatment modifies the conditions of competition to the detriment of the imported products.504   We 
agree that it should not be sufficient per se to find that domestic produc ts and imported like products 
are treated differently but such different treatment  must result on imported products being treated less 
favourably.  In this case, there is an obvious co nclusion: imported clove cigarettes are banned while 
the like domestic menthol cigarettes are allowed to remain in the market.     
Whether that less favourable treatment is rela ted to the national origin of the imports  
7.282  The parties disagree on how to interpre t the Appellate Body's findings in Dominican Republic 
– Import and Sale of Cigarettes , whereby there is no less favourable treatment where the detrimental 
effect is explained by factors or circumstances unrelated to the foreign origin of the product .  The 
United States  interprets these findings as calling for a tw o-step analysis in order to find less 
favourable treatment: (i) it must be determined that like imported and domestic products have been 
treated differently based on national origin , and (ii) it must be determined whether such different 
treatment accords less favourable treatment to the imported product.  The United States further relies 
on the Appellate Body's approach in Korea – Various Measures on Beef in support of this two-step 
approach.505  The United States explains that the Appellate Body in Korea – Various Measures on 
Beef initially found that the Korean measure at issu e provided different treatment to imported and 
domestic products by requiring them to be distribut ed through separate distribution channels.  After 
the initial finding of different treatment, the Appellate  Body turned to examine whether this different 
treatment meant that imported products were treated  less favourably based on the national origin of 
the product. The Appellate Body concluded that because the Korean measure itself imposed on 
retailers the "necessity of making a choice" betw een domestic and imported beef, it limited the 
marketing opportunities for imported beef, and thereb y modified the conditions of competition to the 
detriment of this product. 
7.283  For the United States, whether a measure accord s less favourable treatment turns on how the 
measure treats imported products as compared to dom estic products.  For this purpose, it argues, the 
                                                      
504 Appellate Body Report, Korea – Various Measures on Beef , para. 137. 
505 United States' first written submission, footnot e 249, referring to Appellate Body Report, Korea – 
Various Measures on Beef , paras. 144-146. WT/DS406/R 
Page 86 
 
 
 Appellate Body has examined whether the measure  alters the conditions of competition to the 
detriment of imported products as compared to domes tic products – but has made clear that a measure 
does not alter the conditions of competition to the de triment of imported products when the alleged 
detriment is "explained by factors or circumstances unrelated to the foreign origin of the product s."506 
The United States argues that while there is no si ngle approach or necessarily decisive factor in 
reaching a legal conclusion of "less favourable treatme nt" – and different factors are significant given 
particular facts and circumstances – the guiding princi ple to the analysis is that a measure must not 
single out imports based on national origin so  as to afford protection to domestic product.507  
According to the United States, where an alleged detrimental effect on an imported product is not 
attributable to its foreign origin, but to some other factor, that effect is not evidence of less favourable 
treatment.508 
7.284  The United States submits that this reasoning also  holds with respect to Article 2.1 of the 
TBT Agreement , which, in its view, must be interpreted so  as to permit technical regulations based on 
legitimate product distinctions – even where thos e distinctions may have a different impact on 
different products.  For the United States, Indonesi a seeks to remove any an alytic task by boiling 
down the "less favourable treatment" analysis to a m echanical question of whether a measure applies 
to any import and not to any like domestic product.  In its view, this approach is insufficient as the 
essence of national treatment obligations is whethe r a measure accords less favourable treatment to 
imported products as compared to domestic products, a nd that question requires an examination of all 
relevant facts.509  According to the United States, the "less favourable treatment" analysis is not 
simply a matter of looking at which cigarettes are banned and which are not banned, without also 
examining all relevant evidence, including the ob jective purpose of the measure and whether the 
alleged detrimental effects to impor ts depend on their national origin.510 
7.285  Indonesia  disagrees with the United States' characterization of "less favourable treatment" 
and argues that no panel or Appellate Body report has ever required both a "less favourable treatment" 
test and a second "based on national origin" test in Article III:4 of the GATT 1994.511  According to 
Indonesia, the formulation of the United States would eliminate the concept of de facto 
discrimination.512  Indonesia says that it agrees with Brazil that the United States are misreading the 
Appellate Body's ruling in Dominican Republic – Import and Sale of Cigarettes  by taking a single 
sentence out of its factual context.513  As Brazil noted, it argues, the Appellate Body in that dispute 
was not making a broad and unqualified assertion that a measure is consistent with Article III:4 of the 
GATT 1994 if its detrimental effects are unrelated to th e foreign origin of the product in question.  It 
simply stated that detrimental e ffects to imported products are not, ipso facto , tantamount to 
discrimination, as other characteristics of these effects are also pertinent to the evaluation of whether a 
less favourable treatment has been accorded to imported products.514  As Indonesia and third parties 
have explained, domestic and importe d products can be treated differently, but that treatment will be 
                                                      
506 The United States refers to the Appellate Body Report, Dominican Republic – Import and Sale of 
Cigarettes , para. 96 (emphasis added); Appellate Body Report,  Korea – Various Measures on Beef , para. 144 
and Panel Report, Mexico – Taxes on Soft Drinks , para. 8.118.  United States' second written submission, 
para. 127. 
507 United States' second written submission, para. 127. 
508 United States' oral statement at th e second substantive meeting of the Panel, para. 50;  United States' 
response to Panel question No. 95, para. 49. 
509 United States' second written submission, para. 128. 
510 United States' oral statement at the second substantive meeting of the Panel, para. 50. 
511 Indonesia's second written submission, para. 97;  Indonesia's oral statement at the second 
substantive meeting of the Panel, para. .63. 
512 Indonesia's oral statement at the second s ubstantive meeting of the Panel, para. .63. 
513 Brazil's oral statement, para. 11. 
514 Indonesia's second written submission, para. 98;  Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 64.  WT/DS406/R 
 Page 87 
 
 
 "less favourable" if it has the effect of modifying th e conditions of competition to the detriment of the 
imported products.515  Indonesia urges the Panel to reject th e notion proposed by the United States 
that Section 907(a)(1)(A) must discriminate "based on national origin" in order to result in "less favorable treatment" to imported clove cigarettes.
516  According to Indonesia, it is not its burden to 
demonstrate that imports of the same product from di fferent countries or imports  of different products 
are treated in a less favourable manner than domestic products.  Indonesia argues that the treatment of 
imported products from other count ries is not before the Panel.517 
7.286  We recall that we are dealing with a technical  regulation, Section 907(a)(1)(A), with the 
immediate purpose of banning cigarettes containi ng an additive which provides them with a 
characterizing flavour.  The reason behind Section 90 7(a)(1)(A) is attaining the legitimate objective of 
reducing youth smoking.  We also recall the explan ation for Section 907(a)(1)(A) in the House Report 
on the FSPTCA518 which reads "[c]onsistent with the overall intent of the bill to protect the public 
health, including by reducing the number of children and adolescents who smoke cigarettes, 
[Section 907(a)(1)(A)] is intended to prohibit the manufacture and sale of cigarettes with certain 
'characterizing flavors' that appeal to youth".519 
7.287  It is in that context that we should examine whether imported clove ciga rettes are treated less 
favourably than domestic menthol cigarettes, i.e., wh ether they are discriminated against.  We find 
useful the Appellate Body's definition of what  discrimination is and how it can manifest in Canada – 
Wheat Exports and Grain Imports : 
"…When viewed in the abstract, the c oncept of discrimination may encompass both 
the making of distinctions between simila r situations, as well as treating dissimilar 
situations in a formally identical manner . The Appellate Body has previously dealt 
with the concept of discrimination and the meaning of the term "non-discriminatory", 
and acknowledged that, at least insofar as the making of distinctions between similar 
situations is concerned, the ordinary meaning of discrimination can accommodate 
both drawing distinctions per se, and drawi ng distinctions on an improper basis. Only 
a full and proper interpretation of a provision containing a prohibition on 
discrimination will reveal which type of di fferential treatment is prohibited. In all 
cases, a claimant alleging discrimination will need to establish that differential 
treatment has occurred in order to succeed in its claim."520  
7.288  The preambular language of the WTO Agreement comes to our mind in this respect: "[b]eing 
desirous  of contributing to these objectives by entering into reciprocal and mutually advantageous 
arrangements directed to the subs tantial reduction of tariffs and other barriers to trade and to the 
elimination of discriminatory treatment in interna tional trade relations."  As put by the Appellate 
Body in US – Shrimp: "[a]s this preambular language reflects th e intentions of negotiators of the 
WTO Agreement , we believe it must add colour, texture and shading to our interpretation of the 
agreements annexed to the WTO Agreement" .521  We do not think that it was the intention of the 
negotiators to allow Members to regulat e products in a discriminatory manner. 
7.289  The TBT Agreement  allows Members to regulate products for the purpose of attaining a 
legitimate objective, in this case, a public h ealth objective of reducing youth smoking.  The 
                                                      
515 Indonesia's second written submission, para. 99;  Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 57. 
516 Indonesia's second written submission, para. 99. 
517 Indonesia's response to Panel question No. 95, (a). 
518 See paras. 2.6-2.7 above. 
519 Exhibit US-67. 
520 Appellate Body Report, Canada – Wheat Exports and Grain Imports , para. 87. 
521 Appellate Body Report, US – Shrimp , para. 153. WT/DS406/R 
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 United States has told this Panel that it was not in cluding menthol cigarettes, which we have found to 
be like to clove cigarettes for the purpose of Article 2.1 of the TBT Agreement , because doing so 
without further assessment would not be appropriate  for the public health, because of issues including 
the potential impact on the health care system and the potential development of a black market and 
smuggling of menthol cigarettes.522  These reasons which the United States has presented as 
constituting a legitimate objective by themselves, appear  to us as relating in one way or another to the 
costs that might be incurred by the United States were it to ban menthol cigarettes.  Indeed, the 
United States is not banning menthol cigarettes because it is not a type of cigarette with a characterizing flavour that appeals to youth
523, but rather because of the co sts that might be incurred 
as a result of such a ban.  We recall that at the tim e of the ban, there were no domestic cigarettes with 
characterizing flavours other than menthol cigarette s which accounted for approximately 25 per cent 
of the market524 and for a very significant proportion of the cigarettes smoked by youth in the 
United States.525  It seems to us that the effect of banni ng cigarettes with characterizing flavours other 
than menthol is to impose costs on producers in ot her Members, notably producers in Indonesia, while 
at the same time imposing no costs on any U.S. entity. 
7.290  We are not saying that the United States is  not allowed to adopt measures such as 
Section 907(a)(1)(A) to regulate products for public h ealth reasons;  on the contrary, that is permitted 
provided it respects the boundaries set forth in Article 2.2 of the TBT Agreement such as not being a 
measure more trade restrictive than n ecessary to fulfil a legitimate objective .  We are saying that if the 
United States chooses to do so, it must not accord  less favourable treatment to imported clove 
cigarettes than that it accords to the like domestic menthol cigarettes for reas ons of avoiding potential 
costs.  In this case, the United States has adopt ed a technical regulation in order to attain the 
legitimate objective of reducing youth smoking, but at  the same time limited the product scope of that 
                                                      
522 The United States refers the Panel to the following FDA conclusions: 
"The sudden withdrawal from the market of pro ducts to which so many millions of people are 
addicted would be dangerous.  First, there could be significant health risks to many of these 
individuals.  Second, it is possible that our health care system would be overwhelmed by 
treatment demands that these people would cr eate, and it is unlikely that the pharmaceuticals 
available could successfully treat the withdrawal symptoms of many  tobacco users.  Third, the 
agency also believes that, given the strength of the addiction and the resulting difficulty of 
quitting tobacco use, a black market and smugg ling would develop to supply smokers with 
these products.  It also seems likely that any black market products would be even more 
dangerous than those currently marketed, in that they could contain even higher levels of tar, 
nicotine, and toxic additives." 
Regulations Restricting the Sale and Distribution of Cigarettes and Smokeless Tobacco to Protect 
Children and Adolescents , 61 Fed. Reg. at 44, 413 (Exhibit US-25). United States' first written submission, 
para. 22.  See also paras. 23-25;  United States' response to Panel question Nos. 40, 89 and 100.   
523 See paras. 7.200-7.232 above. 
524 The United States argues that there is eviden ce showing that U.S.-produced cigarettes with 
characterizing flavours were on the market in 2008 a nd 2009 (United States' second written submission, 
para. 132).  In this regard, the United States points to exhibits US-52 and US-62.  In our view, none of the 
exhibits submitted demonstrate that U.S.-produced flavour cigarettes were being sold on the market as of the 
entry into force of Section 907(a)(1)(A).  Exhibit US-52 only contains the "known and possible 'flavored' 
cigarette brands sold in the United States" as of 2008.  Thus, it does not shed light upon the brands of cigarettes 
present in the U.S. market at the time Section 907(a)(1)( A) entered into force.  Exhibit US-62 lists the flavoured 
cigarette brands that were certified as "fire-safe" brands in the States of New York and Maine as of 2009.  
Although this exhibit extends until the entry into force of Section 907(a)(1)(A), it does not demonstrate which 
brands and types of cigarettes were actually being sold on the U.S. market on that date.  Rather, it merely lists 
the brands cigarettes certified as "fire-safe".  We therefore stand by our conclusion. 
525 According to the United States "approximately 31% of youth smokers smoke menthol cigarettes, 
although that number could be higher" (United States ' first written submission, para. 33).  According to 
Indonesia, menthol cigarettes account for approximately 43 per cent of the cigarettes consumed by adolescents 
(Indonesia's first written submission, paras. 2, 7, 40, 93).  WT/DS406/R 
 Page 89 
 
 
 technical regulation in order to minimize, or even to eliminate, the potential costs it may incur while 
triggering costs to producers of like products of other Members.   
7.291  The object and purpose of Article 2.1 of the TBT Agreement is to prohibit discrimination 
between imported products and like domestic product s in respect of technical regulations.  In our 
view, this purpose would be defeated if Members were allowed to remove their domestic products 
from the application of those same regulations to a void potential costs that it might otherwise incur.   
(v) Conclusion on less favourable treatment 
7.292  We therefore conclude that, by banning clove  cigarettes while exempting menthol cigarettes 
from the ban, Section 907(a)(1)(A) does accord impo rted clove cigarettes less favourable treatment 
than that it accords to domestic menthol ciga rettes, for the purpose of Article 2.1 of the 
TBT Agreement.   
(e) Overall conclusion on Indonesia's claim under Article 2.1 of the TBT Agreement  
7.293  Having concluded that (i) Section 907(a)(1)(A) is  a technical regulation within the definition 
of Annex 1.1 of the TBT Agreement ;  (ii) clove cigarettes and menthol cigarettes are like products for 
the purpose of Article 2.1 of the TBT Agreement  and (iii) by banning clove cigarettes while excepting 
menthol cigarettes from the ban, Section 907(a)(1 )(A) does accord imported clove cigarettes less 
favourable treatment than that it accords to domestic menthol cigarettes, for the purpose of Article 2.1 
of the TBT Agreement,  we find that Section 907(a)(1)(A) is in consistent with Article 2.1 of the 
TBT Agreement . 
7.294  Having found that Section 907(a)(1)(A) is inconsistent with Article 2.1 of the 
TBT Agreement , we will therefore not examine Indonesia's al ternative claim under Article III:4 of the 
GATT 1994. 
E. WHETHER SECTION  907( A)(1)(A)  IS JUSTIFIED UNDER ARTICLE  XX( B) OF THE GATT 1994 
1. Arguments of the parties 
7.295  The United States  submits that Section 907(a)(1)(A) is  justified under Article XX(b) of the 
GATT 1994.526  
7.296  The United States submits that Indonesia has faile d to establish that Section 907(a)(1)(A) is 
inconsistent with Article III:4 of the GATT 1994.  However, the United States submits that "should 
the Panel reach the issue of GATT exceptions", th e application of Section 907(a)(1)(A) would be 
justified under Article XX(b) of the GATT 1994.527  The United States clarifies that it is not invoking 
Article XX of the GATT as a defence with respect  to the claims raised by Indonesia under the 
TBT Agreement528, and the Panel therefore does not need to  make a finding on the availability of 
Article XX to justify a violation of a provision of the TBT Agreement .529   
7.297  The United States submits that Section 90 7(a)(1)(A) falls within the scope of 
Article XX(b).530   According to the United States, Section 907(a)(1)(A) was enacted in order to 
                                                      
526 United States' first written submission, paras. 311-342.  
527 United States' first written submission, para. 31 1; United States' oral statement at the first 
substantive meeting of the Panel, para. 72.  
528 United States' response to Panel question No. 78, para. 159. 
529 United States' response to Panel question No. 79, para. 160.  
530 United States' first written submission, paras. 315-329; United States' oral statement at the first 
substantive meeting of the Panel, paras. 73-77. WT/DS406/R 
Page 90 
 
 
 protect human life and health from the risk posed by smoking and was necessary to ensure that 
products that are predominantly used as "starter" pr oducts by youth, leading to years of addiction, 
health problems, and possibly death, cannot be sold in the United States.531  The United States recalls 
that, when faced with the question of whether a m easure is "necessary", other panels have engaged in 
"a process of weighing and balancing a series of fact ors".  In this case, all of the factors weigh in 
favour of a determination that Section 907(a)(1)(A) is necessary.  First, "the interest at stake is of 
fundamental importance".532  Second, Section 907(a)(1)(A) is "directly contributing" to the protection 
of human life and health, and there is a "genuine re lationship of ends and means between the objective 
pursued and the measure at issue".533  Third, the context in which Section 907(a)(1)(A) was enacted – 
namely, the unacceptably high youth smoking rates such  that severe restrictions were required – is 
relevant in assessing the "trade restrictiveness" of the measure, which under the circumstances is 
limited.534 
7.298  The United States submits that Section 907(a )(1)(A) also meets the requirements of the 
chapeau to Article XX.535  First, the United States argues that ther e is "no differential treatment at all", 
and therefore cannot be any "discrimination," arbitrary, unjustified, or otherwise.536  However, even if 
Section 907(a)(1)(A) were found to "discriminate," su ch conduct could not be considered "arbitrary" 
or "unjustified".537  Finally, the evidence demonstrates that  Section 907(a)(1)(A) is not a "disguised 
restriction" on trade.538   
7.299  Indonesia argues that the measure at issue is "not condoned" by Article XX of the 
GATT 1994 because it "constitutes a restriction on in ternational trade masquerading as a measure 
necessary to protect human health".539  In addition, Indonesia submits that Article XX(b) of the 
GATT 1994 cannot be invoked in respect of any violations of the TBT Agreement .540  
7.300  Indonesia submits that it has already demonstrat ed, in the context of its analysis of the 
measure under Article 2.2 of the TBT Agreement , that: (a) the measure is not "necessary" to achieve 
the level of protection sought by the FSPTCA541; and (b) less trade-restrictive measures were 
reasonably available to the United States.542   
7.301  Indonesia submits that even if the measure is somehow "necessary" to protect youth from 
smoking, it is still a "disguised restriction" on international trade within the meaning of the chapeau to Article XX.
543  In Indonesia's view, this is so because by "tailoring the ban on 'characterizing flavours' 
in such a way that virtually no domestic cigarett es, including those most popular with youth, were 
                                                      
531 United States' first written submission, paras. 315-318, 322; United States' oral statement at the first 
substantive meeting of the Panel , paras. 73-74. 
532 United States' first written submission, para. 32 4; United States' oral statement at the first 
substantive meeting of the Panel, para. 76. 
533 United States' first written submission, paras. 325-326; United States' oral statement at the first 
substantive meeting of the Panel, para. 76. 
534 United States' first written submission, paras. 327-329.  
535 United States' first written submission, paras. 330-342. 
536 United States' first written submission, para. 33 4; United States' oral statement at the first 
substantive meeting of the Panel, para. 79. 
537 United States' first written submission, paras. 335-337; United States' oral statement at the first 
substantive meeting of the Panel , para. 79. 
538 United States' first written submission, paras. 338-341; United States' oral statement at the first 
substantive meeting of the Panel, para. 80. 
539 Indonesia's first written submission, paras. 114-127.    
540 Indonesia's response to Panel question No. 79, paras. 156-157.  
541 Indonesia's first written submission, para. 120. 
542 Indonesia's first written submission, para. 126. 
543 Indonesia's first written submission, para. 121.  WT/DS406/R 
 Page 91 
 
 
 removed from the market, the United States was able to generate the appearance  of cracking down on 
youth smoking without actually inflicting any real harm on U.S. tobacco companies or eliminating 
any domestically produced cigarettes popular with youth".544 
2. Analysis by the Panel 
(a) Introduction 
7.302  The arguments of the parties raise two main issues.  The first is whether it is necessary for the 
Panel to determine whether Section 907(a)(1)(A) is  justified under Article XX(b) of the GATT 1994.  
If so, then the second issue is whether Section 907( a)(1)(A) is justified under Article XX(b) of the 
GATT 1994.   
7.303  We shall commence our analysis by setting out the text of Article XX(b) of the GATT 1994.  
We will then address the issue of whether we need  to determine whether Section 907(a)(1)(A) is 
justified under Article XX(b) of the GATT 1994.  Depending on our conclusion, we may or may not 
continue our analysis of the U.S. de fence under Article XX(b) of the GATT 1994. 
(b) The legal provision at issue 
7.304  Article XX of the GATT 1994 is entitled "Gener al Exceptions".  Together with its chapeau, 
Article XX(b) reads as follows: 
"Subject to the requirement that such me asures are not applied in a manner which 
would constitute a means of arbitrary or unjustifiable discrimination between 
countries where the same conditions prev ail, or a disguised restriction on 
international trade, nothing in this Agre ement shall be construed to prevent the 
adoption or enforcement by any c ontracting party of measures: 
 … 
 (b) necessary to protect human, animal or plant life or health". 
(c) Whether it is necessary for the Panel to determin e whether Section 907(a)(1)(A) is justified 
under Article XX(b) of the GATT 1994  
7.305  As explained above, the first issue that we need to  consider is whether it is necessary for us to 
determine whether Section 907(a)(1)(A) is justif ied under Article XX(b) of the GATT 1994.   
7.306  We recall that the Panel has found that Section 907(a)(1)(A) is inconsistent with Article 2.1 of 
the TBT Agreement .  More specifically, we have found that Section 907(a)(1)(A) accords clove 
cigarettes (a product imported from Indonesia) less fa vourable treatment than that accorded to a like 
product of national origin (i.e., menthol cigarettes).545   
7.307  We also recall that, having reached this conc lusion, we decided not to examine Indonesia's 
alternative claim under Ar ticle III:4 of the GATT 1994546, and, therefore, we have made no finding of 
violation in respect of this provision.  It follows th at there is no need for the Panel to consider the 
question of whether a violation of that provision  could be justified under Article XX(b) of the 
GATT 1994.  Thus, as a consequence of our decision to not examine Indonesia's claim of violation of 
                                                      
544 Indonesia's first written submission, para. 125 (emphasis original). 
545 See Section VII.D.2(e) above. 
546 See Section VII.D.2(e) above. WT/DS406/R 
Page 92 
 
 
 Article III:4 of the GATT 1994, we refrain from considering the United States' defence, under 
Article XX(b) of the GATT 1994, to the alle ged violation of Article III:4 of the GATT 1994.547 
7.308  As regards the violation of Article 2.1 of the TBT Agreement , the United States has made 
clear that it "is not invoking Article XX of the GATT 1994 as a defense for the claims raised by 
Indonesia under the TBT Agreement ".548  Under the circumstances, we understand the United States to 
be of the view that the Panel does not need to ma ke a finding on the availability of Article XX to 
justify a violation of a provision of the TBT Agreement .549   
7.309  Our task is to make an objective assessment of the matter before us.550 It is not for us to 
broaden the matter beyond that submitted to us by the parties.  Therefore, we will not embark on an 
enquiry into Article XX(b) of the GATT 1994. 
(d) Conclusion  
7.310  For these reasons, the Panel concludes that it is not necessary to address the question of 
whether Section 907(a)(1)(A) is justified under Ar ticle XX(b) of the GATT 1994.  Accordingly, the 
Panel refrains from doing so. 
F. WHETHER SECTION  907( A)(1)(A)  IS INCONSISTENT WITH ARTICLE  2.2 OF THE 
TBT A GREEMENT  
1. Arguments of the parties 
7.311  Indonesia claims that Section 907(a)(1)(A) is in consistent with Article 2.2 of the 
TBT Agreement  because it is more trade-restrictive than necessary to achieve the objective and level 
of protection sought by the United States, and is thus an unnecessary obstacle to trade.551   
7.312  Indonesia asserts that the objective of the ban on clove cigarettes is to reduce youth smoking.  
Indonesia relies upon a statement in the House Report that Section 907(a)(1)(A) is "intended to 
prohibit the manufacture and sale of cigarettes with certain 'characterizing flavours' that appeal to youth".
552  Indonesia submits that the "youth" in question are minors (i.e., persons under the age of 
18), and not, as the United States argues, minors and also young adults.553  Indonesia also objects to 
the United States' attempt to treat the alleged jus tification for excluding menthol cigarettes from the 
scope of the ban as a second "objective" of Section 907(a)(1)(A).554  However, Indonesia argues that 
regardless of whether the Panel accepts Indonesia's or  the United States' formulation of the objective, 
                                                      
547 We note that in previous cases, panels have only proceeded to examine the question of whether a 
measure is justified under one of the general exceptions in Article XX after upholding one or more claims of 
violation in respect of which that Ar ticle XX defence was proffered.    
548 United States' response to Panel question No. 78, para. 159. 
549 United States' response to Panel question No. 79, para. 160.  
550 Article 11 of the DSU. 
551 Indonesia's first written submission, para. 73.   
552 Indonesia's response to Panel question No. 60 , paras. 127-128; Indonesia's second written 
submission, para. 112.  
553 Indonesia's second written submission, para. 114; Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 75; Indonesia 's comments on the United States' response to Panel 
question No. 101, paras. 52-54.  
554 Indonesia's second written submission, para. 113; Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 74. Indonesia re fers to the U.S. statement whereby the second objective 
would be "to avoid the potential negative consequences associated with banning products to which tens of 
millions of adults are chemically and psychologically addicted due to the potential but unknown consequences 
for the health of the individual users or the overall population," United States' response to Panel question Nos. 
60, 100.  WT/DS406/R 
 Page 93 
 
 
 the ban on clove cigarettes is still more trade-r estrictive than necessary to achieve its objective 
because both parties include "reducing youth smoki ng" in their objectives and that is where the 
United States' defence fails.555  
7.313  Indonesia suggests that the ban on clove ciga rettes does not have a "legitimate" objective, 
arguing that it is a "disguised restriction" on intern ational trade and a "wolf disguised in the sheep's 
clothing" of public health.556  Indonesia clarifies that while the objective of Section 907(a)(1)(A) "as 
stated" in the FSPTCA and the House Report (i.e., to reduce youth smoking) is a "legitimate" 
objective within the meaning of Article 2.2 of the TBT Agreement , the "measure itself" is a disguised 
restriction on international trade.557  More specifically, Indonesia asserts that the United States did not 
include menthol cigarettes in Section 907(a)(1 )(A) because Philip Morris opposed it, that the 
exclusion of menthol cigarettes from the ban was the result of a political compromise, and the real concern was getting a deal on the FSPTCA through the U.S. Congress while also avoiding the 
potential loss of jobs in the United Stat es if menthol cigarettes were banned.
558 
7.314  Indonesia submits that for the purpose of anal ysing whether the measure is "more trade-
restrictive than necessary" to fulfil its objectiv e, the Panel should be guided by the existing 
jurisprudence relating to Article XX(b) of the GATT 1994.559  Indonesia notes that all the third parties 
that addressed Article 2.2 of the TBT Agreement  in their submissions and statements before the Panel 
supported Indonesia's conclusion on this point.560  According to Indonesia, the United States 
overemphasizes the significance of the contextual di fferences between Article 2.2 and Article XX(b), 
and the United States provides no convincing reason wh y the Panel should not look to interpretations 
of Article XX(b) for its analysis of Article 2.2.561  Indonesia disagrees with the United States that 
Article 2.2 should be interpreted to  incorporate the "significantly l ess trade-restrictive" language from 
footnote 3 to Article 5.6 of the SPS Agreement .562  However, Indonesia considers that the application 
of that standard would probably not have any pr actical consequences in the present case, because all 
of the alternative measures it identifies would be "s ignificantly" less trade rest rictive than the measure 
applied by the United States.563 
7.315  Indonesia further argues that the ban on clove cigarettes is "more trade-restrictive than 
necessary" because it "greatly exceeds the leve l of protection sought" by the United States.564 
Indonesia asserts that the level of protection sou ght by the United States through the FSPTCA is "not 
a dramatic reduction in the number of youth who smoke ", but rather "sufficient regulation to deter, 
but not prohibit, the use of t obacco products by adolescents".565  Indonesia submits that a ban "is the 
most trade-restrictive regulatory tool available a nd in certain circumstances may be the only option 
for achieving a health objective, for example wh ere the level of protection needed is the elimination  of 
risk".566  Indonesia reasons that although the FSPTCA does not identify the level of protection sought, 
                                                      
555 Indonesia's oral statement at the second s ubstantive meeting of the Panel, para. 81.  
556 Indonesia's second written submission, para. 140; Indonesia's response to Panel question No. 99.  
557 Indonesia's response to Panel question No. 99, para. 34. 
558 Indonesia's second written submission, para. 118; Indonesia's response to Panel question No. 99, 
para. 37; Indonesia's oral statement at the second  substantive meeting of the Panel, para. 79.  
559 Indonesia's first written submission, paras. 75-77.   
560 Indonesia's second written submission, para. 107.  
561 Indonesia's second written submission, paras. 109- 111; Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 71.  
562 Indonesia's oral statement at the first substan tive meeting of the Panel, para. 155; Indonesia's 
response to Panel question No. 56, para. 116; Indonesi a's second written submission, paras. 108, 110, 135; 
Indonesia's oral statement at the second substantive meeting of the Panel, para. 69. 
563 Indonesia's response to Panel question No. 57, para. 117.  
564 Indonesia's first written submission, para. 85. 
565 Indonesia's first written submission, para. 84.   
566 Indonesia's first written submission, para. 85 (emphasis original).   WT/DS406/R 
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 the provisions of the law convey a much lower level of protection desired than the high level claimed 
by the United States.567   
7.316  Indonesia further argues that the ban on clove cigarettes is "more trade-restrictive than 
necessary" because it makes no material contribution to the objective of reducing youth smoking.568  
Indonesia submits that the question the Panel must c onsider is "whether banning clove cigarettes, but 
not menthol or regular cigarettes, contributes to a reduction in the level of smoking by adolescents".569  
Indonesia submits that in "large measure, the an swer to this question depends on whether clove 
cigarettes are more like those cigarettes smoked by adults, which are excluded from the ban, or 
whether they are more like the 'candy' flavors d esigned and marketed to attract kids to smoke".570  
Indonesia then proceeds to argue that: (i) clove ci garettes pose no greater health risk than other 
cigarettes571; (ii) youth do not smoke clove cigarettes in significant numbers572; (iii) other flavoured 
tobacco products popular with yout h are not banned by the FSPTCA573; and (iv) the available 
scientific evidence shows that banning clove cigarett es, but not menthol or regular cigarettes, will do 
little to deter youth from smoking.574  Indonesia concludes that the banning clove cigarettes "is 
unlikely to have any impact whatsoever on youth smoking", and does not even rise to the minimum 
level of "making a contribution to" to the objective of the FSPTCA.575  Indonesia emphasizes that in 
"assessing the question of the necessity of the measu re, the Panel would have to consider what 
contribution Section 907(a)(1)(A) could possibly ma ke toward reducing youth smoking when menthol 
and regular cigarettes are not banned."576 Indonesia emphasizes that  by prohibiting only a "tiny sliver" 
of the cigarettes smoked by youth, the measure cannot  make a "material contribution" to the objective 
of reducing youth smoking, and is therefore more trade-restrictive than necessary to fulfil this 
objective.577 
7.317  Indonesia submits that is not required to prove that an alternative to the ban on clove 
cigarettes was reasonably available, given that  the ban does not actually fulfil its objective.578 
However, Indonesia argues that even if the ban on clove cigarettes makes some kind of contribution to 
the objective of reducing youth smoking, it still canno t be considered "necessary" because there are 
less trade-restrictive measures were reasonably availa ble to limit the availability of clove cigarettes to 
youth.579  In this regard, Indonesia surveys: (i) the other provisions of the FSPTCA, which are 
applicable to menthol and regular cigarettes, desi gned to reduce the ability of cigarette companies to 
engage in practices that target and attract youth580; (ii) the steps that the FSPTCA expressly prevents 
FDA from taking (e.g. raising the smoking age) that would significantly reduce youth smoking and not be particularly trade-restrictive
581; (iii) certain non-trade restrict ive measures in a 2006 consent 
agreement between R.J. Reynolds and several Stat e Attorneys General concerning new products that 
                                                      
567 Indonesia's response to Panel question No. 58(c),  para. 123; Indonesia's second written submission, 
para. 124.  
568 Indonesia's first written submission, paras. 86-103. 
569 Indonesia's first written submission, para. 89. 
570 Indonesia's first written submission, para. 89. 
571 Indonesia's first written submission, paras. 90-91. 
572 Indonesia's first written submission, paras. 92-96.   
573 Indonesia's first written submission, paras. 97-98. 
574 Indonesia's first written submission, paras. 99-102. 
575 Indonesia's first written submission, para. 103. 
576 Indonesia's response to Panel question Nos. 54, para. 45. 
577 Indonesia's response to Panel question No. 2, para . 6; Indonesia's response to Panel question No. 58, 
para. 124; Indonesia's second written submission, paras. 2 and 125. 
578 Indonesia's oral statement at the first substantive meeting of the Panel, paras. 158-162;  Indonesia's 
oral statement at the second substan tive meeting of the Panel, para. 84.  
579 Indonesia's first written submission, paras. 104-111. 
580 Indonesia's first written submission, para. 106. 
581 Indonesia's first written submission, para. 107.  WT/DS406/R 
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 health advocates alleged were designed and marketed to attract youth582; (iv) non-trade restrictive 
measures adopted by certain other countries, incl uding Australia and Singapore, to address youth 
smoking583; and (v) various measures set out in the WHO Framework Convention on Tobacco 
Control aimed at preventing cigarette sales to minors.584  In its second written submission, Indonesia 
submits that it does not have to show that its proposed alternatives are "significantly" less trade 
restrictive, as the United States improperly imports th is language from footnote 3 to Article 5.6 of the 
SPS Agreement .585 
7.318  The United States  submits that Indonesia's claim under Article 2.2 of the TBT Agreement  
should be rejected.   
7.319  As to the objective that Section 907(a)(1)(A) pursues, the United States submits that the ban 
on clove and certain other flavoured cigarettes "is in tended to fulfil the objective of reducing the rate 
of young people becoming smokers by eliminating certain products from the market place that have 
particular appeal to young people."586  The United States rejects Indonesia's contention that the 
objective of the ban is to reduce smoking prevalence of only people age 17 and younger, and asserts 
instead that the objective is to reduce smoking of all people within the "window of initiation" 
(i.e., people ages 12-26).587  In addition, the United States str esses that Section 907(a)(1)(A) has a 
second objective, which is to avoid the potential negative consequences associated with banning 
products to which tens of millions of adults are ch emically and psychologically addicted due to the 
potential but unknown consequences for the health of  the individual users or the overall population.588  
According to the United States, "Indonesia re peatedly mischaracterizes the objective of 
Section 907(a)(1)(A) as 'reducing youth smoking'", a nd that is a "gross oversimplification of the 
objective of Section 907(a)(1)(A)".589  According to the United States, the practical implications of 
defining the objective simply in terms of "reduci ng youth smoking", without consideration of possible 
negative consequences, is that "this limitation may result in a different pool of alternative measures 
with which the challenged measure is compared".590   
7.320  The United States disputes that the measure is  a "disguised restriction" on international 
trade.591  According to the United States, nothing in the text, design, architecture, or revealing 
structure of Section 907(a)(1)(A) supports Indonesia's allegation that the measure did not ban menthol 
cigarettes simply because a particular U.S. company opposed it.  The extensiv e legislative history of 
the FSPTCA provides no support to Indonesia, and its  evidence on this point – one media report – 
merely quotes one politician speculating as to hi s personal view of the legislation.   
                                                      
582 Indonesia's first written submission, para. 108. 
583 Indonesia's first written submission, para. 109. 
584 Indonesia's first written submission, para. 110. 
585 Indonesia's second written submission, para. 135.  
586 United States' first written submission, para. 229. 
587 United States' response to Panel question No. 12(b), para. 16; United States' response to Panel 
question Nos. 100 and 101, paras. 62 and 71-77.  
588 The Panel notes that the United States has argued that its position that the objective of 
Section 907(a)(1)(A) includes the consideration of negative consequences for the public health is supported by 
the text of Section 907(a)(1)(A) itself, as well as other provisions of Section 907, including Section 907(b)(2).  
As the United States has discussed, Section 907(b)(2) requires FDA to consider the negative consequences of 
any proposed new tobacco product standa rd, or proposed revision to or revo cation of an existing standard, prior 
to approving, revising, or revoking such a standard.  United States' response to Panel question Nos. 60, 100.   
589 United States' second written submission, para. 153. 
590 United States' response to Panel question No. 100, para. 63. 
591 United States' oral statement at the second substa ntive meeting of the Panel, para. 75; United States' 
comments on Indonesia's response to Panel question No. 99. WT/DS406/R 
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 7.321  On the question of whether the ban on clove cigarettes is "more trade-restrictive than 
necessary", the United States submits that the ju risprudence relating to Article XX(b) of the 
GATT 1994 is not relevant to Article 2.2 of the TBT Agreement , and terms the opposing view as 
involving a "radical approach".592  In its view, the Panel should instead apply the test found in 
Article 5.6 and footnote 3 of the SPS Agreement , and require Indonesia to demonstrate that:  (i) there 
is a reasonably available alternative measure; (ii) th at fulfils the objective of the measure at the level 
that the Member imposing the measure considers a ppropriate; and (iii) is "significantly" less trade 
restrictive.593  However, in response to a question from the Panel, the United States acknowledges that 
the issue of whether Article 2.2 embodies a "significan tly less trade-restrictive" standard would "not 
appear to arise in this dispute".594 
7.322  The United States disagrees that the ban on cl ove cigarettes greatly exceeds the level of 
protection sought by the United States. The United States acknowledges that if the measure at issue 
"goes beyond the chosen level of protection", a l ess trade-restrictive measure may likewise fulfil the 
Member's legitimate objective.595  However, Indonesia's understanding of the level of protection 
sought by the United States is erroneous.596  Given the U.S. Government's long and frustrating 
experience in trying to limit youth smoking, the "high" level of protection sought by the United States 
is evidenced by the measure applied – a complete ban.597  The level at which the United States 
considers is appropriate to protect public health is to eliminate from the market, not simply restrict 
access to, those products that are disproportionately used by young people.598   
7.323  The United States submits that Indonesia's argume nt regarding the existence of a "material 
contribution" to the fulfilment of the objective is unfounded.599  The United States considers that 
while this question is legally irrelevant to the analysis under Article 2.2 of the TBT Agreement600, 
banning clove cigarettes does indeed make a materi al contribution to the objective of reducing youth 
smoking.601  Whether the challenged measure makes a mate rial contribution should be judged on its 
own terms, not in comparison with alternative measures.602  The WHO has endorsed the view that 
clove cigarettes disproportionately appeal to you ng people and therefore present the same public 
health concern as the other cigarettes banned under Section 907(a)(1)(A), and the survey data tracking 
actual clove cigarette usage by young people confirms  that, in fact, young people within the window 
of initiation disproportionately use clove cigarettes, as they do other characterizing flavours, such as 
                                                      
592 United States' first written submission, footnote 310. 
593 United States' first written submission, paras. 262-265. 
594 The United States understands that the complainin g party does not establish a breach of Article 2.2 
by proving the existence of an altern ative measure that fulfils the importing Member's legitimate objective at the 
level the Member considers ap propriate that is less trade -restrictive, but only by a de minimis  amount.  See 
United States' first written submission, para. 263 (citing to Letter from Peter D. Suther land, Director-General of 
the GATT, to Ambassador John Schmidt, Chief U.S. Negotiator (December 15, 1993), Exhibit US-79).  
However, as all of the alternative measures that I ndonesia has offered do not ban trade in any flavoured 
cigarettes, the United States considers that the issue of whether Article 2.2 embodies a "significantly less 
trade-restrictive" standard wo uld "not appear to arise in this dispute".  United States' response to Panel question 
No. 57, para. 130.  
595 United States' response to Panel question No. 58(b), para. 134. 
596 United States' first written submission, paras. 255-257. 
597 United States' first written submission, para. 227. 
598 United States' response to Panel question No. 58(b), para. 135; United States' second written 
submission, para. 147. 
599 United States' second written submission, paras. 156-163. 
600 United States' response to Panel question No. 10 3(a).  However, the Un ited States acknowledges 
that "[w]hile Article 2.2 does not require that the measur e fulfill its objective, it is difficult to believe that a 
measure fails to fulfill its objective completely – that is to say, a  measure that does not even make a marginal 
contribution to its objective – could be found consistent with Article 2.2."   
601 United States' response to Panel question No. 103(b).  
602 United States' response to Panel question No. 103(b), paras. 82-84.    WT/DS406/R 
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 chocolate, cherry, coconut, etc.603  In addition, the fact that a particular "trainer" product, such as 
clove cigarettes, does not have a large market shar e does not change this calculation; products that 
appeal disproportionately to young pe ople have particular public hea lth concerns, regardless of their 
market share, and the product's elimination will ma ke a material contribution to a reduction in 
smoking of young people.604  While one might hypothesize that the United States could have designed 
a measure that sought to eliminate or reduce smoking among young people to a greater degree than 
Section 907(a)(1)(A), nothing in the TBT Agreement  requires Members to seek to fulfil their 
legitimate objectives to the maximum extent  possible, nor at any particular level.605  The United States 
asserts that clove cigarettes do in fact attract youth to smoking.606  According to the United States, the 
evidence shows that clove cigarettes, like cigarettes fl avoured with chocolate, vanilla, and the like, are 
overwhelmingly favoured by teenagers and yo ung adults people rather than adults.607  
7.324  With respect to the existence of  less trade-restrictive measures, the United States submits that 
Indonesia's mere listing of a number of different r estrictions drawn from other parts of the FSPTCA, 
the 2006 RJ Reynolds Consent Agreement, the la ws of Singapore and Australia, and the FCTC does 
not satisfy Indonesia's burden of proving that there is a less trade-restrictive measure that would 
achieve the U.S. objective at the level of prot ection that the United States finds appropriate.608  In its 
second written submission, the United States submits  that Indonesia continues to make vague 
references to dozens of different measures that apply to  all cigarettes, such as advertising restrictions.  
Indonesia does not adduce any evidence that any of  these measures fulfil the legitimate objective at 
the level the United States considers appropriate.  It  has, therefore, not met its burden of establishing a 
prima facie case that Section 907(a)(1)(A) is mo re trade-restrictive than necessary to fulfil its 
objective.609  Furthermore, the alternative measures Indon esia identifies would not in fact fulfil the 
objectives of Section 907(a)(1)(A) at the level th e United States considers appropriate:  those 
alternatives would all continue to allow trainer ciga rettes with characterizing flavours of candy, fruit, 
liquor, etc. to remain on the market.  The Unite d States submits that it already imposes significant 
restrictions on the advertising, marketing, and sale of cigarettes610, and that many of the potentially 
alternative measures proposed by Indonesia are already in place in the United States.611 
2. Analysis by the Panel 
(a) Introduction 
7.325  The fundamental issue before us is whethe r the United States' ban on clove cigarettes612 is 
more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks non-
fulfilment would create, in violation of Article 2.2 of the TBT Agreement .   
                                                      
603 United States' second written submission, paras. 46 -49; United States' response to Panel question 
No. 103(b), para. 85.  
604 United States' response to Panel question No. 103(b), para. 86. 
605 United States' second written submission, para. 161. 
606 United States' first written submission, para. 245. 
607 United States' first written submission, para. 249. 
608 United States' first written submission, para. 270. 
609 United States' second written submission, para. 164. 
610 United States' second written submission, para . 165; United States' response to Panel question 
No. 108, para. 103.  
611 United States' first written submission, footnote  316; United States' second written submission, 
para. 165; United States' response to Panel question No. 109(c), paras. 109-110. 
612 We are mindful of the fact, emphasized by the United States throughout this proceeding, that 
Section 907(a)(1)(A) bans all cigarettes with a char acterizing flavour except menthol, and not merely clove 
cigarettes.  See e.g. United States' second written submission, para. 68. WT/DS406/R 
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 7.326  There are a number of points of disagreement be tween the parties in respect of this claim.  
The main points of disagreement between the parties are as follows.  First, the parties disagree on 
whether Indonesia has correctly identified the objec tive of the ban on clove cigarettes.  Second, the 
parties appear to disagree on whether the objective pursued by the United States through the ban on 
clove cigarettes is legitimate.  Third, the par ties disagree on whether jurisprudence relating to 
Article XX(b) of the GATT 1994 is relevant to the interpretation of the "more trade-restrictive than 
necessary" standard in Article 2.2 of the TBT Agreement .  Fourth, the parties disagree on whether the 
ban on clove cigarettes exceeds the level of protectio n sought by the United States.  Fifth, the parties 
disagree on whether the ban on clove cigarettes makes a material contribution to the objective of 
reducing youth smoking.  Finally, the parties disa gree on whether there are less-trade restrictive 
alternative measures that would make an equivalent  contribution to the achievement of the objective 
pursued at the level of protection sought by the Unite d States.  In our view, some of these issues are to 
a certain extent interrelated.  
7.327  We will begin by setting out the text of the legal provision at issue.   
(b) The legal provision at issue 
7.328  Article 2.2 of the TBT Agreement  states:  
"Members shall ensure that technical regula tions are not prepared, adopted or applied 
with a view to or with the effect of creating unnecessary obstacles to international 
trade.  For this purpose, technical regulations  shall not be more trade-restrictive than 
necessary to fulfil a legitimate objective, taking account of the risks non-fulfilment 
would create.  Such legitimate objectives are, inter alia: national security 
requirements; the prevention of deceptive practices; protection of human health or 
safety, animal or plant life or health, or the environment.  In assessing such risks, 
relevant elements of consideration are, in ter alia: available scientific and technical 
information, related processing technol ogy or intended end-uses of products."   
7.329  We note that Article 2.2 of the TBT Agreement  has been discussed in several prior613 panel 
and Appellate Body reports, but only briefly.614  In EC – Asbestos , the panel noted that "the criteria on 
                                                      
613 The Panel is aware that there are other on-going panel proceedings in which claims under 
Article 2.2 of the TBT Agreement have been raised. See US — Tuna II (Mexico) , WT/DS381/4, p. 2; US – 
COOL (Canada) , WT/DS384/8, p. 2 and US — COOL (Mexico) , WT/DS386/7, p. 3.  However, at the time of 
the issuance of the interim report in this case, the panel repo rts in these other cases had not yet been circulated.    
614 In EC – Asbestos , Canada claimed that the measure at issue was inconsistent with several provisions 
of the TBT Agreement , including Article 2.2.  The panel found th at the measure at issue was not a "technical 
regulation", and therefore did not address Canada's claim under Article 2.2.  Panel Report, EC – Asbestos , 
paras. 3.1, 9.1.  The Appellate Body found that the measure was "technical regulation", but found that it did not 
have an adequate basis to properly examine Canada's claims under the TBT Agreement , and refrained from 
doing so.  Appellate Body Report, EC – Asbestos , para. 83. In EC – Sardines , Peru requested that the panel 
examine its claim under Article 2.4 of the TBT Agreement  first and then examine its claims under Articles 2.2 
and 2.1 of the TBT Agreement  only if it were to determine that the EC regulation was not inconsistent with 
Article 2.4.  The panel found that the EC regulation at issue was inconsistent with Article 2.4 of the 
TBT Agreement , and did not address the claim under Article 2.2 of the TBT Agreement .   Panel Report, EC – 
Sardines , paras. 7.14, 7.16-7.19, 7.147, 7.151-152.  The Appellate Body refrained from making a finding under 
Article 2.2 for the same reason as the panel.  Appellate Body Report, EC – Sardines , paras. 312-313.  In EC – 
Trademarks and Geographical Indications (Australia) , Australia made a claim under Article 2.2, but the panel 
found that the measure at issue wa s not a "technical regulations" within the meaning of Annex 1.1 of the 
TBT Agreement .  Panel Report, EC – Trademarks and Geographical Indications (Australia) , para. 7.515.  In EC 
– Approval and Marketing of Biotech Products , Canada and Argentina made alternative claims under the 
TBT Agreement , including Article 2.2, in the event that the measures were found to be covered by the 
TBT Agreement  in addition to, or instead of, the SPS Agreement . The panel found that the measures at issue  WT/DS406/R 
 Page 99 
 
 
 the preparation, adoption or application of technical regulations in Article 2.2 of the TBT Agreement 
are very similar to those in Article XX of the GATT 1994.  The preamble to the TBT Agreement  in 
fact repeats some of the wording of Article XX of the GATT."615  In EC – Sardines , the panel 
observed that: 
"Article 2.2 and this preambular text affirm that it is up to the Members to decide 
which policy objectives they wish to pursue and the levels at which they wish to 
pursue them. At the same time, these provisions  impose some limits on the regulatory 
autonomy of Members that decide to a dopt technical regulations: Members cannot 
create obstacles to trade which are unnecessary or which, in their application, amount 
to arbitrary or unjustifiable discrimination or a disguised restriction on international 
trade. Thus, the TBT Agreement, like the GATT 1994, whose objective it is to 
further, accords a degree of deference with  respect to the domestic policy objectives 
which Members wish to pursue. At the same  time, however, the TBT Agreement, like 
the GATT 1994, shows less deference to the means which Members choose to 
employ to achieve their domestic policy goals. ..."616 
7.330  In this case, the parties agree that th e first sentence of Article 2.2 of the TBT Agreement  sets 
out a general principle, the meaning of which is  explained and defined in the second sentence of 
Article 2.2.  In other words, the parties agree th at the first sentence of Article 2.2 does not create a 
separate and distinct obligation from that found in the second sentence.617  We see no reason to 
disagree618, and will proceed with our anal ysis on this understanding.  
7.331  The parties also agree that Indonesia carries the burden of pr oof in respect of its claim under 
Article 2.2 of the TBT Agreement .619  On this point, the parties agree that there is a significant 
difference between Article 2.2 and Article XX(b) of the GATT 1994.620  Again, we see no reason to 
disagree.  Thus, we proceed with our analysis on  the understanding that Indonesia must demonstrate 
that the ban on clove cigarettes is more trade-rest rictive than necessary to fulfil a legitimate objective 
(taking account of the risks non-fulfilment would creat e).  At the same time, the parties agree that 
there is no "relevant international standard " within the meaning of Article 2.5 of the 
TBT Agreement .621  Accordingly, while Indonesia carries the burden of proof to establish a violation 
of Article 2.2, we do not begin from any rebuttable presumption that the ban on clove cigarettes is not 
an unnecessary obstacle to trade.622 
                                                                                                                                                                     
were SPS measure, and consequently did not address the claims under the TBT Agreement .  Panel Report, EC – 
Approval and Marketing of Biotech Products , paras. 7.2524, 7.2528, 7.3412-7.3413, 8.38, 8.42-8.46, 8.53, 
8.57-8.62.  
615 Panel Report, EC – Asbestos , para. 8.55.  
616 Panel Report, EC – Sardines , para. 7.120.  
617 United States' first written submission, para. 275; Indonesia's response to Panel question No. 98.  
618 Given that the parties in this case agree on this po int, there is no need for this Panel to address the 
point in any detail.  It suffices to note that the second sentence is introduced by the words "for this purpose", 
thereby establishing a direct link between the two senten ces and implying that the second explains the meaning 
of the first, and the remainder of the second sentence appears by its terms to be an elaboration of the concept of 
an "unnecessary" obstacle to international trade.    
619 See generally, Indonesia's response to Panel question Nos. 4, 12(c). 
620 United States' first written submission, para. 267; In donesia's oral statement at the first substantive 
meeting of the Panel, para. 156; Indonesia's second wr itten submission, para. 109 (quoting the European Union's 
oral statement at the first substantiv e meeting of the Panel, para. 15).  
621  Indonesia's first written submission, para. 113;  parties' responses to Panel question No. 59. 
622 The second sentence of Article 2.5 of the TBT Agreement states that "[w]henever a technical 
regulation is prepared, adopted or applied for one of  the legitimate objectives explicitly mentioned in WT/DS406/R 
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 7.332  The parties also seem to agree th at the nature of the analysis to be conducted under Article 2.2 
of the TBT Agreement  is different from that to be conducted under Article 2.1 of the 
TBT Agreement .623  Again, we see no reason to disagree.  The main issues under Article 2.1 in this 
case are whether clove cigarettes and menthol cigare ttes are "like" products, and if so, whether clove 
cigarettes are accorded "less favourable treatment" th an that accorded to menthol cigarettes.  The 
main issue under Article 2.2 in this case is wh ether the ban on clove cigarettes is "more trade-
restrictive than necessary" to fulfil the legitimat e objective of reducing youth smoking.  Thus, our 
finding that the measure is inconsistent with Artic le 2.1 does not prejudge the answer to the question 
of whether the measure is c onsistent with Article 2.2. 
7.333  The terms of Article 2.2 of the TBT Agreement  provide that to be consistent with that 
provision, a technical regulation must: (i) pursue a "l egitimate objective"; and (ii) not be more trade-
restrictive than "necessary" to fulfil that legitim ate objective (taking into account the risks non-
fulfilment would create).  Thus, Article 2.2 appears to call for a two-step analysis.  It is under the 
general framework of this two-step analysis that  we will address the disputed issues identified above. 
(c) Whether the ban on clove cigarettes pursues a legitimate objective 
7.334  In this section, we are faced with two different  albeit related questions.  The first is whether 
Indonesia has correctly identified the objective of th e ban on clove cigarettes.  The second is whether 
the objective pursued by the United States through the ban on clove cigarettes is legitimate.   
(i) Whether Indonesia has correctly iden tified the objective of the ban 
7.335  In Brazil – Retreaded Tyres , the Appellate Body indicated that it would "begin by identifying 
the objective pursued by the Import Ban".624  In our view, the identification of the objective pursued is 
the logical starting point in the analysis under Article 2.2 of the TBT Agreement , because it serves as 
the reference point for the purpose of analysing wh ether a measure is "more trade-restrictive than 
necessary" to achieve its objective.625  
7.336  In this case, the parties agree that the ban on clove cigarettes is aimed at reducing youth 
smoking.  While we recognize that the objective of Section 907(a)(1)(A) is not set forth in the text of 
the FSPTCA itself, there is considerable evidence befo re the Panel to support this understanding.   For 
instance, it is supported by the House Report.  We note that that the House Report articulates both the objectives of the FSPTCA overall, and of Section 907(a)(1)(A) in particular.
 626  According to the 
House Report:  
                                                                                                                                                                     
paragraph 2 and is in accordance with relevant internatio nal standards, it shall be rebuttably presumed not to 
create an unnecessary obstacl e to international trade." 
623 Indonesia's oral statement at the first meeting of the Panel, paras. 132-133, 140; Indonesia's 
response to Panel question No. 53, para. 113.  While the United States has not expressly addressed the 
relationship between Articles 2.1 and 2.2, we see nothing in  its argumentation to suggest that it holds a different 
understanding.   
624 Appellate Body Report, Brazil – Retreaded Tyres , para. 144.   
625 In the context of an analysis under Article XX(b) of the GATT 1994, the panel in EC – Asbestos  
explained that the question was whether the challenged measures were "necessary  in relation to the objectives 
pursued".  Panel Report, EC – Asbestos , para. 8.182.  
626 H.R. Rep. No. 111-58, Pt. 1 (2009).  Indonesia submitted the House Report as Exhibit IND-2; the 
United States submitted the same Ho use Report as Exhibit US-67.  WT/DS406/R 
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 "The objectives of [the FSPTCA] are to provide the Secretary with the proper 
authority over tobacco products in order to protect the public health and to reduce the 
number of individuals under 18 years of age who use tobacco products."627 
7.337  The House Report states the objective of Section 907(a)(1)(A):  
"Consistent with the overall intent of the b ill to protect the public health, including by 
reducing the number of children and adolescents who smoke cigarettes, 
section 907(a)(1) is intended to prohibit the manufacture and sale of cigarettes with 
certain 'characterizing flavors' that appeal to youth."628 
7.338  In addition, the FDA Guidance  supports the conc lusion that the objective of the ban on clove 
cigarettes is to reduce youth smoking.  It explai ns the rationale of Section 907(a)(1)(A) in the 
following way: 
"Smoking is the leading cause of preventa ble death in the United States, claiming 
over 400,000 lives each year.  An import ant way to reduce the death and disease 
caused by smoking is to prevent children and adolescents from starting to smoke.  Studies have shown that 17 year old smokers are three times as likely to use flavored 
cigarettes as are smokers over the age of 25.  In addition to being more attractive to 
young people, flavored produc ts make it easier for new smokers to start smoking by 
masking the unpleasant flavor of tobacco.  St udies have also demonstrated that young 
people believe that flavored tobacco pr oducts are safer than unflavored tobacco 
products.   
Flavored cigarettes are just as addictive and have the same types of harmful effects as 
regular cigarettes.  Removing these flavored products from the market is important 
because it removes an avenue that young peopl e can use to begin regular tobacco use.  
Congress specifically enacted the ban on sale of cigarettes and their component parts, 
such as filters and papers, which contain cer tain characterizing flavors.  The removal 
from the market of cigarettes that contain certain characterizing flavors is an 
important step in the Nation's efforts to reduce the burden of illness and death caused 
by tobacco products as authorized by the FSPTCA, signed by President Obama on June 22, 2009."
629  
7.339  However, while the parties agree that the ban aims to reduce youth smoking, they disagree on 
two points relating to the objective of Section 907(a)(1 )(A).  The first is what is meant by "youth": 
whereas Indonesia understands "youth" to mean  minors (i.e., persons under the age of 18)630, the 
United States asserts that the objective of Secti on 907(a)(1)(A) is to reduce smoking of all people 
within the "window of initiation", which it defines as people ages 12-26.631  The second is whether 
Section 907(a)(1)(A) has only one objective: whereas  the United States argues that the exclusion of 
menthol cigarettes from Section 907(a)(1)(A) reflects a second "objective" of the measure, which is to 
avoid the potential negative conseque nces associated with banning produc ts to which tens of millions 
                                                      
627 Exhibit US-67, p. 14. 
628 Exhibit US-67, p. 37. 
629 Guidance. answer to ques tion No. 1 (Exhibit IND-41).  See also FDA Advisory – Flavored Tobacco 
Products;   What you need to know  (Exhibit IND-25). 
630 Indonesia's second written submission, para. 114; Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 75; Indonesia 's comments on the United States' response to Panel 
question No. 101, paras. 52-54.  
631 United States' response to Panel question No. 12(b), para. 16; United States' response to Panel 
question Nos. 100 and 101, paras. 62 and 71-77.  WT/DS406/R 
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 of adults are chemically and psychologically addicted632; Indonesia considers that this relates to the 
alleged justification  for excluding menthol cigarettes from the scope of the ban, and is not a second 
"objective" of Section 907(a)(1)(A).633    
7.340  In our view, it is not clear that we need to resolve the disagreement between the parties on the 
precise objective of Section 907(a)(1)(A).  First, the outcome of our analysis under Article 2.2 of the 
TBT Agreement  does not turn on either of these points.634  Second, neither party has explained why it 
is necessary for this Panel to identify the objec tive of a measure at such a level of precision.635   
7.341  That having been said, we consider that while the evidence before us is not free of ambiguity, 
it better supports Indonesia's assertion that the obj ective of the ban on clove cigarettes is to reduce 
smoking by persons under the age of 18.  As Indo nesia points out, Section 2 of the FSPTCA lists 
49 findings by the U.S. Congress regarding the use of  tobacco, and "[f]ully one quarter of all these 
findings refer to tobacco use by 'youth,' 'adolescents,'  'minors,' 'children,' those 'underage,' and those 
'under 18.'"636  In addition, the passages from the Ho use Report and FDA Guidance already quoted 
above support this understanding: the former i ndicates that one of the overall objectives of the 
FSPTCA is to "reduce the number of individuals under 18 years of age"637 who use tobacco products, 
and that the objective of Section 907(a)(1)(A) in par ticular is "reducing the number of children and 
adolescents"638 who smoke cigarettes; the latter states that an important way to reduce the death and 
disease caused by smoking is to prevent "children and adolescents"639 from starting to smoke.   
7.342  As to the second issue, we consider that it w ould be entirely possible, both as a factual and a 
legal matter, for a single technical regulation to pursu e more than one objective.  In addition, we are 
mindful of the Appellate Body's guidance on the need to examine a technical regulation as a whole, 
taking into account, as appropriate, both any prohib itions and any exceptions to those prohibitions.640  
                                                      
632 United States' response to Panel question Nos. 60, 100.  
633 Indonesia's second written submission, para. 113; Indonesia's oral statement at the second 
substantive meeting of the Panel, para. 74.  
634 For its part, Indonesia argues that whether the Panel accepts I ndonesia's or the United States' 
formulation of the objective, the ban on  clove cigarettes is still more trade-restrictive than necessary to achieve 
its objective because both parties in clude "reducing youth smoking" in thei r objectives and that is where the 
United States' defence fails. Indonesia 's oral statement at the second substantive meeting of the Panel, 
para. 81.   In response to a question from the Panel asking it to clarify what the practical implications would be 
of defining the objective simply in terms of "reducing youth smoking", without consideration of possible 
negative consequences, the United States simply notes that "this limitation may result in a different pool of 
alternative measures with which the challenged measure is compared". United States' response to Panel question 
No. 100, para. 63.  However, the United States does not elaborate on how this would result in a different pool of 
alternative measures. 
635 We note that the "legitimate objectives" explic itly mentioned in the text of Article 2.2 of the 
TBT Agreement  are formulated at a high level of generality.  Indeed, defining the objective of 
Section 907(a)(1)(A) in terms of "reducing youth smoking" may already be more specific than required under 
Article 2.2, which refers generally to the "protec tion of human health" as a legitimate objective.  
636 Indonesia's response to Panel question No. 12(b). 
637 Exhibit US-67, p. 14. 
638 Exhibit US-67, p. 37. 
639 Guidance, answer to ques tion No. 1 (Exhibit IND-41).  See also FDA Advisory – Flavored Tobacco 
Products;   What you need to know  (Exhibit IND-25). 
640 In EC – Asbestos , the panel adopted a two-stage interpretiv e approach of examining, first, the 
application of the  TBT Agreement  to the "prohibition" contained in the measure and, second and separately, its 
application to the "exceptions" contained in the meas ure.  Following this two-stage approach, the panel 
ultimately concluded that the "prohibition" element of the measure was not a "technical regulation", but that the 
"exceptions" element of the measure was a "technical regulation".  The Appellate Body concluded that the 
panel's approach and conclusion constituted a legal error,  and explained that "the measure at issue is to be  WT/DS406/R 
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 However, we agree with Indonesia that the Unite d States' desire to avoid the potential negative 
consequences associated with banning  products to which tens of millions  of adults are chemically and 
psychologically addicted is not an "objective" of S ection 907(a)(1)(A) itself, but is rather the alleged 
justification  for excluding menthol cigarettes from the scope of the ban.  Basically, we have difficulty  
in understanding how the justification for excluding certain products from the scope of a technical 
regulation could be characterized as an objective of that technical regulation.  
7.343  For these reasons, we conclude that Indonesia h as demonstrated that the objective of the ban 
on clove cigarettes is to reduce smoking by youth (i.e ., persons under the age of 18).  This will serve 
as the reference point for the purpo se of analysing whether the ban on  clove cigarettes is more trade-
restrictive than necessary to achieve its objective. 
(ii) Whether the objective of the ban on cl ove cigarettes is "legitimate"  
7.344  Having determined the objective pursued  by the United States when enacting 
Section 907(a)(1)(A), we proceed to examine its le gitimacy.  We recall that Article 2.2 of the 
TBT Agreement  provides that technical regulations shall not  be more trade-restrictive than necessary 
to fulfil a "legitimate" objective, taking account of the risks non-fulfilment would create.  Article 2.2 
explains that such "legitimate" objectives are, inter alia : "national security requirements; the 
prevention of deceptive practices; protection of human h ealth or safety, animal or plant life or health, 
or the environment".  As observed by the panel in EC – Sardines , although the elaboration of the 
objectives of a measure is a prerogative of the Member establishing that measure, "[p]anels are 
required to determine the legitimacy of those objectives".641  The Appellate Body supported this 
conclusion by stating that it shared the view of the panel that this part of the analysis "implies that 
there must be an examination and a determination on the legitimacy of the objectives of the 
measure".642 
7.345  In this case, Indonesia suggests that the ban on  clove cigarettes does not have a "legitimate" 
objective, arguing that the measure is a "disguised  restriction" on international trade and a "wolf 
disguised in the sheep's clothing" of public health.643  Indonesia clarifies that while the objective of 
the Section 907(a)(1)(A) "as stated" in the FSPTCA and the House Report (i.e., to reduce youth 
smoking) is a "legitimate" objective within the meaning of Article 2.2 of the TBT Agreement , the 
"measure itself" is a disguised restriction on international trade.644  According to Indonesia, the 
United States did not include menthol cigarett es in Section 907(a)(1)(A) because Philip Morris 
opposed it.  Indonesia submits that the exclusion of menthol cigarettes from the ban was the result of a political compromise, and the real concern was getting a deal on the FSPTCA through the U.S. 
Congress while also avoiding the potential loss of jobs  in the United States if menthol cigarettes were 
banned.
645 
7.346  As the party challenging the legitimacy of the identified objective, Indonesia carries the 
burden to establish that the objective concerned is no t "legitimate" within the meaning of Article 2.2 
of the TBT Agreement . 
7.347  We have already concluded that the objective of the ban on clove cigarettes is to reduce youth 
smoking.  It is self-evident that measures to re duce youth smoking are aimed the protection of human 
                                                                                                                                                                     
examined as an integrated whole, taking into account, as appropriate, the prohibitive and the permissive 
elements that are part of it".  Appellate Body Report, EC – Asbestos , para. 64. 
641 Panel Report, EC – Sardines , para. 7.121. 
642 Appellate Body Report, EC – Sardines , para. 286. 
643 Indonesia's second written submission, para. 140; Indonesia's response to Panel question No. 99.  
644 Indonesia's response to Panel question No. 99, para. 34. 
645 Indonesia's second written submission, para. 118; Indonesia's response to Panel question No. 99, 
para. 37; Indonesia's oral statement at the second  substantive meeting of the Panel, para. 79.  WT/DS406/R 
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 health, and Article 2.2 of the TBT Agreement  explicitly mentions the "protection of human health" as 
one of the "legitimate objectives" covered by that provision.  In EC – Asbestos , the Appellate Body 
stated that "the objective pursued by the measure is the preservation of human life and health through 
the elimination, or reduction, of the well-known, an d life-threatening, health risks posed by asbestos 
fibres.  The value pursued is both vital and important in the highest degree."646  In addition, we recall 
that in Brazil – Retreaded Tyres , the Appellate Body agreed with the panel that "few interests are 
more 'vital' and 'important' than prot ecting human beings from health risks".647 
7.348  In addition, while it is open to  a complaining party to seek to demonstrate that a measure does 
not have a "legitimate" objective, and that appearance s can be deceiving, Indonesia's argument in this 
case appears tantamount to saying that the United States has acted in bad faith.  In US – Offset Act 
(Byrd Amendment) , the Appellate Body, recalling its previous reports in US – Shrimp  and US – 
Hot-Rolled Steel , acknowledged that "there is a basis for a di spute settlement panel to determine, in an 
appropriate case, whether a Member has not acted in good faith".648  However, the Appellate Body 
made clear that such a finding is not to be made lightly.   
7.349  Finally, even if we were to accept Indonesia's as sertions for the sake of argument – i.e., that 
the United States did not include menthol cigarett es in Section 907(a)(1)(A) "because Philip Morris 
opposed it", that the exclusion of menthol cigarettes from the ban was the result of a "political compromise", and the "real concern was getting a deal on the FSPTCA through the U.S. Congress 
while also avoiding the potential loss of jobs in the United States if menthol cigarettes were 
banned"
649 – we fail to see how any of this would call into question the conclusion that the ban on 
clove cigarettes is aimed at reducing youth smoking, a nd that this is a legitimate objective.  In our 
view, these assertions would seem more germane to th e question of whether or not the justification 
advanced by the United States for excluding menthol cigarettes from the scope of the ban – i.e., allegedly to avoid the potential negative c onsequences associated with banning products 
(i.e., menthol cigarettes) to which tens of milli ons of adults are chemic ally and psychologically 
addicted due to the potential but unknown consequences for the health of the individual users or the 
overall population
650 – is credible or not.  In our view, these are distinct issues.651  
7.350  For these reasons, we conclude that Indonesia h as failed to demonstrate that the objective of 
the ban is not "legitimate". 
(d) Whether the ban on clove cigarettes is "more tr ade-restrictive than necessary" to fulfil the 
legitimate objective of reducing youth smoking 
7.351  Having defined the objective of the ban on clove cigarettes as reducing youth smoking and 
concluded that this objective is legitimate within the meaning of Article 2.2 of the TBT Agreement , we 
will now proceed to the second step of our analys is, which is to examine whether the ban on clove 
cigarettes is "more trade-restrictive than necessary"  to fulfil that legitimate objective (taking into 
account the risks that non-fulfilment would create).  
7.352  Our examination focuses on four main issues.  The first is whether jurisprudence relating to 
Article XX(b) of the GATT 1994 is relevant to the interpretation of the "more trade-restrictive than 
necessary" standard in Article 2.2 of the TBT Agreement .  The second is whether the ban on clove 
                                                      
646 Appellate Body Report, EC – Asbestos , para. 172. 
647 Appellate Body Report, Brazil – Retreaded Tyres , para. 144 (footnotes omitted).   
648 Appellate Body Report, US – Offset Act (Byrd Amendment) , para. 297. 
649 Indonesia's second written submission, para. 118; Indonesia's response to Panel question No. 99, 
para. 37; Indonesia's oral statement at the second  substantive meeting of the Panel, para. 79.  
650 United States' response to Panel question No. 60. 
651 We need not and do not decide on that issue for the purposes of resolving Indonesia's claim under 
Article 2.2.    WT/DS406/R 
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 cigarettes exceeds the level of prot ection sought by the United States.  The third is whether the ban on 
clove cigarettes makes a material contribution to the objective of reducing youth smoking.  The fourth 
is whether there are less-trade restrictive alternative measures that would make an equivalent contribution to the achievement of the objective pu rsued at the level of protection sought by the 
United States. 
(i) Whether jurisprudence developed under Article XX( b) of the GATT 1994 is relevant to the 
interpretation of the "more trade-restrictive than necessary" standard in Article 2.2 of the 
TBT Agreement 
7.353  In this case, the parties disagree not only abou t whether the ban on clove cigarettes is "more 
trade-restrictive than necessary", but also on the appropriate legal framework for undertaking that 
analysis.  In its first written submission, Indonesia pr oceeds on the premise that the test that has been 
developed under Article XX(b) of  the GATT 1994 is equally applicable to the second sentence of 
Article 2.2 of the TBT Agreement .  The United States disagrees, and terms this a "radical approach".
652  
In its view, the Panel should instead apply the test that has been developed by the Appellate Body in 
the context of Article 5.6 of the SPS Agreement .653   
7.354  Article XX of the GATT 1994 is entitled "Gener al Exceptions".  Together with its chapeau, 
Article XX(b) reads as follows: 
"Subject to the requirement that such me asures are not applied in a manner which 
would constitute a means of arbitrary or unjustifiable discrimination between 
countries where the same conditions prev ail, or a disguised restriction on 
international trade, nothing in this Agre ement shall be construed to prevent the 
adoption or enforcement by any c ontracting party of measures: 
 …  (b) necessary to protect human, animal or plant life or health". 
7.355  There is a substantial body of jurisprudence re lating to the interpretation and application of 
Article XX(b)
654, as well as its chapeau.655  
7.356  As discussed above656, we consider that a treaty interpreter should not automatically transpose 
jurisprudence developed in the context of one provis ion to another.  Rather, a treaty interpreter must 
carefully consider any difference s in the wording, context and purpose of different provisions, and 
assess the significance of any such differences.  In our view, such a cautious approach is mandated by 
Article 31(1) of the VCLT, and is also consistent with previous findings by the Appellate Body.  For 
                                                      
652 United States' first written submission, footnote 310. 
653 United States' first written submission, paras. 262-265. 
654 Panel Report, US – Gasoline , paras. 6.20-29; Panel Report, EC – Asbestos , paras. 8.184-8.223; 
Appellate Body Report, EC – Asbestos , paras. 155-175; Panel Report, EC – Tariff Preferences , 
paras. 7.178-7.224; Panel Report, Brazil – Retreaded Tyres , paras. 7.35-7.215, 7.375-7.380, 7.438-7.446; 
Appellate Body Report, Brazil – Retreaded Tyres , paras. 133-212; Panel Report, US – Poultry (China) , 
paras. 7.458-483.   
655 Appellate Body Report, US – Gasoline , paras. 22-30; Panel Report, US – Shrimp , paras. 7.31-7.62; 
Appellate Body Report, US – Shrimp , paras. 146-186; Panel Report, Argentina – Hides and Leather , 
paras. 11.309-11.331; Panel Report, EC – Asbestos , paras. 8.224-8.240; Panel Report, US – Shrimp (Article 21.5 
– Malaysia) , paras. 5.43-5.144; Appellate Body Report, US – Shrimp (Article 21.5 – Malaysia) , paras. 111-152; 
Panel Report, EC – Tariff Preferences , paras. 7.225-7.235; Panel Report, Brazil – Retreaded Tyres , 
paras. 7.217-7.357, 7.375-7.380; Appellate Body Report, Brazil – Retreaded Tyres , paras. 213-252.  
656 See Section VII. D.2(c)(i) above. WT/DS406/R 
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 example, in US – Gambling  the Appellate Body concluded that previous decisions under Article XX 
of the GATT 1994 were relevant to its analysis under Article XIV of the GATS, but it reached that 
conclusion only after it considered some of the differences and similarities between the two 
provisions: 
"Article XIV of the GATS sets out the gene ral exceptions from obligations under that 
Agreement in the same manner as does Artic le XX of the GATT 1994.  Both of these 
provisions affirm the right of Members to pursue objectives identified in the 
paragraphs of these provisions even if, in doing so, Members act inconsistently with 
obligations set out in other provisions of the respective agreements, provided that all 
of the conditions set out therein are satisfied.  Similar language is used in both 
provisions349, notably the term 'necessary' and the requirements set out in their 
respective chapeaux. Accordingly, like the Panel, we find previous decisions under 
Article XX of the GATT 1994 relevant for our analysis under Article XIV of the 
GATS. 
_____________ 
349  Notwithstanding the general similarity in la nguage between the two provisions, we note 
that Article XIV(a) of the GATS expressly en ables Members to adopt measures 'necessary to 
protect public morals or to maintain public order' , whereas the corresp onding exception in the 
GATT 1994, Article XX(a), speaks of measures  'necessary to protect public morals'. 
(emphasis added)"657  
7.357  The United States' argument that relying on th e jurisprudence developed under Article XX(b) 
of the GATT 1994 in the context of Article 2.2 of the TBT Agreement  would be a "radical approach" 
rests on the premise that Article 2.2 should be inte rpreted and applied in a manner that is radically 
different from the manner in which Article XX(b) has been interpreted and applied.  Having carefully 
considered the wording, context and objective of Article XX(b) and Article 2.2, we disagree.     
7.358  To begin with, the wording of the second sentence of Article 2.2 of the TBT Agreement  is 
very similar to that found in Article XX(b) of the GATT 1994.  Indeed, in a case such as this one 
where the "legitimate objective" at issue is the "prot ection of human health", the terms appear to be 
interchangeable.  For example, in US –Gasoline  the panel understood the expression "necessary to 
protect human ... life or health" in Article XX(b) called for an analysis of  whether measures "were 
necessary to fulfil the policy objective" of protecting human life or health.658 
7.359  In addition, the context of Article 2.2 of the TBT Agreement  establishes a direct link to 
Article XX(b) of the GATT 1994.  In this regard, we note that the sixth recital of the preamble to the 
TBT Agreement essentially reproduces the language contained in Article XX of the GATT 1994.659 
7.360  Furthermore, we note that the panel in  EC – Asbestos  observed that "the criteria on the 
preparation, adoption or application of technical re gulations in Article 2.2 of the TBT Agreement are 
very similar to those in Article XX of the GATT 1994. The preamble to the TBT Agreement in fact 
repeats some of the wording of Article XX of the GA TT.  In the panel's view the TBT Agreement is a 
development of the GATT."660  The panel then added, in a footnote, that:  
                                                      
657 Appellate Body Report, US – Gambling , para. 291 and footnote 349 (some footnotes omitted).  
658 Panel Report, US – Gasoline , para. 6.20 (cited in Panel Report, EC – Asbestos , para. 8.169; Panel 
Report, EC – Tariff Preferences , para. 7.197; Panel Report, Brazil – Retreaded Tyres , para. 7.40.) 
659 See paragraph 7.3 above for the text of the sixth recital of the preamble.  
660 Panel Report, EC – Asbestos , para. 8.55.  WT/DS406/R 
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 "[T]he preparatory work on the Agreement on Technical Barriers to Trade in the 
Tokyo Round show that the TBT Agreement that should have emerged from the 
Tokyo Round was already seen as being a development of the existing rules of the GATT, notably Article XX. See for example the extract from document 
MTN/3E/W/26, October 1974, quoted in  paragraph 7 of document TRE/W/21, 
17 January 1994."
661 
7.361  In our view, the foregoing does not support the view that Article 2.2 of the TBT Agreement  
should be given a radically different interpre tation from Article XX(b) of the GATT 1994.   
7.362  In addition, the United States has not actually identified any significant differences between 
the tests that have been developed under Artic le XX(b) of the GATT 1994 and Article 5.6 of the 
SPS Agreement , or any aspect of the Article XX(b) jurisp rudence relating to the interpretation of the 
term "necessary" that would be inapplicable to Article 2.2 of the TBT Agreement .  The United States 
suggests that there are three ways in which the test developed under Article XX(b) of the GATT 1994 
differs from that developed under Article 5.6 of the SPS Agreement .  We review the alleged 
differences below. 
7.363  First, the United States indicates that under Article 2.2 of the TBT Agreement , a panel is 
inquiring as to whether a measure fulfils a leg itimate objective is "more trade restrictive than 
necessary" to fulfil that objective, whereas unde r Article XX of the GATT 1994, the question is 
whether it is "necessary" to breach the GATT 1994 to prot ect human, animal or plant life or health, to 
protect public morals or to secure compliance with laws or regulations.  Thus, the United States argues, the alternatives that are being compared under Article 2.2 are two alternatives that are WTO-
consistent while the alternatives being comp ared under Article XX of the GATT 1994 are an 
alternative that is WTO-inconsistent and another that is WTO-consistent.
662  While the foregoing may 
in some cases be correct, we are unable to see what  bearing this has on the question of whether legal 
test that has been developed under Article XX( b) is applicable to Article 2.2 of the TBT Agreement .  
We agree with the European Union that: 
"This difference, however, is of relativ e insignificance to the question of how the 
terms  Article 2.2 should be interpreted.  The fact that Article XX of the GATT 1994  
constitutes an exception and Article 2.2 of the TBT Agreement a prohibition does not 
go to either the question of how the text  in Article 2.2 should be interpreted, nor to the 
                                                      
661 Panel Report, EC – Asbestos , footnote 41. 
662 United States' first written submission, para. 267. Based on this difference in wording between 
Article XX(b) of the GATT 1994 and Article 2.2 of the TBT Agreement , the United States further argues that 
there is another significant difference between these prov isions, which is that the question under Article XX(b) 
is whether the measure  itself  is necessary, whereas under Article 2.2 the question is whether the degree of trade-
restrictiveness  is necessary (United States' second written s ubmission, para. 181; United States' response to 
Panel question No. 55, para. 123).  We agree with the Un ited States that Article XX(b) is drafted in terms of 
whether the trade-restrictive measure is necessary to fulf il its objective, whereas Article  2.2 is drafted in terms 
of whether the degree of trade-restrictiveness of that meas ure is necessary to fulfil its objective.  However, the 
United States has not explained why or how an analys is framed in terms of the necessity of the "trade-
restrictiveness" of a trade-restrictive measure would be si gnificantly different from an analysis framed in terms 
of the necessity of that trade-restri ctive measure. For example, the United States' arguments in this case suggest 
that a Panel analysing the necessity of the degree of trade-restrictiveness  of a trade-restrictive measure under 
Article 2.2 (as opposed to the n ecessity of a trade-restrictive measure ) would still need to consider the extent to 
which that measure  makes a "contribution" to its objective.  In this regard, we recall that the United States 
recognizes that "[w]hile Article 2.2 do es not require that the measure fulfill its  objective, it is difficult to believe 
that a measure fails to fulfill its objective completely – th at is to say, a measure that does not even make a 
marginal contribution to its objective – could be found cons istent with Article 2.2"  (United States' response to 
Panel question No. 103(a)).   WT/DS406/R 
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 question of the importance of jurisprudence under Article XX of the GATT 1994 .  
Rather, this "functional" difference between  the two provisions  affects only the 
burden of proof between the parties, and not the meaning of the terms of a provision."
663 
7.364  Second, the United States indicates that unlike the situation under Article XX of the 
GATT 1994, it is the complaining party that has the burden of establishing that the measure is "more 
trade-restrictive than necessary" under Article 2.2 of the TBT Agreement .664   That is correct.  
However, it does not follow from this fact, i.e., that the burden of proof is a llocated differently under 
Article XX and Article 2.2, that jurisprudence deve loped in the context of Article XX(b) can provide 
no guidance on the interpretation of the "more tr ade-restrictive than necessary" standard in 
Article 2.2.  
7.365  Third, the United States relies on footnote 3 to Article 5.6 of the SPS Agreement  to argue that 
the appropriate standard to be applied is whether an  alternative measure exists that is "significantly" 
less restrictive to trade.665  Article 5.6 of the SPS Agreement and its accompanying footnote provide 
that: 
"Without prejudice to paragraph 2 of Artic le 3, when establishing or maintaining 
sanitary or phytosanitary measures to achieve the appropriate level of sanitary or phytosanitary protection, Members shall en sure that such measures are not more 
trade-restrictive than required to achieve  their appropriate level of sanitary or 
phytosanitary protection, taking into account technical and economic feasibility.
3 
______________ 
3 For purposes of paragraph 6 of Article 5, a measure is not more trade-restrictive than 
required unless there is another measure, reas onably available taking into account technical 
and economic feasibility, that achieves the appr opriate level of sanitary or phytosanitary 
protection and is significantly  less restrictive to trade. " (emphasis added) 
7.366  However, the United States does not explain the basis for the underlying premise that a 
different standard applies under Article XX(b).  I ndeed, we are unaware of any GATT or WTO panel 
or Appellate Body report which suggests that a diff erent standard applies under Article XX(b).  In 
addition, the United States acknowledges in response to a question from the Panel that the issue of 
whether Article 2.2 embodies a "significantly less trad e-restrictive" standard would "not appear to 
arise in this dispute", where the challenged measure is an import ban, if Indonesia adduced sufficient 
evidence that an alternative measure exists that does not ban its product.666 
7.367  We would also observe that in the context of  arguing that the measure would be justified 
under Article XX(b) of the GATT 1994 "should the Pa nel reach the issue of GATT exceptions", the 
United States provides an extensive review of the case law under that provision and then proceeds to 
advance substantially the same arguments that it h as advanced in the context of Article 2.2 of the 
TBT Agreement .  For example, the United States submits th at "as discussed in section III.H", i.e., the 
                                                      
663 European Union's third-party oral statement, para. 15. 
664 United States' first written submission, para. 267. 
665 The Panel notes that the United States further contends that a 1993 letter from Peter D. Sutherland, 
Director-General of the GATT, to Ambassador John Schm idt, Chief U.S. Negotiator, Exhibit US-79, provides 
additional support, as a supplemental m eans of interpretation under Article 32 of the VCLT, that Article 2.2 of 
the TBT Agreement  should be interpreted similarly to Article 5.6 of the SPS Agreement , specifically that a 
measure cannot be considered more trade-restrictive than  necessary in the absence of a reasonably available 
alternative measure that is "significantly" less-trade restrictive. 
666 United States' response to Panel question No. 57, para. 130.   WT/DS406/R 
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 section of its first written submission pertaining to Article 2.2, "Section 907(a)(1)(A) was enacted in 
order to protect human life and health from the ri sk posed by smoking" and "was necessary to ensure 
that products that are predominantly used as 'starter ' products by youth, leading to years of addiction, 
health problems, and possibly death, cannot be sold in the United States at all."667  In the context of its 
Article XX(b) analysis, the United States notes that "[a] s elaborated above", which we read to mean in 
the context of its Article 2.2 analysis, "[s]moki ng presents an undeniable risk to human life and 
health. And by banning certain products that are predominantly used as smoking 'starter' products by 
young smokers, Congress clearly took at ac tion to reduce this risk of smoking."668  Again in its 
Article XX(b) analysis, the United States submits th at "[a]s has been detailed in this submission, 
smoking poses a severe risk to human life and health , and the FSPTCA is the latest in a series of 
restrictions placed on the cigarette companies to address this risk."669 
7.368  In the light of the foregoing, we are not persuaded by the United States' argument that the 
jurisprudence that has been developed under Artic le XX(b) of the GATT 1994 is inapplicable to 
Article 2.2 of the TBT Agreement .  Rather, we agree with Indonesia, as well as the third parties that 
have addressed this issue, that th e jurisprudence developed under Ar ticle XX(b) is relevant to the 
interpretation of Article 2.2 of the TBT Agreement .  Therefore, in addressing the arguments of the 
parties relating to the question of whether the ban on clove cigarettes is "more trade-restrictive than necessary", we will look for guidan ce in this jurisprudence.  
7.369  We do not agree with the United States that "no aspect"
670 of Article XX(b) jurisprudence is 
applicable to an Article 2.2 analysis.  At th e same time, we are not saying that Article XX(b) 
jurisprudence can be transposed in its entirety onto Article 2.2 of the TBT Agreement .  It may well be 
that there are certain aspects of Article XX(b) jurisp rudence that are not applicable in the context of 
Article 2.2 of the TBT Agreement .  Rather, we are of the view that there are some aspects of 
Article XX(b) jurisprudence that may be taken into  account in the context of interpreting Article 2.2 
of the TBT Agreement . 
(ii) Whether Indonesia has demonstrated that th e ban on clove cigarettes exceeds the level of 
protection sought by the United States  
7.370  In this case, both parties agree that the "level of  protection" sought is directly connected to the 
question of whether a measure is "more trade-rest rictive than necessary" within the meaning of 
Article 2.2 of the TBT Agreement .671  We see no reason to disagree.  Although the concept is not 
explicitly referred to in the text of Article 2.2 of the TBT Agreement , the sixth recital to the preamble 
of the TBT Agreement  states no country should be prevente d from taking measures "necessary … for 
the protection of human … life or health … at the leve ls it considers appropriate".   In addition, panels 
and the Appellate Body have considered the "level of protection" in the context of analysing measures 
under Article XX(b) of the GATT 1994, notwithsta nding that these words are not found in that 
provision either.  Among other things , the Appellate Body has explained that "in order to qualify as an 
alternative, a measure proposed by the complaini ng Member must be not only less trade restrictive 
than the measure at issue, but should also "preserve  for the responding Member its right to achieve its 
desired level of protection with respect to the objective pursued".672 
                                                      
667 United States' first written submission, para. 316. 
668 United States' first written submission, para. 318. 
669 United States' first written submission, para. 322. 
670 United States' response to Panel question No. 55, para. 121. 
671 Parties' responses to Panel question No. 58. 
672 Appellate Body Report, Brazil – Retreaded Tyres , para. 156;  Appellate Body Report, US – 
Gambling, para. 308. WT/DS406/R 
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 7.371  Indonesia submits that the ban on clove cigarett es is "more trade-restrictive than necessary" 
because it "greatly exceeds the level of protection sought" by the United States.673  Indonesia asserts 
that because "the vast majority of cigarettes know n to be smoked by youth are not banned by the Act", 
the level of protection sought by the United Stat es through the FSPTCA is "not a dramatic reduction 
in the number of youth who smoke", but rather "suffici ent regulation to deter, but not prohibit, the use 
of tobacco products by adolescents".674  Indonesia submits that a ban "is the most trade-restrictive 
regulatory tool available and in certain circumstan ces may be the only option for achieving a health 
objective, for example where the le vel of protection needed is the elimination  of risk".675  Indonesia 
submits that although the FSPTCA does not expressl y state a "level of protection sought," the 
provisions of the law convey a much lower level of protection desired than the high level claimed by 
the United States.676   
7.372  The United States acknowledges that if the measure  at issue "goes beyond the chosen level of 
protection", a less trade restrictive measure may likewise fulfil the Member's legitimate objective.677  
However, in its view, Indonesia's understanding of th e level of protection sought by the United States 
is erroneous.678  Given the U.S. Government's long and frustrating experience in trying to limit youth 
smoking, the "high" level of protection sought by  the United States is evidenced by the measure 
applied – a complete ban.679  The level at which the United States considers appropriate to protect 
public health is to eliminate from the market, not simply restrict access to, those products that are 
disproportionately used by young people.680   
7.373  As the party asserting that the ban on clove cigare ttes "greatly exceeds the level of protection 
sought" by the United States, Indonesia carries the burden of providing us with evidence and 
argumentation on what is the level of protection so ught by the United States, and why banning clove 
cigarettes greatly exceeds the level of protection sought.   
7.374  Indonesia has not pointed us to any direct evidence regarding the "level of protection" sought 
by the United States.  For example, there appears to be nothing in the text of the FSPTCA stating the 
level of protection that it seeks to achieve.  In th e absence of any direct evidence regarding the level 
of protection sought by the United States, we are somewhat hesitant to find that the ban on clove 
cigarettes greatly exceeds that level of protection. 
7.375  In addition, insofar as Indonesia seeks to infer681 the level of protection from the measure 
itself, it is not clear how the ban on clove cigarettes could be found to exceed (or fall short of meeting) 
this level of protection.  If we were to infer the "l evel of protection" from the measure itself, the level 
of protection must necessarily be the level of protecti on reflected in the measure itself.  It is then not 
clear how the measure could exceed (or fall short of mee ting) that level of protection.  In other words, 
where the level of protection is inferred from the measure itself, the measure  will necessarily achieve 
exactly that level of protection.  The Appellate Bo dy seems to have alluded to this problem in the 
context of the SPS Agreement .  In Australia – Salmon , the Appellate Body noted that: 
                                                      
673 Indonesia's first written submission, para. 85. 
674 Indonesia's first written submission, para. 84.   
675 Indonesia's first written submission, para. 85 (emphasis original).   
676 Indonesia's response to Panel question No. 58(c),  para. 123; Indonesia's second written submission, 
para. 124.  
677 United States' response to Panel question No. 58(b), para. 134. 
678 United States' first written submission, paras. 255-257. 
679 United States' first written submission, para. 227. 
680 United States' response to Panel question No. 58(b), para. 135; United States' second written 
submission, para. 147. 
681 Indonesia's response to Panel question No. 58(d).  WT/DS406/R 
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 "To imply [i.e. infer] the appropriate level of protection from the existing SPS 
measure would be to assume that the measure always achieves the appropriate level 
of protection determined by the Member."682 
7.376  Indeed, in the present case the United States argues that the "high" level of protection can be 
inferred from the measure applied – a complete ban.683  According to the United States, the inference 
to be drawn from Section 907(a)(1)(A) itself is that the level of protection is "to eliminate from the 
market"684 those products at issue.   
7.377  We are not persuaded by Indonesia's argument th at because "the vast majority of cigarettes 
known to be smoked by youth are not banned by the Act"685, the level of protection sought by the 
United States through the FSPTCA is relatively low,  and banning clove cigarettes therefore exceeds 
that level of protection.  While it is common ground between the parties that the ban on clove 
cigarettes (and the FSPTCA mo re generally) only seeks to reduce  rather than eliminate  youth 
smoking, it does not follow that banning certain types of cigarettes ipso facto  exceeds the level of 
protection sought.  We fail to see any contradic tion in the idea that a Member may seek to reduce  
(rather than eliminate) certain risks by banning  certain (but not all) products. 
7.378  For these reasons, we conclude that Indonesia has not demonstrated that the ban on clove 
cigarettes exceeds the "level of prot ection" sought by the United States. 
(iii) Whether Indonesia has demonstrated that the ban on clove cigarettes makes no "material 
contribution" to the objective of reducing youth smoking   
Introduction 
7.379  In Korea – Various Measures on Beef , the Appellate Body explained that determining 
whether a measure is "necessary" within the meaning of Article XX(d) of the GATT 1994 "involves 
in every case a process of weighing and balancing a series of factors which prominently include the 
contribution  made by the compliance measure to the enforc ement of the law or regulation at issue, the 
importance of the common interests or values pr otected by that law or regulation, and the 
accompanying impact of the law or regulation on imports or exports."686  In US – Gambling , the 
Appellate Body stated that the weighing and bala ncing process inherent in the necessity analysis 
involves an assessment of other factor s, which will usually include "the contribution  of the measure to 
the realization of the ends pursued by it" and "the  restrictive impact of the measure on international 
commerce".687  In Brazil – Retreaded Tyres , the Appellate Body stated that "a contribution exists 
when there is a genuine relationship of ends and means between the objective pursued and the 
measure at issue."688  We see nothing in the text, contex t or purpose of Ar ticle 2.2 of the 
TBT Agreement  to suggest that a different standard should be applied in the context of examining 
whether a measure is "more trade-restrictive than  necessary to fulfil a legitimate objective" for the 
purpose of that provision.   
7.380  There are certain similarities between the facts of this case and those of Brazil – Retreaded 
Tyres .  In both cases, the measure at issue was an import ban.  In both cases, the objective of the 
measure was to protect human life and health.  In th at case, the Appellate Body explained that "when 
                                                      
682 Appellate Body Report, Australia – Salmon , para. 203. 
683 United States' first written submission, para. 227. 
684 United States' response to Panel question No. 58(b), para. 135; United States' second written 
submission, para. 172. 
685 Indonesia's first written submission, para. 84.   
686 Appellate Body Report, Korea – Various Measures on Beef , para. 164. 
687 Appellate Body Report, US – Gambling , para. 306 (emphasis added). 
688 Appellate Body Report, Brazil – Retreaded Tyres , para. 145.   WT/DS406/R 
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 a measure produces restrictive effects on interna tional trade as severe as those resulting from an 
import ban, it appears to us that it would be difficult for a panel to find that measure necessary unless 
it is satisfied that the measure is apt to make a material contribution  to the achievement of its 
objective."689  The Appellate Body distinguished a "mater ial contribution" from a contribution that is 
"marginal or insignificant".690  We will apply the same standard here, and examine whether banning 
clove cigarettes makes a material contribution to the objective of reducing youth smoking.  
7.381  In this case, Indonesia argues that the ban on clove cigarettes makes no material contribution 
to the objective of reducing youth smoking.691  It advances four lines of argument, supported by 
different categories of evidence.  According to I ndonesia: (i) clove cigarettes pose no greater health 
risk than other cigarettes692; (ii) youth do not smoke clove cigarettes in significant numbers693; (iii) 
other flavoured tobacco products p opular with youth are not banned694; and (iv) the available 
scientific evidence shows that banning clove ci garettes will do little to deter youth from smoking.695  
We will examine these contentions in turn, recalli ng that Indonesia carries the burden of proof.  
Whether clove cigarettes pose a greater health risk than other cigarettes 
7.382  Indonesia submits that there is no scientific or technical information indicating that clove 
cigarettes pose a greater health risk than cigarettes not banned by the Act.  In this regard, Indonesia 
asserts that the FDA's fact sheets state that flavour ed cigarettes have same health risks and are as 
addictive as regular cigarettes.  According to Indone sia, the FDA's conclusion is further confirmed by 
various scientific studies that have shown that the health effects of smoking clove cigarettes are the 
same as regular cigarettes.696   
7.383  According to the United States, Indonesia's argument that clove cigarettes are no more 
dangerous than other types of cigarettes lacks any c onnection to the requirements of Article 2.2 of the 
TBT Agreement  and also misses the point of Section 907(a)(1)(A).697   
7.384  In our view, Indonesia's argument is misplaced.  The reason is not that evidence relating to 
the health risk of a product inherently lacks any connection to the requirements of Article 2.2 of the 
TBT Agreement .  Rather, the reason is that the measure at issue in this case does not ban clove and 
certain other flavoured cigarettes on the grounds th at they are more toxic than other kinds of 
cigarettes.  If the objective of the measure at issue was to ban the cigarettes that were "more 
harmful"698, more "dangerous"699, or more "toxic"700 than regular cigarettes or menthol cigarettes"701, 
then evidence showing that clove cigarettes are no more harmful, dangerous or toxic than other 
cigarettes would be highly relevant to the question of whether banning clove cigarettes could make a 
material contribution to fulfilling that objectiv e.  However, that is not the objective of 
Section 907(a)(1)(A).   
                                                      
689 Appellate Body Report, Brazil – Retreaded Tyres , para. 150 (emphasis added).   
690 Appellate Body Report, Brazil – Retreaded Tyres , paras. 150 and 210.  
691 Indonesia's first written submission, paras. 86-103. 
692 Indonesia's first written submission, paras. 90-91. 
693 Indonesia's first written submission, paras. 92-96.   
694 Indonesia's first written submission, paras. 97-98. 
695 Indonesia's first written submission, paras. 99-102. 
696 Indonesia's first written submission, paras. 90-91. 
697 United States' first written submission, para. 274. 
698 Indonesia's first written submission, paras.  6, 35. 
699 Indonesia's first written submission, para.  6. 
700 Indonesia's first written submission, para.  6. 
701 Indonesia's first written submission, paras. 90-91.   WT/DS406/R 
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 7.385  Accordingly, we do not consider that the ev idence submitted by Indonesia relating to the 
health risks of clove cigarettes as compared with other types of cigarettes sheds much light on the 
question of whether the ban on clove cigarettes makes a material contribution to the objective of reducing youth smoking.  
Whether youth smoke clove cigarettes in insignificant numbers 
7.386  The parties have presented extensive arguments , mostly on the basis of survey evidence, 
regarding the number of youth who smoke clove cigarettes.702   
7.387  In general, Indonesia asserts that an insignifican t number of youth smoke clove cigarettes.  In 
support of this assertion, Indonesia refers the Panel to  various survey evidence.   Indonesia asserts that 
according to the National Survey on Drug Use and Health ("NSDUH"): (i) only 0.05 per cent of 
cigarettes consumed by youth are clove cigarettes,  while 43 per cent are menthol and 57 per cent are 
regular; (ii) of the youth who smoke, virtually all smoke regular or menthol cigarettes; (iii) clove 
cigarette smokers smoke fewer cigarettes per day than  menthol or regular cigarette smokers; (iv) in 
2007, only 0.1 per cent of youth smokers used clove cigarettes and by 2008 that number had fallen to 
zero 703  On the basis of the Western Watts Survey, I ndonesia asserts that two thirds of all current 
clove cigarette smokers reported smoking their first cl ove cigarette more than one year after trying 
their first cigarette while only 6 per cent reported clove as their first cigarette.704  Indonesia also refers 
the Panel to a 2009 survey by another, Monitoring the Future , which surveyed a total of 46,097 
eighth, tenth, and twelfth graders in 389 secondary schools across the United States and found that 
"the annual prevalence of kretek use was not very high in the first year of measurement (2001); after that use declined by roughly half in 8th and 10th grades by 2005, before the question was dropped 
from the 8th- and 10th-grade questionnaires".
705  Indonesia also refers the Panel to a telephone survey 
conducted 23-26 September 2010 by Opinion Research Corporation, in which 98 per cent of teens 
surveyed indicated they had never heard of a kretek.706 
7.388  The United States submits that the survey data generated in the last decade refutes Indonesia's 
assertions, and shows that clove cigarettes are smoke d by a significant number of young people.  The 
United States criticizes the NSDUH survey presented by Indonesia, and provides different market 
data regarding the U.S. market for cigarettes.  According to the United States, the 2002-2003 NSDUH 
data suggest that around 5-6 per cent of youth smoke rs smoke clove cigarettes.  The United States 
considers that the most reliable survey is the National Youth Tobacco Survey ("NYTS"), which finds 
that, among smokers aged 12 to 21, approximately 11% use clove cigarettes.  The United States notes that, according to a survey conducted in 2004, the consumption of flavoured cigarettes was highest 
among the categories of people aged 17 (22.8 per cen t) and 18 to 19 (21.7 per cent), and lowest for 
smokers aged 40 to 54 (6.2 per cent) and 55 and older (0.8 per cent).
707   
7.389  In our view, the arguments of the parties show that the survey eviden ce before the Panel is 
susceptible to different interpretations.  However,  even if we accept Indonesia's numbers, these 
numbers do not show that an insignificant number of youth smoke clove cigarettes.   
                                                      
702 [insert reference to submissions and responses to questions] 
703 Indonesia's first written submission, paras. 93-94.  
704 Indonesia's first written submission, para. 95. 
705 Indonesia's first written submission, para. 95. 
706 Indonesia's first written submission, para. 96. 
707 United States' first written submission, para. 53. WT/DS406/R 
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 7.390  To the contrary, Indonesia's own estimate, approximately 6,800 minors regularly  smoked 
clove cigarettes.708  In our view, that is hardly an insignificant number.   
7.391  In addition, the NSDUH surveys relied upon by  both parties actually show that even if 
"youth" is understood to mean only those under the age of 18, it is still the case that clove cigarettes 
were used disproportionately by "youth".  The 2002 and 2003 NSDUH surveys contained the 
question, "[d]uring the past 30 days, have you smoked all or part of a clove cigarette?"  Exhibit IND-
73 sets forth the results of the 2002 and 2003 NSDUH surveys.  It indicates that in 2002, 7.3 per cent 
of smokers under the age of 18 answered yes to th is question, whereas only 2.5 per cent of smokers 
over the age of 18 answered yes to this question.  It indicates that in 2003, 5.8  per cent of smokers 
under the age of 18 answered yes to this question, whereas only 2.2  per cent of smokers over the age 
of 18 answered yes to this question.  
7.392  Accordingly, we do not consider that the survey data provided by Indonesia offer a sufficient 
basis for determining that the ban on clove cigare ttes does not make a material contribution to the 
objective of reducing youth smoking.  
Whether the United States' failure to ban other flavoured tobacco products most popular with 
youth demonstrates that banning clove cigare ttes makes no "material contribution" to 
reducing youth smoking 
7.393  Indonesia argues that because other flavoured tobacco products popular with youth, and in 
particular menthol cigarettes, are not banned by the FSPTCA, banning clove cigarettes cannot make a 
material contribution to the objective of reducing yo uth smoking.  In this regard, Indonesia reiterates 
that by prohibiting only a "tiny sliver" of the ciga rettes smoked by youth, the measure cannot make a 
"material contribution" to the objective of reduc ing youth smoking, and is therefore more trade-
restrictive than necessary to  fulfil this objective.709 
7.394  We note that it is not in dispute that youth smoke menthol (and regular) cigarettes in far 
greater numbers than clove cigarettes.  However, we do not consider that the failure to ban these 
cigarettes demonstrates that banning clove cigare ttes makes no material contribution to reducing 
youth smoking.   
7.395  First, assuming for the sake of argument that  by prohibiting only a " tiny sliver" of the 
cigarettes smoked by youth the measure cannot make  a material contribution to the objective of 
reducing youth smoking, it would seem to follow that the measure is less trade-restrictive than 
necessary to fulfil its objective.  More specifically, it  would mean that, in order to make a material 
contribution to the objective of reducing youth smoking, the United States would have to ban more 
types of cigarettes than it has.  We fail to see ho w the ban on clove cigarettes can be found to be 
"more trade-restrictive than necessary" to fulfil its  objective based on the conclusion that it is less 
trade-restrictive than necessary to fulfil its objective.    
7.396  In addition, given that the other flavoured ci garettes banned by Section 907(a)(1)(A) also had 
a very small market share – indeed, apparently smaller than that enjoyed by clove cigarettes – 
accepting Indonesia's line of reasoning would lead to the conclusion that banning these other 
                                                      
708 According to Indonesia, "[s]omewhere between 2.2 and 2.5 million people under the age of 18 
smoke cigarettes in the United States.  Of that amount , approximately 1.1 million (or 43 percent) regularly 
smoke menthol cigarettes.  This compares to only 6,800 minors that regularly smoke clove cigarettes."  
Indonesia's oral statement at the first su bstantive meeting of the Panel, para. 143.  
709 Indonesia's response to Panel question No. 2, para . 6; Indonesia's response to Panel question No. 58, 
para. 124; Indonesia's second written submission, paras. 2 and 125.  WT/DS406/R 
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 cigarettes would also fail to make a material cont ribution to the objective of reducing youth smoking.  
Indeed, Indonesia itself recognizes the logical implication of its argument.710  
7.397  Moreover, we do not consider that an examin ation of whether a measure makes a "material 
contribution" to its objective can proceed by compari ng that measure with a hypothetical measure that 
makes more of a contribution to the achievement of the objective.  In Brazil – Retreaded Tyres , the 
Appellate Body judged whether the challenged meas ure made a material contribution on its own 
terms, not in comparison with alternative measures.  In the Appellate Body's Article XX analysis, the 
comparison of the challenged measure to alternativ e ones is only done to confirm that the measure is 
"necessary," not to determine the extent to which th e measure contributes to its objective.  That is a 
separate inquiry, and one that takes place prior to  comparison of the measure with alternatives.711 
7.398  Finally, we see a difficulty with Indonesia's argu ment that "if it is not necessary to ban the 
tobacco products that are most widely used by adolescents, it cannot be necessary to ban clove 
cigarettes, which are rarely used"712, namely, that it assumes that the United States excluded menthol 
cigarettes and other tobacco products most popular  with youth from the scope of the ban because the 
United States does not consider it necessary to ban such products in order to reduce youth smoking.  
There is no evidence before the Panel that the Un ited States has ever made such an assessment.  
Rather, the United States submits that the reason menthol cigarettes were excluded from the scope of the ban was to avoid the potential negative conse quences associated with banning products to which 
tens of millions of adults are chemically and psychologically addicted due to the potential but 
unknown consequences for the health of th e individual users or the overall population.
713   
7.399  For these reasons, we do not consider that the Un ited States' failure to ban other flavoured 
tobacco products most popular with youth, in partic ular menthol cigarettes, demonstrates that banning 
clove cigarettes makes no material contribution to reducing youth smoking. 
Whether the available scientific evidence shows that banning clove cigarettes will do little to 
deter youth from smoking 
7.400  This takes us to Indonesia's final line of argumen t, which is that there is no scientific evidence 
which shows that banning clove cigarettes will make a contribution to deter youth smoking.  
According to Indonesia, "[t]he most frequently cite d justification for a ban on flavored cigarettes is 
that flavored cigarettes lure children into smoking by incorporating appealing flavors.  A single line 
from a single study is most frequently used to support this assumption."714 
7.401  Here we consider that the evidence before the Panel provides a solid basis for reaching a 
definite conclusion.  The evidence before the Panel from health experts squarely contradicts 
Indonesia's assertion that there is no scientific evidence to support the United States ban on clove 
cigarettes.  The United States has submitted a numb er of studies from qualified and respected sources, 
and all appear to advance the same view.  Indeed , there appears to be a growing consensus, among 
those who have conducted research on the issue, in  support of the United States' position on this 
particular question.  This is not a case in which a Member is seeking to base a public health measure 
                                                      
710 Indonesia's response to Panel question No. 62, para. 130 (confirming that, in its view, "…so long as  
menthol, the most popular flavour with youth, is not banned, it is difficult to imagine how a ban on any other 
flavour, especially products not even  on the market at the time the meas ure was adopted, could be considered 
"necessary.") 
711 Appellate Body Report, Brazil – Retreaded Tyres , paras. 134-155, 156-175. 
712 Indonesia's first written submission, para. 98.  
713 United States' response to Panel question Nos. 60, 100.  
714 Indonesia's first written submission, para. 99.  WT/DS406/R 
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 on a minority view within the scientific community ; this is a case in which the measure actually 
reflects at least the majority view, and potentially the unanimous view.715 
7.402  For example, a 1985 study by the U.S. Center for Disease Control notes that: 
"In addition to adverse health effects that may result from inhaled eugenol and 
pyrolyzed cloves, use of clove cigarett es may be changing the smoking patterns of 
American teenagers. Some researchers have  suggested that eugenol, which is present 
in substantial quantities in clove cigare tte smoke (4), anesthetizes the backs of 
smokers' throats and tracheas, permitting deep er inhalation and possibly encouraging 
smoking in persons who might otherwise be dissuaded by the harshness of regular 
cigarettes."716 
7.403  A 1989 study published in the The Western Journal of Medicine  states that: 
"Aside from marketing surveys that are not circulated outside the industry, the most 
precise estimate of clove cigarette consumption for a defined population is that 
derived by Robinson and co-workers in an  extensive survey of substance use among 
adolescents aged about 16 years in norther n California under conditions of anonymity 
and isolation from school authorities. Their da ta are summarized in Table 1. In this 
study of almost 1,300 predominantly white tenth graders, 20% of the boys and 26% of the girls indicated that they had at l east experimented with clove cigarettes, and 
about 1% of each smoked them on a daily or near-daily basis. Among adolescents 
who use one or more substances daily , about 12% smoked clove cigarettes. 
In the absence of meaningful data beyond c onsumption patterns, we might expect that 
clove cigarettes would engage young smoke rs in the habit more easily than 
conventional cigarettes. The exotic appeal, strong aroma, and peer interest in the 
product would be factors, especially given the early image of clove cigarettes as a 
healthy alternative to conventional cigarettes.  The clove cigarette is nearly ideal in 
design as a 'trainer' cigarette for capturing young people as smokers."
717 
                                                      
715 At paragraph 591 of its Report in US/Canada – Continued Suspension , the Appellate Body clarified 
the standard of review applicable in the context of Article 5.1 of the SPS Agreement : 
"The Appellate Body has observed that a WTO Member may properly base an SPS measure 
on divergent or minority views , as long as these views are from qualified and respected 
sources .  This must be taken into account in defining a panel's standard of review. 
Accordingly, a panel reviewing the consistency of an SPS measure with Article 5.1 of the 
SPS Agreement must, first, identify the scientific basis upon which the SPS measure was 
adopted. This scientific basis need not reflect the majority view within the scientific 
community  but may reflect divergent or minority views. Having identified the scientific basis 
underlying the SPS measure, the panel must then verify that the scientific basis comes from a 
respected and qualified source . Although the scientific basis need not represent the majority 
view within the scientific community, it must nevertheless have the necessary scientific and 
methodological rigour  to be considered reputable science.  ..." (emphasis added, footnotes 
omitted) 
716 CDC, "Epidemiologic Notes and Reports Illnesses Possibly Associated with Smoking Clove 
Cigarettes," MMRW Weekly, 34(21), 297-9 (May 31, 1985) (Exhibit US-37) p. 3 of 4.  
717 Guidotti et al, "Clove Cigarettes: the Basis fo r Concern Regarding Health Effects," The Western 
Journal of Medicine (August 1989) (Exhibit US-38) pp. 221, 225-226.  WT/DS406/R 
 Page 117 
 
 
 7.404  A 1992 study published in the same medical journal states that: 
"Clove cigarettes are sweetly aromatic, and some numbing of the mouth occurs.  The 
effect is to remove much of the unpleasant ness of cigarette smoking for new smokers.  
The have been called 'trainer' cigarettes. 
… 
Of equal concern has been the potentia l for conditioning smoking behaviour among 
adolescents.  Clove cigarettes are a less noxious smoking habit because of their 
acceptable taste and an aesthetic effect on mucous membranes that lessening discomfort.  The habit has b een associated with many social trends important among 
adolescent peer groups: new wave music, 'n atural' and herbal products, athletic 
activity (surfing), exoticism (Indonesian names and brightly colored packages), and parental unawareness (until widespread pub licity focused attention on the fad). As 
such, clove cigarettes may represent a dange rous potential for initiating previously 
inexperienced smokers to the habit."
718 
7.405  A 1991 study authored by the Committee on Subs tance Abuse of the American Academy of 
Pediatrics, and published in the journal Pediatrics , concludes that: 
"Clove cigarettes should be suspected as a gateway drug because of their properties 
and the manner in which they are smoked.  Because the eugenol in the clove cigarette 
acts as a topical anesthetic to the post erior oropharynx, it reduces the noxious 
elements of smoking.  Thus it may facilita te the learning of smoking techniques, both 
regular inhalation and the deep inhalati on toking technique used in marijuana 
smoking.  In addition, the aroma and mysti que of the use of clove cigarettes have 
made them very popular among those nondrug-using adolescents who are seeking to be accepted by and participate in the e xperiences of a drug-using peer group."
719 
7.406  A 2003 publication of the National Institute on Drug Abuse states that: 
"Clove cigarettes are sometimes referred to as 'trainer cigarettes' and may serve as 
'gateway' products that introduce young people to smoking. The Monitoring the 
Future (MTF) survey, conducted by the Univer sity of Michigan's Institute for Social 
Research and funded by NIDA, tracks 8th-, 10th-, and 12th-graders' drug use, 
including use of tobacco  products. In 2002,  prevalence of clove cigarette smoking in 
the past year was 2.6 percent for 8th-graders, 4.9 percent for 10th-graders, and 8.4 percent for 12th-graders."
720 
7.407  Another 2003 study, published in the journal Pharmacology Biochemistry and Behavior , 
states that: 
"In fact, clove cigarettes are referred to as ''trainer cigarettes,'' implying that the use of 
clove cigarettes may prove to be a gate way product to conventional cigarettes 
(American Academy of Pediatrics Committ ee on Substance Abuse, 1991; Guidotti 
                                                      
718 Guidotti & Laing,"Clove Cigarettes," The We stern Journal of Medicine (August 1992) 
(Exhibit US-41) pp. 537, 538.  
719 Committee on Substance Abuse, "Hazards of Clove Cigarettes," Pediatrics, Vol 88, (1991) 
(Exhibit US-43) pp. 395-396 (citing, inter alia, Guidotti,  et al, "Clove Cigarettes: the Basis for Concern 
Regarding Health Effects," The Western Journal of Medicine (August 1989)).  
720 Susan Farrer, "Alternative Cigarettes May Deliver  More Nicotine Than Conventional Cigarettes," 
National Institute on Drug Abuse (NIDA) Notes , Vol. 18, No. 2 (August 2003) (Exhibit US-42).  WT/DS406/R 
Page 118 
 
 
 and Laing, 1992).  A significant proportion of  young smokers in the United States use 
clove cigarettes. A 1999 national survey fo und that 1.9% of middle school students 
and 5.8% of high school students curre ntly smoked clove cigarettes (CDCP, 
2000)."721   
7.408  A 2005 article published in the journal Health Affairs  observes that: 
"Internally, the appeal of flavored cigare ttes has long been associated with specific 
consumer populations, particularly young and novice smokers.  For example, Brown 
and Williamson's (B&W's) consumer research in 1984 revealed notable agreement among respondents that flavored cigarettes would be much more popular among 
young and inexperienced smokers. 
[F]lavoured cigarettes can promote youth initiation and help young occasional 
smokers to become daily smokers by reduc ing or masking the natural harshness and 
taste of tobacco smoke and increasing the acceptability of a toxic product. … in 
addition to promoting public awareness and ta king action at the community level in 
response to youth-targeted products, po licymakers should support legislation 
prohibiting manufacturers from adding these candylike flavors to tobacco 
products."
722 
7.409  A 2006 study published in the American Journal of Public Health  states that: 
"Recent studies show that the 3 flavored pr oducts are being used primarily by young 
people. In surveys conducted in 2004, as many as 20% of smokers 17 to 19 years old had used flavored cigarettes in the last 30 days, whereas only 6% of smokers older 
than 25 were found to have smoked one of the 3 flavored lines. Use was highest for 
17-year-olds (19.6%) and 18- to 19-year-old s (20.2%) and lowest for smokers older 
than 40. … These data raise significant concer ns regarding the implications of these 
products for smoking among yo uths and young adults.  
Although we agree that these products are indeed enticing to youths and at the very 
least are being marketed with them in mi nd, in this discussion we will focus on the 
tobacco industry's stated target populati on of adults, principally young adults, who 
serve as role models for youths. …  Targ eting young adults may be perceived as 
doubly beneficial in that it both captures 18- to 24-year-olds and indirectly influences 
teens, who may seek to emulate their older peers. 
Although much of the controversy over these flavored cigarettes has centered on their 
potential to encourage experimentation (w hile masking the taste of the tobacco) 
among nonsmokers, smoking initiation is not th e only behavior they may influence. 
The products discussed here offer a variet y of tempting tastes and smells that may 
                                                      
721 Malson, et al. , "Clove Cigarette Smoking: Biochemical, Physiological, and Subjective Effects," 
Pharmacology Biochemistry and Behavior 74(3): 739-45 (February, 2003) (Exhibit US-44) pp. 739-740 (citing 
American Academy of Pediatrics Committee on Substan ce Abuse. Hazards of clove cigarettes. Pediatrics 
1991;88:5– 6; Guidotti TL, Laing L. Clove cigarette s. West J Med 1992;156:537– 8; Centers for Disease 
Control and Prevention (CDCP). Tobacco use among mi ddle and high school stude nts—United States, 1999. 
Morb Mortal Weekly Rep 2000;49:49 – 53.) 
722 Carrie M. Carpenter, et al. , "New Cigarette Brands with Flavor s that Appeal to Youth:  Tobacco 
Marketing Strategies," Health Affairs, Vol. 24, No. 6 (Nov./Dec. 2005) (Exhibit US-40) pp. 1603, 1608 (citing 
T.G. Sommers, "Topline: Alternate Cigarette Flavors," 18 January 1984, Bates no. 537004281–537004282, 
tobaccodocuments.org/bw/163368.html (23 August 2005); Wayne and Connolly, "How Cigarette Design Can 
Affect Youth Initiation into Smoking.")  WT/DS406/R 
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 entice current and transitional smokers to continue smoking, derail quitting attempts, 
and lure those who have quit smoking to take  it up again. These, too, are questions 
that need to be explored. 
One provision of recently proposed legislation for the Food and Drug Administration 
regulation of tobacco calls for banning the use of flavoring other than menthol in 
cigarettes. Other policies that require plain or generic packaging of tobacco products 
could limit the appeal of these attractivel y packaged cigarettes by standardizing 
tobacco product packaging and design so it  is the same from brand to brand. These 
policies would protect not only youths but also other susceptible target groups such as 
young adults."723 
7.410  A 2006 publication of the American Lung Association raises the following concerns: 
"[T]he limited data that exists on these new products shows that they are much more 
popular among younger smokers than older smokers. In 2005, researchers at the 
Roswell Park Cancer Institute in Buffalo, NY,  released the results of several surveys 
conducted in 2004 that showed that 20 percent of smokers ages 17 to 19 had smoked 
flavored cigarettes in a 30-day period while only 6 percent of smokers over the age of 
25 did. Also, 8.6 percent of ninth graders in Western New York State had tried flavored cigarettes in a 30-day period. 
A report from R.J. Reynolds in 1985 st ated: 'Sweetness can impart a different 
delivery taste dimension, which younger adult smokers may be receptive to, as 
evidenced by their taste wants in other product areas.' A Brown & Williamson report 
from 1972 suggested consideration of devel oping cola-flavored and apple-flavored 
cigarettes. The report also suggested a sweet-flavored cigarette and stated: 'It's a well-known fact that teenagers like sweet products. Honey might be considered.' 
[T]he policy solution for candy-flavored cigarettes and other flavored tobacco 
products is quite simple. To reduce their appeal  to children, most flavorings should be 
eliminated from cigarettes and other tobacco products. 
Preliminary survey data show these products  to be much more appealing to youth, 
which should serve as a strong warning to policymakers, since approximately 
90 percent of smokers begin before they reach the age of 21."
724 
7.411  Another 2006 study, published in the Journal of Agricultural and Food Chemistry ,  observes 
that "eugenol, a spicy flavor compound present in clove cigarettes, can act as an anesthetic that numbs 
the throat, making smoke easier to inhale; hence, clove cigarettes have been referred to as trainer 
cigarettes".725 
                                                      
723 Jane Lewis and Olivia Wackowski, "Dealing with an Innovative Industry: A Look at Flavored 
Cigarettes Promoted by Mainstream Brands," American Journal of Public Health, Vol. 96, No. 2 
(February 2006) (Exhibit US-33) pp. 244, 247-249.  
724 American Lung Association, To bacco Policy Trend Alert, From Joe Camel to Kauai Kolada – the 
Marketing of Candy Flavored Cigarettes, at 1 (July 2005, updated May 2006), 
http://slati.lungusa.org/reports/CandyFlavoredUpdatedAlert.pdf  (Exhibit US-35) pp. 2-4. 
725 Stanfill SB, Brown CR, Yan XJ, Watson CH, As hley DL, "Quantification of Flavor-Related 
Compounds in the Unburned Contents of Bidi and Clove Cigarettes," J. Agric. Food Chem. 2006, 54, 8580-
8588 (Exhibit US-46) p. 8581 (citing Guidotti, T. L.; Binder, S.; Stratton, J. W.; Schechte r, F. G.; Jenkins, R. A. 
Clove cigarettes: development of the fad and evidence for health effects. In Current Topics in Pulmonary 
Pharmacology and Toxicology ; Hollinger, M. A., Ed.; Elsevier: New York, 1987; Vol. 2, pp 1-23.) WT/DS406/R 
Page 120 
 
 
 7.412  A 2007 study, published in the journal Food & Chemical Toxicology , concludes that 
"inhalation of eugenol, a known analgesic, may numb  the throat of the smoker, allowing an easier 
initiation into a lifetime of smoking", and observes that: 
"Although the US consumption of kreteks dropped in the mid-1980s (Guidotti et al., 
1987), recent data suggest that significant kr etek use continues. A CDC survey found 
that 2.7% of high school students across the US smoke kreteks regularly (Allen et al., 
2003). Other studies have placed lifetime kretek use as high as 8.9% (Tercyak and 
Audrain, 2002) and regular usage as high as 2.6% among middle and high school students (Tercyak and Audrain, 2002; Soldz et al., 2003). Among the alternative 
tobacco products, bidis (cut tobacco, ofte n flavored, rolled in a tendu leaf as a 
cigarette), cigars, kreteks, and smokeless tobacco, kretek use is second only behind cigar use (Soldz et al., 2003)."
726 
7.413  One of the studies submitted by the United States is a 2007 report by a WHO Study Group 
entitled "The Scientific Basis of  Tobacco Product Regulation".727  The Study Group was comprised of 
eleven experts in the field, and was supported by a Secretariat.728  It was established pursuant to the 
WHO FCTC.  The Study Group recommends that "R egulations should be developed to prohibit 
manufacturing and marketing of candy-like and exoti cally flavoured tobacco pr oducts targeting young 
and novice smokers."729  The Study Group explained that: 
"In recent years, tobacco manufacturers have qualitatively changed this practice by 
introducing a range of flavoured, brand-specific tobacco products including cigarettes, cigars, smokeless tobacco, kretek s (cloves), bidis and waterpipe (hookah) 
tobacco. The recent production and promoti on of flavoured tobacco products is a 
major public health concern. ... Flavours could entice youths to experiment with 
tobacco products by masking the natu ral harshness of smoke. ... Younger and 
inexperienced smokers are more inclined to  try flavoured cigarettes since the enticing 
flavouring agents suppress the harsh and toxic properties of tobacco smoke, making it 
more appealing to novices in smoking.
730 
... [P]ublished research suggests that candy-flavoured additives are a significant factor 
in attracting young and inexperienced smokers."
731 
                                                      
726 Polzin, et al. , "Determination of eugenol, anethole, and coumarin in the mainstream cigarette smoke 
of Indonesian clove cigarettes," Food & Chemical Toxicology 45(10): 1948-53 (October 2007) (Exhibit US-45) 
(citing Allen, J.A., Vallone, D., Haviland, M.L., Heal ton, C., Davis, K.C., Farrelly, M.C., Husten, C.G., 
Pechacek, T., 2003. Tobacco use among middle and high school students – United States, 2002. MMWR 52, 
1096–1098; Tercyak, K.P., Audrain, J., 2002. Psychosoci al correlates of alternate tobacco produce use during 
adolescence. Prevent. Med. 35, 193–198; Soldz, S., Huyser, D.J., Dorsey, E., 2003. Characteristics of users of 
igars, bidis, and kreteks and the relationship to cigarette use. Prevent. Med. 37, 250–258.) 
727 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113). 
728 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113) pp. vii-viii. 
729 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113) p. 18. 
730 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113) p. 26. 
731 World Health Organization, "The Scientific Basis of Tobacco Product Regulation," WHO Technical 
Report Series 945 (2007) (Exhibit US-113) p. 100.  WT/DS406/R 
 Page 121 
 
 
 7.414  The WHO Partial Guidelines  reinforce our understanding.  As indicated above732, these 
Guidelines, "drawing on the best available scientific evidence  and the experience of Parties"733, show 
a growing consensus within the international community to st rengthen tobacco-control policies 
through regulation of the content of tobacco  products, including additives that increase the 
attractiveness and palatability of ciga rettes.  In this regard, the WHO  Partial Guidelines  state that 
"[r]egulating ingredients aimed at reducing tob acco product attractiveness can contribute to reducing 
the prevalence of tobacco use and dependence among new and continuing users".  They therefore  
recommend, among other things, that the "[p]arties should regulate, by prohibiting or restricting, 
ingredients that may be used to in crease palatability in tobacco products".734  Targeted ingredients 
include those that are used to in crease palatability and among the ingr edients that increase palatability 
listed in the WHO Partial Guidelines are masking agents, such as menthol as well as spices and herbs 
which include mint and may cover clove. 
7.415  In our view, the evidence review ed above basically speaks for itself: it is not correct, as 
Indonesia asserts, that the scientific basis for banning clove and/or ot her flavoured cigarettes consists 
of a "single line from a single study".735  Rather, there is extensive scientific evidence supporting the 
conclusion that banning clove and other flavoured  cigarettes could contribute to reducing youth 
smoking.  
7.416  We note that the conclusion arising from the scientific evidence reviewed above is only 
further reinforced by Indonesia's counter evidence.  We find it striking that Indonesia has apparently 
only been able to find one scientific  expert who expresses a contradict ory view, and then only in the 
form of a post to his own web blog (as opposed to peer-reviewed medical or scientific journal).736   
Conclusion 
7.417  For these reasons, we conclude that Indonesia h as failed to demonstrate that the ban on clove 
cigarettes makes no "material contribution" to the objective of reducing youth smoking.  In our view, 
there is "a genuine relationship of ends and mean s" between the objective pursued and the measure at 
issue.737    
(iv) Whether Indonesia has demonstrated that there a re less-trade restrictive alternative measures 
that would make an equivalent contribution to the achievement of the objective at the level of protection sought by the United States 
7.418  In Brazil – Retreaded Tyres , the Appellate Body explained th at if a panel finds that the 
measure at issue makes a material contribution to th e achievement of the objective, the next question 
is whether there exist alternative measures that ar e less trade-restrictive and that would provide an 
equivalent contribution:  
"In order to determine whether a measure is "necessary" within the meaning of 
Article XX(b) of the GATT 1994, a panel must assess all the relevant factors, 
                                                      
732 See paras. 7.229-7.231 above. 
733 WHO Partial Guidelines , Section 1.1. 
734 The text of the draft Guidelines, which was adopte d without change at the COP, is available online 
at http://apps.who.int/gb/fctc/PDF/cop4/FCTC_COP4_28draft-en.pdf. 
735 Indonesia's first written submission, para. 99.  
736 Indonesia's first written submission, para. 102; I ndonesia's oral statement at the first substantive 
meeting of the Panel, para. 16 (quoting Dr. Michael Siegel's views expressed in the blog comment "FDA 
Commissioner Falsely Asserts that Flavored Cigarette s are a Gateway for Teen Smoking; Representative 
Waxman Also Makes the Same False Clai m," Dr. Michael Siegel, available at 
www.tobaccoanalysis.blogspot.com , 24 June 2010, (Exhibit IND-37).) 
737 Appellate Body Report, Brazil – Retreaded Tyres , para. 145.  WT/DS406/R 
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 particularly the extent of the contribution to the achievement of a measure's objective 
and its trade restrictiveness, in the light of  the importance of the interests or values at 
stake.  If this analysis yields a preliminar y conclusion that the measure is necessary, 
this result must be confirmed by comparing the measure with its possible alternatives, 
which may be less trade restrictive while pr oviding an equivalent contribution to the 
achievement of the objective pursued.  It rests upon the complaining Member to 
identify possible alternatives to the measu re at issue that the responding Member 
could have taken."738 
7.419  We see nothing in the text, context or purpose of Article 2.2 of the TBT Agreement  to suggest 
that a different approach is called for in that provision.  
7.420  In this case, Indonesia argues that even if it were the case that the ban on clove cigarettes 
made a contribution to the objective of youth sm oking, less trade-rest rictive measures were 
reasonably available to limit the availability of clove cigarettes to youth.739  In this regard, Indonesia 
surveys: (i) the provisions of the FSPTCA that ar e applicable to menthol and regular cigarettes 
designed to reduce the ability of cigarette companies to engage in practices that target and attract 
youth740; (ii) the steps that the FSPTCA expressly prev ents FDA from taking that would significantly 
reduce youth smoking and not be pa rticularly trade-restrictive741; (iii) certain non-trade restrictive 
measures in a 2006 consent agreement between R.J. Reynolds and several State Attorneys General 
concerning new products that health advocates a lleged were designed and marketed to attract 
youth742; (iv) non-trade restrictive measures adopted by certain other countries, including Australia 
and Singapore, to address youth smoking743; and (v) various measures set out in the WHO Framework 
Convention on Tobacco Control  aimed at preventing cigarette sales to minors.744   
7.421  In our view, Indonesia has failed to demonstrate th at there are less-trade restrictive alternative 
measures that would make an equiva lent contribution to the achievement of the objective at the level 
of protection sought by the United States. 
7.422  First and foremost, we consider that Indonesia has not adequately identified the alternative 
measure(s) that the United States should have ap plied.  Instead, Indonesia simply lists numerous 
different measures, mostly in bullet point form.  More specifically, Indonesia submits that substituting 
the ban on clove cigarettes with the fo llowing less trade-restrictive measures745 would make an 
equivalent contribution at the level of protection sought by the United States: 
 banning all outdoor tobacco advertisi ng within 1,000 feet of schools and 
playgrounds746; 
 banning all remaining tobacco-brand sponsor ships of sports and entertainment 
events747; 
 banning free giveaways of any non-tobacco  items with the purchase of a tobacco 
product748; 
                                                      
738 Appellate Body Report, Brazil – Retreaded Tyres , para. 156. 
739 Indonesia's first written submission, paras. 104-111. 
740 Indonesia's first written submission, para. 106. 
741 Indonesia's first written submission, para. 107. 
742 Indonesia's first written submission, para. 108. 
743 Indonesia's first written submission, para. 109. 
744 Indonesia's first written submission, para. 110. 
745 Indonesia's first written submission, para. 106. 
746 Indonesia's first written submission, para. 106. 
747 Indonesia's first written submission, para. 106.  WT/DS406/R 
 Page 123 
 
 
  limiting to black-and-white text only advertis ing in publications with significant teen 
readership, as well as outdoor and point-of sale advertising except in adults-only 
facilities749; 
 restricting vending machines and self-service displays to adult-only facilities750;  
 requiring retailers to verify age for a ll over-the-counter sales and providing for 
federal enforcement and penalties ag ainst retailers who sell to minors751; 
 raising the legal age to bu y tobacco products to 19752; 
 restricting the sales of cigarettes to adult-only locations753; 
 a prohibition on the use of fruit-, candy-, or alcoholic bevera ge-related terms or 
images in the brand name, packaging, print advertising (other than in an adult-only 
facility), direct mail or email prom otions, and web-based advertising754; 
 giving the FDA the author ity to approve any new t obacco brands, labels, and 
packaging755; 
 banning almost all tobacco advertising and prohibited tobacco companies from 
sponsoring events756; 
 prohibiting free giveaways of promotion items in conjunction with the purchase of 
tobacco products757; 
 limiting the display of tobacco products 758; 
 placing strict requirements on packaging759; 
 requiring health warnings 760; 
 raising fines for underage smoking 761; 
 preventing certain retailers from selling tobacco products to make them less available 
to youth, including health-related stores, youth-centric stores such as arcades, and gas 
stations762; 
                                                                                                                                                                     
748 Indonesia's first written submission, para. 106. 
749 Indonesia's first written submission, para. 106. 
750 Indonesia's first written submission, para. 106. 
751 Indonesia's first written submission, para. 106. 
752 Indonesia's first written submission, para. 107. 
753 Indonesia's first written submission, para. 107. 
754 Indonesia's first written submission, para. 108. 
755 Indonesia's first written submission, para. 108. 
756 Indonesia's first written submission, para. 109. 
757 Indonesia's first written submission, para. 109. 
758 Indonesia's first written submission, para. 109. 
759 Indonesia's first written submission, para. 109. 
760 Indonesia's first written submission, para. 109. 
761 Indonesia's first written submission, para. 109. 
762 Indonesia's first written submission, para. 109. WT/DS406/R 
Page 124 
 
 
  revoking the licence of tobacco retailers caught  selling to underage buyers on the first 
offense763; 
 allowing cigarillos (mini-cigars) to be sold on ly in packs of 20 instead of 10 to price 
them out of reach of young buyers 764; 
 banning candy-flavoured cigarettes, but not clove cigarettes 765; 
 banning the sale of tobacco products in any manner by which they are directly 
accessible, such as store shelves 766; 
 prohibiting the manufacture and sale of sweets, snacks, toys or any other objects in 
the form of tobacco products that appeal to minors 767; 
 ensuring that tobacco vending machines under its jurisdiction are not accessible to 
minors and do not promote the sale of tobacco products to minors 768;  
 prohibiting the distribution of free tobacco  products to the public and especially 
minors 769; and/or 
 prohibiting the sale of cigarettes individually  or in small packets which increase the 
affordability of such products to minors. 770  
7.423  In our view, such a mere listing of two dozen possible alternative measures is insufficient to 
establish a prima facie case.  It seems clear e nough that each of these measures would be less trade-
restrictive than the ban on clove cigarettes.  The problem is that the mere listing of two dozen 
alternative measures without more does not show that such measures would make an equivalent 
contribution to the achievement of the objective at th e level of protection sought by the United States.  
We further note that Indonesia does not specify whether it is any one of these measures, or some 
combination of these measures, or all of these measu res, that would be the alternative measure(s). 
7.424  In addition, each of the altern ative measures suggested by Indonesia appears to involve a 
greater risk of non-fulfilment of the objective of reducing youth smoking, as compared with the outright ban currently in place.  In analysing the ex istence of alternative measures, we are required by 
the terms of Article 2.2 to take into account "t he risks that non-fulfilment would create".  Thus, 
Article 2.2 suggests that if an alternative means of achieving the objective of reducing youth smoking 
would involve greater "risks of non-fulfilment", this  may not be a legitimate alternative.  This is 
consistent with the jurisprudence developed un der Article XX(b) of the GATT 1994, pursuant to 
which the relevant question is, as explained above, wh ether there is one or more alternative measures 
that would make an "equivalent" contribution to th e achievement of the objective at the level sought.  
In our view, where an alternative measure woul d entail a greater risk of non-fulfilment of the 
objective, it would be difficult to find that it would make an "equivalent" contribution to the achievement of the objective, at the level of protection sought. 
                                                      
763 Indonesia's first written submission, para. 109. 
764 Indonesia's first written submission, para. 109. 
765 Indonesia's first written submission, para. 109. 
766 Indonesia's first written submission, para. 110. 
767 Indonesia's first written submission, para. 110. 
768 Indonesia's first written submission, para. 110. 
769 Indonesia's first written submission, para. 110. 
770 Indonesia's first written submission, para. 110.  WT/DS406/R 
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 7.425  However, even if Indonesia's listing of alte rnative measures is sufficient to establish a 
prima facie case, we consider that the United States has rebutted it by pointing out that many of the 
alternative measures proposed by Indonesia are already in  place in the United States.771  In Brazil – 
Retreaded Tyres , the panel rejected a number of the altern ative measures proposed by the complainant 
in that case on the grounds that the proposed alternatives were already partly in place.  The Appellate 
Body upheld the panel's finding that "the possible alternative measures iden tified by the European 
Communities to avoid the generation of w aste tyres could not 'apply as a substitute'  for  the Import 
Ban but are, rather, complementary measures that Brazil already applies, at least in part ".772 
7.426  In addition, we consider that Indonesia's reliance upon non-trade restrictive measures to 
address youth smoking allegedly adopted by certa in other countries, including Australia and 
Singapore, is misplaced.  For one thing, Indonesia has only provided some selective references to the 
practices of a few other countries, and has not ma de reference to other Members that have banned 
clove cigarettes.  More importantly, however, is that  it is not clear that the laws implemented to date 
by other countries should serve as some kind of  benchmark for the United States or any other 
sovereign WTO Member, particularly where Indonesia has not established the objectives of these 
foreign measures and at what level those measures fulfil their respective objectives, and whether the 
objectives of the foreign measures are the same as the U.S. objective and that the foreign countries 
seek to achieve that objective at the same level the United States does.  
7.427  Finally, while a ban on flavoured-cigarettes is not  one of the various measures set out in the 
WHO Framework Convention on Tobacco Control  itself, we recall that prohibiting the sale of 
flavoured cigarettes is actually  one of the measures that has now been recommended in the WHO 
Partial Guidelines .   
7.428  We therefore conclude that Indonesia has fa iled to demonstrate that the ban on clove 
cigarettes is "more trade restrictive than necessar y" to fulfil its legitimate objective, taking into 
account the risks that non-fulfilment would create. 
(e) Overall conclusion on Indonesia's claim under Article 2.2 of the TBT Agreement  
7.429  We began by setting out a two-step analysis to structure our examination of Indonesia's claim 
under Article 2.2 of the TBT Agreement .  The first step of our analys is was to consider whether the 
ban on clove cigarettes pursues a "legitimate objectiv e".  The second step of our analysis was to 
consider whether the ban on clove cigarettes is "mor e trade restrictive than necessary" to fulfil its 
legitimate objective of reducing youth smoking (tak ing into account the risks that non-fulfilment 
would create).   
7.430  Under the first step of our analysis, we conclude d that (i) Indonesia has demonstrated that the 
objective of the ban on clove cigarettes is to redu ce youth smoking; and (ii) the objective of the ban 
on clove cigarettes is "legitimate".  Thus, we c oncluded that the ban on clove cigarettes pursues a 
"legitimate objective" within the meaning of Article 2.2 of the TBT Agreement .    
7.431  Under the second step of our analysis, we c oncluded that: (i) the jurisprudence developed 
under Article XX(b) of the GATT 1994 is relevant to the interpretation of the "more trade-restrictive 
than necessary" standard in Article 2.2 of the TBT Agreement ; (ii) Indonesia has not demonstrated that 
the ban on clove cigarettes exceeds the "level of protection" sought by the United States; (iii) Indonesia has not demonstrated that the ban on clov e cigarettes makes no "material contribution" to 
the objective of reducing youth smoking; and (iv) Ind onesia has failed to demonstrate that there are 
                                                      
771 United States' first written submission, footnote  316; United States' second written submission, 
para. 165; United States' response to Panel question No. 109(c).  
772 Appellate Body Report, Brazil – Retreaded Tyres , para. 159 (emphasis added). WT/DS406/R 
Page 126 
 
 
 less-trade restrictive alternative measures that would make an equivalent contribution to the 
achievement of the objective at the level of protection sought by the United States.  Thus, we 
concluded that Indonesia has failed to demonstrate that the ban on clove cigarettes is "more trade 
restrictive than necessary" to fulfil its legitimat e objective, taking into account the risks that non-
fulfilment would create. 
7.432  For these reasons, we find that Indonesia has failed to demonstrate that the ban on clove 
cigarettes imposed by Section 907(a)(1)(A) is more  trade-restrictive than necessary to fulfil the 
legitimate objective of reducing youth smoking, taking account of the risks non-fulfilment would 
create.  Accordingly, we find that Indonesia has fa iled to demonstrate that Section 907(a)(1)(A) is 
inconsistent with Article 2.2 of the TBT Agreement .  
G. WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.5 OF THE 
TBT A GREEMENT  
1. Arguments of the parties 
7.433  Indonesia  claims that by failing to provide a "complete response" to Indonesia's questions 
contained in document G/TBT/W/323 concerning th e justification for Section 907(a)(1)(A), the 
United States has not complied with its  obligation under Article 2.5 of the TBT Agreement .773  At first, 
Indonesia also includes in its claim of violation the alleged failure of the United States to refer to the 
terms of Articles 2.2, 2.3, and 2.4 of the TBT Agreement in its oral response to Indonesia at the 
TBT Committee meeting of 5-6 November 2009.774  However, in response to a question from the 
Panel, Indonesia conceded that a Member is not required to articulate each article of the 
TBT Agreement by name in its response in order to satisfy  the obligations under Article 2.5 of the 
TBT Agreement .775  Thus, according to Indonesia, the only issu e in dispute before the Panel is whether 
the United States provided an explanation in a timely  manner as required pursuant to Article 2.5 of the 
TBT Agreement.776 
7.434  According to Indonesia, on two occasions777 after the FSPTCA was signed, but before 
Section 907(a)(1)(A) entered into force (on 22 Se ptember 2009), it requested the United States to 
answer questions containe d in document G/TBT/W/323778, aimed at understanding why the 
                                                      
773 Indonesia's first written submission, para. 132. 
774 Indonesia's first written submission, para. 132. 
775 Indonesia's response to Panel question No. 68, para. 137. 
776 Indonesia's oral statement at the first substantiv e meeting of the Panel, para. 163;  Indonesia's 
second written submission, para. 142. 
777 According to Indonesia the first occasion was on 20 August 2009, and the second on 
27 August 2009. 
778 The questions were the following: 
"Referring to Section 907 of the Family Smoking Prevention and Tobacco Control Act, the 
Government of Indonesia also requests the United States to address the following questions:   
(a) Section 907 prohibits a cigarette or any of its components from containing a natural 
or artificial flavour (other than tobacco or menthol) or an herb or spice. Why was menthol 
singled out as the only flavour, herb, or spice excluded from this provision. 
(b) We know that clove cigarettes are an important industry in Indonesia. Are clove 
cigarettes also produced domestically in the United States? 
(c) Section 907 further indicates that the pr ohibition on a natural or artificial flavour, 
herb or spices applies if it is "a characterizin g flavour" of the tobacco product or the tobacco 
smoke. However, the bill does not define what elements of a cigarette constitute a 
"characterizing flavour".  How does FDA plan to  interpret the concept of a "characterizing 
flavour"? 
(d) Cigarettes contain many ingredients other than tobacco. Under Section 907, how will 
it be possible to distinguish certain "ing redients" from "characterizing flavours"?  WT/DS406/R 
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 United States, under the guise of protecting adolescent s from smoking, would ban a type of cigarette 
adolescents rarely smoke (i.e., clove), and not ban a cigarette "they literally flock to in droves" 
(i.e., menthol).779  Indonesia explains that its claim under Article 2.5 of the TBT Agreement is not that 
the United States failed to answer each and every question posed.780  Indonesia argues that when the 
United States was asked to explain the "justificati on" for Section 907(a)(1)(A), the United States was 
required by Article 2.5 of the TBT Agreement  to identify the scientific or other evidence supporting 
the adoption of the measure.781  Indonesia contends that informing Indonesia that 
Section 907(a)(1)(A) is meant to protect public health, and particularly the health of young 
Americans, goes, at most, to the objective of the po licy, but it sheds no light on the measure itself and 
provides no "scientific or technical information"  concerning the risks that non-fulfilment of the 
objective would create.782     
7.435  Indonesia submits that it never received a comp lete response from the United States, other 
than that it would not reverse the ban on clove cigare ttes, and that it had identified several risks that 
clove cigarettes cause to human health.783  Indonesia argues that the United States concedes that 
Indonesia asked the United Stated to "explain the ju stification" for Section 907(a)(1)(A) within the 
meaning of Article 2.5 of the TBT Agreement.784   
7.436  Indonesia contends that it "can't be right" that a Member satisfies the obligation under 
Article 2.5 of the TBT Agreement by "simply directing a Member to read the measure for which 
explanation and justification is sought"785.  According to Indonesia, if this were the case, Article 2.5 of 
                                                                                                                                                                     
(e) Menthol is an artificial flavour derived from  mint, which is clearly an herb or spice.  
Does the United States believe that menthol cigarettes would fall under the provisions of 
Section 907 and would be prohibited absent the exception granted in the bill? 
(f) Physically, both clove and menthol cigare ttes contain tobacco with an herbal flavour 
additive with soothing properties.  The end us e of both clove and menthol cigarettes is the 
same, i.e., both are used to smoke tobacco.  Does the United States believe that clove 
cigarettes and menthol cigarettes are like products? 
(g) A primary purpose of the bill, as stated in the bill's finding, is to reduce the incidence 
of youth smoking.  The findings further indicate that additional regulation of tobacco products 
and tobacco marketing is necessa ry to prevent under-age youth from obtaining cigarettes.  
However, the evidence available to us indicates that many more youth smoke menthol 
cigarettes than clove cigarettes.  Are you aware of any data to the contrary that indicate clove 
cigarettes are used by youth in greater quantities than menthol cigarettes? 
(h) The WTO does allow members to take measures to protect human health, but these 
measures must be based on sound science. Are you aware of any scientific studies that show 
that clove cigarettes pose a greater h ealth risk than menthol cigarettes? 
(i) Several of the other flavoured cigarettes that would be prohibited by Section 907 
(e.g., cherry, strawberry, chocol ate) were created and marketed  to appeal to youth. Clove 
cigarettes have been sold for decades and are not  marketed to youth. Clove cigarettes are sold 
primarily through speciality to bacco shops.  Are you aware of  any specific advertising of 
clove cigarettes that has been viewed as targeting or appealing to youth?  
(j) Flavoured cigarettes other than menthol are banned under Section 907. Menthol 
cigarettes will be subject to study and regulation by the FDA.  Why is it necessary to ban other 
flavours but only necessary to study and regulate menthol cigarettes?". 
779 Indonesia's first written submission, para. 130. 
780 Indonesia's oral statement at the first substantive meeting of the Panel, para. 165. 
781 Indonesia's oral statement at the first substantive meeting of the Panel, para. 169. 
782 Indonesia's oral statement at the first substantiv e meeting of the Panel, para. 168;  Indonesia's 
second written submission, para. 145;  Indonesia's response to Panel question No. 68, para. 138. 
783 Indonesia's first written submission, paras. 130-131. 
784 Indonesia's oral statement at the first substantive meeting of the Panel, para. 163. 
785 Indonesia's oral statement at the first substantive meeting of the Panel, para. 170. WT/DS406/R 
Page 128 
 
 
 the TBT Agreement would be largely without meaning.786  Indonesia argues that the FSPTCA and its 
legislative history did not provide the scientific and other evidence that Indonesia sought.787   
7.437  Indonesia argues that Section 907(a)(1)(A) has had a significant effect on its trade, because 
more than six million Indonesians depend on clove ci garette production, and that in 2008 alone it 
exported more than USD 15 million in clove cigarettes to the United States.788  Indonesia submits that 
it was prejudiced by the failure of the Unite d States to explain the justification for 
Section 907(a)(1)(A) because it undermined the ability of Indonesia to provide a fact-based rebuttal to 
any specific concerns related to clove cigarettes during the legislative process.789  According to 
Indonesia, not knowing the scientific or technical justifications for the measure or the views of the 
United States concerning the risks of non-fulfilment of the measure, left Indonesia to guess what such 
concerns might be.  Indonesia argues that the refusa l of the United States to provide the information 
pursuant to Article 2.5 of the TBT Agreement  gives the impression that no such information exists.  
Indonesia "suspects" that if the United States had information indicating that clove cigarettes were 
luring youth to smoke in significant numbers, the Un ited States would have been more than willing to 
share it.790 
7.438  The United States submits that Indonesia never invoked Article 2.5 of the TBT Agreement , 
nor requested an explanation of the justification fo r Section 907(a)(1)(A) in terms of the provisions of 
Articles 2.2 to 2.4.791  For the United States, it is thus "not su rprising" that in r esponse to the request 
for an explanation by Indonesia, the Unite d States did not refer to such provisions.792  In addition, the 
United States submits that, contrary to Indonesia's contention, it has fully explained the justification for Section 907(a)(1)(A)
793, and that Indonesia has failed to sh ow that the United States acted 
inconsistently with the obligation of Article 2.5, first sentence, of the TBT Agreement .794 
                                                      
786 Indonesia's oral statement at the first substantiv e meeting of the Panel, para. 170;  Indonesia's 
second written submission, para. 145. 
787 Indonesia's oral statement at the first substantive meeting of the Panel, para. 170. 
788 Indonesia's first written submission, para. 129. 
789 Indonesia's second written submission, para. 145;  Indonesia's response to  Panel question No. 70. 
790 Indonesia's response to Panel question No. 70, para. 143. 
791 United States' oral statement at the second substantive meeting of the Panel, para. 87. 
792 United States' oral statement at the second substantive meeting of the Panel, para. 87. 
793 United States' first written submission, paras. 282-283. 
794 United States' first written submission, para. 285.  The minutes of the November 2009 
TBT Committee meeting read as follows: 
"The representative of the United States indicat ed that the United States was not going to 
reverse the ban on clove cigarettes given the high priority the Obama Administration placed 
on protecting the health of Americans, especially  youth.  U.S. health authorities support a ban 
on clove cigarettes to protect the public h ealth.  He noted that clove cigarettes were 
particularly appealing to youth and represented a 's tarter product' that could lead to the use of 
regular cigarettes.  In particular, he stressed that clove cigarettes made it easier for new 
smokers to start smoking by masking the harshness of cigarette smoke and, like other banned 
fruit flavours, could ease the transition to addi ction.  Evidence also indicated that clove 
cigarettes could pose a range of additional health risks over conventional cigarettes.  With 
regard to the allegation of discrimination, the U.S. representative noted that substantial 
differences related to consumption, use patterns, and epidemiology existed between clove and 
menthol cigarettes, which made the two situatio ns not comparable.  He noted that the U.S. 
Food and Drug Administration (FDA) had established a Scientific Advisory Committee that 
would support additional studies of menthol cigarettes before deciding an appropriate public 
health action.  His delegation was open to further discussing the issue with Indonesia, so that 
Indonesian regulators could better understand  the scientific basis for the U.S. action." 
TBT Committee, Minutes of the Meeting 5-6 November 2009 , G/TBT/M/49, at para. 7 
(December 2009).  United States' fi rst written submission, para. 281.  WT/DS406/R 
 Page 129 
 
 
 7.439  The United States argues that Article 2.5 of the TBT Agreement  only requires a Member to 
explain its justification for a technical regulation when another Member inquires about the measure, 
and does not require the responding Member to answ er "every specific detailed question" that it 
receives, including questions that do not rela te to Articles 2.2, 2.3, or 2.4 of the TBT Agreement .795  
According to the United States, Indonesia is also  incorrect in holding that Article 2.5 of the 
TBT Agreement  requires importing Members to provide, essentially, "a full legal analysis" of each 
element and to provide the exporting Member  with all the related scientific data.796   
7.440  The United States submits that it h as complied with Article 2.5 of the TBT Agreement  by 
explaining to Indonesia the objectives and justifica tion of Section 907(a)(1)(A) on at least three 
occasions.  It recalls that in meeting its obligati on, the United States first held a bilateral discussion 
with Indonesia in Geneva on 27 August 2009.  The U.S. authorities met again with the Indonesian 
Ambassador to discuss Indonesia's concerns the week  after that meeting among trade ministers in 
India.  Finally, the delegations of the resp ective countries discussed the issue again at the 
November 2009 TBT Committee meeting.797  According to the United States, the minutes of that 
meeting798 contain the indication of the United States' re presentative that, given the high priority the 
Obama Administration placed on protecting the hea lth of Americans (especially youth), the ban on 
clove cigarettes was not going to be reversed.  As explained at the meeting, it argues, clove cigarettes 
are particularly appealing to youth and represent a "starter product" that could lead to the use of 
regular cigarettes.  In particular, clove cigarett es make it easier for new smokers to start smoking.  
The United States also argues that, at  that meeting, its representative explained that existing evidence 
indicates that clove cigarettes could pose a range  of additional health risks over conventional 
cigarettes.799 
7.441  Additionally, the United States asserts that th e FSPTCA provides a full justification of the 
measure in the initial sections of the law, which is  further supplemented in its legislative history.800  
According to the United States, the explanation of the FSPTCA, its purposes and legislative history 
are now and have been readily available.801  The United States maintains th at Indonesia is incorrect in 
arguing that Article 2.5 of the TBT Agreement would be rendered largely without meaning if the 
explanation provided in the text of the measure itself and the legislative history of Section 907(a)(1)(A) could be considered in eval uating whether a Member has met its obligation 
pursuant to Article 2.5 of the TBT Agreement .
802 The United States argues that the fact that much of 
the information Indonesia claims to need was "alrea dy readily available" – and "no doubt reviewed by 
Indonesia" – "certainly is relevant" to the claim of Indonesia.803 
7.442  The United States contends that Indonesia is wrong when claiming that it has suffered 
prejudice.804  According to the United States, Indonesia had ample opportunity, and, as far as the 
United States is aware, took full advantage of that, to express its views to the officials of the U.S. 
Government.  The United States argues that the language of Section 907(a)(1)(A) was basically 
unchanged from when it was drafted in 2004, and it had been well-known for some time that part of 
its underlying aim was to eliminate those products that appeal to young people.  The United States 
                                                      
795 United States' first written submission, para. 279.  United States' oral statement at the second 
substantive meeting of the Panel, para. 87. 
796 United States' oral statement at the second substantive meeting of the Panel, para. 88.  
797 United States' first written submission, para. 280. 
798 TBT Committee, Minutes of the Meeting 5-6 November 2009 , G/TBT/M/49, at para. 7 
(December 2009). 
799 United States' first written submission, para. 281. 
800 United States' first written submission, paras. 282-283. 
801 United States' oral statement at the second substantive meeting of the Panel, para. 85. 
802 United States' oral statement at the second su bstantive meeting of the Panel, paras. 89-90. 
803 United States' oral statement at the second substantive meeting of the Panel, para. 90. 
804 United States' oral statement at the second substantive meeting of the Panel, para. 86. WT/DS406/R 
Page 130 
 
 
 contends that if Indonesia considered that there w as a lack of scientific evidence supporting the ban, it 
had the opportunity to provide fact-based arguments on that issue.805 
7.443  Thus, in the United States' view, Indonesia's Ar ticle 2.5 claim amounts to nothing more than 
an expression of Indonesia's dissatisfaction with the explanation provided by the United States.806  
2. Analysis by the Panel 
(a) Introduction 
7.444  The question before the Panel is therefore whet her the United States has failed to explain the 
justification for Section 907(a)(1)(A) upon Indonesia's request, in terms of Articles 2.2, 2.3 and 2.4 of 
the TBT Agreement , as required by Article 2.5 of the TBT Agreement.  According to Indonesia, the 
only issue in dispute before the Panel in this respect is whether the United States provided an 
explanation in a timely manner as required pursuant to Article 2.5 of the TBT Agreement.807  
7.445  As with other provisions in the present dispute, we face an issue of first impression since 
there are no prior Appellate Body or panel report s that have interpreted Article 2.5 of the 
TBT Agreement .  We shall therefore commence by examini ng the legal provision at issue to ascertain 
the applicable legal test.   
(b) The legal provision at issue 
7.446  Article 2.5 of the TBT Agreement  provides as follows: 
"A Member preparing, adopting or applying a technical regulation which may have a 
significant effect on trade of other Memb ers shall, upon the request of another 
Member, explain the justification for that  technical regulation in terms of the 
provisions of paragraphs 2 to 4.  Whenever  a technical regulation is prepared, adopted 
or applied for one of the legitimate obj ectives explicitly mentioned in paragraph 2, 
and is in accordance with relevant intern ational standards, it shall be rebuttably 
presumed not to create an unnecessary obstacle to international trade." 
7.447  We note that Article 2.5 contains two senten ces: a first sentence regarding the explanation 
that Members are to provide, at the request of another Member, about the justification for their 
technical regulations; and a second sentence, which establishes a rebuttable presumption of 
compliance with the first sentence of Article 2.2 fo r those technical regulations that are prepared, 
adopted or applied for one of the legitimate objectives  explicitly mentioned in Article 2.2, and that are 
in accordance with relevant international standa rds.  Indonesia's claim under Article 2.5 of the 
TBT Agreement is in respect only of the first sentence.   
7.448  Article 2.5, first sentence, of the TBT Agreement thus obliges any Member preparing, 
adopting or applying a technical regulation that may have a significant effect on trade of other 
Members to explain, upon the request of another Member, the justification for that technical regulation in terms of the provisions of paragraphs 2 to 4 of Article 2 of the TBT Agreement .   
7.449  We observe that Article 2.5 of the TBT Agreement , first sentence, includes four elements that 
must be present:  (i) the Member in question is "preparing, adopting or applying a technical 
                                                      
805 United States' oral statement at the second substantive meeting of the Panel, para. 91. 
806 United States' first written submission, para. 284. 
807 Indonesia's oral statement at the first substantiv e meeting of the Panel, para. 163;  Indonesia's 
second written submission, para. 142.   WT/DS406/R 
 Page 131 
 
 
 regulation"; (ii) this measure "may have a significant effect on trade of other Members"; (iii) there is a 
"request of another Member"; and (iv) the Member in  question is to "explain the justification for that 
technical regulation in terms of the provisions  of paragraphs 2 to 4" of Article 2. 
7.450  Rather than following the order of appearance of those elements in the first sentence of 
Article 2.5 of the TBT Agreement , in our view, the threshold question to which we should respond is 
whether Indonesia actually requested the United States to explain the justification for 
Section 907(a)(1)(A) in terms of the provisions of paragraphs 2 to 4 pursuant to the first sentence of 
Article 2.5 of the TBT Agreement .  Indeed, in the absence of such a request, the obligation to explain 
the justification for Section 907(a)(1)(A) would not be triggered. 
(c) Whether Indonesia requested the United St ates to provide an explanation for 
Section 907(a)(1)(A) pursuant to Article 2.5, first sentence, of the TBT Agreement  
7.451  We therefore proceed with our analysis by first examining wh ether Indonesia has requested 
the United States to provide an explanation of the justification for Section 907(a)(1)(A) pursuant to 
Article 2.5, first sentence, of the TBT Agreement . 
7.452  Indonesia argues that it submitted questions to the United States on two occasions after the 
FSPTCA was signed, but before the Section 907(a )(1)(A) entered into force on 22 September 2009.808  
Indonesia alleges that the first time it requested  an explanation of the justification for 
Section 907(a)(1)(A) was on 17 August 2009.  On that date, Indonesia submitted a series of questions 
to the United States in document G/TBT/W/323, circulated on 20 August 2009, through the 
TBT Committee.  The second occasion was during in formal bilateral discussions held on 27 August 
2009 in Geneva, where Indonesia submitted essentially the same questions to the United States that 
were contained in document G/TBT/W/323.809  After Section 907(a)(1)(A) entered into force, 
Indonesia again expressed its concerns through its questions in document G/TBT/W/323 at the 
TBT Committee meeting of 5-6 November 2009.810 
7.453  The United States responds that Indonesia never invoked Article 2.5 of the TBT Agreement  
nor requested an explanation of the justification fo r Section 907(a)(1)(A) in terms of the provisions of 
Articles 2.2 to 2.4.811  At the same time, the United States ma intains that it acted consistently with 
Article 2.5, explained the objectives and provided  a justification for the measure's enactment.812 
7.454  We note that the document G/TBT/W/323 to which Indonesia refers commences with a 
lengthy explanation of why Indonesia believes Secti on 907(a)(1)(A) is inconsistent with a number of 
provisions of the covered agreements.  In this respect, we note that Indonesia refers to Articles 2, 3, 5, 
and 7 of the SPS Agreement , Articles 2 and 12 of the  TBT Agreement , and Articles III and XXIII of 
the GATT 1994.   
7.455  As the United States points out, there is no mention of Article 2.5 of the TBT Agreement  in 
document G/TBT/W/323.  There is also no request to the United States "to explain the justification for 
[Section 907(a)(1)(A)] in terms of Articles 2.2 to 2.4 of the TBT Agreement ".   
7.456  In the absence of any reference to Article 2.5 of the TBT Agreement  or even to a request for 
justification for Section 907(a)(1)(A) "in terms of Articles 2.2 to 2.4 of the TBT Agreement ", 
especially when coupled with specifc, express refe rences to numerous other provisions of other 
                                                      
808 Indonesia's first written submission, para. 130. 
809 Indonesia's first written submission, para. 130. 
810 Indonesia's first written submission, para. 131. 
811 United States' oral statement at the second substantive meeting of the Panel, para. 87.  
812 United States' first written submission, para. 280. WT/DS406/R 
Page 132 
 
 
 covered agreements such as the SPS Agreement , it is conceivable that the United States would not 
have understood that Indonesia's questions in doc ument G/TBT/W/323 constituted a request pursuant 
to the first sentence of Article 2.5 of the TBT Agreement .   
7.457  We shall nevertheless examine the substance of the questions themselves to ascertain whether 
the United States could have understood that they constituted a request pursuant to the first sentence 
of Article 2.5 of the TBT Agreement .  In other words, we will consider whether Indonesia implicitly 
imposed the request pursuant to Article 2.5.  We w ill do so by looking at whether the subject matter of 
the questions at issue pertain to issues regulated through paragraphs 2 to 4 of Article 2 of the 
TBT Agreement .  Thus it may be useful to recall the wording of these paragraphs: 
"2.2 Members shall ensure that technical regulations are not prepared, adopted or 
applied with a view to or with the effect of creating unnecessary obstacles to international trade.  For this purpose, tec hnical regulations shall not be more trade-
restrictive than necessary to fulfil a legitimate objective, taking account of the risks 
non-fulfilment would create.  Such legitimate objectives are, inter alia:   national 
security requirements;  the prevention of deceptive practices;  protection of human 
health or safety, animal or plant life or h ealth, or the environment.  In assessing such 
risks, relevant elements of consideration are, inter alia:   available scientific and 
technical information, related proces sing technology or intended end-uses of 
products. 
2.3 Technical regulations shall not be maintained if the circumstances or 
objectives giving rise to their adoption no longer exist or if the changed 
circumstances or objectives can be addressed in a less trade-restrictive manner. 
2.4 Where technical regulations are require d and relevant international standards 
exist or their completion is imminent, Members shall use them, or the relevant parts 
of them, as a basis for their technical re gulations except when such international 
standards or relevant parts would be an ineffective or inappropriate means for the 
fulfilment of the legitimate objectives pursue d, for instance because of fundamental 
climatic or geographical factors or fundamental technological problems." 
7.458  Given the facts of the present dispute and the absence of any "relevant international 
standards", paragraph 4 would not appear to be of any relevance.
 813  The same seems to be the case 
with paragraph 3 as it deals with the maintenance of  a measure in the light of changed circumstances 
and objectives, and Indonesia is complaining about the alleged lack of an answer by the United States 
concerning a measure that had not yet entered into force (the first two occasions when questions were 
posed) or that had just entered into force (the th ird occasion mentioned by Indonesia).  Accordingly, 
on the basis of the arguments and evidence provided by the parties, the only paragraph that would be 
relevant to an explanation by the United States of the justification for Section 907(a)(1)(A) would be 
paragraph 2.   
7.459  We note that a number of questions posed by Indonesia appear to be unrelated to Article 2.2 
of the TBT Agreement .  For example, question (f) asks about "like products", which pertains to 
Article 2.1 of the TBT Agreement.   We recall that Indonesia argues in document G/TBT/W/323 the 
inconsistency of Section 907(a)(1)(A) with a number of provisions of the SPS Agreement  and the 
GATT 1994.  The questions posed thus not only do not  relate exclusively paragraphs 2 to 4 of 
Article 2 of the TBT Agreement , but relate to provisions in other covered agreements. 
                                                      
813 In response to a question from the Panel, both par ties agreed that there is no relevant "international 
standard" within the meaning of the se cond sentence of Article 2.5 of the TBT Agreement .  Indonesia's and 
United States' responses to Panel question No. 59.  WT/DS406/R 
 Page 133 
 
 
 7.460  Taking into account the fact that the questions at  issue relate to various issues regulated by 
provisions of the covered agreements other than Article 2.2 of the TBT Agreement , together with the 
absence of any reference Article 2.5 of the TBT Agreement  or even to a request for an explanation for 
the justification for Section 907(a)(1)(A) "in terms of Articles 2.2 to 2.4 of the TBT Agreement ", we 
conclude that Indonesia did not make a request pursuant to the first sentence of Article 2.5 of the 
TBT Agreement through its questions in document G/TBT/W/323 .   
(d) Conclusion 
7.461  The Panel therefore finds that Indonesia did not request the United States to explain the 
justification for Section 907(a)(1)(A) "in terms of Articles 2.2 to 2.4 of the TBT Agreement " through 
its questions in document G/TBT/W/323.  Thus one  of the necessary elements of Article 2.5 is 
missing. 
7.462  We note that in addition to claiming that Indonesia did not invoke Article 2.5 of the 
TBT Agreement , the United States says that it complied with Article 2.5 and that it did provide the 
required information.  Given our finding that the United States was not required to provide the explanation referred to in Article 2.5, it is not st rictly speaking necessary for this Panel to consider 
whether the United States would have been in comp liance had the request under Article 2.5 in fact 
been made by Indonesia.  Having said that, we note that the United States did in fact provide an explanation
814 with respect to the enactment of Secti on 907(a)(1)(A) at the TBT Committee Meeting 
in November 2009 in response to Indonesia's request in document G/TBT/W/323. 
7.463  Accordingly, we find that In donesia has failed to demonstrate that the United States acted 
inconsistently with Article 2.5 of the TBT Agreement . 
H. WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.8 OF THE 
TBT A GREEMENT  
1. Arguments of the parties 
7.464  Indonesia claims that Section 907(a)(1)(A) is in consistent with Article 2.8 of the 
TBT Agreement.  In particular, Indonesia argues that Article 2.8 of the TBT Agreement  requires 
Members to provide "a certain level of specificity" in their technical regulations815, and that 
Section 907(a)(1)(A) "lacks the specificity required" by the TBT Agreement .816 
7.465  Indonesia notes that the FSPTCA provides no definition of "characterizing flavour" for 
purposes of the ban, or any further explanation of wh at constitutes a "characterizing flavour" in either 
the FDA Guidance or in the public notice announc ing its enforcement of Section 907(a)(1)(A).817  
Indonesia observes that many ingredients are used to create the taste and flavour of cigarettes, 
including in cigarettes that are not marketed as "flavoured".818  The FSPTCA enumerates no 
performance-based standard for its ban other than th e use of the general descriptor "characterizing 
flavour".819  Indonesia explains that there is an estab lished process for determining the thresholds at 
which flavours can be detected (set forth in "A STM E679 - 04 "Standard Practice for Determination 
of Odor and Taste Thresholds By a Forced-C hoice Ascending Concentration Series Method of 
Limits"), and argues that a "perform ance" standard could use this es tablished method to determine the 
concentrations of flavours that reach a threshold where they are recognizable by taste and odour and 
                                                      
814 See footnote 794. 
815 Indonesia's first written submission, para. 134. 
816 Indonesia's first written submission, para. 10.   
817 Indonesia's first written submission, para. 135. 
818 Indonesia's first written submission, para. 135. 
819 Indonesia's first written submission, para. 136. WT/DS406/R 
Page 134 
 
 
 are, thus, "characterizing".820  Indonesia argues that in the absence of a performance-based standard, it 
is impossible for manufacturers to know at what poi nt the use of flavouring is considered to be 
"characterizing".821  Since an established, performance-based standard for evaluating sensory 
thresholds regarding odour and taste exists, Indonesia considers that it is "appropriate" to expect that 
it be used.822   
7.466  The United States  notes that Indonesia's underlying argument regarding its claim under 
Article 2.8 of the TBT Agreement  is that Section 907(a)(1)(A) is "vague"823.  The United States 
submits that this argument is "both incorrect, and unrelated to the application of Article 2.8", and 
notes that the United States "fails to understand how such an argument is relevant" to this provision.824  
In the United States' view, Article 2.8 "does not obl igate the Members to set requirements that are as 
specific as possible".825  The United States further argues that it is "entirely specious" for Indonesia to 
imply that its producers do not know whether the measure bans their product.826   
7.467  The United States does not dispute that Section 907(a)(1)(A) is structured in terms of 
"descriptive" characteristics, rather than in terms of "performance".827  However, the United States 
notes that Indonesia carries the burden of establishing a breach of Article 2.8, and has not provided 
one example of how the measure could be written in  terms of performance, nor provided one reason 
why it would be "appropriate ", within the meaning of Article 2.8 of the TBT Agreement .828  According 
to the United States, the standard re ferred to by Indonesia clarifies what concentration of an additive 
is needed to give the product a characterizing fla vour of that additive, and thus would not be a 
performance standard – it is not a standard  as to how a cigarette is to perform.829   
2. Analysis by the Panel 
(a) Introduction 
7.468  The main question before the Panel is whether the United States has acted inconsistently with 
Article 2.8 of the TBT Agreement  by failing to specify Section 907(a)(1)(A) in terms of performance.  
7.469  The United States does not dispute that Section 907(a)(1)(A) is specified in terms of "design 
or descriptive characteristics", and not in terms of "performance".830  Rather, the arguments of the 
parties focus on two other issues.  The first is whether, as Indonesia argues, Article 2.8 of the 
TBT Agreement  obliges Members to provide "a certain le vel of specificity" in their technical 
regulations.  The second is whether it would be "appr opriate" to specify the ban on clove cigarettes in 
terms of performance, rather than design or descriptive characteristics. 
7.470  The Panel will address these issues in turn.  Before  doing so, we shall set out the text of the 
legal provision at issue. 
                                                      
820 Indonesia's response to Panel question No. 64, para. 132; Indonesia's second written submission, 
para. 149. 
821 Indonesia's response to Panel question No. 65, para. 133; Indonesia's oral statement at the first 
substantive meeting of the Panel, para. 172. I ndonesia's second written submission, para. 148. 
822 Indonesia's response to Panel question No. 65, para. 133. 
823 United States' oral statement at the second substantive meeting of the Panel, para. 99. 
824 United States' first written submission, para. 290. 
825 United States' oral statement at the second substantive meeting of the Panel, para. 99. 
826 United States' oral statement at the second substantive meeting of the Panel, para. 93. 
827 United States' first written submission, para. 288. 
828 United States' oral statement at the second su bstantive meeting of the Panel, paras. 94, 96. 
829 United States' oral statement at the second substantive meeting of the Panel, para. 97. 
830 United States' first written submission, paras. 288-290.  WT/DS406/R 
 Page 135 
 
 
 (b) The legal provision at issue 
7.471  Article 2.8 of the TBT Agreement  provides that: 
"Wherever appropriate, Members shall speci fy technical regulations based on product 
requirements in terms of performance rather than design or descriptive 
characteristics." 
7.472  Although this is not the first case in which a claim under Article 2.8 of the TBT Agreement  
has been raised, there is no substantial jurisprude nce relating to Article 2.8 and no prior panel or 
Appellate Body report addresses the question of what  legal test should be applied to establish a 
violation of Article 2.8.831  Thus, the Panel is again confronted with issues of first impression. 
(c) First issue: whether Article 2.8 obliges Members to  provide "a certain level of specificity" in 
their technical regulations  
7.473  Beginning with the first of the two issues iden tified above, it appears to us that Indonesia 
reads the requirement that Members specify technical regulations in terms of performance rather than 
design or descriptive characteristics as obliging Members to provide "a certain level of specificity" in 
their technical regulations.832  In its first written submission, Indonesia summarizes its claim under 
Article 2.8 of the TBT Agreement  as follows: 
"In banning cigarettes with 'characterizing flavors,' [Section 907(a)(1)(A)] lacks the 
specificity required by the TBT Agreement.  Most, if not all, cigarettes sold in the 
United States contain a variety of ingredients and flavors that are added to the 
tobacco or filter.  Yet, neither the Ac t nor [Section 907(a)(1)(A)] provide any 
definition of 'charactering flavor' or any performance-based standard by which 
different flavors qualify as 'characterizing. '  As such, [Section 907(a)(1)(A)] is 
inconsistent with Article 2.8 of the TBT Agreement because it bans cigarettes solely 
on the basis of descriptive characteristics."833  
7.474  In addressing this issue, we begin with the ordina ry meaning of the terms of Article 2.8 of the 
TBT Agreement .  When the sentence contained in Article 2.8 of the TBT Agreement  is read as a whole, 
the ordinary meaning of this sentence is that  it establishes one qualified (i.e., "[w]herever 
appropriate") obligation to specify technical regulations " in terms of performance rather than design 
or descriptive characteristics ", as opposed to a second, additional obligation to "specify" those 
technical regulations.  We consider that if th e drafters had intended to establish two separate 
obligations, then it would be expected that Article 2.8 would have been drafted very differently, for 
example:  
"Wherever appropriate, Members shall speci fy technical regulations based on product 
requirements, and shall do so in terms of performance rather than design or 
descriptive characteristics." 
                                                      
831 In EC – Asbestos , Canada claimed that the measure at issu e in that dispute was inconsistent with 
Article 2.8 of the TBT Agreement .  The panel found that the measure at  issue was not a "technical regulation", 
and therefore did not examine Canada's claim under Article 2.8.  The Appellate Body reversed the panel and 
found that the measure was a "technical regulation", but did not go further and examine Canada's claim under 
Article 2.8.   The panel in EC – Sardines  made a passing reference to Articl e 2.8 in the context of examining a 
claim under Article 2.4 of the TBT Agreement .  Panel Report, EC – Sardines , para. 7.81. 
832 Indonesia's first written submission, paras. 10, 134. 
833 Indonesia's first written submission, para. 10. WT/DS406/R 
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 7.475  Alternatively, Article 2.8 of the TBT Agreement  could have been separated into two sentences 
in order to reflect two separate obligations, so as to read,  
"Wherever appropriate, Members shall speci fy technical regulations based on product 
requirements.  Members shall further ensure that such technical regulations are 
specified in terms of performance rather than design or descriptive characteristics." 
7.476  The difficulty we have with Indonesia's reading of Article 2.8 of the TBT Agreement  can be 
approached from a different angle, which is consid ering how this provision would read if the verb 
"specify" were replaced with a different verb, such as  "set forth", "stipulate", or "formulate".  Using 
"set forth" as an example, Article 2.8 would then read: 
"Wherever appropriate, Members shall specify  set forth technical regulations based 
on product requirements in terms of performance rather than design or descriptive 
characteristics." 
7.477  Under Indonesia's reading of the sentence structure of Article 2.8 of the TBT Agreement , 
replacing the verb "specify" with "set forth" would oblige Members to "set forth technical 
regulations".  Along the same lines, if the ve rb "specify" were replaced with the essentially 
synonymous verb "formulate", then under Indonesi a's reading of this sentence, this would oblige 
Members to "formulate technical regulations".   
7.478  The Panel notes that the Spanish and French versions of Article 2.8 of the TBT Agreement  
each have the same sentence structure as the English version of this provision.834  Accordingly, the 
foregoing considerations apply equally with respect to  those versions of the text of Article 2.8.  
7.479  In our view, the context of Article 2.8 of the TBT Agreement  does not support Indonesia's 
argument that this provision obliges Members to provi de "a certain level of specificity" in their 
technical regulations.  Indeed, Indonesia's interpreta tion of Article 2.8 would give rise to an odd result 
in the light of the definition of "technical regulation" set forth in Annex 1.1 of the TBT Agreement .  
We recall that the obligations in Article 2 of the TBT Agreement  only apply to measures that meet the 
definition of "technical regulation"  set forth in Annex 1.1 of the TBT Agreement .  As expl ained above, 
there are several elements that must be satisfied  in order for a measure to be characterized as a 
"technical regulation".835  Among these is the requirement that the measure must "lay down" product 
characteristics with which compliance is mandato ry.  We recall that the Appellate Body has 
interpreted the term "lays down" to mean "set forth, stipulate or provide".836  Another element of the 
definition is that the measure "must apply to  an identifiable product or group of products".837  We also 
recall that the Appellate Body has explained that th is is so because "[o]therwise, enforcement of the 
regulation will, in practical terms, be impossible".838 
                                                      
834 The Spanish and French versions of Article 2.8 read as follows: 
"En todos los casos en que sea procedente, los reglamentos técnicos basados en 
prescripciones para los productos serán definidos por los Miembros en función de las 
propiedades de uso y empleo de los productos más bien que en función de su diseño o de sus 
características descriptivas. " 
"Dans tous les cas où cela sera approprié, les Membres définiront les règlements techniques 
basés sur les prescriptions relatives au produit en fonction des propriétés d'emploi du produit 
plutôt que de sa conception ou de ses caractéristiques descriptives. " 
835 See Section VII.C. 
836 Appellate Body Report, EC – Asbestos , para. 67. 
837 Appellate Body Report, EC – Asbestos , para. 70. 
838 Appellate Body Report, EC – Asbestos , para. 70.  WT/DS406/R 
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 7.480  Accordingly, we are of the view that, in orde r to reach the question of whether a measure is 
consistent with Article 2.8 of the TBT Agreement , a complaining party must first demonstrate, and a 
panel must first find, that the measure at issue "lays down" one or more product characteristics, and that the measure applies "to an identifiable product or group of products".  Thus, in light of the 
architecture of the TBT Agreement , we have difficulty in accepting that  a measure that has been found 
to meet the definition of a "technical regulati on" under Annex 1.1 could then be found to be 
inconsistent with Article 2.8 on the ground that it does not satisfy the alleged obligation to "specify" 
product characteristics.
839  Under such an analysis, a panel w ould first have to find that a measure 
does "lay down" (i.e., "set forth, stipulate or provide") product requirements that apply "to an 
identifiable product or group of products", and then  a panel would seemingly have to conclude that 
the measure fails to give particulars or details840 on these very same matters.   
7.481  In our view, the object and purpose of Article 2.8 of the TBT Agreement  does not support the 
conclusion that this provision obliges Members to provide "a certain level of specificity" in their 
technical regulations.  In this regard, the Panel sees nothing in Article 2.8 to suggest that the purpose 
of this provision is to ensure that a "clear dis tinction between the banned a nd the allowed product" is 
drawn.841  Rather, the object and purpose of Article  2.8 is to avoid the creation of unnecessary 
obstacles to trade by requiring that product require ments be laid down in functional terms wherever 
appropriate.  For example, an ISO/IEC Directive explains that: 
"Whenever possible, requirements shall be expressed in terms of performance rather 
than design or descriptive characteristics. This approach leaves maximum freedom to 
technical development. Primarily those characteristics shall be included that are 
suitable for worldwide (universal) acceptance."842 
7.482  Along the same lines, a Decision taken by  the TBT Committee in 2000 reflects the 
understanding of WTO Members that:  
"In order to serve the interests of the WT O membership in facilitating international 
trade and preventing unnecessary trade barriers,  international standards need to be 
relevant and to effectively respond to  regulatory and market needs, as well as 
scientific and technological developments in various countries.  They should not 
distort the global market, have adverse effects on fair competition, or stifle innovation 
and technological development.  In addition, they should not give preference to the 
characteristics or requirements of specific countries or regions when different needs 
or interests exist in other countries or re gions.  Whenever possible, international 
standards should be performance based rath er than based on design or descriptive 
characteristics."843 
                                                      
839 Indonesia's first written submission, para. 134. 
840 The ordinary meaning of "specify" is "[s]peak or treat of a matter etc. in detail; give details or 
particulars".  Shorter Oxford English Dictionary , 5th edn., W.R. Trumble, A. Stevenson (eds.) (Oxford 
University Press, 2002), Vol. 2, p. 2946.  See also Oxford English Dictionary Online , accessed on 
30 April 2011, defining "specify" to mean, among other things, "[t]o speak or make relation of some matter 
fully or in detail"; Webster's Online Dictionary , accessed on 30 April 2011, defining "specify" to mean, among 
other things, "to name or state explicitly or in detail". 
841 Indonesia's oral statement at the first substantive meeting of the Panel, para. 172. 
842 ISO/IEC Directives, Part 2: Rules for the struct ure and drafting of International Standards, Fifth 
edition, 2004, available online at: 
http://www.iso.org/iso/standards_development/pro cesses_and_procedures/drafting_standards.htm 
843 G/TBT/9, Committee on Technical Barriers to Trade,  Second Triennial Review of the Operation and 
Implementation of the Agreement on Technical Barriers to Trade, 13 November 2000, Annex 4, para. 10. WT/DS406/R 
Page 138 
 
 
 7.483  Finally, we observe that Indonesia has not provi ded the Panel with any legal arguments to 
support its interpretation of Article 2.8.  In res ponse to a question from the Panel asking Indonesia to 
explain the legal basis for its view that Article 2.8 of the TBT Agreement requires Members to provide 
"a certain level of specificity"844 in their technical regulations, Indonesia provides a response that 
could even be understood as acknow ledging that Article 2.8 embodies no such requirement.  In its 
response, Indonesia refers the Panel to the definitio n of a "technical regulati on" in Annex 1.1 of the 
TBT Agreement  and then explains that: 
"[A] measure that is a technical regula tion sets forth the characteristics of the 
products it regulates and ipso facto provides a certain level of specificity.  All 
Article 2.8 does is mandate, wherever a ppropriate, the form in which the product 
characteristics must be described, inter a lia, 'in terms of performance rather than 
design or descriptive characteristics'."845  
7.484  We therefore conclude that Article 2.8 of the TBT Agreement  does not oblige Members to 
provide "a certain level of specificity"846 in their technical regulations.  It thus follows that the "level 
of specificity" reflected in Section 907(a)(1)(A) is not  relevant to the question of whether this measure 
is consistent with Article 2.8.  Accordingly, we do not need to consider whether the FSPTCA provides 
a definition of "characterizing fl avour" for purposes of the ban, an d/or whether the FDA has provided 
further specification on what constitutes a "characterizing flavour".847  Insofar as Indonesia's claim 
under Article 2.8 rests on the argument that Section 907(a)(1)(A) "lacks the specificity required"848, 
then the Panel concludes that Indonesia's claim and argument are misplaced.  
(d) Second issue: whether it would be "appropriate" to specify the ban on clove cigarettes in 
terms of performance, rather than on design or descriptive characteristics 
7.485  The Panel now turns to the second main issue in dispute, which is whether it would be 
"appropriate" to specify the ban on clove cigarettes in terms of "performance", rather than in terms of 
"design or descriptive characteristics".  We recall that Article 2.8 of the TBT Agreement  sets forth a 
qualified obligation to specify technical regulations in terms of "performance", rather than in terms of 
"design or descriptive" characteristics.  The obligati on is qualified by the words that introduce this 
sentence, i.e., "[w]herever appropria te...".  The Panel will begin by se tting out its interpretation of the 
terms "wherever appropriate" in the context of Article 2.8.  The Panel will then consider the question 
of whether Indonesia has demonstrated that it would be "appropriate" to specify the technical 
regulation at issue in terms of "performance".   
7.486  While there is no jurisprudence relating to the terms "[w]herever appropr iate" in the context 
of Article 2.8 of the TBT Agreement , the Panel is mindful that the term "appropriate" appears in 
numerous other provisions found in the WTO Agreemen ts and that there is substantial and broadly 
consistent jurisprudence relating to the ordinary meaning of this term.849  Panels and the Appellate 
Body have relied upon ordinary dictionary definitio ns, and given the term "a ppropriate" its ordinary 
meaning. For example, the Panel in Mexico – Telecoms  observed that: 
                                                      
844 Indonesia's first written submission, para. 134. 
845 Indonesia's response to Panel question No. 66, para. 136 (emphasis original). 
846 Indonesia's first written submission, para. 134. 
847 Indonesia's first written submission, para. 135. 
848 Indonesia's first written submission, para. 10.   
849 The word "appropriate" has been interpreted in a number of prior panel reports, including but not 
limited to the following: Panel Report, Mexico – Telecoms , paras. 7.265, 7.367-7.368; Panel Report, EC – Tube 
or Pipe Fittings , paras. 7.240-7.241; Panel Report, Argentina – Poultry Anti-Dumping Duties,  paras. 7.191 and 
7.365; Panel Report, EC – Sardines , para. 7.116; Panel Report, US – Steel Plate , para. 7.72; Panel Report, 
Australia – Salmon , paras. 8.57 and 8.71.  WT/DS406/R 
 Page 139 
 
 
 "The word 'appropriate', in its general dic tionary sense, means 'specially suitable, 
proper'. This suggests that 'appropriate me asures' are those that are suitable for 
achieving their purpose."850   
7.487  Along the same lines, the Panel in EC – Tube or Pipe Fittings  considered that: 
"The ordinary meaning of the term 'appr opriate' refers to something which is 
'especially suitable or fitting'.  'Suitable', in  turn, is defined as 'fitted for or appropriate 
to a purpose, occasion…' or 'adapted to a use or purpose'.  'Fitting' is defined as 'of a 
kind appropriate to the situa tion'.  ... The term is consis tent with an intent not to 
prejudge what the circumstances might be in the context of a given case.  It is 
necessary for such appropriateness to be j udged on a case by case basis ...  There is an 
element of flexibility, in that there are no predetermined rigid factors, indices, levels 
or requirements."851 
7.488  More recently, in US — Anti-Dumping and Countervailing Duties (China) , the Appellate 
Body relied on the same dictionary definitions in the context of interpreting the term "appropriate  
amounts" in Article 19.3 of the SCM Agreement : 
"Beginning with the term "appropriate am ounts", we note that relevant dictionary 
definitions of the term "appropriate" include  "proper", "fitting" and "specially suitable 
(for, to )".852  These definitions suggest that what is "appropriate" is not an 
autonomous or absolute standard, but rath er something that must be assessed by 
reference or in relation to something else."853   
7.489  We would also observe that in EC – Sardines , the Appellate Body agreed with the panel that 
the term "inappropriate" in the context of Article 2.4854 of the TBT Agreement  "refers to something 
which is not 'specially suitable', 'proper', or 'fitti ng'", and that the question of appropriateness relates 
more to the  nature   of the means employed".855 
7.490  With regard to the burden of proof, we consid er that where a claim under Article 2.8 of the 
TBT Agreement  is made, it is the complaining party that carries the burden of demonstrating that it 
would be "appropriate" (i.e., "prope r", "fitting", and "suitable") to specify a particular technical 
regulation in terms of "performance",  rather than in terms of design or descriptive characteristics.  
This approach is consistent with the general prin ciples governing the burden of proof in WTO dispute 
settlement proceedings.856  It is also consistent with the Appella te Body's analysis of the terms "except 
                                                      
850 Panel Report, Mexico – Telecoms , para. 7.265 (citing The Shorter Oxford English Dictionary , 
3rd edition, (Clarendon Press, 1990), p. 94). 
851 Panel Report, EC – Tube or Pipe Fittings , para. 7.240 (citing Webster's New Encyclopaedic 
Dictionary (1994) and The New Shorter Oxford English Dictionary  (1993). 
852 (footnote original)  Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford 
University Press, 2007), Vol. 1, p. 106. 
853 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China) , para. 552. 
854 Article 2.4 of the TBT Agreement  reads:  
"Where technical regulations are required and re levant international standards exist or their 
completion is imminent, Members shall use them, or the relevant parts of them, as a basis for 
their technical regulations except when  such international standards or relevant parts would be 
an ineffective or inappropriate means for the fulfilment of the legitimate objectives pursued, 
for instance because of fundam ental climatic or geographi cal factors or fundamental 
technological problems." (emphasis added) 
855 Appellate Body Report, EC – Sardines , para. 285. 
856 Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, 323 at 335. WT/DS406/R 
Page 140 
 
 
 when ... inappropriate", in the context of the obligation in Article 2.4 of the TBT Agreement , in EC – 
Sardines .857  We do not understand Indonesia to suggest otherwise.858   
7.491  Based on the foregoing, we consider that the rele vant question before us  is whether Indonesia 
has demonstrated that it would be "proper", "fitti ng", and "suitable" to formulate the technical 
regulation in Section 907(a)(1)(A) in terms of "performance".  
7.492  Indonesia seeks to discharge its burden by asser ting that there is an established process for 
determining the thresholds at whic h flavours can be detected, set forth in "ASTM E679 - 04 "Standard 
Practice for Determination of Odor and T aste Thresholds By a Forced-Choice Ascending 
Concentration Series Method of Limits".859  Indonesia argues that a "performance" standard could use 
this established method to determine the concentrations  of flavours that reach a threshold where they 
are recognizable by taste and odour and are, thus, "characterizing".860     
7.493  The Panel agrees with the United States that th e standard referred to by Indonesia does not 
demonstrate that the technical regulation set forth Section 907(a)(1)(A) coul d be written in terms of 
"performance", let alone that it would be "appropriate" to do so.861  Leaving aside the question of 
whether the standard referred to could be applied to cigarettes862, it merely purports to provide a 
particular means of testing for flavour levels.  We agree with the United States that an example of a 
performance requirement would be a technical re gulation for chairs, for example, that set a 
requirement that the chair must support a person of at  least 130 kilograms, rather than in terms of the 
components of the chair ( i.e., if made of wood then the wood mu st be of a certain thickness and the 
nails must be of a certain length).  We also agree with the United States that, rather than transforming 
the standard in Section 907(a)(1)(A) from one based  on "design or descriptive" characteristics to one 
based on "performance", reliance on this standard refe rred to would simply provide a particular means 
of testing whether that standard is met.  We furt her agree with the United States that providing a test 
of when the standard of the measure written in descriptive terms is met does not mean that it is 
possible to put the requirement in the fundamentally  different terms of perfo rmance, nor why it would 
be "appropriate" to do so.  The standard Indonesia refers to would not be a "performance" standard 
within the meaning of Article 2.8 of the TBT Agreement  – simply put, it is not a standard as to how a 
cigarette is to perform (i.e., function863).   
7.494  The Panel takes note of Indonesia's clarification that it: 
                                                      
857 In EC – Sardines , the Appellate Body found that the co mplaining party carries the burden of 
demonstrating that the "international standard" in question was an "appropriate" means to fulfil the legitimate 
objectives pursued by the responding Member.  Appellate Body Report, EC – Sardines , paras. 269-282.  
While the obligations in Articles 2.8 and 2.4 of the TBT Agreement are obviously different from one 
another, an element that is common to both provisions is  that the two obligation are qualified in essentially the 
same way: the obligation in Article 2.8 is qualified by the terms "[w]herever appropriate", and the obligation in 
Article 2.4 is qualified by the terms "except when ... in appropriate".  These terms are interchangeable with one 
another, with the only difference being that the first is formulated in positive terms, while the second is 
formulated in negative terms.  Thus, the introductory words to Article 2.8 could be changed to read "[e]xcept 
when inappropriate, ..." without altering the meaning of the obligation set out therein.   
858 In its response to Panel question No. 4, Indonesia ag rees that it carries the burden of proof in respect 
of all of its claims under the TBT Agreement , including its claim under Article 2.8.   
859 http://www.astm.org/Standards/E679.htm   (Exhibit IND-70). 
860 Indonesia's response to Panel question No. 64, para. 132; Indonesia's second written submission, 
para. 149. 
861 United States' response to Panel question No. 111, paras. 113-116. 
862 United States' response to Panel question No. 111, para. 114; Indonesia's comments on the 
United States' response to Panel question No. 111, para. 72. 
863 The Panel notes that the Spanish and French  versions of Article 2.8 use the terms " en función de las 
propiedades de uso y empleo de los productos " and " en fonction des propriétés d'emploi du produit ".    WT/DS406/R 
 Page 141 
 
 
 "... does not propose simply to test whether the standard in [Section 907(a)(1)(A)] has 
been met, as the United Stat es claims ....  Indonesia is proposing that the U.S. 
government could require cigarette manufacturers to use the testing method articulated in ASTM E679 to identify the sp ecific threshold at wh ich a specific flavor 
used in a cigarette become recognizable in a cigarette and, thus, 'characterizing.'  For 
example if vanilla were identifiable in the t aste or aroma of cigarette smoke at a level 
of 'X,' then [Section 907(a)(1)(A)] would ba n cigarettes containing vanilla in levels 
greater than 'X'.  This would be complete ly consistent with the definition of  a 
'performance requirement' articulated by th e United States ... since it would indicate 
clearly to manufacturers how a cigarette must perform with respect to flavor in order 
to be allowed in the U.S. market."
864   
7.495  However, in the Panel's view, this response is simply a reiteration of Indonesia's argument 
that Article 2.8 of the TBT Agreement  requires Members to provide "a certain level of specificity" in 
their technical regulations865, and that Section 907(a)(1)(A) "lacks the specificity required" by the 
TBT Agreement .866  For the reasons already set forth above, the Panel does not agree with this 
interpretation of Article 2.8.  
7.496  We further observe that, insofar as Indonesia is arguing that (i) there is a relevant 
international standard in existence (i.e., ASTM E679 - 04 "Standard Practice for Determination of 
Odor and Taste Thresholds By a Forced-Choice As cending Concentration Series Method of Limits") 
and that (ii) the United States should have used this  relevant international standard as a basis for its 
technical regulation, its argument actually appears to relate to Article 2.4 of the TBT Agreement .867  In 
this regard, Indonesia's claim and argument under Article 2.8 of the TBT Agreement  once again seems 
misplaced.  In making this observation, we ar e obviously not expressing any view on whether the 
United States has acted consistently with Article 2.4 given that Indonesia has made no such claim.   
7.497  For these reasons, the Panel concludes that Indon esia has not demonstrated that it would be 
"appropriate" to formulate the technical regulation in Section 907(a)(1)(A) in terms of "performance". 
(e) Conclusion 
7.498  For these reasons, the Panel finds that In donesia has failed to demonstrate that 
Section 907(a)(1)(A) is inconsiste nt with Article 2.8 of the TBT Agreement .   
I. WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.10  OF THE 
TBT AGREEMENT  
1. Arguments of the parties 
7.499  Indonesia  claims that, if the United States believed there was a justification for not following 
the procedures in Article 2.9, the United States violated Article 2.10 of the TBT Agreement  because it 
                                                      
864 Indonesia's comments on the United States' response to Panel question No. 111, para. 73. 
865 Indonesia's first written submission, para. 134. 
866 Indonesia's first written submission, para. 10.   
867 Article 2.4 of the TBT Agreement  reads: 
"Where technical regulations are required and re levant international standards exist or their 
completion is imminent, Members shall use them, or the relevant parts of them, as a basis for 
their technical regulations except when such international standards or relevant parts would be 
an ineffective or inappropriate means for the fu lfilment of the legitimate objectives pursued, 
for instance because of fundam ental climatic or geographi cal factors or fundamental 
technological problems." WT/DS406/R 
Page 142 
 
 
 did not provide the Secretariat with the notification of  the measure and the urgent nature of the alleged 
problem.868  Indonesia argues that the United States c oncedes that none of the urgent circumstances 
listed under Article 2.10 of the TBT Agreement  surrounded the adoption of Section 907(a)(1)(A).869 
7.500  The United States  has not put forward any arguments to contest Indonesia's claim under 
Article 2.10 of the TBT Agreement .  In response to a question from the Panel, the United States 
confirmed that it did not notify Section 907(a)(1)(A) to the WTO Secretariat pursuant to 
Article 2.10.1 of the TBT Agreement .870 
2. Analysis by the Panel 
(a) Introduction 
7.501  As explained in Section VII.B above, we unders tand that Indonesia only claims a violation of 
Article 2.10 of the TBT Agreement  to the extent that the United States would invoke this provision as 
a defence to the alleged violation of Article 2.9 of the TBT Agreement .871  To our understanding, the 
United States has not done so. 
7.502  We note that the obligations under Article 2.10 of the TBT Agreement  are only applicable 
when a Member omitted  the steps enumerated in Article 2.9 of the TBT Agreement  because "urgent 
problems of safety, health, environmental protection or national security arise or threaten to arise".  In 
our view, the fact that Article 2.10 of the TBT Agreement only applies when a Member is departing 
from the general obligations established in Article 2.9 of the TBT Agreement entails that these two 
provisions have two distinct and separate scop es.  Indeed, we see no situation in which a 
WTO Member's actions would fall within the scope of  both obligations at the same time.  Either the 
Member in question follows the genera l requirements under Article 2.9 of the TBT Agreement , or it 
decides to omit those requirements owing to any of the listed "urgent problems" described in 
Article 2.10 of the TBT Agreement . 
7.503  Bearing in mind our mandate to make an objective assessment of the matter before us 
pursuant to Article 11 of the DSU and the impact that findings under Article 2.10 of the 
TBT Agreement would have on the applicability of the releva nt obligations under Article 2.9 of the 
TBT Agreement , we will examine whether the conditions of  urgency described in Article 2.10 are 
present in this dispute.  If we find that these conditio ns are not present, we will continue and examine 
Indonesia's claims under Articles 2.9.2 and 2.9.3 of the TBT Agreement . 
(b) The legal provision at issue  
7.504  Article 2.10 of the TBT Agreement  reads as follows: 
"Subject to the provisions in the lead-in to paragraph 9, where urgent problems of 
safety, health, environmental protection or national security arise or threaten to arise 
for a Member, that Member may omit such of the steps enumerated in paragraph 9 as it finds necessary, provided that the Member , upon adoption of a technical regulation, 
shall:  
2.10.1 notify immediately other Members through the Secretariat of the particular 
technical regulation and the products cove red, with a brief indication of the 
                                                      
868 Indonesia's first written submission, para. 142. 
869 Indonesia's second written submission, para. 151. 
870 United States' response to Panel question No. 71, para. 150. 
871 WT/DS406/2, p. 2;  Indonesia's first written submission, para. 142.  WT/DS406/R 
 Page 143 
 
 
 objective and the rationale of the techni cal regulation, including the nature of 
the urgent problems; 
2.10.2 upon request, provide other Members with copies of the technical regulation; 2.10.3 without discrimination, allow other Members to present their comments in 
writing, discuss these comments upon request, and take these written 
comments and the results of these discussions into account." 
7.505  Accordingly, Article 2.10 of the TBT Agreement allows WTO Members to omit the 
requirements imposed by Article 2.9 of the TBT Agreement with respect to proposed technical 
regulations, where certain urgent problems arise or threaten to arise.  We understand Indonesia's claim 
to be restricted to an alleged failure to comply  with the notification requirement under Article 2.10.1 
of the TBT Agreement , and not to the other obligations embodied in Articles 2.10.2 and 2.10.3 of the 
TBT Agreement .
872 
7.506  A threshold matter to establish the applicati on of the notification obligation imposed by 
Article 2.10.1 of the TBT Agreement is therefore whether urgent problems of safety, health, 
environmental protection or national security arise or threaten to arise in respect of the adoption of 
Section 907(a)(1)(A).  Indonesia claims that the Un ited States has conceded that none of the urgent 
circumstances listed under Article 2.10 of the TBT Agreement  surrounded the adoption of 
Section 907(a)(1)(A).873  We note, however, that the United States has kept silent in this respect and, 
in response to a question from the Panel, si mply confirmed that it had not notified 
Section 907(a)(1)(A) to other Members through the WTO Secretariat pursuant to Article 2.10.1 of the TBT Agreement .
874 
(c) Conclusion 
7.507  In the absence of any evidence or argument that  such urgent problems of safety, health, 
environmental protection or national security ar ose or threatened to arise upon adoption of 
Section 907(a)(1)(A), we can only conclude that these  urgent circumstances were not present and that, 
accordingly, Article 2.10 of the TBT Agreement  would not be applicable to this dispute.  The Panel 
therefore refrains from further examining Indonesia's claim under Article 2.10 of the TBT Agreement  
and will proceed to examine Indonesia's claims under Articles 2.9.2 and 2.9.3 of the TBT Agreement . 
J. WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLES  2.9.2  AND 2.9.3  
OF THE TBT AGREEMENT  
1. Arguments of the parties 
7.508  Indonesia  claims that the United States failed to comply with its obligations under 
Articles 2.9.2 and 2.9.3 of the TBT Agreement .875  It argues that, before adopting 
Section 907(a)(1)(A), the United States was required to  follow the procedures set out in Article 2.9 of 
the TBT Agreement .876  It considers that those procedures were triggered because: (i) there are no 
relevant international standards for flavourings in cigarettes;  and (ii) Section 907(a)(1)(A) has had a 
significant effect on the trade of Indonesia. 877 
                                                      
872 Indonesia's first written submission, para. 142. 
873 Indonesia's second written submission, para. 151. 
874 United States' response to Panel question No. 71, para. 150. 
875 Indonesia's first written submission, para. 140. 
876 Indonesia's first written submission, para. 139. 
877 Indonesia's first written submission, para. 139. WT/DS406/R 
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 7.509  In its interpretation of the term "significan t effect on trade" under Article 2.9.2 of the 
TBT Agreement , Indonesia relies on a recommendation adopted by the TBT Committee concerning 
this provision.  This recommendation establishes that  Members should consider factors, such as "the 
value or other importance of imports in resp ect of the importing and/or exporting Members 
concerned, whether from other Members individually or collectively, the potential growth of such 
imports, and difficulties for producers in other Members to comply with proposed technical 
regulations".878  Indonesia notes that the recommendation adopted by the TBT Committee also 
provides that "[t]he concept of a significant eff ect on trade of other Members should include both 
import-enhancing and import-reducing effects on the trade of other Members, as long as such effects 
are significant".879 
7.510  Indonesia submits that given that virtually all cl ove cigarettes sold in the United States were 
imported from Indonesia, the United States was well aware of the signi ficant effect that 
Section 907(a)(1)(A) could have on Indonesia's trade.880  Thus, Indonesia argues, the United States 
was obliged to follow the procedures in Ar ticle 2.9 before adop ting Section 907(a)(1)(A) 881, in 
particular the obligations set forth in Articles 2.9.2 and 2.9.3 of the TBT Agreement .882 
7.511  Indonesia notes that according to the TBT Committee recommendation, a notification under 
Article 2.9.2 "should be made when a draft with the complete text of a proposed regulation or 
procedures for assessment of conformity is availa ble and when amendments can still be introduced 
and taken into account".883  Indonesia claims that the United Stat es failed to provide a notification to 
the TBT Committee of the products covered by Section 907(a)(1)(A) during the time period when 
amendments to the FSPTCA or the implementing regula tions could have been introduced (i.e., either 
during the period after the FSPTCA was introduced and before its passage by the U.S. Congress, or 
when the FDA published its request for comments on the implementation of the FSPTCA884).885 
7.512  Regarding Article 2.9.3, Indonesia  claims that the United States acted inconsistently with its 
obligations under this provision by failing to resp ond to Indonesia's questions regarding particular 
aspects of Section 907(a)(1)(A).886 
7.513  According to the United States , the term "significant effect on trade" under Article 2.9 of the 
TBT Agreement  does not require that a large amount of trade be affected before Article 2.9 is 
triggered.  Instead, the United States contends that  the term "significant effect" encompasses all non 
de minimis effects on trade.887 
                                                      
878 Indonesia's response to Panel question No. 69, referring to TBT Committee, Decisions and 
Recommendations Adopted by the TBT Committee since 1 January 1995, G/TBT/1/Rev.9, 8 September 2008, 
p. 20. 
879 Indonesia's response to Panel question No. 69, referring to TBT Committee, Decisions and 
Recommendations Adopted by the TBT Committee since 1 January 1995, G/TBT/1/Rev.9, 8 September 2008, 
p. 20. 
880 Indonesia's first written submission, para. 139. 
881 Indonesia's first written submission, para. 139. 
882 Indonesia's first written submission, para.  140 
883 Indonesia's first written submission, para. 140, referring to TBT Committee, Decisions and 
Recommendations Adopted by the TBT Committee since 1 January 1995, G/TBT/1/Rev.8, 23 May 2002, p. 15. 
884 Exhibit IND-42. 
885 Indonesia's first written submission, para. 140. 
886 Indonesia's first written submission, para. 140.  Indonesia's questions were circulated to WTO 
Members through document G/TBT/W/323. 
887 United States' response to Panel question No. 69.  WT/DS406/R 
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 7.514  In response to a question from th e Panel, the United States explains that it did not notify 
Section 907(a)(1)(A) to the WTO Secretariat pursuant to Article 2.9.2 of the TBT Agreement .888 
7.515  The United States contends, however, that  all relevant information relating to 
Section 907(a)(1)(A) has always been publicly availa ble, and that Indonesia did in fact provide input 
in the legislative process.889 
7.516  The United States further argues that it is a l eader in supporting transparency among the WTO 
membership.  It submits that it has notified 589 m easures to the TBT Committee  since the creation of 
the WTO (80 measures, in 2010 alone).  This, acco rding to the United States, is in contrast to 
Indonesia which appears to have notified 46 measures in total and only 14 measures in 2010.  Finally, 
according to the United States, Indonesia has recently  failed to notify to the TBT Committee a number 
of implemented measures.890 
2. Analysis by the Panel 
(a) Introduction 
7.517  The question before the Panel is whether the Un ited States has acted inconsistently with its 
obligations under Articles 2.9.2 and 2.9.3 of the TBT Agreement .891   In particular: (i) whether the 
United States failed to notify the product covera ge, the objective and the rationale of draft 
Section 907(a)(1)(A), as required by Article 2.9.2 of the TBT Agreement ;  and (ii) whether the 
United States failed to provide particulars or copi es of draft Section 907(a)(1)(A), in accordance with 
Article 2.9.3 of the TBT Agreement . 
7.518  We note that, in its Panel Request, Indonesia brought claims under Articles 2.9.1, 2.9.2, 2.9.3 
and 2.9.4 of the TBT Agreement , but subsequently only presented arguments and evidence with 
respect to its claims under Articles 2.9.2 and 2.9. 3.  We therefore understand that Indonesia decided 
not to pursue its claims under Articles 2.9.1 and 2.9.4 of the TBT Agreement  and we will thus not 
examine them.892 
7.519  We have decided to address both claims under th e same section of this Report, following the 
structure of the argumentation put forward by the parties and that of the provision itself.   
(b) The legal provisions at issue 
7.520  Article 2.9 of the TBT Agreement  reads as follows: 
"Whenever a relevant interna tional standard does not exist or the technical content of 
a proposed technical regulation is not in accordance with the technical content of 
relevant international standards, and if th e technical regulation may have a significant 
effect on trade of other Members, Members shall: 
                                                      
888 United States' response to Panel question No. 71. 
889 United States' first written submission, para. 294. 
890 United States' first written submission, para. 295. 
891 Indonesia's first written submission, para. 140. 
892 We note that the panel in India – Additional Import Duties found that the United States had 
abandoned its claim under Article III:4 of the GATT 1994, which appeared in its panel request, because the 
United States had made no reference, either explicitly or  implicitly, to this claim in its submissions.   Panel 
Report, India – Additional Import Duties , paras. 7.402-7.405.  See also the findings of the panel in Egypt – Steel 
Rebar , whereby Turkey was found to have abandoned its claim under Article X:3 of the GATT 1994, which 
also appeared in its panel request but had not been argued by Turkey in any of its submissions.  Panel Report, 
Egypt – Steel Rebar , para. 7.30. WT/DS406/R 
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 2.9.1 ...  
2.9.2 notify other Members through the Secretariat of the products to be covered 
by the proposed technical regulation, together with a brief indication of its objective and rationale. Such notifications shall take place at an early 
appropriate stage, when amendments  can still be introduced and comments 
taken into account;  
2.9.3 upon request, provide to other Member s particulars or copies of the proposed 
technical regulation and, whenever possible, identify the parts which in substance deviate from relevant  international standards; 
2.9.4 …"  
7.521  We note that, pursuant to its introductory para graph, Article 2.9 would only apply where:  
(i) no relevant international standard  exists or the technical content of a proposed technical regulation 
is not in accordance with the technical content of the relevant international standard;  and (ii) a 
technical regulation may have a significant effect on trade of other Members. 
(c) Conditions for the application of Article 2.9 of the TBT Agreement  
7.522  Accordingly, before embarking on an analysis of whether the United States has failed to 
comply with the relevant obligations under Articles 2.9.2 and 2.9.3 of the TBT Agreement , we shall 
examine whether the conditions for the application of the obligations embodied in those provisions 
are present in this case.  We shall first exam ine whether a relevant international standard on 
flavourings in cigarettes exists and, if so, whet her Section 907(a)(1)(A) is in accordance with the 
technical content of such an internationa l standard.  We will then examine whether 
Section 907(a)(1)(A) may have a significant effect on trade of other Members, in particular, on 
Indonesia's trade. 
(i) First condition: absence of a relevant international standard, or a proposed technical 
regulation not in accordance with a relevant international standard 
7.523  As explained above, the first condition for the application of the obligations set out in 
Article 2.9 is either the absence of a relevant international standard; or if  this were to exist, the lack of 
concordance between the technical content of a proposed technical regulation with the technical 
content of that relevant international standard. 
7.524  Indonesia submits that there are no relevant international standards for flavourings in 
cigarettes.  In response to a question from the Pane l, Indonesia clarifies that the existing standards for 
cigarettes maintained by the International Orga nization for Standardization ("ISO") do not make 
distinctions among flavours of cigarettes.
893  The United States agrees that there are no relevant 
international standards applicable in the present case.894 
7.525  In light of the above, we find that the first condition set out in Article 2.9 of the 
TBT Agreement  for the application of the obligations therein is fulfilled. 
                                                      
893 Indonesia's first written submission, para. 132 (E xhibit IND-40);  Indonesia's response to Panel 
question No. 59. 
894 United States' response to Panel question No. 59.  WT/DS406/R 
 Page 147 
 
 
 (ii) Second condition:  whether the technical regula tion may have a significant effect on trade of 
other Members 
7.526  The second condition imposed by Article 2.9 of the TBT Agreement  is that the technical 
regulation "may have a significant effect on trade of other Members". 
7.527  In this respect, Indonesia argues that Secti on 907(a)(1)(A) has had a significant effect on its 
trade with the United States because approxima tely 6 million Indonesians depend directly and 
indirectly on the production of cigarettes and the growing of tobacco.895  Indonesia further submits 
that, in 2008, its exports of clove cigarettes to the United States amounted to approximately 
USD 15 million.896 
7.528  The United States has not contested that Section 907(a)(1)(A) has a significant impact on 
Indonesia's trade. 
7.529  We observe that the wording of this second c ondition for the applicability of Article 2.9 is 
that the technical regulation " may have a significant effect on trade of other Members" as opposed to 
"will have a significant effect" or "has a significant e ffect".  "May" is used to express a possibility as 
opposed to a certainty.897  We therefore interpret these terms to mean that Article 2.9 of the 
TBT Agreement  does not require proving actual trade eff ects.  Rather, this condition encompasses 
situations in which a technical regulation may have a significant effect on trade of other Members. 
7.530  We further observe that Article 2.9 of the TBT Agreement  refers to a "significant" effect.  
Significant means "sufficiently great or important to be worthy of attention; noteworthy".898  We thus 
agree with the United States that a "significant effect" encompasses all non de minimis  effects on 
trade.899  In this respect, we observe that Indonesia presented evidence before this Panel that shows 
that the effect of Section 907(a)(1)(A) is substan tial and noteworthy on its clove cigarettes trade with 
the United States.  In particular, the data provided by Indonesia shows that the vast majority of clove 
cigarettes imported into the United States come from Indonesia.900  Indonesia has also shown that the 
value of such imports amounted to approximately USD 15 million in 2008.901  We also observe that 
Indonesia has argued that it has exported clove cigarettes to the United States for more than 
40 years.902 
7.531  Since Section 907(a)(1)(A) prohibits the importation of clove cigarettes into the 
United States, we can only conclude that the impa ct of Section 907(a)(1)(A) on Indonesia's trade is 
significant within the terms of Article 2.9 of the TBT Agreement .  Accordingly, we find that the 
                                                      
895 Indonesia's first written submission, para. 129;  Indonesia's oral statement at the first substantive 
meeting , para. 4;  Indonesia's response to Panel question No. 69. 
896 Indonesia's first written submission, paras. 29 and 40. 
897 Oxford English Dictionary Online,  accessed on 30 April 2011.  See also Shorter Oxford English 
Dictionary , 5th edn., W.R. Trumble, A. Stevenson (eds.) (Oxford University Press, 2002), Vol. I, p. 1725, 
defining "may" to mean, among other things, "have the possibility, opportunity, or suitable conditions to; be 
likely to"; Webster's Online Dictionary , accessed on 30 April 2011, defining "may" to mean, among other 
things, "used to indicate possibility or probability". 
898 Oxford English Dictionary Online,  accessed on 30 April 2011.  See also Shorter Oxford English 
Dictionary , 5th edn., W.R. Trumble, A. Stevenson (eds.) (Oxford University Press, 2002), Vol. II, p. 2835, 
defining "significant" to mean, among other things, "[i]mportant, notable; consequential"; Webster's Online 
Dictionary , accessed on 30 April 2011, defining "significant" to mean, among other thin gs, "of a noticeably or 
measurably large amount". 
899 United States' response to Panel question No. 69. 
900 Indonesia's first written submission, paras. 18 and 139;  Indonesia's response to Panel question 
No. 48;  United States' first written submission, para. 35. 
901 Exhibits IND-68, IND-102;  US-100, US-134. 
902 Indonesia's first written submission, para. 5. WT/DS406/R 
Page 148 
 
 
 second condition for the application of the oblig ations in Articles 2.9.2 and 2.9.3 of the 
TBT Agreement  is also fulfilled. 
7.532  We now turn to examine Indonesia's clai ms under Articles 2.9.2 and 2.9.3 of the 
TBT Agreement . 
(d) Article 2.9.2:  Obligation to notify the proposed technical regulation 
7.533  We recall that Article 2.9.2 of the TBT Agreement obliges Members to notify other Members 
through the WTO Secretariat of the products to be covered by the proposed technical regulation, 
together with a brief indication of its objective and rationale.  Such notifications must take place at an 
early appropriate stage, when amendments can s till be introduced and comments taken into account.   
7.534  The obligation in Article 2.9.2 was d escribed by the Appellate Body in EC – Asbestos as 
requiring "identification of the product coverage of a technical regulation".903 
7.535  We note that Article 2.9.2, unlike Article 2.9.3, does not link the obligation to notify to the 
request of a Member. 
7.536  We also note that Article 2.9.2 of the TBT Agreement  applies to "proposed" technical 
regulations.  Along the same lines, the French version of Article 2.9.2 of the TBT Agreement  uses the 
terms "le règlement technique projeté ", and the Spanish version of Article 2.92 of the TBT Agreement  
uses the terms "el reglamento técnico en proyecto ".  "To propose" can be defined as "to put forward [a 
technical regulation] for consideration by others".904  Article 2.9.2 of the TBT Agreement  therefore 
applies to what we would refer to as legal instru ments falling within the definition of a technical 
regulation that would still be in "draft" form, i.e., not yet adopted or in force.  The language of the 
second sentence of Article 2.9.2 of the TBT Agreement  reinforces this conclusion as it indicates that 
the notification must take place "at an early ap propriate stage, when amendments can still be 
introduced and comments taken into account".  Theref ore, since the provision foresees the possibility 
of amendments and comments, the technical regulati on at issue cannot have been enacted or adopted 
before the notification takes place.  In our view, Artic le 2.9.2 (as it is also the case with Article 5.6.2 
for conformity assessment procedures) is at the core of the TBT Agreement 's transparency provisions: 
the very purpose of the notification is to prov ide opportunity for comment before the proposed 
measure enters into force, when there is time fo r changes to be made be fore "it is too late". 
7.537  We find further guidance and support for our interpretation in a recommendation from the 
TBT Committee regarding the timing of notifications: 
"When implementing the provisions of Articles 2.9.2, 3.2 (in relation to 
Article 2.9.2), 5.6.2 and 7.2 (in relation to  Article 5.6.2), a notification should be 
                                                      
903 In EC – Asbestos  the Appellate Body found that: 
"A 'technical regulation' must, of course, be applicable to an identifiable product, or group of 
products. Otherwise, enforcement of the regula tion will, in practical terms, be impossible. 
This consideration also underlies the form al obligation, in Article 2.9.2 of the TBT Agreement , 
for Members to notify other Members, through the WTO Secretariat, 'o f the products to be 
covered' by a proposed 'technical regulation'. (emphasis added) Clearly, compliance with this 
obligation requires identification of the produc t coverage of a technical regulation. ...." 
Appellate Body Report, EC – Asbestos , para. 70. 
904 Oxford English Dictionary Online , accessed on 30 April 2011.  See also Shorter Oxford English 
Dictionary , 5th edn., W.R. Trumble, A. Stevenson (eds.) (Oxford University Press, 2002), Vol. II, p. 2371, 
defining "proposed" to mean, among other things, "put forward for consideration or action"; Webster's Online 
Dictionary , accessed on 30 April 2011, defining "proposed" to mean, among other things, "to set forth for 
acceptance or rejection".  WT/DS406/R 
 Page 149 
 
 
 made when a draft with the complete te xt of a proposed technical regulation or 
procedures for assessment of conformity is available and when amendments can still 
be introduced and taken into account."905 
7.538  We shall therefore examine whether the United States notified the pr oduct coverage, as well 
as the objective and rationale of Section 907(a)(1)(A) at an early appropriate stage, i.e., when it was in 
draft form, before its adoption, when amendments  could still be introduced and comments taken into 
account. 
7.539  As explained above, Indonesia claims that the United States failed to notify Indonesia through 
the WTO Secretariat of the product coverage of S ection 907(a)(1)(A).  As support for its allegation, 
Indonesia points the Panel to "[t]he TBT Informat ion Management System, a searchable database 
containing all notifications related to the TBT Agreement, [that] shows, as of the date of [Indonesia's 
first written] submission, no notifications submitted by the United States regarding 
[Section 907(a)(1)(A)]".906 907 
7.540  The United States has not rebutted Indonesia's assertion.  To the contrary, in response to a 
question from the Panel, the United States acknowle dges not notifying Section 907(a)(1)(A) through 
the WTO Secretariat.908  In its defence, the United States argues that all relevant information has 
always been publicly available, that Indonesia di d in fact provide input in the legislative process909, 
and that the United States is a "leader in s upporting transparency among the WTO membership".910 
7.541  In our view, regardless of the merits of the United States' arguments, the obligation set out in 
Article 2.9.2 of the TBT Agreement  is straightforward:  WTO Members must notify other Members 
through the WTO Secretariat of the product coverage , the objective and the rationale of their proposed 
technical regulations, at an early appropriate stage.  The United States has failed to do so in respect of 
Section 907(a)(1)(A). 
7.542  Accordingly, in the absence of a notification to  WTO Members through the Secretariat of 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 early appropriate stag e, i.e., when amendments and comments were still 
possible, the Panel finds that the United States h as failed to comply with  its obligations under 
Article 2.9.2 of the TBT Agreement . 
(e) Article 2.9.3:  Obligation to provide particular s or copies of the proposed technical regulation 
7.543  We recall that Article 2.9.3 of the TBT Agreement obliges Members, upon request from 
another Member, to provide particulars or copies of a proposed technical regulation.  This provision 
also requires that, whenever necessary, the regula ting Member identify the parts that in substance 
deviate from relevant international standards.  Th is last obligation would have no bearing in the 
present case because, as we explained above911, there are no relevant international standards on 
flavourings of cigarettes. 
7.544  Indonesia claims that the Unite d States acted inconsistently with Article 2.9.3 of the 
TBT Agreement by failing to respond to Indonesia's ques tions seeking explanation of particular 
                                                      
905 G/TBT/1/Rev.9, p. 16. 
906 Indonesia's first written submission is dated 20 October 2010. 
907 Indonesia's first written submission, footnote 160. 
908 United States' response to Panel question No. 71. 
909 United States' first written submission, para. 294;  Exhibit US-81. 
910 United States' first written submission, para. 295. 
911 See paras. 7.523-7.525. WT/DS406/R 
Page 150 
 
 
 aspects of Section 907(a)(1)(A) outlined in document G/TBT/W/323.912  The United States does not 
directly respond to Indonesia's claim under Article 2.9.3 of the TBT Agreement .913 
7.545  We note that, unlike the case of Article 2.9.2 of the TBT Agreement , the obligation to provide 
particulars or copies of a proposed technical  regulation imposed by Article 2.9.3 of the 
TBT Agreement is only triggered by the request of a Member.  However, as is the case with 
Article 2.9.2 of the TBT Agreement , such an obligation is limited to "proposed technical regulations", 
i.e.,  technical regulations which are still in draft fo rm and thus, as explained above, amendments can 
still be introduced and comments taken into account. 
7.546  Therefore, in order for the United States to have been obliged under Article 2.9.3 of the 
TBT Agreement to provide particulars or copies of Section 907(a)(1)(A) to Indonesia, Indonesia must 
have requested the United States to do so when Section 907(a)(1)(A) was still in draft form. 
7.547  As explained, Indonesia claims that its request pursuant to Article 2.9.3 of the TBT Agreement 
was embodied in its questions posed to the United States through the TBT Committee and recorded in 
document G/TBT/W/323.  We note that Indonesia's communication was dated 17 August 2009914, 
i.e., almost two months after the enactment of S ection 907(a)(1)(A), on 20 June 2009.  The questions 
posed by Indonesia to the United States in document G/TBT/W/323 could thus not relate to a 
"proposed" technical regulation, but rather to a technical regulation which was already enacted.  
Therefore, even if Indonesia's questions in doc ument G/TBT/W/323 were to be considered as a 
request for particulars within the terms of Article 2.9.3 of the TBT Agreement, those questions did not 
regard a proposed technical regulation. 
7.548  We note that Indonesia has not provided this Pa nel with any further ev idence that could prove 
that it had requested the United States to provide pa rticulars or copies of Section 907(a)(1)(A) when it 
was still in draft form. 
7.549  Accordingly, we find that, by failing to demons trate that it had requested the United States to 
provide particulars or copies of Section 907(a)(1 )(A) while it was still in draft form, Indonesia has 
failed to demonstrate that the United States ac ted inconsistently with Article 2.9.3 of the 
TBT Agreement . 
(f) Conclusion 
7.550  By failing to notify to WTO Members through th e Secretariat the products to be covered by 
the proposed Section 907(a)(1)(A), together with a br ief indication of its objective and rationale, at an 
appropriate early stage, i.e., when amendments a nd comments were still possible, the Panel finds that 
the United States has failed to comply with its obligations under Article 2.9.2 of the TBT Agreement . 
7.551  Further, for the reasons set forth above, we fi nd that Indonesia has failed to demonstrate that 
the United States acted inconsistently with Article 2.9.3 of the TBT Agreement . 
                                                      
912 Indonesia's first written submission, para. 140.  Indonesia's questions were circulated to WTO 
Members through document G/TBT/W/323 on 20 August 2009. 
913 The United States addresses Indone sia's argument regarding the failure to respond to the questions 
in document G/TBT/W/323 in the context of Indonesia's claim under Article 2.5 of the TBT Agreement .  In that 
context, the United States argues that it had numerous exchanges on this issue with Indonesia.  In particular, the 
United States points to a bilateral discussion with Indonesia in Geneva on 27 August 2009, a discussion between 
the U.S. Trade Representative Ronald Kirk and an Indone sia representative at a WTO Ministerial in India, and a 
deliberation at the TBT Committee meeting of November 2009.  United States' first written submission, 
para. 280. 
914 We note that Indonesia's questions were circulated to WTO Members through document 
G/TBT/W/323 on 20 August 2009.  WT/DS406/R 
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 K. WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  2.12  OF THE 
TBT A GREEMENT  
1. Arguments of the parties 
7.552  Indonesia  claims that by not allowing a reasonable interval of at least six months between the 
publication and the entry into force of Section 907(a )(1)(A), the United States violated its obligations 
under Article 2.12 of the TBT Agreement . 915  Indonesia is of the view th at the right incorporated in 
Article 2.12 of the TBT Agreement  should be extended, in partic ular, in favour of developing 
countries.916 
7.553  In its first submission, Indonesia refers to a decision of the TBT Committee according to 
which the term "reasonable interval" in Article 2.12 of the TBT Agreement  "shall be understood to 
mean normally a period of not less than 6 months, ex cept when this would be ineffective in fulfilling 
the legitimate objectives pursued".917  Later, Indonesia explains th at the TBT Committee took note of 
the Doha Ministerial Decision on Implementation -related Issues and Concerns of 14 November 2001 
("the Doha Ministerial Decision")918, and defined a "reasonable interval" as at least six months.919  
Indonesia argues that this interpretation of the reas onable period is legally bi nding on Members, given 
that this Ministerial Decision is an interp retative decision under Article IX:2 of the 
WTO Agreement .920  Indonesia notes that the FSPTCA was signed on 22 June 2009 and 
Section 907(a)(1)(A) entered into effect 90 days later.   Indonesia submits that this period of 90 days 
falls short of the "reasonable interval" standard of six months recommended by the 
TBT Committee.921 
7.554  According to Indonesia, the "reasonable interval " standard contained in Article 2.12 of the 
TBT Agreement is specifically designed to give producers in other Members, and in particular those in 
developing countries like Indonesia, adequate time to  adapt to new technical regulations adopted by 
other Members.  Indonesia contends that the United States failed to meet this standard.922 
7.555  According to Indonesia, the United States has faile d to prove that the shorter interval applied 
was justified under any of the urgent circum stances identified in Article 2.10 of the TBT Agreement  or 
that the reasonable interval of 6 months w ould have rendered the objectives of the measure 
ineffective.923 
7.556  The United States  contends that Indonesia has failed to  show that the United States has acted 
inconsistently with Article 2.12.924  For the United States, Indonesia's argument expressing that the 
90-day period allowed by the United States was not  reasonable, under Article 2.12, is in error.925  In 
                                                      
915 Indonesia's first written submission, para. 145. 
916 Indonesia's oral statement at the first substantive meeting of the Panel, para. 176. 
917 TBT Committee, Decisions an d Recommendations Adopted by the Committee since 1 January 
1995, G/TBT/1/Rev.8, 23 May 2002, p. 30.  We note that Indonesia referred to the old version of a compilation 
of TBT decisions and recommendations.  The up-to-date version is document G/TBT/1/Rev.9, p. 20. 
918 Doha Ministerial Decision on Implementation-Related Issues and Concerns of 14 November 2001, 
WT/MIN(01)/17, para. 5.2. 
919 Indonesia's second written submission, para. 151;  Indonesia's response to Panel question No. 6, 
paras. 18, 25, 29. 
920 Indonesia's second written submission, para. 151;  Indonesia's response to Panel question No. 6, 
paras. 18, 30. 
921 Indonesia's first written submission, para. 145. 
922 Indonesia's first written submission, para. 145. 
923 Indonesia's response to Panel question No. 6, para. 25. 
924 United States' first written submission, para. 304. 
925 United States' first written submission, para. 296. WT/DS406/R 
Page 152 
 
 
 respect of Indonesia's reliance upon a TBT Committ ee decision, the United States contends that 
TBT Committee decisions are not part of the c overed agreements and do not result in mandatory 
obligations on Members.926  The United States acknowledges th at the TBT Committee decision 
referenced by Indonesia provides relevant context. 
7.557  In response to Indonesia's reliance upon the D oha Ministerial Decision, the United States 
argues that it is not an interpretation of the WTO Agreement within the meaning of Article IX:2 of the 
WTO Agreement .927  According to the United States, the Doha Ministerial Decision may, at most, be 
considered as "supplementary means of inte rpretation" under Article 32 of the VCLT.928  The 
United States thus argues that the Doha Minist erial Decision cannot be considered as a binding 
interpretation of Article 2.12 of the TBT Agreement .929 
7.558  According to the United States, given the fact  that neither the TBT Committee decision nor 
the Doha Ministerial decision binds the WTO membership, and given the qualified nature of their 
language, a panel's determination of whether a particular delay is "reas onable" must be considered on 
a case by case basis.  The United States supports its conclusion with the dictio nary definition of the 
term "reasonable," which is "in accordance with reason; not irrational or absurd."930  Thus, to 
determine whether a particular interval is reasona ble, the Panel must weigh whether the interval 
provided is within reason or whether it is irrational or absurd, a determination that depends on all of 
the facts and circumstances surroundi ng the enactment of the measure.931   
7.559  In the view of the United States, Indonesia h as not demonstrated why in the case at hand the 
"reasonable interval" should be not less than six m onths.  For to the United States, Indonesia fails to 
explain why delaying the effective date for six mont hs would be consistent with the objectives of the 
measure.932  In this regard, the United States recalls that the language of the Doha Ministerial 
Decision envisages that the "reasonable interval" shall,  in normal circumstances, be not less than six 
months.  For the United States, this means that the "reasonable interval" may be less than six 
months.933 
7.560  The United States further argues that Indonesia has adduced no evidence to suggest that the 
difference between a 90 day period and a six-m onth period had any impact on the ability of 
Indonesian producers "to adapt their products or methods of production to the requirements of the importing Member."  According to the United States , Indonesian producers have been and are able to 
market tobacco flavoured and menthol-flavoured cigare ttes in the United States' market.  However, as 
far as the United States is aware, Indonesian producer s, even 16 months after the enactment of the 
FSPTCA, have not adjusted their product lines to produce tobacco or menthol-flavoured cigarettes.  
Thus, in its view, whether the United States waited three months or six months after the measure's 
enactment to allow it to enter in to force appears not to have a ffected Indonesian producers in any 
way.
934 
                                                      
926 United States' first written submission, paras. 298- 299;  United States' response to Panel question 
No. 7, paras. 6, 8. 
927 United States' response to Panel question No. 6, para. 5.  
928 United States' response to Panel question No. 6, para . 3;  United States' oral statement at the second 
substantive meeting of the Panel, para. 103. 
929 United States' response to Panel question No. 6, para. 5. 
930 New Oxford English Dictionary , vol. 2, at 2496 (1993) (Exhibit US-82); United States' response to 
Panel question No. 6, para. 4. 
931 United States' first written submission, para. 301. 
932 United States' first written submission, para. 302; United States' oral statement at the second 
substantive meeting of the Panel, paras. 102 and 104. 
933 United States' oral statement at the second substantive meeting of the Panel, para. 104. 
934 United States' first written submission, para. 303.  WT/DS406/R 
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 2. Analysis by the Panel  
(a) Introduction 
7.561  We recall that the FSPTCA was enacted as law in the United States on 22 June 2009.  The 
measure at issue in this dispute, Section 907(a)(1)(A),  entered into force three months after the date of 
enactment of the FSPTCA.  The question before the Panel therefore is whether the United States has 
acted inconsistently with its obligations under Article 2.12 of the TBT Agreement by allowing an 
interval of three months between the enactment  of the FSPTCA and the entry into force of 
Section 907(a)(1)(A).   In particular, the main issue is whether, as Indonesia claims, Article 2.12 of the 
TBT Agreement  obliged the United States to allow as a minimum a period of six months between the 
publication and the entry into force of Section 907(a)(1)(A).   
7.562  As with other provisions in the present dispute, we face an issue of first impression since 
there are no prior Appellate Body or panel repor ts that have interpreted Article 2.12 of the 
TBT Agreement.   We shall therefore commence by examini ng the legal provision at issue to ascertain 
the applicable legal test. 
(b) The legal provision at issue 
7.563  Article 2.12 of the TBT Agreement  reads as follows: 
"Except in those urgent circumstances re ferred to in paragraph 10, Members shall 
allow a reasonable interval between the publi cation of technical regulations and their 
entry into force in order to allow time  for producers in exporting Members, and 
particularly in developing country Members,  to adapt their products or methods of 
production to the requirements of the importing Member." 
7.564  We note that this provision begins with th e exclusion from the obligation to allow a 
reasonable interval of "those urgent circumstances re ferred to in paragraph 10" .  We understand this to 
mean that the obligation to allow a reasonable interval between the publication of technical 
regulations and their entry into force would not ap ply in the event that "urgent problems of safety, 
health, environmental protec tion or national security arise or threaten to arise".935   
7.565  We recall that, in response to a question by the Panel, the United States has confirmed that it 
did not notify Section 907(a)(1)(A) to the WTO Secretariat pursuant to Article 2.10.1 of the 
TBT Agreement .936  As discussed in our findings under I ndonesia's claim of violation of Article 2.10 
of the TBT Agreement , the Panel considers that the circum stances of urgency foreseen in this 
provision were not present in this case.  He nce, the obligation in Article 2.12 of the TBT Agreement 
applies to the present dispute and thus the United States was obliged to allow a reasonable interval 
between the publication and the entry into  force of Section 907(a)(1)(A).   
7.566  Consequently, except in urgent circumstanc es as described above, Article 2.12 obliges 
("shall") Members to allow a "reasonable interval" between the publication of technical regulations 
and their entry into force.  Article 2.12 also explai ns the reason why such an interval is needed: "to 
allow time for producers in exporting Members, and particularly in developing country Members, to 
adapt their products or methods of production to  the requirements of the importing Member".   
7.567  We shall therefore examine whether the interv al allowed by the United States between the 
publication and the entry into force of Section 907(a)(1)(A) was "reasonable" within the meaning of 
                                                      
935 Article 2.10 of the TBT Agreement . 
936 United States' response to Panel question No. 71, para. 150. WT/DS406/R 
Page 154 
 
 
 Article 2.12 of the TBT Agreement .  We note that, in this respect, both parties agree that for the 
purposes of Article 2.12, the date of "publication" of Section 907(a)(1)(A) is  22 June 2009 (i.e., the 
date the FSPTCA became law), and that the date of "entry into force" is 22 September 2009 (i.e., the 
date that Section 907(a)(1)(A) took effect).937  Both parties referred to the actual interval allowed by 
the United States as a 90-day period or a three-month period.938  The Panel is therefore called upon to 
decide whether the 90-day or three-month period between the publication and the entry into force of 
Section 907(a)(1)(A) constitutes a reasonable interv al within the terms of Article 2.12 of the 
TBT Agreement .   
7.568  Concerning the interpretation of "reasonable interval", Indonesia has drawn the Panel's 
attention to a decision of the TBT Committee939 taken at its meeting of 15 March 2002, which takes 
note of paragraph 5.2 of the Doha Ministerial Decision.940  This paragraph provides as follows: 
"Subject to the conditions specified in para graph 12 of Article 2 of the Agreement on 
Technical Barriers to Trade, the phrase 'reasonable interval' shall be understood to 
mean normally a period of not less than 6 months, except when this would be ineffective in fulfilling the legitimate objectives pursued." 
7.569  We note that the parties disagree in respect of the interpretative value of the Doha Ministerial 
Decision.  Indonesia argues that the interpretation in  the Doha Ministerial Decision of the reasonable 
interval is legally binding on WTO Members becau se this Ministerial Decision is an interpretative 
decision under Article IX:2 of the WTO Agreement .
941   
7.570  The United States, on the contrary, is of the view  that the Doha Ministerial Decision is not an 
interpretation within the meaning of Article IX:2 of the WTO Agreement  because it does not purport 
to set forth an interpretation of the WTO Agreement .942  According to the United States, nothing in the 
text of the Doha Ministerial Decision makes reference to Article IX.2 of the WTO Agreement , nor 
indicates that the procedures set out in this pr ovision for adopting such  interpretations were 
followed.943  According to the United States, the Doha Ministerial Decision may, at most, be 
considered as "supplementary means of in terpretation" under Article 32 of the VCLT.944  
7.571  We note that the WTO Agreement  is categorical on who has the authority to issue 
authoritative and thus binding interpretations of th e provisions of the covered agreements.  Indeed, 
Article IX:2 of the WTO Agreement  stipulates that:  
"The Ministerial Conference and the Ge neral Council shall have the exclusive 
authority to adopt interpretations of th is Agreement and of the Multilateral Trade 
                                                      
937 In response to Panel question No. 72, the United States explained that:  
"The U.S. Congress passed the Tobacco Control Act on June 11, 2009.  The President signed 
the Act into U.S. [law] on June 22, 2009.  The Act, as signed by the President, was publicly 
available (published on the U.S. government website for legislation) as of June 22, 2009.  
September 22, 2009 is the day that section 907(a)(1)(A) took effect." 
938 Indonesia's first written submission, para. 145;  Indonesia's response to Panel question No. 2, 
para. 7, and No. 3, para. 10;  Indonesia's second writte n submission, para. 151;  United States' first written 
submission, paras. 296, 298 and 302; 
939 See footnote 917 above. 
940 See footnote 918 above. 
941 Indonesia's second written submission, para. 151;  Indonesia's response to Panel question No. 6, 
paras. 18 and 30. 
942 United States' response to Panel question No. 6, para. 5. 
943 United States' response to Panel question No. 6, para. 5. 
944 United States' response to Panel question No. 6, para . 3;  United States' oral statement at the second 
substantive meeting of the Panel, para. 103.  WT/DS406/R 
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 Agreements.  … The decision to adopt an interpretation shall be taken by a three-
fourths majority of the Members…"   
7.572  Therefore, the Ministerial Conference (and the General Council) has the exclusive authority 
to adopt interpretations of  the covered agreements.945  The Doha Ministerial Decision at issue was 
indeed adopted by consensus by the Ministerial Conference.946   
7.573  We note that the first preambular recital of the Doha Ministerial Decision indicates that the 
Ministerial Conference had decided on the matters addressed therein "having regard to", inter alia , 
Article IX of the WTO Agreement .  We observe that the Decision does not specify the paragraph of 
Article IX the Ministerial Conference had regard to, but  refers generally to that provision as a whole.  
We nevertheless note that, from the various  paragraphs of Article IX of the WTO Agreement , only 
paragraph 2 refers to interpretation. 
7.574  However, the United States argues that the Doha Ministerial Decision is not an Article IX:2 
authoritative interpretation because the procedural re quirements described therein were not followed.  
As pointed out by the United States, Article IX:2 of the WTO Agreement  envisages a preliminary 
requirement which applies in relation to the WTO Agreements incorporated in Annex 1 (including, 
the TBT Agreement ).  Specifically, when adopting an author itative interpretation under Article IX:2 of 
the WTO Agreement , the Ministerial Conference (and the General Council) shall act "on the basis of a 
recommendation by the Council overseeing the functioning of that Agreem ent".  In this respect, as the 
United States suggests, it appears that when adoptin g the Doha Ministerial Decision, the Ministerial 
Conference did not comply with the preliminary requirement under Article IX:2 of the WTO Agreement ; i.e., no recommendation was preliminarily issued by the Council for Trade in 
Goods, or the TBT Committee.
947  Indonesia disagrees and points out that the Doha Ministerial 
Decision was adopted in response to the problems raised by developing countries concerning the implementation of the WTO Agreements.
948  Indonesia thus submits th at, based on paragraph 12 of 
the Doha Ministerial Declaration949 and the preamble of the Doha Ministerial Decision, it is clear that 
the interpretation was reached on the basis of di scussions carried out within the General Council and 
the WTO subsidiary bodies.950 
7.575  It could be argued that the absence of this formal  requirement is insufficient to conclude that 
paragraph 5.2 of the Doha Ministerial Decisi on is not an authoritative interpretation under 
Article IX:2 of the WTO Agreement  given that all WTO Members meeting in a Ministerial 
Conference agreed on an interpretation of a provi sion of the WTO Agreements.  We note that the 
purpose of Article IX:2 of the WTO Agreement  is to allow the Members to clarify the meaning of 
WTO provisions.  In our view, paragraph 5.2 of the Doha Ministerial Decision meets this purpose, as 
it provides an interpretation of certain terms cont ained in WTO rules, in particular, of the phrase 
"reasonable interval" in Article 2.12 of the TBT Agreement .  This view is reinforced by the actual 
wording of paragraph 5.2 of the Doha Ministeria l Decision which provides an interpretation of the 
phrase "reasonable interval" using the term "shall be understood to mean ...".  The use of "shall" and 
not, for example, of "should" or "may" appears to  suggest that the intention of the Ministerial 
                                                      
945 We note that the Appellate Body in Japan – Alcoholic Beverages II  clarified that the adoption by the 
DSB of a panel report does not amount to a definitiv e interpretation of the GATT 1994.  According to the 
Appellate Body, this position is confirmed by the circumstance that the WTO Agreement  contemplates in 
Article IX:2 an "exclusive authority" for taking bind ing interpretations of WTO obligations, which "does not 
exist by implication or by inadvertence elsewhere".  Appellate Body Report, Japan – Alcoholic Beverages II , 
p. 13;  Appellate Body Report, US – Wool Shirts and Blouses , pp. 19-20. 
946 The Doha Ministerial Conference was held from 9 to 14 November 2001. 
947 United States' response to Panel question No. 6, para. 5. 
948 Indonesia's response to Panel question No. 6, para. 27. 
949 Doha Ministerial Declaration of 14 November 2001, WT/MIN(01)/DEC/1, para. 12. 
950 Indonesia's response to Panel question No. 6, para. 27. WT/DS406/R 
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 Conference, and thus the highest level organ of the WTO where all Members meet, was that 
paragraph 5.2 is binding.951 
7.576  Although the parties disagree on the categorization of paragraph 5.2 of the Doha Ministerial 
Decision as an authoritative interpre tation under Article IX:2 of the WTO Agreement , this Panel 
deems that it must be guided by it in its interp retation of the phrase "reasonable interval", as it was 
agreed by all WTO Members meeting in the form of  Ministerial Conference, the highest ranking body 
of the WTO.  Furthermore, the Panel is of the view that paragraph 5.2 of the Doha Ministerial 
Decision could be considered as a subsequent ag reement of the parties within the meaning of 
Article 31(3)(a) of the VCLT952, on the interpretation of "reasonabl e interval" within Article 2.12 of 
the TBT Agreement.953    
7.577  We therefore turn to the text of paragraph 5.2 of the Doha Ministerial Decision itself to 
ascertain whether it would aid this Panel in its task of deciding whether the three-month interval 
allowed by the United States between the publication and the entry into force of Section 907(a)(1)(A) 
constitutes a reasonable interval w ithin the scope of Article 2.12. 
7.578  We recall that paragraph 5.2 of the Doha Ministerial Decision provides that "the phrase 
'reasonable interval' shall be understood to mean nor mally a period of not less than 6 months, except 
when this would be ineffective in fulfilling the legitimate objectives pursued".  The Panel observes 
                                                      
951 We note that the panel in US – Lead and Bismuth II  found that "a Declaration lacks the mandatory 
authority of a Decision", being a mere "Declaration" and not a "Decision" of the Ministers. According to this 
panel, the simple recognition of the need for an action, as in a Ministerial Declara tion, does not mandate that 
action, while "[i]n a Ministerial Decision, by contrast, Ministers 'decide' that certain action shall be taken".  
Panel Report, US – Lead and Bismuth II , para. 6.17.  In US – FSC , the Appellate Body explained that GATT 
"decisions" within the meaning of Article XVI:1 of the WTO Agreement  provide "guidance" to the WTO. 
Appellate Body Report, US – FSC , para. 115. 
952 Article 31(3)(a) of the VCLT  reads as follows: "3. Ther e shall be taken into account, together with 
the context: ( a) any subsequent agreement between the parties re garding the interpretation of the treaty or the 
application of its provisions …". The Appellate Body in EC – Bananas III (Article 21.5 – Ecuador II) / EC – 
Bananas III (Article 21.5 – US) , made reference to the commentary on th e Draft Articles on the Law of Treaties 
of the International Law Commission (the "ILC"), which describes a subsequent agreement "as a further 
authentic element of interpretation to be taken into cons ideration together with the context".   The Appellate 
Body concluded that, by making reference to "authentic interpretation", "the ILC reads Article 31(3)(a) [of the 
VCLT] as referring to agreements bearing specifically u pon the interpretation of a treaty".  Report of the 
International Law Commission on the Work of its 18th Session, Geneva, 4 May-19 July 1966" (1966) II 
Yearbook of the International Law Commission 172, at 221, para. 14;  Appellate Body Report, EC – Bananas III 
(Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , para. 390. 
953 We note that the United States has put forward the argument that the Doha Ministerial Decision 
may, at most, be considered as "supplementary mean s of interpretation" under Article 32 of the VCLT 
(United States' response to Panel question No. 6, para. 3;  United States' oral statemen t at the second substantive 
meeting of the Panel, para. 103.).  Article 32 of the VCLT  reads as follows:  
"Recourse may be had to supplementary means of interpretation, including the preparatory 
work of the treaty and the circumstances of its conclusion, in order to confirm the meaning 
resulting from the application of article 31 , or to determine the meaning when the 
interpretation according to article 31: 
(a) leaves the meaning ambiguous or obscure; or  
(b) leads to a result which is manifestly absurd or unreasonable." 
We note that Article 32 of the VCLT allows a treaty interpreter to have recourse to supplementary 
means of interpretation if after applying Article 31 of the VCLT, the meaning of the term remains ambiguous or 
obscure, or leads to a result which is manifestly absurd or unreasonable.   We observe that, in the event that the 
Doha Ministerial Decision could not amount to a subsequent agreement, quod non , we could still use it to 
confirm our interpretation of the concept of reasonable  interval within the terms of Article 2.12 of the 
TBT Agreement , or even determine the meaning of that concept if the term remains ambiguous or obscure.    WT/DS406/R 
 Page 157 
 
 
 that the period of no less than six months is qua lified by the term "normally" which thus appears to 
limit the obligation to those instances that are " under normal or usual conditions; as a rule".954 
7.579  The United States argues that by qualifying the obligation with the term "normally", a 
Member is not expected to provide a six-month de lay in all instances, precisely where delaying the 
entry into force would undermine the measure' s ability to fulfil the legitimate objective.955  The 
United States further contends that, given the fact that the Doha Ministerial Decision does not bind the 
WTO membership, and given the qualified nature of its language, a panel's de termination of whether 
a particular delay is "reasonable" must be considered on a case-by-case basis.956  The United States 
further supports its conclusion by the dictionary de finition of the term "reasonable," which is "in 
accordance with reason; not irrational or absurd."957  Thus, it argues, to determine whether a particular 
interval is reasonable, the Panel must weigh whethe r the interval provided is within reason or whether 
it is irrational or absurd, a determination that  depends on all of the facts and circumstances 
surrounding the enactment of the measure.958  
7.580  We agree that the inclusion of the term "norma lly" before defining the six-month length of the 
reasonable interval qualifies the length of such an  interval.  The Panel has considered whether 
"normally" could be understood to mean "in any case other than in urgency circumstances", and has 
concluded that as a matter of textual analysis this  cannot be the case.  As explained above, the first 
sentence of Article 2.12 of the TBT Agreement  already provides that it applies "[e]xcept in those 
urgent circumstances referred to in  paragraph 10".  Accordingly, if we were to read the word 
"normally" in paragraph 5.2 of the Doha Mini sterial Decision as meaning "except in urgent 
circumstances", we would effectively be reading th e latter terms out of the first sentence out of the 
text of Article 2.12 of the TBT Agreement , or the word "normally" out of the text of paragraph 5.2 of 
the Doha Ministerial Decision.  It is therefore our view that the six-month guideline does not apply across the board to all non-urgent cases, and that  there may be non-urgent cases where it would be 
reasonable to have a shorter interval while in othe rs, such an interval should be of more than six 
months. 
7.581  We also agree with the United States that an  examination of whether an interval for the 
purposes of Article 2.12 of the TBT Agreement  is reasonable is to be done on a case-by-case basis.  
We are therefore to examine the circumstances of the adoption of Section 907(a)(1)(A) in order to 
decide whether the obligation to provide for a "r easonable interval" between the publication and the 
entry into force of Section 907(a)(1)(A) foreseen in Article 2.12 of the TBT Agreement  was satisfied 
by the United States.  In particular, we will cons ider whether taking into account the circumstances of 
this case, the three-month period provided by the United States between the publication and the entry 
into force of Section 907(a)(1)(A ) was sufficient to constitute a reasonable interval in terms of 
Article 2.12 of the TBT Agreement  or whether the United States should have allowed at least 6 months 
between both instances.  However, for the reasons  already explained above, while our examination 
must be informed by the specific facts and circum stances of this case, we shall be guided by the 
general rule set forth in the Doha Ministerial Decision. 
7.582  The text of Article 2.12 of the TBT Agreement  provides us with some indications as to what 
must be examined in a particular case.  Indeed, Article 2.12 of the TBT Agreement explains that the 
reason for allowing an interval between the publi cation and the entry into force of a technical 
regulation is to allow time for producers in e xporting Members, and particularly in developing 
country Members, to adapt their products or me thods of production to the requirements of the 
                                                      
954 Oxford English Dictionary Online , accessed on 25 May 2011. 
955 United States' first written submission, para. 300. 
956 United States' first written submission, para. 301. 
957 New Oxford English Dictionary , vol. 2, at 2496 (1993) (Exhibit US-82). 
958 United States' first written submission, para. 301. WT/DS406/R 
Page 158 
 
 
 importing Member.  Therefore, the Panel may exam ine whether the three-month period allowed by 
the United States between the publication and the en try into force of Section 907(a)(1)(A) permitted 
Indonesia the time for its producers to adapt their products or methods of production to the requirements of the importing Member. 
7.583  The United States argues that Indonesia has adduced no evidence to suggest that the 
difference between a three-month period and a six- month period had any impact on the ability of 
Indonesian producers "to adapt their products or methods of production to the requirements of the 
importing Member."  According to the United States , Indonesian producers have been and are able to 
market tobacco-flavoured and menthol-flavoured cigare ttes in the United States' market.  However, as 
far as the United States is aware, Indonesian producer s, even 16 months after the enactment of the 
FSPTCA, have not adjusted their product lines to produce tobacco or menthol-flavoured cigarettes.  Thus, it argues, whether the United States waited three months or six months after the measure's 
enactment to allow it to enter in to force appears not to have a ffected Indonesian producers in any 
way.
959   
7.584  In considering whether Indonesia has had sufficien t time to prepare itself for the ban on clove 
cigarettes, the Panel notes that Indonesia has particip ated in the U.S. legisl ative process that resulted 
in the adoption of Section 907(a)(1)(A) and was th us aware that the ban on clove cigarettes was 
coming.  In this respect, Indonesia tells us that it communicated its concerns to the White House and 
the Office of the U.S. Trade Repres entative ("USTR") on multiple occasions.960  For example, on 
15 May 2009 during Ministerial-level bilateral me etings in Washington DC, Indonesia communicated 
to USTR its concerns about the discrimination agai nst clove cigarettes contai ned in the Act.  When 
the United States House of Representatives first considered the legislation in July of 2008961, then-
Secretary of Health and Human Services Mike Leavitt sent a letter to the Ranking Member of the House Energy and Commerce Committee, Congressma n Joe Barton, expressing concerns with the 
legislation as drafted.  Among the concerns raised by Secretary Levitt was that: 
"Our trading partners believe that by banning the sale of clove cigarettes but not 
prohibiting the sale of menthol cigarettes, the bill raises questions under U.S. 
international trade obligations.  The gover nment of Indonesia has repeatedly objected 
to the bill on the grounds that this disparat e treatment is unjustified and incompatible 
with WTO trade rules.  Accordingly, I would recommend that the Committee further 
review the relevant language in this light to ensure the bill is consistent with US trade 
obligations."
962   
7.585  It may be arguable that through its active par ticipation in the legislative process, Indonesia 
would have had sufficient notice of the impending ad option of Section 907(a)(1)(A) so as to prepare 
its industry for the ban.  In that scenario, the fact that the interval allowed by the United States was of 
three months instead of six would not have si gnificant consequences.  This can be however 
approached from a different angle, i.e., that of th e expectations raised by the Doha Implementation 
                                                      
959 United States' first written submission, para. 303. 
960 See Letter from H.E. Mari Pangestu, Trade Minister of Indonesia, to Ambassador Ron Kirk, 
United States Trade Representative, 3 July 2009; Letter from H.E. Sudjadnan Parnohadiningrat, Ambassador of 
Indonesia to the United States, to United States Senate  Majority Leader Harry Reid, 8 April 2009; and Letter 
from H.E. Mari Pangestu, Trade Minister of Indonesia, to Ambassador Susan C. Schwab, 28 August 2007 
(Exhibit IND-15). 
961 This means more than a year before the adoption of the FSPTCA, which was signed on 
22 June 2009. 
962 Letter from Secretary of HHS Mike Leavitt to Congressman Joe Barton, 21 July 2008 
(Exhibit IND-16) p. 2.  Indonesia's first written submi ssion, para. 24.  We review Indonesia's participation 
during the U.S. legislative process and the responses of ke y figures in the U.S. government to that participation 
in greater detail below, in the context of examining Indonesia's claim under Article 12.3 of the TBT Agreement .   WT/DS406/R 
 Page 159 
 
 
 Decision itself.  Indeed, as discussed above, all Memb ers, meeting as a Ministerial Conference agreed 
that the reasonably interval would nor mally, i.e., by rule, be of at least six months.  Indonesia, in spite 
of its participation in the legislative process, coul d reasonably have expected  that it would have at 
least six months to adjust its industry.  Furthermore, Indonesia's active participation in the legislative 
process strongly suggests that it considered that th ere was at least some possibility of having clove 
cigarettes excluded from the scope of the ban.   
7.586  The text of paragraph 5.2 of the Doha Ministerial Decision also provides us with useful 
guidance on what circumstances to examine.  We r ecall that the Doha Ministerial Decision indicates 
that the reasonable interval shall be understood as nor mally no less than six months, "except when this 
would be ineffective in fulfilling the legitimate objectives pursued".   
7.587  In this respect, Indonesia argues that "neither  the Act itself nor any other statement by the 
United States indicates that having [Section 907(a )(1)(A)] enter into force 90 days after signing was 
necessary to fulfil the objectives of the Act".963  It further argues that th e United States concedes that 
Section 907(a)(1)(A) did not address an "urgent proble m" within the meaning of Article 2.10 of the 
TBT Agreement .964 
7.588  The United States argues that the FSPTCA "directly addresses a serious problem – youth 
smoking" and that "Congress intended to limit this behaviour as much as practicable".965 
7.589  We recall the long legislative history of the FSPTC A.  We further recall our findings that, in 
the absence of any evidence or argument that urgent problems of, inter alia , health, arose or 
threatened to arise upon adoption of Section 907( a)(1)(A), these urgent circumstances were not 
present.966   
7.590  We also note that it is not in dispute that clove cigarettes had already been sold in the 
United States for approximately 40 years at the time of the ban, and had a flat market share for at least the 10 years preceding the ban.  In addition,  the other flavoured cigarettes banned by 
Section 907(a)(1)(A) had been introduced into the U.S. market a number of years prior to the ban, and 
had no sizeable market share at the time of the ban.   
7.591  The United States argues that Indonesia has failed to  meet its burden of demonstrating that the 
three-month period provided by the United States is  not reasonable because it failed to explain why 
delaying the effective date for six months would be consistent with the objectives of the measure.
967  
We disagree.  We recall the Appellate Body's findings in US – Wool Shirts and Blouses  whereby "the 
burden of proof rests upon the party, whether co mplaining or defending, who asserts the affirmative 
of a particular claim or defence.  If that party ad duces evidence sufficient to raise a presumption that 
what is claimed is true, the burden then shifts to the other party, who will fail unless it adduces 
sufficient evidence to rebut the presumption."968  We also recall that "a prima facie  case is one which, 
in the absence of effective refutation by the defendi ng party, requires a panel, as a matter of law, to 
rule in favour of the complaining party presenting the prima facie  case."969 
7.592  We consider that Indonesia has made a prima facie case that allowing at least six months 
between the date of publication of Section 907(a )(1(A) and its entry into force would not render the 
                                                      
963 Indonesia's first written submission, para. 145. 
964 Indonesia's second written submission, para. 151. 
965 United States' first written submission, para. 302. 
966 See Section VII.I.2(c). 
967 United States' first written submission, para. 302. 
968 Appellate Body Report on US – Wool Shirts and Blouses , p. 14. 
969 Appellate Body Report on EC – Hormones , para. 104. This was confirmed by the Appellate Body in 
its Reports Japan – Agricultural Products II , paras. 98 and 136 and Japan – Apples , para. 159. WT/DS406/R 
Page 160 
 
 
 fulfilment of the objective pursued by Section 907( a)(1)(A) ineffective.  The onus was thus on the 
United States to demonstrate why the interval be tween the publication and the entry into force of 
Section 907(a)(1)(A) should be considered to be outside  the rule and thus why it must have been less 
than the "normal" "no less than six months".  The United States has advanced no argumentation nor 
presented evidence in this regard. 
7.593  Thus, we are not persuaded that delaying the ba n by six months, rather than the three-month 
period provided for in Section 907( a)(1)(A) would have been ineff ective in fulfilling the objective 
pursued by the United States.  The United States has not explained the Panel why it deemed that 
allowing a 90 day/three month interval between the publication and entry into force of 
Section 907(a)(1)(A) was not ineffective in fulfilli ng the objective pursued by Section 907(a)(1)(A), 
while a six-month interval would be.  The United States has also not explained why six months was 
ineffective when the government of the Unite d States has not deemed necessary to notify 
Section 907(a)(1)(A) as an urgent measure pursuant to Article 2.10 of the TBT Agreement . 
7.594  We are not saying that the burden of proof in a claim under Article 2.12 of the 
TBT Agreement is on the respondent.970  The burden of proof is on Indonesia.  We are saying that 
Indonesia has persuaded the Panel that, in the light of Article 2.12 of the TBT Agreement  and 
paragraph 5.2 of the Doha Ministerial Decision, an interval of less than six months was not reasonable 
in the circumstances of this case and that the United States has not rebutted that presumption. 
(c) Conclusion 
7.595  The Panel finds that, 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), the United States acted inconsistently 
with Article 2.12 of the TBT Agreement . 
L. WHETHER THE UNITED  STATES HAS ACTED INCONSISTENTLY WITH ARTICLE  12.3  OF THE 
TBT A GREEMENT  
1. Arguments of the parties 
7.596  Indonesia claims that Section 907(a)(1)(A) violates Article 12.3 of the TBT Agreement  
because the ban on clove cigarettes created an unnecessary barrier to exports from a developing 
country.  Indonesia submits that it has already de monstrated in the context of its claim under 
Article 2.2 of the TBT Agreement  that the ban on clove cigarettes created an unnecessary barrier to 
exports from Indonesia.971  Indonesia argues that because the sale of clove cigarettes in the 
United States consisted primarily of imports from Indonesia, the United States was obliged to take 
account of the special development and trade needs of Indonesia, a developing country Member.972  
As many as six million Indonesians are employed directly or indirectly in the manufacture of 
cigarettes and the growing of tobacco.973 Indonesia asserts that it expressed its concerns to the 
United States about the effect the ban would have on its trade on several occasions through bilateral 
discussions in August 2009, Indonesia's questions concerning the justification for 
Section 907(a)(1)(A) circulated in document G/TB T/W/32, and statements at the TBT Committee 
meeting in November 2009.974  Indonesia asserts that the Unit ed States disregarded Indonesia's 
repeated concerns and never provided any justifica tion for the measure or explained to Indonesia on 
                                                      
970 See, Appellate Body Report, EC – Sardines,  paras. 274, 275 and 282. 
971 Indonesia's first written submission, para. 147. 
972 Indonesia's first written submission, para. 147. 
973 Indonesia's first written submission, para. 5; Indonesia's response to Panel question No. 114, 
paras. 68-70. 
974 Indonesia's first written submission, para. 147; Indonesia's response to Panel question No. 76, 
para. 151; Indonesia's second written submission, para. 154.  WT/DS406/R 
 Page 161 
 
 
 how it had complied with its obliga tions under Article 2.5 of the TBT Agreement in light of the 
significant effect that Section 907(a)(1)(A) would have on Indonesia's trade and development.975  
7.597  Indonesia submits that the United States cannot be  held to have complied with its obligation 
under Article 12.3 of the TBT Agreement  merely by allowing Indonesia to comment on 
Section 907(a)(1)(A), and merely by listening to those comments.976  Indonesia submits that 
Article 2.9.4 of the TBT Agreement  already guarantees this right, and the United States' interpretation 
of Article 12.3 would therefore read that provision out of existence.977  In Indonesia's view, 
Article 12.3 requires Members to "do something".978  Indonesia submits that the United States cannot 
point to anywhere in the Act or its legisla tive history where the Congress even said the word 
"developing country".979 
7.598  Indonesia submits that the Panel should exercise  great caution before transposing any aspects 
of the reasoning of the panel in EC – Approval and Marketing of Biotech Products  to the 
interpretation of Article 12.3 of the TBT Agreement , given that, in Indonesia's view, Article 12.3 of 
the TBT Agreement  differs from Article 10.1 of the SPS Agreement  in that the former does "prescribe 
a specific result to be achieved".980  Nonetheless, Indonesia believes several aspects of the panel 
report in EC – Approval and Marketing of Biotech Products  provide useful insights and instruction for 
purposes of Article 12.3 of the TBT Agreement  and the present dispute.981  Among other things, 
Indonesia appears to agree with that panel's interp retation of the terms "take account of", and recalls 
that panel's statement that "take account of" imp lies to "consider along with other factors before 
reaching a decision".982 
7.599  Indonesia clarifies that it is not its position that the last part of Article 12.3 of the 
TBT Agreement sets forth a stand-alone legal prohibition on  the creation of unnecessary obstacles to 
exports from developing country Members.983  Indonesia submits that although a developing country 
invoking Article 12.3 of the TBT Agreement  does not have to prove that  it communicated its special 
development, financial and trade needs to the de veloped country enacting a technical regulation in 
order to trigger the protection of this provision984, it did in fact do so on several occasions985.  
Indonesia submits that it is not necessary for the Panel to speculate on what type of evidence would be 
sufficient to establish that a Member implementing a technical regulation complied with the obligation to "take account of" the special needs of developing countries; rather, it is clear what the 
                                                      
975 Indonesia's first written submission, para. 147. 
976 Indonesia's oral statement at the first substantive meeting of the Panel, paras. 184-186.   
977 Indonesia's oral statement at the first substantive meeting of the Panel, para. 185; Indonesia's second 
written submission, paras. 156-157; Indonesia's comment s on the United States' response to Panel question 
No. 112, para. 74. 
978 Indonesia's oral statement at the first substantive meeting of the Panel, paras. 184, 186. 
979 Indonesia's oral statement at the first substantive meeting of the Panel, para. 187. 
980 Indonesia's response to Panel question No. 73, para. 145; Indonesia's second written submission, 
para. 153. 
981 Indonesia's response to Panel question No. 73, para. 146. 
982 Indonesia's second written submission, footnote 276 (citing Panel Report, EC – Approval and 
Marketing of Biotech Products , para. 7.1620). 
983 Indonesia's response to Panel question No. 74, para. 147. 
984 Indonesia's response to Panel question No. 75, para. 148-150; Indonesia's second written 
submission, para. 153. 
985 Indonesia's response to Panel question No. 76, para. 151; Indonesia's second written submission, 
para. 154. WT/DS406/R 
Page 162 
 
 
 United States did, and the only question is whet her those actions satisfied the requirements of 
Article 12.3.986  
7.600  In response to the United States questioning whether Indonesia is a "developing country", 
Indonesia notes that the World Bank classifies Indonesia as a developing country, Indonesia's status 
as a developing country member of the WTO was recognized in Indonesia – Autos , and Indonesia is 
also a member of the G-33 developing countries in the WTO.987   
7.601  Indonesia submits that there is nothing in the wording of Article 12.3 of the TBT Agreement  
that implies that the needs of developing countries have to be "unique" to developing countries; rather, this provision identifies "development, fina ncial and trade needs" as the "special" needs of 
developing countries that must be taken into account.
988   
7.602  The United States  submits that Indonesia has failed to demonstrate that the United States 
acted inconsistent with Article 12.3 of the TBT Agreement .  The United States argues that in order to 
establish a violation of Article 12.3, the complaining party must demonstrate the following:  (a) that it 
is a developing country; (b) that the other Member did not take account of its special development, 
financial or trade needs during the preparation and a pplication of a technical regulation; and (c) that 
the Member did not take account of these needs with a view to ensuring that the technical regulation 
does not create unnecessary obstacles to export.989   
7.603  The United States submits that even assuming arguendo  that Indonesia is a developing 
country, Indonesia has not demonstrated that the Unite d States failed to take account of one or more 
special needs of Indonesia in the en actment of the law.  To the contra ry, in the five years between the 
initial bill being introduced for consideration in th e House of Representatives in 2004, and the law 
being enacted in 2009, Indonesia had ample opportunity to make its views known to both Congress 
and the Executive Branch and, in fact, did make its views known.  The Un ited States recalls that 
Indonesia had numerous communications with both  Congress and the Executive Branch, making the 
United States well aware of Indonesia's position.  The United States submits that by allowing 
Indonesia an opportunity to comment on previous iter ations of the legislation, as well as the version 
that was actually enacted into U. S. law, the United States compli ed with its obligations under 
Article 12.3.990   
7.604  The United States further argues that Article 12.3 does not require the developed country 
Member to accept every recommendation presented by the developing country Member, and the fact 
that Congress decided to value the public health over the interests of cigarette manufactures, both 
domestic and foreign, does not mean that the United States has acted inconsistently with 
Article 12.3.991   
                                                      
986 Indonesia's response to Panel question No. 77, para. 152-153; Indonesia's second written 
submission, para. 155. 
987 Indonesia's second written submission, footnote 277. 
988 Indonesia's response to Panel question No. 113, paras. 66-67. 
989 United States' first written submission, para. 307. 
990 United States' first written submission, para. 308; United States' oral statement at the second 
substantive meeting of the Panel, para. 109. 
991 United States' first written submission, para. 309; United States' response to Panel question No. 77, 
para. 158; United States' oral statemen t at the second substantive meeting of the Panel, para. 109; United States' 
response to Panel question No. 112, para. 118.  WT/DS406/R 
 Page 163 
 
 
 7.605  The United States submits that Indonesia has failed to establish that Section 907 (a)(1)(A) 
creates an unnecessary obstacle to e xport, for the reasons discussed in the context of the claim under 
Article 2.2 of the TBT Agreement.992  
7.606  The United States submits that based on the similarities between the provisions, Article 10.1 
of the SPS Agreement  provides relevant context for the interpretation of Article 12.3 of the 
TBT Agreement , and that past WTO reports examining the meaning of Article 10.1, such as the panel 
report in EC – Approval and Marketing of Biotech Products , may be instructive to the Panel in this 
dispute.993  
7.607  In addition, the United States argues that I ndonesia has failed to identify any "special 
development, financial [or] trade needs" unique to  a developing country that it had, and that the 
United States failed to take into account.994  Insofar as Indonesia is arguing that the measure risks 
unemployment, a risk of unemployment cannot be a "special need" given that every  government is 
concerned about the unemployment rate of its citizens.995  In addition, Indonesia has provided no  
reliable evidence that Section 907(a)(1)(A) has had any  impact on employment in Indonesia, much 
less the "severe adverse impact" that  Indonesia repeatedly refers to.996 In the United States' view, 
Indonesia's interpretation of Article 12.3 would read the term "special" out of the text.997 
7.608  As to the legal standard at issue, the Unite d States submits that it is not sufficient for 
Indonesia to simply say that "something" more th an what the United States has done is required 
without explaining what that "something" more is exactly.998   
7.609  Finally, the United States' view does not render Article 12.3 of the TBT Agreement  redundant 
of Article 2.9.4 of the TBT Agreement  as Indonesia claims. Article 2.9.4 could, in some instances, 
provide a mechanism for a dialogue on the "special needs" referenced in Article 12.3. The obligation 
of Article 2.9.4 is only one of a set of obligations contained in Article 2.9. If the conditions contained 
in the Article 2.9 chapeau are satisfied, then the tr ansparency mechanisms described in Article 2.9 are 
triggered. Article 12.3 is not so conditioned and does not specify a particular mechanism to facilitate 
the communications. In this regard, Article 12.3 is  a broader obligation than the one provided in 
Article 2.9.4. The fact that in certain circumstan ces, Article 12.3 could be satisfied by satisfying 
Article 2.9.4 does not mean that Article 12.3 is inutile.999 
2. Analysis by the Panel 
(a) Introduction 
7.610  The question before the Panel is whether th e United States acted inconsistently with 
Article 12.3 of the TBT Agreement  by failing to take account of th e special development, financial and 
trade needs of Indonesia, a developing country Member.  
                                                      
992 United States' first written submission, para. 310. 
993 United States' response to Panel question No. 74, para. 152; United States' oral statement at the 
second substantive meeting of the Panel, para. 109. 
994 United States' response to Panel question Nos. 75 and 77, paras. 155 and 157. 
995 United States' oral statement at the second substantive meeting of the Panel, para. 107. 
996 United States' oral statement at the second substantive meeting of the Panel, para. 108; 
United States' comments on Indonesia's response to Panel question No. 114, para. 78. 
997 United States' comments on Indonesia's response to Panel question No. 113, para. 73. 
998 United States' oral statement at the second substantive meeting of the Panel, para. 106; 
United States' response to Panel question No. 112, para. 118. 
999 United States' oral statement at the second substantive meeting of the Panel, para. 110; 
United States' response to Panel question No. 112, para . 117; United States' commen ts on Indonesia's response 
to Panel question No. 113, para. 75. WT/DS406/R 
Page 164 
 
 
 (b) The legal provision at issue 
7.611  We note that Article 12 of the TBT Agreement  is entitled "Special and Differential Treatment 
of Developing Country Members".  Article 12.3 of the TBT Agreement  provides that: 
"Members shall, in the preparation and app lication of technical regulations, standards 
and conformity assessment procedures, take  account of the special development, 
financial and trade needs of developing country Members, with a view to ensuring 
that such technical regulations, standards and conformity assessment procedures do 
not create unnecessary obstacles to exports from developing country Members."  
7.612  In EC – Approval and Marketing of Biotech Products , the panel observed that "Article 12.3 
requires that in preparing and applying technical  regulations, standards and conformity assessment 
procedures, Members take account of the special needs of developing country Members."1000  That 
Panel also noted that "Article 12.3 is a specific a pplication of the obligation in Article 12.2 to take 
account of developing country needs in the implementation of the TBT Agreement  at the national 
level."1001 
7.613  Beyond this, there is no substantial juri sprudence relating to Article 12.3 of the 
TBT Agreement  and no prior panel or Appellate Body report  addresses the question of what legal test 
should be applied to establish a violation of Article 12.3.   
(c) Scope of the obligation in Article 12.3 of the TBT Agreement  
7.614  The Panel observes that certain elements of  Indonesia's Panel Request and subsequent 
submissions suggest that, in Indonesia's view, the relevant question under Article 12.3 of the 
TBT Agreement is whether a challenged measure "created  an unnecessary obstacle to exports from 
developing country Members".1002  To the extent that Indonesia is arguing that Article 12.3 embodies 
a prohibition against creating unnecessary obstacles to exports from developing countries, the Panel is 
unable to agree.  We read Article 12.3 as establishi ng an obligation to "take account of" the special 
development, financial and trade needs of developing country Members.  We read the last part of the 
sentence in Article 12.3 as providing guidance on how and why the Member preparing or applying the 
technical regulation should "take account of" these speci al needs – namely, "with a view to" ensuring 
that technical regulations do not create unnecessary obstacles to exports from developing country 
Members.   
7.615  In our view, this interpretation flows natura lly from the plain language of the text of 
Article 12.3 of the TBT Agreement .  We find it difficult to read a provision structured in terms of 
Article 12.3  – i.e., structured in terms of "Members shall take into acc ount ..., with a view to  ..." –  to 
mean that words following "with a view ..." woul d establish an additional obligation, or a separate 
                                                      
1000 Panel Report, EC – Approval and Marketing of Biotech Products , para. 7.47, subpara. 75. 
1001 Panel Report, EC – Approval and Marketing of Biotech Products , para. 7.47, subpara. 77. 
1002 We note that Indonesia's Panel Request states that the measure at issue, i.e.  Section 907(a)(1)(A), is 
inconsistent with "TBT Article 12.3  because the ban created an unnecessa ry barrier to exports from developing 
countries".  WT/DS406/2, p. 2.  Throughout its first written submission, Indonesia asserts that 
Section 907(a)(1)(A) is inconsistent with Article 12.3 because it creates an unnecessary barrier to exports from 
Indonesia.  Indonesia's first written submission, para. 12, Section V.I 8 (entitled "The Special Rule Violates 
Article 12.3 of the TBT Agreement because the Ban Created an Un necessary Barrier to Exports from a 
Developing Country"), and para. 147.   
However, elsewhere Indonesia seems to agree that the relevant question under Article 12.3 is whether 
the Member concerned did or did not "take account of" the needs of developing country Members. See e.g. 
Indonesia's response to Panel question No. 74, para. 147.  WT/DS406/R 
 Page 165 
 
 
 element of a claim.  The Spanish and French versions of Article 12.3 are drafted in the same way1003, 
thereby reinforcing the view that the first part of Article 12.3 establishes an obligation to "take 
account of" the special development, financial a nd trade needs of developing country Members, 
whereas the last part of the sentence in Article 12.3 simply provides guidance on how and why the 
Member preparing or applying the technical regulation should "take account of" these special needs.   
7.616  We find further support for our inte rpretation of Article 12.3 of the TBT Agreement  by 
reading this provision in the context of Article 2.2 of the TBT Agreement .  The latter provision, which 
clearly prohibits Members from adopting technical regulations that create unnecessary obstacles to trade, is worded and structured differently from the obligation in Article 12.3.  In addition, it is not 
clear what object or purpose would be served by duplicating the obligation, already found in 
Article 2.2, in Article 12.3.  Any measure captured by an obligation under Artic le 12.3 to ensure that 
technical regulations "do not create unnecessary obstacles to exports from developing country 
Members" would already be captured and subsumed w ithin the obligation under Article 2.2 to ensure 
that technical regulations do not create "unnecessary obst acle to international trade" (as defined in the 
second sentence of that provision).  Accordingly, if  such an obligation were to be read in to 
Article 12.3, it would appear to be redundant  and inutile in the light of Article 2.2.  
7.617  For these reasons, we do not read Article 12.3 of the TBT Agreement  as establishing an 
obligation against creating "unnecessary obstacles to  exports from developing country Members".  
Contrary to certain arguments from Indonesia, th is provision does not, in our view, "prescribe a 
specific result to be achieved".
1004  Rather, we read Article 12.3 as an obligation to "take account of" 
the special needs of developing countries.  This me ans that the focus and scope of the enquiry under 
Article 12.3 of the TBT Agreement differs significantly from that of Article 2.2 of the TBT Agreement , 
and finding that a measure is consis tent (or inconsistent) with Article  2.2 does not answer the question 
of whether that measure is inconsistent with Article 12.3 .  Thus, where a panel finds that a Member 
has adopted a technical regulation that is more trade-restrictive than necessary to fulfil a legitimate 
objective under Article 2.2, this finding does not prove that the Member did not take account of 
developing country needs in the preparation and a pplication of that measure.  Conversely, where a 
panel finds that a Member has adopted a technical regulation that is not more trade-restrictive than 
necessary to fulfil a legitimate objective, this does not prove that the Member took account of 
developing country needs in the prepara tion and application of that measure. 
7.618  Of course, even if the Panel were to assume arguendo  that Article 12.3 prohibits the adoption 
of technical regulations that create unnecessary obstacles to exports from developing countries, the 
Panel has already found that Section 907(a)(1)(A) is not more trade-restrictive than necessary to fulfil 
a legitimate objective, taking account of  the risks non-fulfilment would create1005.  If Article 12.3 
                                                      
1003 The Spanish and French versions of Article 12.3 read as follows: 
"Los Miembros, cuando preparen o apliquen reglamentos técnicos, normas y procedimientos 
para la evaluación de la conformidad, tendrán  en cuenta las necesidades especiales que en 
materia de desarrollo, finanzas y comercio tengan los países en desarrollo Miembros, con el 
fin de asegurarse de que dichos reglamentos técnicos, normas y procedimientos para la 
determinación de la conformidad no creen obstáculos innecesarios para las exportaciones de 
los países en desarrollo Miembros. "   
"Dans l'élaboration et l'application des règlements techniques, des normes et des procédures 
d'évaluation de la conformité, les Membres tiendront compte des besoins spéciaux du 
développement, des finances  et du commerce des pays en d éveloppement Membres, pour faire 
en sorte que ces règlements techniques, normes et procédures d'évaluation de la conformité ne 
créent pas d'obstacles non nécessaires aux exportation s des pays en développement 
Membres. " 
1004 Indonesia's second written submission, para. 153. 
1005 See Section VII.F.2(e) above. WT/DS406/R 
Page 166 
 
 
 called for the same analysis as Article 2.2, then that finding would apply equally in the context of 
Article 12.3. 
7.619  We shall therefore continue our  analysis of the elements that must be demonstrated by 
Indonesia in order to prove a violation by the United States of Article 12.3 of the TBT Agreement  by 
failing to take account of the special needs of Indonesia as a developing country. 
(d) Elements of the obligation in Article 12.3 of the TBT Agreement  
7.620  We understand the wording of Article 12.3 of the TBT Agreement  to require that three 
elements must be demonstrated in order to establis h a violation of the obligation set forth in that 
provision.  In particular, the Panel consid ers that Indonesia must demonstrate that: 
(a) Indonesia is a "developing country";  
(b) Indonesia has "special developm ent, financial and trade need s" that are affected by 
Section 907(a)(1)(A); and  
(c) the United States failed to "take account of" Indonesia's special financial, 
development and trade needs. 
(i) First element: whether Indonesia is a "developing country" 
7.621  As we explained above, the first element that must be demonstrated is that Indonesia is a 
"developing country". 
7.622  In its first written submission, the United Stat es asserts in general that Indonesia has not met 
its burden of proof on any of the elements under Article 12.3 of the TBT Agreement , but that the 
United States will assume arguendo  that Indonesia is a developing country in responding to the claim 
under Article 12.3.1006 
7.623  Indonesia states that it is a developing country1007 and argues, inter alia , that the World Bank 
classifies it as a developing country and that its st atus as a developing country Member of the WTO 
was recognized in Indonesia – Autos .1008 
7.624  The Panel is of the view that the foregoing is more than sufficient to conclude that Indonesia 
is a "developing country".  We therefore find that th e first element of a claim under Article 12.3 of the 
TBT Agreement  is satisfied. 
(ii) Second element: whether Indonesia has "special development, financial and trade needs" that 
are affected by Section 907(a)(1)(A) 
7.625  The next question before the Panel is whether Indonesia has "special development, financial 
and trade needs" that are affected by Section 907(a)(1)(A). 
7.626  The United States submits that Indonesia has ne ver identified any needs "that are unique to a 
developing country (as opposed to a developed one)".1009  Indonesia responds that there is nothing in 
the wording of Article 12.3 of the TBT Agreement  that implies that the needs of developing countries 
                                                      
1006 United States' first written submission, para. 308.   
1007 Indonesia's first written submission, paras. 12, 147;  Indonesia's orals statement at the first 
substantive meeting of the Panel, paras. 20, 22, 178;  Indonesia's second written submission, paras. 90, 154.  
1008 Indonesia's second written submission, footnote 277 (citing Exhibit IND-89). 
1009 United States' response to Panel question Nos. 74 and 77, paras. 154 and 157.  WT/DS406/R 
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 have to be unique to developing countries; rath er, this provision identifies "development, financial 
and trade needs" as the special needs of devel oping countries that must be taken into account.1010  In 
the United States' view, Indonesia's interpretation of Article 12.3 would read the term "special" out of 
the text.1011 
7.627  We begin by observing that the meaning of th e expression "special development, financial 
and trade needs" is not entirely clear.  Indeed, th e expression appears to be deliberately vague.  The 
Panel notes that similar expressions are found in other WTO Agreements and instruments.  For 
example, in EC – Tariff Preferences , the Appellate Body elaborated upon the meaning of the phrase 
"development, financial, and trade needs" in the context of paragraph 3(c) of the Enabling Clause.1012  
In Brazil – Aircraft , the panel had to consider the phrase "d evelopment needs" in the context of 
Article 27.4 of the SCM Agreement .1013  That panel made the interesting observation that "an 
examination of whether export subsidies are inc onsistent with a developing country Member's 
development needs is an inquiry of a peculiarly economic and political nature, and notably ill-suited 
to review by a panel whose f unction is fundamentally legal".1014 
7.628  Whatever the exact meaning of the terms "speci al development, financial and trade needs", 
the Panel considers that Indonesia satisfies the requi rement of being a developing country that has 
"special development, financial and trade needs" af fected by the ban on clove cigarettes.  In this 
regard, the Panel notes that Indonesia explained "t he importance of clove cigarettes to its economy 
and its people".1015  More specifically, clove cigarettes have  been produced in Indonesia for over a 
century; it is estimated that as many as 6 million Indonesians are employed directly or indirectly in the manufacture of cigarettes and the growing of tobacco ; the cigarette industry, including clove, accounts 
for approximately 1.66 per cent of Indonesia's total gross domestic product ("GDP"); and Indonesia 
has exported clove cigarettes to the United States for well over 40 years.
1016  It is also not in dispute 
that, as a result of the ban, U.S. imports of clove  cigarettes produced in Indonesia have declined from 
approximately $15 million in  2008 to zero in 2010.1017   
7.629  We consider that the above is sufficient to conc lude that Indonesia has "special development, 
financial and trade needs" that are affected by tec hnical regulation at issue. We therefore find that the 
second element of a claim under Article 12.3 of the TBT Agreement  is satisfied.  
(iii) Third element: whether the United States faile d to "take account of" Indonesia's special 
financial, development and trade needs 
7.630  This takes the Panel to the third and final elem ent that must be demonstrated to establish a 
violation of Article 12.3 of the TBT Agreement , which is whether the United States failed to "take 
account of" these special financial, development and trade needs.  We will begin by providing some 
general observations on the obligation, in Article 12.3, to "take account of" a developing country's 
special needs.  We will then review the evidence be fore the Panel in order to determine whether the 
United States failed to take account of Ind onesia's special needs in connection with 
Section 907(a)(1)(A).  
7.631  We note that there is no jurisprudence examini ng the nature of the obligation in Article 12.3 
of the TBT Agreement  to "take account of" the special needs of developing countries.  However, the 
                                                      
1010 Indonesia's response to Panel question No. 113, paras. 66-67. 
1011 United States' comments on Indonesia's response to Panel question No. 113, para. 73. 
1012 Appellate Body Report, EC – Tariff Preferences , para. 159.   
1013 Panel Report, Brazil – Aircraft , para. 7.89. 
1014 Panel Report, Brazil – Aircraft , para. 7.89. 
1015 Indonesia's first written submission, para. 6.   
1016 Indonesia's first written submission, para. 5.   
1017 Indonesia's first written submission, para. 40. WT/DS406/R 
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 panel in EC – Approval and Marketing of Biotech Products  examined a claim brought by Argentina 
under Article 10.1 of the SPS Agreement , which the panel described as the "equivalent provision" to 
Article 12.3 of the TBT Agreement .1018  Article 10.1 reads as follows: 
"In the preparation and application of sanitary or phytosanitary measures, Members 
shall take account of  the special needs of developing country Members, and in 
particular of the least-developed country Members." (emphasis added) 
7.632  The panel in EC – Approval and Marketing of Biotech Products , which rejected Argentina's 
claim under Article 10.1 of the SPS Agreement,  observed with respect to the meaning of the terms 
"take account of" that: 
"... The dictionary defines the expression 'take account of' as 'consider along with 
other factors before reaching a decision'.1019  Consistent with this, Article 10.1 does 
not prescribe a specific result to be achieved.   Notably, Article 10.1 does not provide 
that the importing Member must invariably accord special and differential treatment 
in a case where a measure has lead, or may l ead, to a decrease, or a slower increase, 
in developing country exports".1020   
7.633  That panel also found that it is the complaining party that carries the burden of proving that 
the Member adopting the technical regulation did not "take account of" developing country Members' 
needs.1021   
7.634  We agree with that panel's interpretation of the obligation to "take account of" developing 
country Members' needs, and we agree with the pa nel that it is the complaining party, in this case 
Indonesia, that carries the burden of proof.1022   
7.635  The evidence before the Panel on this issue cons ists of a series of letters between key figures 
in the Indonesian and United States governments.  We  will briefly review th is record, moving in 
chronological order.  
7.636  A letter dated 28 August 2007 from the Trade Mi nister of Indonesia to the United States 
Trade Representative records that: 
"This draft Act contains a provision, whic h, if enacted as currently drafted, will 
unjustifiably discriminate against Indonesia's ci garette exports in favor of competing, 
domestically produced U.S.  cigarette products.  We understand that Senator Kennedy, 
who has been supportive of addressing our c oncerns with appropriate legislative 
language, has written to you about this matter ."1023 
7.637  A letter dated 21 July 2008 from the Secretary of Health and Human Services to the Ranking 
Member of the Committee on Energy and Commerce explains that: 
                                                      
1018 Panel Report, EC – Approval and Marketing of Biotech Products , fn 1330. 
1019 (footnote original ) The Concise Oxford Dictionary , 10th edn., J. Pearsall (ed.) (Clarendon Press, 
1999), p. 8. 
1020 Panel Report, EC – Approval and Marketing of Biotech Products , para. 7.1620. 
1021 Panel Report, EC – Approval and Marketing of Biotech Products , paras. 7.1622 and 7.1625. 
1022 The Panel takes note of Colombia's view that, while Indonesia carries the burden of proof on this 
element of its claim, it is important to bear in mind that obligations of Members under Article 12.3 of the 
TBT Agreement , are only verifiable through information available to the Member bound to comply with such 
provision.  Colombia's third-party oral statement, para. 40. 
1023 Letter from H.E. Mari Pangestu, Trade Minister of Indonesia, to Ambassador Susan C. Schwab, 
United States Trade Representative, 28 August 2007 (Exhibit IND-15) p. 7 of 9 (emphasis added).  WT/DS406/R 
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 "There is a further issue regarding the bill th at I would like to bring to your attention.  
Our trading partners believe that by ba nning the sale of clove cigarettes but not 
prohibiting the sale of menthol cigarettes, the bill raises questions under U.S. international trade obligations.  The gover nment of Indonesia has repeatedly objected 
to the bill on the ground that this disparat e treatment is unjustified and incompatible 
with WTO trade rules.  Accordingly, I would recommend that the Committee [on 
Energy and Commerce] further re view the relevant language in this light to ensure 
that the bill is consistent  with U.S. trade obligations ."
1024 
7.638  The record continues with a letter dated 25 July 2008, in which the Chairman of the 
Committee on Energy and Commerce writes to the Ch airman of the Committee on Ways and Means: 
"You have also expressed concerns  about the provision in the bill that prohibits the 
use of clove to create a characterizing fl avor in cigarettes.  I acknowledge your 
concerns and understand that the Committee on Ways and Means has jurisdiction 
over import bans because of the effects on trade and on customs revenues."1025 
7.639  On 30 July 2008 the Executive Office of the Presi dent of the United States issued a Statement 
of Administration Policy on H.R. 1108 (The Family Smoking Prevention and Tobacco Control Act).  
This statement indicated that "the Administration has serious concerns with H.R. 1108"1026, and stated 
that: 
"Additionally, our trading partners  may argue that by banning the sale of clove 
cigarettes but not prohibiting the sale of ment hol cigarettes, the bill raises questions 
under U.S. international trade obligations."1027 
7.640  A letter dated 16 March 2009 from the Chairman of the Committee on Ways and Means to 
the Chairman of the Committee on Energy and Commerce notes that: 
"The Committee has taken note that H.R. 1256 includes a prohibition against the use 
of clove to create a characterizing flavo r in cigarettes.  The Committee on Ways and 
Means believes this provision to be with in its jurisdiction because most clove-
flavored cigarettes currently sold in the United States are imported.  I understand 
that you recognize our jurisdictional interest in this question, given its effects on 
trade  and on customs revenues.  The Committe e on Ways and Means has agreed to 
forego action on this bill and will not o ppose its consideration, based on our 
understanding that you agree, as the bill moves through the legislative process, you 
                                                      
1024 Letter from Mike Leavitt, Secretary of Health  and Human Services, to Joe Barton, Ranking 
Member of the House of Representa tives Committee on Energy and Commerce, 21 July 2008 (Exhibit IND-16) 
p. 2 of 3 (emphasis added). 
1025 Letter from John Dingell, Chairman of the Hous e of Representatives Co mmittee on Energy and 
Commerce, to Charles B. Rangel, Ch airman of the House of Representa tives Committee on Ways and Means, 
25 July 2008 (Exhibit IND-18) p. 2 of 2 (emphasis added). 
1026 Executive Office of the President, Office of Management and Budget, Statement of Administration 
Policy, H.R. 1108 – The Family Smoking Prevention and Tobacco Control Act, 30 July 2008 (Exhibit IND-17) 
p. 1 of 2. 
1027 Executive Office of the President, Office of Management and Budget, Statement of Administration 
Policy, H.R. 1108 – The Family Smoking Prevention and Tobacco Control Act, 30 July 2008 (Exhibit IND-17) 
p. 2 of 2 (emphasis added). WT/DS406/R 
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 will continue to discuss with the Committee on Ways and Means the concerns raised 
with respect to the clove provision ."1028 
7.641  That same day, the Chairman of the Committee on Energy and Commerce responded: 
"You have expressed concerns about the provision of the bill that prohibits the use of 
clove to create a characterizing flavor in cigarettes.  I acknowledge your concerns and understand that the Committee on Ways and Means has jurisdiction over import 
bans because of the effects on import trade  and on customs revenues. … As the bill 
moves through the legislative process, we will continue to discuss with the 
Committee on Ways and Means the concerns  raised with respect to the clove 
provision.  Per your request, I will include copies of our exchange of letters on these 
matters in the Congressional Record."
1029   
7.642  A letter dated 8 April 2009 from the Ambassador of Indonesia to the U.S. Senate Majority 
Leader once again noted: 
"… that Chairman Kennedy's mark of th e bill in 2007 included appropriate language 
that treated clove and menthol cigarett es with parity – consistent with the 
United States' longstanding trade obligations.  We urge you to contact Senator 
Kennedy's office to encourage him to re-insert such language in the bill in the Senate."
1030 
7.643  The evidence before the Panel is no doubt fra gmented and incomplete .  However, several 
inescapable conclusions emerge from this record, such as it is. 
7.644  In the first place, Indonesia was able to comm unicate its concerns to key figures in the 
U.S. Government on multiple occasions, over a pe riod of several years.  These communications 
consisted of numerous written communications as well  as high-level meetings with U.S. officials. 
7.645  The evidence shows that Indonesia's concerns were subsequently raised on a number of 
occasions, by key officials within the U.S. G overnment.  In fact, the exchanges among key 
U.S. officials presented by the parties show that the United States actively took account of Indonesia's 
concerns.  In other words, the evidence demonstr ates that Indonesia's concerns were "taken into 
account" by the United States. 
7.646  In addition, to "take account of" the special financial, development and trade needs of a 
developing country does not necessarily mean that the Member preparing or applying a technical 
regulation must agree with or accept the developing  country's position and desired outcome.  In our 
opinion, the fact that the United States ultimatel y decided not to exclude clove cigarettes from the 
scope of the ban in Section 907(a)(1)(A) does not me an that the United States did not take account of 
Indonesia's special financial, development and trade needs. 
7.647  Finally, in its communications, Indonesia made clear that its desired outcome was for the 
United States to exclude clove cigarettes from the sco pe of Section 907(a)(1)(A).  However, we have 
                                                      
1028 Letter from Charles B. Rangel, Chairman of th e House of Representatives Committee on Ways and 
Means, to Henry Waxman, Chairman of the House of  Representatives Committee on Energy and Commerce, 16 
March 2009 (Exhibit US-67) pp. 28-29 of 52 (emphasis added). 
1029 Letter from Henry Waxman, Chairman of the House of Representatives Committee on Energy and 
Commerce, to Charles B. Rangel, Ch airman of the House of Representa tives Committee on Ways and Means, 
16 March 2009 (Exhibit US-67) p. 30 of 52 (emphasis added). 
1030 Letter from H.E. Sudjadnan Parnohadiningrat, Ambassador of Indonesia to the United States, to 
Harry Reid, United States Senate Majority Lead er, 8 April 2009 (Exhibit IND-15) p. 5 of 9.  WT/DS406/R 
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 found that banning clove cigarettes makes a materi al contribution to the legitimate objective of 
reducing youth smoking in the United States.  Consider ing that the measure is a ban on cigarettes with 
characterizing flavours for reasons of public health , the Panel fails to see how it could be possible, 
under WTO rules, to exclude from the ban cigarett es with characterizing flavours from developing 
countries.  Indeed, a requirement to exclude a prod uct that is harmful to human health from a ban, 
solely on the grounds that the product is produced  and exported by a devel oping country, would limit 
Members' ability to regulate for public health purposes. 
7.648  In the light of the foregoing, we find that Indonesia has not demonstrated that the 
United States failed to "take account of" Indonesia's sp ecial financial, trade and development needs.   
(e) Conclusion  
7.649  The Panel therefore finds that, by failing to de monstrate that the United States did not take 
account of the special development, financial and tr ade needs of Indonesia, in the preparation and 
application of Section 907(a)(1)(A), Indonesia has fa iled to demonstrate that the United States acted 
inconsistently with Article 12.3 of the TBT Agreement . 
VIII.  CONCLUSIONS AND RECOMMENDATIONS 
8.1 As described in greater detail above, the Panel finds  that: 
(a) Section 907(a)(1)(A) is a "technical regulation" within the meaning of Annex 1.1 of 
the TBT Agreement ; 
(b) Section 907(a)(1)(A) is inconsiste nt with Article 2.1 of the TBT Agreement  because it 
accords to imported clove cigarettes treatmen t less favourable than that it accords to 
like menthol cigarettes of national origin; 
(c) by failing to demonstrate that the ban on clove cigarettes imposed by 
Section 907(a)(1)(A) is more trade-restrictiv e than necessary to fulfil the legitimate 
objective of reducing youth smoking, taki ng account of the risks non-fulfilment 
would create, Indonesia has failed to dem onstrate that Section 907(a)(1)(A) is 
inconsistent with Article 2.2 of the TBT Agreement ; 
(d) by failing to request the United States to explain the justification for 
Section 907(a)(1)(A) "in terms of Articles 2.2 to 2.4 of the TBT Agreement " through 
its questions in document G/TBT/W/323, Indo nesia has failed to demonstrate that the 
United States acted inconsistently with Article 2.5 of the TBT Agreement ; 
(e) by failing to demonstrate that it would be  "appropriate" to formulate the technical 
regulation in Section 907(a)(1)(A) in terms of "performance", Indonesia has failed to 
demonstrate that Section 907(a)(1)(A) is inconsistent with Article 2.8 of the 
TBT Agreement ; 
(f) 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 early appropr iate stage, i.e., when amendments and 
comments were still possible, the United States has acted inconsistently with 
Article 2.9.2 of the TBT Agreement ; 
(g) by failing to demonstrate that it had request ed the United States to provide particulars 
or copies of Section 907(a)(1)(A) while it was still in draft form, Indonesia has failed WT/DS406/R 
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 to demonstrate that the United States acted inconsistently with Article 2.9.3 of the 
TBT Agreement;  
(h) 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), the United States has acted inconsistently 
with Article 2.12 of the TBT Agreement;  
(i) by failing to demonstrate that the United States did not take account of the special 
development, financial and trade needs of Indonesia, in the preparation and 
application of Section 907(a)(1)(A), Indon esia has failed to demonstrate that the 
United States acted inconsistently with Article 12.3 of the TBT Agreement . 
8.2 In the absence of any evidence or argument on the existence of urgent problems of health that 
arose or threatened to arise fo r the United States at the time of adopting Section 907(a)(1)(A), the 
Panel declines to rule  on Indonesia's claim under Article 2.10 of the TBT Agreement.   
8.3 Having found that Section 907(a)(1)(A) is inconsistent with Article 2.1 of the 
TBT Agreement , the Panel also declines to rule  on Indonesia's claim under Article III:4 of the 
GATT 1994. 
8.4 Having declined to rule on Indonesia's a lternative claim under Article III:4 of the 
GATT 1994, the Panel further declines to rule  on whether Section 907(a)(1)(A) is justified under 
Article XX(b) of the GATT 1994.  
8.5 Under Article 3.8 of the DSU, in cases where th ere is an infringement of the obligations 
assumed under a covered agreement, the action is considered prima facie to constitute a case of 
nullification or impairment of benefits under that agreement. Accordingly, we conclude that the 
United States has nullified or impaired benefits accruing to Indonesia under the TBT Agreement , to 
the extent that the United States has acted inconsis tently with Articles 2.1, 2.9.2 and 2.12 of the 
TBT Agreement .   
8.6 Pursuant to Article 19.1 of the DSU, having found that the United States has acted 
inconsistently with its obligations und er Articles 2.1, 2.9.2 and 2.12 of the TBT Agreement , we 
recommend that the Dispute Settlement Body request  the United States to bring Section 907(a)(1)(A) 
into conformity with its obligations under the TBT Agreement .   
 
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