WORLD TRADE  
ORGANIZATION   
WT/DS406/AB/R 
4 April 2012 
 (12-1741) 
 Original:   English 
  
 
     
 
    
 
     
UNITED STATES – MEASURES AFFECTING THE PRODUCTION 
AND SALE OF CLOVE CIGARETTES 
 
  
AB-2012-1 
  
    
 
     
Report of the Appellate Body  WT/DS406/AB/R 
 Page i 
 
 
I.  Introduction .................................................................................................................. ............... 1  
II.  Arguments of the Participants and the Third Participants .......................................................... 5  
A.  Claims of Error by the United States – Appellant  ......................................................... 5  
1.  Article 2.1 of the TBT Agreement  – "Like Products" ....................................... 5  
(a)  End-Uses .............................................................................................. 5  
(b)  Consumer Tastes and Habits ................................................................ 6  
2.  Article 2.1 of the TBT Agreement  – "Treatment No Less Favourable" ............ 9  
3.  Article 2.12 of the TBT Agreement  – "Reasonable Interval" .......................... 13  
B.  Arguments of Indonesia – Appellee  ............................................................................. 15  
1.  Article 2.1 of the TBT Agreement  – "Like Products" ..................................... 15  
(a)  End-Uses ............................................................................................ 16  
(b)  Consumer Tastes and Habits .............................................................. 17  
2.  Article 2.1 of the TBT Agreement  – "Treatment No Less Favourable" .......... 20  
3.  Article 2.12 of the TBT Agreement  – "Reasonable Interval" .......................... 23  
C.  Arguments of the Third Participants  ............................................................................ 25  
1.  Brazil ............................................................................................................... 25  
2.  Colombia ......................................................................................................... 27  
3.  European Union .............................................................................................. 27  
4.  Mexico ............................................................................................................ 29  
5.  Norway ........................................................................................................... 31  
6.  Turkey ............................................................................................................. 32  
III.  Issues Raised in This Appeal .................................................................................................. .. 33 
IV.  Background .................................................................................................................... ........... 34  
V.  Article 2.1 of the TBT Agreement  ............................................................................................. 37  
A.  Introduction  ................................................................................................................. 37  
B.  The Panel's Finding that Clove Cigarettes and Menthol Cigarettes are 
"Like Products" within the Meaning of Article 2.1 of the TBT Agreement  .................. 41  
1.  "Like Products" under Article 2.1 of the TBT Agreement  .............................. 42  
2.  End-Uses ......................................................................................................... 48  
3.  Consumer Tastes and Habits ........................................................................... 51  
4.  Conclusion on "Like Products" ....................................................................... 58  
C.  The Panel's Finding that Section 907(a)(1)(A) of the FFDCA Accords Imported 
Clove Cigarettes Less Favourable Treatmen t than That Accorded to Domestic 
Menthol Cigarettes, within the Meaning of Article 2.1 of the TBT Agreement  ........... 60  
1.  Introduction ..................................................................................................... 60  
2.  "Treatment No Less Favourable" under Article 2.1 of the 
TBT Agreement  ............................................................................................... 61  
3.  Product Scope of the "Treatment No  Less Favourable" Comparison ............. 66  
4.  Temporal Scope of the "Treatment No Less Favourable" Comparison .......... 72  
(a)  Application of Article 2.1 of the TBT Agreement  .............................. 72  
(b)  Article 11 of the DSU ........................................................................ 74  
5.  Detrimental Impact on Imported Products ...................................................... 75  
(a)  Application of Article 2.1 .................................................................. 77  
(b)  Article 11 of the DSU ........................................................................ 80  
6.  Conclusion on "Treatment No Less Favourable" ........................................... 82  WT/DS406/AB/R 
Page ii  
 
D.  Conclusions under Article 2.1 of the TBT Agreement  ................................................. 82  
VI.  Article 2.12 of the TBT Agreement  ........................................................................................... 83  
A.  Introduction  ................................................................................................................. 83  
B.  The Interpretative Value of Paragraph 5.2 of the Doha Ministerial Decision  ............ 84  
C.  The Panel's Finding that the United States Acted Inconsistently with 
Article 2.12 of the TBT Agreement  .............................................................................. 94  
VII. Findings and Conclusions ...................................................................................................... . 101 
 Annex I  Notification of an Appeal by the United States, WT/DS406/6  WT/DS406/AB/R 
 Page iii 
 
 
CASES CITED IN THIS REPORT 
 
Short Title Full case title and citation 
Australia – Salmon Appellate Body Report, Australia – Measures Affecting Importation of 
Salmon , WT/DS18/AB/R, adopted 6 November 1998, DSR 1998:VIII, 3327 
Border Tax Adjustments Working Party Report, Border Tax Adjustments , L/3464, adopted 2 
December 1970, BISD 18S/97 
Brazil – Retreaded Tyres Appellate Body Report, Brazil – Measures Affec ting Imports of Retreaded 
Tyres , WT/DS332/AB/R, adopted 17 December 2007, DSR 2007:IV, 1527 
Canada – Provincial Liquor 
Boards (US) GATT Panel Report, Canada – Import, Distribution and Sale of Certain 
Alcoholic Drinks by Provincial Marketing Agencies , DS17/R, adopted 
18 February 1992, BISD 39S/27 
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 
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 
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 
Chile – Price Band System Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products , WT/DS207/AB/R, adopted  
23 October 2002, DSR 2002:VIII, 3045 (Corr.1, DSR 2006:XII, 5473) 
Chile – Price Band System 
(Article 21.5 – Argentina) Appellate Body Report, Chile – Price Band System and Safeguard Measures 
Relating to Certain Agricultural Products – Recourse to Article 21.5 of the 
DSU by Argentina , WT/DS207/AB/RW, adopted 22 May 2007, DSR 2007:II, 
513 
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 
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 – Bananas III Panel Reports, European Communities – Regime for the Importation, Sale 
and Distribution of Bananas ("EC – Bananas III "), WT/DS27/R/ECU 
(Ecuador)  / WT/DS27/R/GTM, WT/DS27/R/HND (Guatemala and 
Honduras)  / WT/DS27/R/MEX (Mexico)  / WT/DS27/R/USA (US), adopted 
25 September 1997, as modified by Appellate Body Report WT/DS27/AB/R, 
DSR 1997:II, 695 to DSR 1997:III, 1085 WT/DS406/AB/R 
Page iv  
 
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 – Bed Linen 
(Article 21.5 – India) Appellate Body Report, European Communities – Anti-Dumping Duties on 
Imports of Cotton-Type Bed Linen from India – Recourse to Article 21.5 of the DSU  by India , WT/DS141/AB/RW, adopted 24 April 2003, DSR 
2003:III, 965 
EC – Fasteners (China) Appellate Body Report, European Communities – Definitive Anti-Dumping 
Measures on Certain Iron or Steel Fasteners from China , WT/DS397/AB/R, 
adopted 28 July 2011 
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 – Sardines Appellate Body Report, European Communities – Trade Description of 
Sardines , WT/DS231/AB/R, adopted 23 October 2002, DSR 2002:VIII, 3359 
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 
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 – 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 – 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 – Apples Appellate Body Report, Japan – Measures Affecting the Importation of 
Apples , WT/DS245/AB/R, adopted 10 December 2003, DSR 2003:IX, 4391 
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 
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 
Philippines – Distilled Spirits Appellate Body Reports, Philippines – Taxes on Distilled Spirits , 
WT/DS396/AB/R / WT/DS403/AB/R, adopted 20 January 2012 
Philippines – Distilled Spirits Panel Reports, Philippines – Taxes on Distilled Spirits , WT/DS396/R / 
WT/DS403/R, adopted 20 January 2012, as modified by Appellate Body 
Reports WT/DS396/AB/R / WT/DS403/AB/R  
Thailand – Cigarettes 
(Philippines) Appellate Body Report, Thailand – Customs and Fiscal Measures on 
Cigarettes from the Philippines , WT/DS371/AB/R, adopted 15 July 2011  WT/DS406/AB/R 
 Page v 
 
 
Short Title Full case title and citation 
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 – Clove Cigarettes Panel Report, United States – Measures Affecting the Production and Sale of 
Clove Cigarettes , WT/DS406/R, circulated to WTO Members 
2 September 2011 
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 – 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 – Stainless Steel (Mexico) Appellate Body Report, United States – Final Anti-Dumping Measures on 
Stainless Steel from Mexico , WT/DS344/AB/R, adopted 20 May 2008, DSR 
2008:II, 513 
US – Steel Safeguards Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Certain Steel Products , WT/DS248/AB/R, WT/DS249/AB/R, 
WT/DS251/AB/R, WT/DS252/AB/R, WT /DS253/AB/R, WT/DS254/AB/R, 
WT/DS258/AB/R, WT/DS259/AB/R, adopted 10 December 2003, DSR 
2003:VII, 3117 
US – Tuna (II) (Mexico) Panel Report, United States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products , WT/DS381/R, circulated to 
WTO Members 15 September 2011 
US – Tuna II (Mexico) Panel Report, United States – Measures Concerning the Importation, 
Marketing and Sale of Tuna and Tuna Products , WT/DS381/R, circulated to 
WTO Members 15 September 2011 [appeal in progress] 
US – Upland Cotton 
(Article 21.5 – Brazil) Appellate Body Report, United States – Subsidies on Upland Cotton – 
Recourse to Article 21.5 of the DSU by Brazil , WT/DS267/AB/RW, adopted 
20 June 2008, DSR 2008:III, 809 
US – Wheat Gluten Appellate Body Report, United States – Definitive Safeguard Measures on 
Imports of Wheat Gluten from the European Communities , WT/DS166/AB/R, 
adopted 19 January 2001, DSR 2001:II, 717 
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 
 WT/DS406/AB/R 
Page vi  
 
ABBREVIATIONS USED IN THIS REPORT 
 
Abbreviation Description 
Doha Ministerial Decision Doha Ministerial Decision on Im plementation-Related Issues and 
Concerns, Decision of 14 November 2011, WT/MIN(01)/17 
DSB Dispute Settlement Body 
DSU Understanding on Rules and Procedures Governing the Settlement of 
Disputes 
FDA United States Food and Drug Administration  
FDA Guidance Guidance for Industry and FDA Staff, "General Questions and 
Answers on the Ban of Cigarettes that Contain Characterizing 
Flavors (Edition 2)", 23 December 2009 (Panel Exhibit IND-41) 
FFDCA United States Federal Food , Drug and Cosmetic Act, United States 
Code , Title 21, Chapter 9 
FSPTCA United States Family Smoking Prevention and Tobacco Control Act, 
Public Law No. 111-31, 123 Stat. 1776 (22 June 2009) (Panel Exhibit US-7) 
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) (Panel Exhibits IND-2 and US-67) 
ILC International Law Commission 
March 2011 TPSAC Report Report by the Tobacco Products Sc ientific Advisory Committee to 
the FDA, March 2011 available at <http://www.fda.gov/downloads /AdvisoryCommittees/CommitteesM eetingMaterials/Tobacco 
ProductsScientificAdvisoryCommittee/UCM247689.pdf>  
Panel Report Panel Report, United States – Measures Affecting the Production and 
Sale of Clove Cigarettes , WT/DS406/R 
Section 907(a)(1)(A)  Section 907(a)(1)(A) of the FFDCA (as amended by the  FSPTCA), 
codified at United States Code , Title 21, Chapter 9, section 
387g(a)(1)(A)  
TBT Agreement Agreement on Technical Barriers to Trade 
Vienna Convention Vienna Convention on the Law of Treaties , done at Vienna, 
23 May 1969, 1155 UNTS, 8 International Legal Materials 679 
WHO World Health Organization 
Working Procedures Working Procedures for Appellate Review , WT/AB/WP/6, 
16 August 2010 
WTO World Trade Organization 
WTO Agreement Marra kesh Agreement Establishing the World Trade Organization  
 
  WT/DS406/AB/R 
 Page 1 
 
 
WORLD TRADE ORGANIZATION  
APPELLATE BODY 
 
 
United States – Measures Affecting the 
Production and Sale of Clove Cigarettes 
 
United States, Appellant  
Indonesia, Appellee  
 Brazil, Third Participant  
Colombia, Third Participant 
Dominican Republic, Third Participant 
European Union, Third Participant 
Guatemala, Third Participant 
Mexico, Third Participant  
Norway, Third Participant  
Turkey, Third Participant   AB-2012-1 
 
 Present:  
 Oshima, Presiding Member 
 Ramírez-Hernández, Member  Van den Bossche, Member 
 
 
I. Introduction 
1. The United States appeals certain issues of law and legal interpretations developed in the 
Panel Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes1 (the 
"Panel Report").  The Panel was established on 20 July 2010 to consider a complaint by Indonesia 
with respect to a measure adopted by the United States that prohibits cigarettes with characterizing 
flavours, other than tobacco or menthol. 
2. Before the Panel, Indonesia claimed that the United States acted inconsistently with its 
substantive and procedural obligations under the Agreement on Technical Barriers to Trade  (the 
"TBT Agreement ") and the General Agreement on Tariffs and Trade 1994  (the "GATT 1994").  In 
particular, Indonesia claimed that Section 907(a)(1 )(A) of the United States Federal Food, Drug and 
Cosmetic Act2 (the "FFDCA")—as amended by the Family  Smoking Prevention and Tobacco Control 
Act3 (the "FSPTCA")—was inconsistent with Articles 2.1,  2.2, 2.5, 2.8, 2.9, 2.10, 2.12, and 12.3 of 
the TBT Agreement .  Alternatively, Indonesia claimed that Section 907(a)(1)(A) was inconsistent with 
Article III:4 of the GATT 19944, and could not be justified under Article XX(b) thereof.5 
                                                      
1WT/DS406/R, 2 September 2011. 
2Codified at United States Code , Title 21, Chapter 9, section 387g(a)(1)(A). 
3United States Family Smoking Prevention and Tobacco Control Act, Public Law No. 111-31, 
123 Stat. 1776 (22 June 2009) (Panel Exhibit US-7) . 
4Panel Report, para. 3.1. 
5Panel Report, para. 7.299 (referring to Indone sia's first written submission to the Panel, 
paras. 114-127). WT/DS406/AB/R 
Page 2  
 
3. The Panel Report was circulated to Members of the World Trade Organization (the "WTO") 
on 2 September 2011.  The Panel found that Section 9 07(a)(1)(A) was inconsistent  with Article 2.1 of 
the TBT Agreement because it accorded to imported clove ciga rettes less favourable treatment than 
that accorded to like menthol cigarettes of national origin.
6  Having found that Section 907(a)(1)(A) 
was inconsistent with Article 2.1 of the TBT Agreement , the Panel declined to rule on 
Indonesia's alternative claim under Article III:4 of the GATT 1994 and on the United States' related 
defence under Article XX(b) of the GATT 1994.7 
4. The Panel further found that the United States acted  inconsistently with Article 2.9.2 of the 
TBT Agreement  by failing to notify to WTO Members, thr ough the Secretariat, the products to be 
covered by the proposed Section 907(a)(1)(A), togeth er with a brief indication of its objective and 
rationale, at an appropriate early stage when  amendments and comments were still possible.8  T h e  
Panel also found that the United States acted inconsistently with Article 2.12 of the TBT Agreement  
by not allowing an interval of no less than six mont hs between the publication and the entry into force 
of Section 907(a)(1)(A).9 
5. Conversely, the Panel rejected Indonesia's claims under Articles 2.2, 2.5, 2.8, 2.9.3, 2.10, 
and 12.3 of the TBT Agreement .  More specifically, the Panel found that Indonesia failed to 
demonstrate that Section 907(a)(1)(A) was inconsistent with Article 2.2 of the TBT Agreement to the 
extent that its ban on clove cigarettes was more trad e restrictive than necessar y to fulfil the legitimate 
objective of reducing youth smoking, taking account of the risks non-fulfilment would create .10  The 
Panel also concluded that Indonesia failed to demonstrate that the United States had acted 
inconsistently with Article 2.5 of the TBT Agreement , because Indonesia did not request the United 
States to explain the justification for Section 907( a)(1)(A) "in terms of Articles 2.2 and 2.4 of the 
TBT Agreement ".11  Similarly, the Panel found that Indonesia failed to demonstrate that it would be 
"appropriate" to formulate the technical regulation in Section 907(a)(1)(A) in terms of "performance" 
rather than design or descriptive characteristics,  within the meaning of Article 2.8 of the 
TBT Agreement.12 
6. The Panel further found that Indonesia failed to demonstrate that the United States had acted 
inconsistently with Article 2.9.3 of the TBT Agreement , because Indonesia did not request the 
                                                      
6Panel Report, paras. 7.293 and 8.1(b). 
7Panel Report, paras. 7.294, 7.310, 8.3, and 8.4. 
8Panel Report, paras. 7.550 and 8.1(f). 
9Panel Report, paras. 7.595 and 8.1(h). 
10Panel Report, paras. 7.432 and 8.1(c). 
11Panel Report, paras. 7.461, 7.463, and 8.1(d). 
12Panel Report, paras. 7.497, 7.498, and 8.1(e).  WT/DS406/AB/R 
 Page 3 
 
 
United States to provide particulars or copies of Section 907(a)(1)(A) while it was still in draft form.13  
The Panel also found that, in the absence of any ev idence or arguments that  "urgent problems of 
safety, health, environmental protection or natio nal security" arose or threatened to arise upon 
adoption of Section 907(a)(1)(A), Article 2.10 of the TBT Agreement  would not be applicable to the 
present dispute.14  Finally, the Panel found that Indonesia failed to demonstrate that the United States 
had acted inconsistently with Article 12.3 of the TBT Agreement by failing to take account of the 
special development, financial, and trade needs of  Indonesia in the preparation and application of 
Section 907(a)(1)(A).15 
7. Accordingly, the Panel recommended that the Di spute Settlement Body (the "DSB") request 
the United States to bring Section 907(a)(1)(A) into c onformity with its obligations under Articles 2.1, 
2.9.2, and 2.12 of the TBT Agreement .16 
8. On 5 January 2012, the United States notified the DS B of its intention to appeal certain issues 
of law covered in the Panel Report and certain legal interpretations developed by the Panel, pursuant 
to Articles 16.4 and 17 of the Understanding on Rules and Procedures Governing the Settlement of 
Disputes  (the "DSU"), and filed a Notice of Appeal17 and an appellant's submission pursuant to 
Rules 20 and 21, respectively, of the Working Procedures for Appellate Review18 (the " Working 
Procedures ").  On 23 January 2012, Indonesia filed an appellee's submission.19  On 26 January 2012, 
Brazil, Colombia, the European Union, Mexico, No rway, and Turkey each filed a third participant's 
submission.20  On the same date, the Dominican Republic  and Guatemala notified their intention to 
appear at the oral hearing as third participants.21 
9. On appeal, the United States claims that the Pa nel erred in finding that the United States acted 
inconsistently with Article 2.1 of the TBT Agreement .  In particular, the United States claims that the 
Panel erred in finding that imported clove ciga rettes and domestic menthol cigarettes were like 
products within the meaning of Article 2.1.  The United States also challenges the Panel's finding that 
Section 907(a)(1)(A) accords to imported clove cigarett es less favourable treatment than that accorded 
to domestic like products.  The United States claims further that the Panel acted inconsistently with 
Article 11 of the DSU in reaching these findings.  Th e United States also claims that the Panel erred 
in finding that the United States acted in consistently with Article 2.12 of the TBT Agreement by not 
                                                      
13Panel Report, paras. 7.549, 7.551, and 8.1(g). 
14Panel Report, para. 7.507. 
15Panel Report, paras. 7.649 and 8.1(i). 
16Panel Report, para. 8.6. 
17WT/DS406/6 (attached as Annex I to this Report). 
18WT/AB/WP/6, 16 August 2010. 
19Pursuant to Rule 22 of the Working Procedures . 
20Pursuant to Rule 24(1) of the Working Procedures . 
21Pursuant to Rule 24(2) of the Working Procedures . WT/DS406/AB/R 
Page 4  
 
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 conditi onally appeals the Panel's reliance on the 
jurisprudence developed under Article XX(b)  of the GATT 1994 in its assessment of 
Indonesia's claims under Article 2.2, should Indonesia appeal the Panel's finding that the United States 
did not act inconsistently with Article 2.2 of the TBT Agreement .  Indonesia did not raise an other 
appeal of any issues under Article 2.2 of the TBT Agreement .  Therefore, the condition on which the 
United States bases its appeal of the Panel' s findings under Article 2.2 is not met. 
10. Two amicus curiae  briefs were received by the Appellate Body in relation to this appeal:  on 
24 January 2012 from the Campaign for Tobacco-Free Ki ds, the American Academy of Pediatrics, the 
American Cancer Society, the American Cancer Society Cancer Action Network, the American Lung 
Association, the American Medical Association, and the American Public Health Association;  and on 
26 January 2012 from the O'Neill Institute for Nationa l and Global Health Law at the Georgetown 
University Law Center.  The Appellate Body Divisi on hearing the appeal gave the participants and 
third participants an opportunity to express their views on the amicus curiae  briefs referred to above.  
The Division did not find it necessary to rely on these amicus curiae briefs in rendering its decision. 
11. On 25 January 2012, the Presiding Member of the Division received a letter from the 
Director-General of the World Health Organizati on (the "WHO") expressing interest and offering 
technical assistance in this appeal in areas cove red by the WHO's mandate.  The Division thanked the 
WHO Director-General for her letter, and indicat ed that it would reflect on the need for such 
assistance.  The Division asked the participants a nd third participants to comment on the letter from 
the WHO.  Of the participants, the United States submitted comments, and of the third participants, 
the European Union commented.  In  the light of the fact that the parties had placed a considerable 
amount of materials regarding WHO legal instrument s and the WHO's work in the area of tobacco 
control on the Panel record, and mindful of its ma ndate on appeal under Article 17.6 of the DSU, the 
Division did not deem it necessary to request assistance from the WHO. 
12. The oral hearing in this appeal was held on 9 and 10 February 2012.  The participants and 
six of the third participants (Brazil, Colombia, Guatemala, Mexico, Norway, and Turkey) made oral 
opening statements.  The participants and third pa rticipants subsequently responded to questions 
posed by the Members of the Division hearing the appeal.  WT/DS406/AB/R 
 Page 5 
 
 
II. Arguments of the Participants  and the Third Participants 
A. Claims of Error by the United States – Appellant 
1. Article 2.1 of the TBT Agreement  – "Like Products" 
13. The United States claims on appeal that the Pa nel erred in its interpretation and specific 
application of the term "like products" under Article 2.1 of the TBT Agreement , and requests the 
Appellate Body to reverse the Panel's findings in th is respect.  In particular, while agreeing with the 
overall approach adopted by the Panel in its lik e product analysis—that is, one that determines 
likeness based on the traditional "likeness" criteria, and in the light of the legal provision at issue and 
of the public health nature of the measure being challenged22—the United States contends that the 
Panel conducted an "incomplete and flawed" analysis with respect to two of the traditional "likeness" 
criteria, namely, end-uses and consumer tastes and habits.23 
(a) End-Uses 
14. The United States claims that the Panel erred by failing to perform a complete analysis of the 
different end-uses of clove and menthol cigarett es and by concluding that the end-use for both 
products is "to be smoked".24  In the United States' view, the Panel improperly dismissed the possible 
different end-uses presented by the United States—t hat is, satisfying an addi ction to nicotine, and 
creating a pleasurable experience associated with th e taste of the cigarette and aroma of the smoke25—
and erroneously based its ultimate conc lusion on an "overly narrow analysis".26 
15. The United States submits that a panel, when c onducting an end-use analysis, must consider 
the different uses of the products in question and not just the use that is a "common denominator" 
between the products.  In this regard, the United St ates relies on statements of the Appellate Body in 
EC – Asbestos  that "a panel must also examine the other, different  end-uses for products" and that "[i]t 
is only by forming a complete picture of the various end-uses of a product that a panel can assess the 
significance of the fact that products share a limited number of end-uses."27  According to the 
United States, it is undisputed that both clove and menthol cigarettes are used for smoking, but the Panel improperly limited its analysis to consid ering only such common use between the products 
while ignoring other relevant end-uses.  Menthol cigarettes, the United States posits, are used to 
                                                      
22United States' appellant's submission, paras. 37 and 41. 
23United States' appellant's submission, para. 42. 
24United States' appellant's submission, para. 43 (quoting Panel Report, para. 7.199). 
25United States' appellant's submission, para. 44. 
26United States' appellant's submission, para. 45. 
27United States' appellant's submission, para. 45 (quoting Appellate Body Report, EC – Asbestos , 
para. 119 (original emphasis)). WT/DS406/AB/R 
Page 6  
 
"satisfy the nicotine addictions of millions of sm okers in the United States", whereas clove cigarettes 
are primarily used "for experimentation and special social settings" and generally are not smoked to 
satisfy nicotine addiction in the US market.
28  
16. The United States further takes issue with the Pa nel's rejection of the different end-uses of 
clove and menthol cigarettes based on the argument that these end-uses are related to the reasons why a person might smoke a cigarette, and maintains that  the Panel erred in finding that end-uses and 
consumer tastes and habits are "mutually exclusive concepts".
29  Referring to the Appellate Body 
report in EC – Asbestos , the United States notes that, although cons umer tastes and habits constitute a 
"likeness" criterion separate from end-uses, consum er preferences are nonetheless relevant to how 
products are capable of being used.30   However, the United States contends that the Panel incorrectly 
considered end-uses "absent the relevant, real-world context"31 of how the products at issue are used 
in the relevant market.  Clove and menthol ciga rettes have different and "multi-faceted" end-uses—
that is, "habitual use and satisfying addi ction versus occasional, experimental use"32—which cannot, 
in the United States' view, be reduced to the simple , undisputed fact that both types of cigarettes are 
used for smoking.  This is particularly true, th e United States adduces, where the public health context 
relates to the different ways in which cigarettes are used in the re levant market.  According to the 
United States, the Panel erred by failing to consid er the "complete picture" and by disregarding 
evidence relating to such differences in use.33 
(b) Consumer Tastes and Habits 
17. The United States claims that the Panel failed to perform a complete analysis of consumer 
tastes and habits related to cl ove and menthol cigarettes.  In the United States' view, the Panel 
first made a legal error by excluding the tastes and ha bits of current adult consumers from its analysis.  
The United States further contends that the Panel act ed inconsistently with Article 11 of the DSU by 
refusing to examine evidence on how consumers in  the relevant market use clove and menthol 
cigarettes.34 
18. First, the United States maintains that the Panel erred in determining that it need not examine 
the tastes and habits of current adult consumers as pa rt of its analysis.  In the United States' view, by 
disregarding how current consumers perceive and u se the products at issue, the Panel erroneously 
                                                      
28United States' appellant's submission, para. 46. 
29United States' appellant's submission, para. 48. 
30United States' appellant's submission, para. 47 (quoting Appellate Body Report, EC – Asbestos , 
para. 102). 
31United States' appellant's submission, para. 48. 
32United States' appellant's submission, para. 49. 
33United States' appellant's submission, para. 49. 
34United States' appellant's submission, para. 50.  WT/DS406/AB/R 
 Page 7 
 
 
limited the scope of consumer tastes and habits  to one aspect of the public health basis for 
Section 907(a)(1)(A) of the FFDCA—use by young pe ople—and failed to capture the other aspect—
use by adult smokers—thereby nullifying consumer  tastes and habits as a meaningful criterion.35  
Consistent with the principle stated by the Appellate Body in EC – Asbestos , the Panel was required 
to examine evidence related to each of the criteri a set forth in the GATT Working Party report in 
Border Tax Adjustments , and to weigh " all of the relevant evidence".36  Accordingly, the United 
States claims that the Panel committed a fundamental error in excluding, a priori , an essential element 
from the analysis of consumer tastes and habits.37 
19. Moreover, the United States posits that, given the pa rticular nature of this dispute, the tastes 
and habits of current adult consumers are highl y relevant.  First, Section 907(a)(1)(A) draws 
regulatory distinctions among cigarettes based not only  on their appeal to potential smokers, but based 
on their uses by current adult smokers as well.  Banni ng cigarettes that are used by adults on a regular 
basis entails a risk of "straining the health care system or exacerbating the illicit market".38  Second, 
clove and other banned flavoured cigarettes are used in very small numbers and almost exclusively by 
young people, thus being "trainer" or "starter" ciga rettes, whereas menthol ci garettes are consumed by 
20 to 26 per cent of adult smokers in the United States.39  Consequently, the Un ited States argues, the 
products at issue pose different public health cha llenges:  clove cigarettes present a unique risk to 
young, uninitiated smokers, while menthol cigare ttes also have a significant impact on adults.40  
Finally, the particular flavour matters, in the sen se that adult smokers seldom use clove-flavoured 
cigarettes and do not perceive them to be like menthol cigarettes.41 
20. The United States further claims that the exclusion of current adult consumer tastes and habits 
cannot be justified by the Panel's finding on the d eclared legitimate objectiv e of Section 907(a)(1)(A) 
to prevent new young smokers from becoming addicted to cigarettes.42  Albeit agreeing with the Panel 
that the characteristics of the produc ts at issue must be examined in the light of the public health basis 
of the measure at issue43, the United States contends that there is  no textual basis in Article 2.1 of the 
TBT Agreement  to limit the consideration of the public hea lth distinctions to the immediate objective 
                                                      
35United States' appellant's submission, para. 58. 
36United States' appellant's submission, para. 56 (quoting Appellate Body Report, EC – Asbestos , 
paras. 109 (in turn referring to GATT Working Party Report, Border Tax Adjustments ) and 113 (original 
emphasis)). 
37United States' appellant's submission, para. 53. 
38United States' appellant's submission, para. 54. 
39United States' appellant's submission, para. 58 (referring to Panel Report, paras. 2.24, 2.25, 
and 7.391). 
40United States' appellant's submission, para. 55. 
41United States' appellant's submission, para. 58. 
42United States' appellant's submission, para. 59 (referring to Panel Report, paras. 7.116, 7.119, 7.201, 
and 7.206). 
43United States' appellant's submission, para. 59 (referring to Panel Report, paras. 7.245-7.249). WT/DS406/AB/R 
Page 8  
 
of the measure.
44  Rather, technical regulations inevitably reflect a balancing of other considerations 
relevant to public welfare—in this case, the add itional health concerns associ ated with heavily used 
cigarettes, such as possible increases in unregulated bl ack market cigarettes or strain on the healthcare 
system.45  The United States submits that the Panel ba sed its exclusion of cu rrent adult consumers on 
a narrow view of the measure's objective, which w as actually targeting a group of tobacco products 
"that uniquely  appeal to youth" without precluding access by adults to those cigarettes that are "most 
heavily used in the U.S. market".46  Even assuming that the Panel was correct to limit its assessment 
of the product distinctions on the basis of the primary legitimate objective of Section 907(a)(1)(A)—
that is, the "reduction of youth smoking"—the United States contends that, precisely because of the 
measure's distinction between adu lt and youth smoking behaviour, the Pa nel was required to take into 
account the comparative patterns of  use in the relevant market.47 
21. Second, the United States claims that the Pane l acted inconsistently with Article 11 of the 
DSU by disregarding critical evidence on how  consumers use and perceive the products48, and thereby 
came to a "fatally flawed" conclusion on consumer tastes and habits.49  In the United States' view, the 
Panel improperly disregarded critical survey evidence submitted by both parties on the basis that it 
was not clear and that the information presented therein was "not directly comparable", without duly 
examining such evidence accord ing to its probative force.50  According to the United States, the 
survey data were particularly relevant becau se the data provided evidence on how consumers and 
potential consumers "used and perceived different cigarettes in the United States ".51  In addition, the 
United States argues that the Panel based its c onclusions entirely on speculation and conjecture, 
without any evidentiary support on the record, and ul timately concluded that, for potential consumers, 
arguably, "any cigarette would lik ely be fine to start smoking".52  However, the United States submits, 
the reports used as evidence by the Panel "do not tell the whole story", because they focus on 
cigarettes with characterizing flavours, but do not present the whole picture as to how cigarettes 
actually are used and perceived in the United St ates, the relevant market in this dispute.53  According 
                                                      
44United States' appellant's submission, para. 60 (referring to Panel Report, para. 7.116). 
45United States' appellant's submission, para. 61. 
46United States' appellant's submission, para. 61. (original emphasis) 
47United States' appellant's submission, para. 63. 
48United States' appellant's submission, para. 64. 
49United States' appellant's submission, para. 68. 
50United States' appellant's submission, para. 67 (quoting Panel Report, para. 7.210).  The United States 
also stresses that, in the section of the Panel Report devoted to its analysis under Article 2.2 of the TBT Agreement , the Panel did rely upon the information provided in the surveys on market share. ( Ibid., 
para. 66) 
51United States' appellant's submission, para. 67. (original emphasis) 
52United States' appellant's submission, para. 68 (quoting Panel Report, para. 7.214). 
53United States' appellant's submission, para. 69 (referring to United States' response to Panel 
Question 44, para. 110;  and Indonesia's response to Panel Question 44, para. 97).  WT/DS406/AB/R 
 Page 9 
 
 
to the United States, the handling of the evidence by  the Panel falls short of an objective assessment 
of the facts and is therefore incompatible w ith the Panel's duty under Article 11 of the DSU.54 
2. Article 2.1 of the TBT Agreement  – "Treatment No Less Favourable" 
22. The United States claims that the Panel erre d in finding that Section 907(a)(1)(A) of the 
FFDCA accords to imported clove cigarettes less favourable treatment than that accorded to like 
domestic products, and requests the Appellate Body to  reverse this finding.  The United States also 
requests the Appellate Body to find that the Pane l acted inconsistently with Article 11 of the DSU 
when it found:  (i) that there were no domestic cigarettes with characterizing flavours other than 
menthol at the time of the ban;  and (ii) that Section 907(a)(1)(A) imposes no costs on any US entity. 
23. First, the United States argues that the Panel erroneously limited the scope of the products to 
be compared for the purposes of its less favourab le treatment analysis to one banned imported 
product—Indonesian clove cigarettes—and one  non-banned like domestic product—menthol 
cigarettes—thereby reaching the "flawed conclusion" that Indonesian clove cigarettes are treated less 
favourably than like domestic products.55  Referring to the Appellate Body report in EC – Asbestos , 
the United States posits that "the relevant analysis  is how the measure treats like imported products, as 
a group, and like domestic products, as a group".56  Accordingly, the Panel was required to consider 
the "treatment of all domestic and importe d cigarettes with characterizing flavors".57  However, in the 
United States' view, the Panel improperly exclude d, with respect to like domestic products, the 
treatment accorded by the measure to domestic cigare ttes with other characterizing flavours and, with 
respect to like imported products, the treatment ac corded to menthol cigarettes from other countries.58  
According to the United States, a proper less favourable  treatment analysis that considers all cigarettes 
that meet the criteria of "like products" demonstr ates that Section 907(a )(1)(A) bans only products 
comprising "a very small market segment in the Un ited States", and "does not alter the conditions of 
competition" as between like imported products, as a group, and like domestic products, as a group.59 
24. For the United States, the reference to treatment  accorded to the products imported from the 
territory of " any other  Member" in Article 2.1 does not compel the conclusion that only the treatment 
                                                      
54United States' appellant's submission, para. 69 (quoting Appellate Body Report, EC – Hormones , 
para. 133). 
55United States' appellant's submission, para. 74. 
56United States' appellant's submission, para. 75 (referring to Appellate Body Report, EC – Asbestos , 
para. 100).  See also Panel Report, US – Tuna II (Mexico) , para. 7.295. 
57United States' appellant's submission, para. 77. (original underlining)  Albeit disagreeing with the 
Panel's conclusion that clove and menthol cigarettes are like products, the United States stresses that "other 
cigarettes with characterizing flavors … would meet the Panel's criteria and thus belong to the category of 
cigarettes deemed by the Panel to be like products." ( Ibid., para. 78 (referring to Panel Report, para. 7.247)) 
58United States' appellant's submission, para. 79. 
59United States' appellant's submission, paras. 80 and 81. (original underlining) WT/DS406/AB/R 
Page 10  
 
accorded to the complaining Member's products are relevant.
60  In the United States' view, the main 
purpose of a de facto  less favourable treatment analysis is  to assess whether Section 907(a)(1)(A) 
legitimately draws distinctions am ong like products or whether it creates "a proxy for singling out the 
like products of the complaining Member for less favorable treatment".61  In order to make such an 
assessment, the analysis should consider the entire range of like products addressed by the measure.  
The question of less favourable treatment is not answer ed by the sole fact that clove cigarettes were 
banned while a single like domestic product (menthol cigarettes) was not.  In this case, the United 
States contends that the ban affected some importe d and domestic products, but "did not affect other 
domestic and imported like products".62 
25. In addition, to the extent that the Panel took  the view that it was limited by its terms of 
reference to consider only the products mentioned in Indonesia's request for the establishment of a 
panel63, the United States claims that the Panel erred in concluding that Indonesia, as the complaining 
party, "set the field of products to be compared"64—that is, "imported clove cigarettes versus  domestic 
menthol cigarettes".65  While defining which measures and clai ms a panel may consider, the terms of 
reference do not define the scope of the relevant pr oducts to analyze with respect to a discrimination 
claim, nor do they limit which defences a responding party may invoke.66  The United States notes 
that the question of which products should be comp ared in the less favourable treatment analysis was 
a point of argument between the parties in the pr esent dispute, and stresses that the complainant 
cannot a priori  limit the scope of the comparison by its selection of products in its panel request. 
26. Second, the United States takes issue with the Pa nel's statement that, "at the time of the ban, 
there were no domestic cigarettes with characterizing flavours other than menthol."67  T h e  
United States submits that such a statement reflect s a "mis-application of the legal standard" under 
Article 2.1 of the TBT Agreement .68  The Panel "improperly restrict[ed] the legal analysis" when it 
limited the comparison to only products that were on the market at the time the ban went into effect, 
without regard to the years preceding or forthcoming.  Article 2.1 of the TBT Agreement  does not 
contain any "rigid temporal limitation" to the evidence a panel may consider in conducting a less 
favourable treatment analysis.69  Therefore, the Panel should have taken into account the fact that 
                                                      
60United States' appellant's submission, para. 84 (referring to Panel Report, para. 7.275). 
61United States' appellant's submission, para. 84. 
62United States' appellant's submission, para. 85. (original underlining) 
63Request for the Establishment of a Panel by Indonesia, WT/DS406/2. 
64United States' appellant's submission, para. 87. 
65United States' appellant's submission, para. 86 (quoting Panel Report, para. 7.147 (original 
emphasis)). 
66United States' appellant's submission, para. 87. 
67United States' appellant's submission, para. 90 (quoting Panel Report, para. 7.289). 
68United States' appellant's submission, para. 91. 
69United States' appellant's submission, para. 91.  WT/DS406/AB/R 
 Page 11 
 
 
there were domestic cigarettes with characterizing flavours other than menthol in the years preceding 
the effective date of the ban.70  Moreover, the Panel incorrectly dismissed the fact that 
Section 907(a)(1)(A) was enacted specifically "to respond to an emerging  trend of products" that 
US producers "were actively exploring".71  In that respect, the United St ates stresses that the focus of 
Section 907(a)(1)(A) was "primarily U.S. production" , and that it is not unusual that producers will 
stop investing in products "even be fore the ban goes into effect".  This should not be construed, 
however, as evidence that US production "was not affected".72 
27. Third, the United States claims that the Panel failed to make an objective assessment of the 
facts, in violation of Article 11 of the DSU, by  ignoring unrebutted evidence showing that cigarettes 
with characterizing flavours other than menthol were marketed in the United States at the time of the 
ban.  The facts on record do not support the Panel' s finding that there were no domestically produced 
flavoured cigarettes—other than menthol—at the time of the ban.  In particular, the United States 
recalls that the Panel had already found that:  (i) th ere was at least one domestically produced brand of 
clove cigarettes on the market prior to the ban73;  (ii) the list of cigarettes authorized for sale in 2008 
and 2009 in several US states included at least 20 different brands of domestic flavoured cigarettes 
other than menthol;  and (iii) by 2008, just one year before the ban went into effect, at least 
four US companies were producing flavoured cigarettes.74 
28. Fourth, the United States claims that the Panel erred in concluding that any detriment to the 
competitive conditions for clove cigarettes in the US market could not be explained by factors 
unrelated to the foreign origin of the products.  Even assuming arguendo  that the Panel had properly 
identified the like imported and domestic products to be compared, its analysis of whether the less 
favourable treatment accorded to clove cigarettes w as related to the origin of the imported products 
was in error.75 
29. For the United States, under Article 2.1 of the TBT Agreement , a technical regulation may 
impose costs or burdens associated with imported products as compared to like domestic products 
without necessarily according less favourable treatment to the imported product, where these burdens 
                                                      
70United States' appellant's submission, para. 92 (refe rring to Indonesia's first written submission to the 
Panel, footnote 29 to para. 22;  United States' first written submission to the Panel, para. 51;  ACNielson 2008 
Data on Flavored Cigarettes in the United States (Panel  Exhibit US-52);  Examples of Cigarettes Certified for 
Sale in the United States as of 2009 (Panel Exhibit US-6 2);  New York List of Fire -Safe Certified Cigarettes as 
of 20 January 2009 (Panel Exhibit US-63);  and Maine List of Fire-Safe Certified Cigarettes as of 29 July 2009 
(Panel Exhibit US-64)). 
71United States' appellant's submission, para. 93. (original emphasis) 
72United States' appellant's submission, para. 94. 
73United States' appellant's submission, para. 97 (referring to Panel Report, para. 2.27). 
74United States' appellant's submission, paras. 97 and 98 (quoting Panel Report, paras. 2.27, 2.28, and 
footnote 524 to para. 7.289, in turn quoting Panel Exhibits US-52 and US-62 ( supra , footnote 70)). 
75United States' appellant's submission, para. 99. WT/DS406/AB/R 
Page 12  
 
are explained by a factor or circumstance other than the origin of the products.
76  In this regard, the 
United States stresses that there are a number of prior WTO reports in which a detrimental effect on 
an imported product was not related to its origin, but rather to other factors—such as the product's 
particular market share or import profile, a difference in  the real or perceived safety of the products at 
issue, or the choices of the producers themselves, as private actors.77  According to the United States, 
the Panel failed to consider any arguments or evid ence bearing upon other relevant factors (unrelated 
to origin) that could have explained the detrim ent to the competitive situation of imported clove 
cigarettes.78 
30. In the United States' view, in finding that the reason for excluding menthol cigarettes from the 
ban under Section 907(a)(1)(A) related to "the cost s that might be incurred by the United States were 
it to ban menthol cigarettes"79, the Panel failed to examine whethe r the detriment to the competitive 
situation of clove cigarettes was related to their origin.80  Besides the fact that "it is unclear" what the 
Panel meant by "costs", the United States submits that  the text of Article 2.1 requires panels to focus 
on the comparative treatment of products.  Therefore,  Article 2.1 contains "no basis" for a comparison 
of costs imposed on foreign producers with those avoided by "any U.S. entity".81  In any case, the 
United States posits, the Panel's finding does not show  that any detrimental effect to the competitive 
conditions for clove cigarettes compared to menthol cigarettes was related to the national origin of 
imported products.  In fact, the costs incurred by the United States if it were to ban menthol 
cigarettes—that is, "the potential impact on the h ealth care system and the potential development of a 
black market and smuggling of menthol cigarettes"82—would remain unaltered regardless of where 
menthol cigarettes were produced, and even if all menthol cigarettes were imported.83 
31. In addition, the United States claims that the Panel acted inconsistently with its duties under 
Article 11 of the DSU by finding, wit hout an appropriate evidentiary basis84, that 
Section 907(a)(1)(A) does not impose " any costs on any U.S. entity".85  The United States recalls that 
Article 11 requires a panel to refrain from issuing "affirmative findings that lack a basis in the 
                                                      
76United States' appellant's submission, para. 101 (referring to Panel Report, para. 7.269;  Appellate 
Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 96;  and United States' second written 
submission to the Panel, paras. 137-144). 
77United States' appellant's submission, para. 102 (referring to Appellate Body Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 96;  Panel Report, EC – Approval and Marketing of Biotech 
Products , para. 7.2514;  Panel Report, US – Tuna II (Mexico) , paras. 7.331, 7.332, and 7.340;  and 
United States' second written submission to the Panel, paras. 138 and 140). 
78United States' appellant's submission, paras. 103 and 104. 
79United States' appellant's submission, para. 105 (quoting Panel Report, para. 7.289). 
80United States' appellant's submission, para. 105. 
81United States' appellant's submission, para. 106. 
82United States' appellant's submission, para. 107 (quoting Panel Report, para. 7.289). 
83United States' appellant's submission, para. 107. 
84United States' appellant's submission, para. 113. 
85United States' appellant's submission, para. 109. (original emphasis)  WT/DS406/AB/R 
 Page 13 
 
 
evidence contained in the panel record".86  In this dispute, the United States posits, there was no basis 
for the Panel to conclude that the measure avoids  costs to any US entity, as underscored by the fact 
that the Panel "barely cited the record".87  According to the United States, the Panel ignored the fact 
that the United States Food and Drug Administrati on (the "FDA") was charged with enforcing the 
measure, thereby incurring "costs" as a US entity.88  Moreover, the Panel did not take into account 
that the effect of the measure on US production w as "pre-emptive and closed off a potential market 
that U.S. producers were actively exploring", nor did it consider that, by reducing youth smoking, 
Section 907(a)(1)(A) reduces demand for all cigarettes and thus "shrinks the U.S. adult cigarette 
market".89 
3. Article 2.12 of the TBT Agreement  – "Reasonable Interval" 
32. The United States claims that the Pane l's analysis under Article 2.12 of the TBT Agreement  
contains three errors that led it to find, incorrec tly, that the United States acted inconsistently with 
Article 2.12.  First, the United States argues that the Panel attributed an incorrect "interpretative 
value" to the Doha Ministerial Decision on Implementation-Related Issues and Concerns90 (the "Doha 
Ministerial Decision") in interpreting the meaning of Article 2.12.  Second, the United States argues that the Panel incorrectly found that Indonesia had established a prima facie  case of inconsistency 
with Article 2.12.  Lastly, the United States argues th at, regardless of whether the Panel was correct in 
finding that Indonesia had established a prima facie  case of inconsistency with Article 2.12, the Panel 
incorrectly determined that the United St ates did not rebut Indonesia's arguments.
91 
33. The United States first claims that the Panel attr ibuted an incorrect "interpretative value" to 
paragraph 5.2 of the Doha Ministerial Decisi on by treating paragraph 5.2 as though it were an 
authoritative interpretation adopted by the Minister ial Conference pursuant to Article IX:2 of the 
Marrakesh Agreement Es tablishing the World Trade Organization  (the " WTO Agreement "), despite 
not having found that it has this legal status.  The United States further argues that the legal value of 
paragraph 5.2 of the Doha Ministerial Decision is, at  most, a "means of supplemental interpretation" 
under Article 32 of the Vienna Convention on the Law of Treaties92  (the " Vienna Convention ").93  
Therefore, while paragraph 5.2 of the Doha Minist erial Decision may be used to confirm the meaning 
of the term "reasonable interval" in Article 2.12 of the TBT Agreement , it may not be applied as a 
                                                      
86United States' appellant's submission, para. 110 (quoting Appellate Body Report, Canada – Wheat 
Exports and Grain Imports , para. 181). 
87United States' appellant's submission, para. 110. 
88United States' appellant's submission, para. 110. 
89United States' appellant's submission, para. 111. 
90Decision of 14 November 2011, WT/MIN(01)/17. 
91United States' appellant's submission, para. 123. 
92Done at Vienna, 23 May 1969, 1155 UNTS 331;  8 International Legal Materials 679. 
93United States' appellant's submission, para. 126. WT/DS406/AB/R 
Page 14  
 
"rule" that can be relied upon as the exclusive basi s for concluding that the term "reasonable interval" 
means "not less than six months".
94 
34. According to the United States, the Doha Mini sterial Decision "preceded by several months"95 
a TBT Committee decision that took note of paragra ph 5.2 of the Doha Ministerial Decision and, 
therefore, the Ministerial Conference could not have acted on a recommendation of the Council for Trade in Goods, as Article IX:2 of the WTO Agreement  requires for the adoption of multilateral 
interpretations of agreements contained in Annex 1 to the WTO Agreement . 
35. Second, the United States claims that the Panel incorrectly found that Indonesia had 
established a prima facie case of inconsistency with Article 2.12 where it did not establish that the 
interval period was unreasonable in the light of the impact on the ability of exporting Members to 
adapt to the requirements of Section 907(a)(1)(A) of the FFDCA.
96  The United States submits that 
Indonesia never provided any  evidence or legal argument that demonstrates that the three-month 
period allowed by the United States prejudiced the ability of any foreign producer, including 
Indonesian producers, to adapt to the requirements of Section 907(a)(1)(A).97 
36. The United States argues further that, "[e]ven assuming arguendo that the Panel was correct 
in deciding that the elements of the prima facie case could be drawn exclusively from paragraph 5.2", 
the Panel erred in finding that In donesia had succeeded in establishing a prima facie case under the 
terms of that paragraph98, because Indonesia would have had to establish "with evidence and 
argument" that Section 907(a)(1)(A) presents a "nor mal" situation and does not constitute one of the 
non-urgent cases where it would be reasonable to have a shorter interval.99  The United States submits 
that Indonesia would also have had to establish that "allowing an interval period of at least six months 
would not render the fulfillment of the objectiv e pursued by Section 907(a)(1)(A) ineffective".100 
37. According to the United States, the Panel b ased its finding that Indonesia had established a 
prima facie case entirely on a "single"  statement made by Indonesia 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 fulfill the objectives of the Act".101  According to the 
United States, "Indonesia's assertion does not demons trate what the Panel cl aimed Indonesia needed 
                                                      
94United States' appellant's submission, para. 126 (quoting Panel Report, para. 7.559). (footnote 
omitted) 
95United States' appellant's submission, para. 125. 
96United States' appellant's submission, para. 131. 
97United States' appellant's submission, para. 133. 
98United States' appellant's submission, para. 135. 
99United States' appellant's submission, paras. 135 and 138. 
100United States' appellant's submission, para. 136. 
101United States' appellant's submission, para. 147 (quoting Panel Report, para. 7.587, in turn quoting 
Indonesia's first written submissi on to the Panel, para. 145).  WT/DS406/AB/R 
 Page 15 
 
 
to prove—that a six month interval period would be  effective in fulfilling the legitimate objective of 
Section 907(a)(1)(A)".102 
38. Third, the United States claims that, even if Indonesia did establish a prima facie  case, the 
Panel improperly found that the United States did not rebut that prima facie  case.  According to the 
United States, "no matter what weight"103 is attributed to the Doha Ministerial Decision, Indonesia 
was required to establish a prima facie  case under the terms of Article 2.12 of the TBT Agreement .  In 
the United States' view, the evidence and argument be fore the Panel on whether the interval period 
chosen allowed time for Indonesian producers to  adapt their products to the requirements of 
Section 907(a)(1)(A) showed that "the difference be tween the three and six month interval periods 
had no impact  on Indonesian producers".104  According to the United Stat es, the fact that "Indonesian 
producers, even 16 months after the enactment of the FSPTCA, had not adjusted their product lines to 
produce tobacco or menthol-flavoured cigarettes"105 is sufficient evidence to rebut the prima facie  
case that the Panel found Indonesia to have established.   Accordingly, the Panel committed legal error 
in finding that "the United States has not rebutted" Indonesia's prima facie  case.106 
B. Arguments of Indonesia – Appellee 
1. Article 2.1 of the TBT Agreement  – "Like Products" 
39. Indonesia requests the Appellate Body to rej ect the United States' appeal against the 
Panel's finding that clove and menthol cigarettes are li ke products within the meaning of Article 2.1 of 
the TBT Agreement .  In Indonesia's view, the United States' obj ection is not about the legal findings of 
the Panel, but about the appropriate weight to give to certain evidence and findings of fact.  According 
to Indonesia, in many of its claims, the United Stat es is simply attempting to disguise its disagreement 
with the Panel's findings of fact as legal error.107  Indonesia also recalls that the United States did not 
appeal the Panel's conclusion that clove an d menthol cigarettes share similar physical 
characteristics.108 
                                                      
102United States' appellant's submission, para. 149. (footnote omitted) 
103United States' appellant's submission, para. 132. 
104United States' appellant's submission, para. 152. (original emphasis) 
105United States' appellant's submission, para. 152 (quoting Panel Report, para. 7.583). 
106United States' appellant's submission, para. 153 (quoting Panel Report, para. 7.594). 
107Indonesia's appellee's submission, para. 65. 
108Indonesia's appellee's submission, para. 66. WT/DS406/AB/R 
Page 16  
 
(a) End-Uses 
40. Indonesia takes issue with the United States' c ontention that the Panel "over-simplified" its 
analysis in finding that the end-use of both products at issue is "to be smoked".
109  In Indonesia's view, 
the United States' claim that clove and menthol cigarettes have different end-uses because clove 
cigarettes are smoked only occasionally while menthol  cigarettes are used regularly by addicted 
smokers has no merit and should be rejected by the A ppellate Body.  At the outset, Indonesia recalls 
that, in Philippines – Distilled Spirits , the United States correctly noted that "there is no support for 
the [] proposition that a product consumed on special occasions cannot be in competition with a 
routinely purchased product".110 
41. Indonesia first submits that the Panel examined  end-uses pursuant to prior guidance from the 
Appellate Body.  In particular, in accordan ce with the Appellate Body's guidance in EC – Asbestos , 
the Panel noted that the definition of "end-uses"  is "the extent to which two products are capable  of 
performing the same function".111  According to Indonesia, in its finding with respect to end-uses, the 
Panel also properly gave special consideration to the fact that Section 907(a)(1)(A) of the FFDCA is a 
public health measure aimed at addressing youth smoking.  In Indonesia's view, moreover, even 
assuming arguendo  that the end-uses put forward by the Un ited States were pertinent ones, the United 
States presented no evidence showing that clove a nd menthol cigarettes were not both capable of 
performing the end-uses of satisfying a nicotine addiction and creating a pleasurable experience.112  In 
addition, Indonesia contends that the Panel did not dismiss out-of-hand the possibility that products 
may have more than one end-use, but rather simply concluded that the products at issue in the present 
case did not have the specific end-u ses suggested by the United States.113 
42. Second, Indonesia submits that the Panel di d not ignore the alternative end-uses for the 
products at issue proposed by the United States, but rather went to great lengths to consider the evidence regarding end-uses, including those additi onal end-uses put forth by the United States.  
According to Indonesia, the Panel addressed the questi on of whether "regular use" is different from 
"occasional use", and carefully laid out in its Re port the United States' argument that delivering 
nicotine to addicted smokers must be consider ed as a separate end-use.  However, the Panel 
eventually found that the United States ' argument on end-uses was "circular".
114  Indeed, Indonesia 
                                                      
109Indonesia's appellee's submission, para. 67. 
110Indonesia's appellee's submission, para. 68 (quoting Appellate Body Reports, Philippines – Distilled 
Spirits , para. 71). 
111Indonesia's appellee's submission, para. 71 (referring to Panel Report, para. 7.191, in turn referring to 
Appellate Body Report, EC – Asbestos , para. 117). (original emphasis) 
112Indonesia's appellee's submission, para. 73. 
113Indonesia's appellee's submission, para. 74 (referring to Panel Report, para. 7.198). 
114Indonesia's appellee's submission, para. 75.  WT/DS406/AB/R 
 Page 17 
 
 
argues, the Panel simply was not persuaded by the merits of the argument of the United States115 and 
proceeded to conclude—based on evidence showing that both clove and menthol cigarettes were 
capable of delivering nicotine116—that the end-use of both types of cigarettes was "to be smoked".117  
Although the United States asserted that there w as an "occasional"-use cigarette market, it provided 
little evidence in support of this claim.118  Accordingly, Indonesia subm its that the Panel did not 
commit errors of law or fail to make an objec tive assessment of the evidence, and requests the 
Appellate Body to uphold the Panel's conclusion th at clove and menthol cigarettes share the same 
end-use of "being smoked".119 
(b) Consumer Tastes and Habits 
43. Indonesia first submits that the Panel did not comm it a legal error in its analysis of consumer 
tastes and habits, but rather conducted a thorough an alysis, acted consistently with guidance from the 
Appellate Body and, after weighing all the evidence on the record, concluded that consumer tastes and 
habits are similar with respect to clove and menthol cigarettes.  In Indonesia's view, the United States 
simply disagrees with the Panel's conclusion.120  According to Indonesia, when presenting its claims 
of error, the United States ignored the Appellate  Body's view that it is not necessary to show actual  
substitution by consumers when assessing "the exte nt to which consumers perceive and treat the 
products as alternative means of perform ing particular functions in order to satisfy a particular want or 
demand".121  Indonesia contends that the United Stat es failed to present evidence showing that 
consumers, whether adult or youth,  would be unwilling to substitute clove and menthol cigarettes for 
the end-use of smoking.  Indonesia argues that the United States is wrong in presuming that consumer 
tastes and habits must be identical to be like, cons idering that the Appellate Body found that products 
that are close to being perfectly substitutable can  be like products.  Indonesia further submits that 
there is sufficient evidence on record supporting the fact that young smokers and pre-smoking youth 
view clove and menthol cigarettes "as at least  close to substitutable".122 
44. Indonesia disagrees with the Unite d States' claim that the Panel erred by failing to include 
addicted adult smokers in the comparison of consumer  tastes and habits.  In its view, the Panel's first 
obligation was to determine the objective of the measure, and then determine which consumers to 
                                                      
115Indonesia's appellee's submission, para. 77. 
116Indonesia's appellee's submission, para. 78 (referring to Panel Report, para. 7.196). 
117Indonesia's appellee's submission, para. 76 (referring to Panel Report, para. 7.199). 
118Indonesia's appellee's submission, para. 78 (referring to United States' response to Panel 
Question 41, paras. 104-106). 
119Indonesia's appellee's submission, para. 79. 
120Indonesia's appellee's submission, para. 80. 
121Indonesia's appellee's submission, para. 81 (quoting Appellate Body Report, EC – Asbestos , 
para. 101). (emphasis added by Indonesia omitted) 
122Indonesia's appellee's submission, para. 82 (referring to Appellate Body Reports, Philippines – 
Distilled Spirits , para. 149). (original emphasis) WT/DS406/AB/R 
Page 18  
 
compare "in light of the context and the object and purpose of the provision at issue" and of the 
measure.
123  Indonesia recalls that the United States in itially agreed with the Panel's focus on the 
public health aspects of Section 907(a)(1)(A), and only subsequently took issue with the Panel's 
linkage "of the consideration of likeness under Ar ticle 2.1 with the objective of the measure".124  
According to Indonesia, the Panel did not fail to c onsider Section 907(a)(1)(A) as an integral whole.  
Rather, in the light of the measure's objective of  reducing youth smoking, th e Panel concluded that 
"the perception of consumers, or rather potentia l consumers, can only be assessed with reference to 
the health protection objective of the technical regulation at issue".125 
45. Indonesia further submits that, contrary to what  the United States alleges, the Panel did not 
exclude current consumers from its analysis, since it did include current young smokers.  According 
to Indonesia, what the Panel did was not to include  the tastes and habits of adults in its analysis126, but 
to lay out very carefully the basis for its decision to focus on current and pre-smoking youth.127  
Indonesia notes that the Panel est ablished that the purpose of S ection 907(a)(1)(A) was to reduce 
youth smoking, whereas it rejected that a second obj ective of the measure was to avoid the potential 
negative consequences or costs associated with banni ng products to which tens  of millions of adults 
are chemically and psychologically addicted.128  Accordingly, the Panel evaluated the consumer tastes 
and habits of youth, following the guidance set out by  the Appellate Body to consider 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 wh ich that provision may apply".129 
46. Second, Indonesia submits that, in considering evidence regarding consumer tastes and habits, 
the Panel did not exceed its discretion as the trier of facts, and made an objective assessment of the 
facts in accordance with Article 11 of the DSU.  Indonesia notes, at the outset, that the United States 
inaccurately cited to the Panel Report when adduc ing that the Panel focused only on potential young 
smokers.130  On the contrary, Indonesia posits, the Panel specifically identified the consumers at issue 
                                                      
123Indonesia's appellee's submission, para. 83 (quoting Appellate Body Report, EC – Asbestos , 
paras. 88 and 89). (emphasis added by Indonesia omitted) 
124Indonesia's appellee's submission, para. 84 (referring to United States' appellant's submission, 
para. 60). 
125Indonesia's appellee's submission, para. 86 (quoting Panel Report, para. 7.119). 
126Indonesia's appellee's submission, para. 87 (referring to United States' appellant's submission, 
para. 54). 
127Indonesia's appellee's submission, para. 88 (referring to Panel Report, para. 7.119). 
128Indonesia's appellee's submission, paras. 90 and 91. 
129Indonesia's appellee's submission, para. 92 (quoting Appellate Body Report, Japan – Alcoholic 
Beverages II , p. 21, DSR 1996:I, 97, at 114). 
130Indonesia's appellee's submission, para. 100 (referring to United States' appellant's submission, 
para. 64).  WT/DS406/AB/R 
 Page 19 
 
 
in this case as " young smokers and  potential young smokers".131  In addressing the United States' 
specific claims, Indonesia argues that the Panel did not wilfully disregard or distort evidence.  Rather, 
in Indonesia's view, the Panel carefully reviewed the survey evidence and de voted two paragraphs and 
five footnotes in its Report to explain that th e survey data did not provide clear guidance on 
comparing consumer tastes and habits, given that the research parameters varied from survey to 
survey.132  Indonesia contends that the Panel's approa ch to the survey evidence hardly amounts to 
excluding it a priori  but, rather, that the Panel, acting within  its discretion, simply did not place the 
same importance on the evidence concerning addi cted adult smokers as did the United States.133 
47. Indonesia further submits that the Panel did not make affirmative findings of fact that were 
not grounded on evidence.  In Indonesia's view, while not relying on certain evidence put forward by the United States, the Panel identified and relied on other evidence on the record proving that both 
clove and menthol cigarettes were "trainer" or  "starter" cigarettes that appeal to youth.
134  According 
to Indonesia, the Panel methodically described a number of sources of evidence (the FDA, the 
American Lung Association, the WHO, the Nati onal Survey on Drug Use and Health, and the 
Tobacco Products Scientific Advisory Council) indi cating that flavoured cigarettes appeal to youth 
and novice smokers because their characterizing flavour s mask the harshness of tobacco.  It was based 
on this evidence that the Panel concluded that all these flavoured cigarettes are perceived as vehicles 
to start smoking.135 
48. Lastly, Indonesia adds that the Panel did not co mmit an egregious error in declining to accord 
the same weight as the United States sought regarding the addiction rates of use of clove and menthol 
cigarettes by youth and adults.  Refe rring to Appellate Body reports in EC – Bed Linen (Article 21.5 – 
India), Australia – Salmon , and Canada – Wheat Exports and Grain Imports , Indonesia highlights 
that panels are given "great latitude"136 in determining what evidence to consider in evaluating the 
validity of claims and that a panel's decision not to  rely on some of the facts submitted by one of the 
parties would not by itself constitute legal error.137  In conclusion, Indonesia requests the Appellate 
Body to reject the United States' claims with respect to the Panel's findings on consumer tastes and 
                                                      
131Indonesia's appellee's submission, para. 100 (quoting Panel Report, para. 7.232). (emphasis added by 
Indonesia) 
132Indonesia's appellee's submission, para. 104 (referr ing to Panel Report, paras. 7.209 and 7.210 and 
footnotes 426-430 thereto). 
133Indonesia's appellee's submission, para. 106. 
134Indonesia's appellee's submission, para. 111. 
135Indonesia's appellee's submission, paras. 112-114. 
136Indonesia's appellee's submission, para. 116. 
137Indonesia's appellee's submission, paras. 115-117 (referring to Appellate Body Report, EC – Bed 
Linen (Article 21.5 – India) , para. 177;  Appellate Body Report,  Australia – Salmon , para. 267;  and Appellate 
Body Report, Canada – Wheat Exports and Grain Imports , para. 186). WT/DS406/AB/R 
Page 20  
 
habits, and to uphold the Panel's de termination that clove and menthol  cigarettes are like products for 
purposes of Article 2.1 of the TBT Agreement .
138 
2. Article 2.1 of the TBT Agreement  – "Treatment No Less Favourable" 
49. Indonesia claims that the Panel did not err in finding that, under Section 907(a)(1)(A) of the 
FFDCA, imported clove cigarettes are treated less favourably than domestic menthol cigarettes for the purposes of Article 2.1 of the TBT Agreement .  In particular, Indonesia contends that the Panel did not 
commit error in identifying the products to be compar ed for its less favourable  treatment analysis, and 
properly found that the less favourable treatment a ccorded to clove cigarette s cannot be explained by 
factors unrelated to their foreign origin.  Indonesi a further maintains that the Panel did not fail to 
make an objective assessment of the facts in evaluating the evidence before it, thereby acting 
consistently with Article 11 of the DSU. 
50. First, Indonesia argues that the United States misinterprets the Appellate Body report in EC – 
Asbestos  and the panel report in US – Tuna II (Mexico)  as requiring the Panel to have included 
treatment of cigarettes with characterizing flavours other than clove and menthol in its less favourable treatment analysis.
139  While the panels in both of the a bove disputes had conducted an initial like 
product analysis of a group of products140, the scope of the like produc ts to be considered in 
evaluating less favourable treatment was limited to the imported and domestic products at issue, and 
did not extend to "other potentially 'like' products in general".141  Since the products at issue in this 
dispute had been identified as being imported clove  cigarettes and domestically produced menthol 
cigarettes in the United States, the Panel correctly assessed likeness only as between these 
two categories of products and, as a consequence, properly identified those products for comparison 
in its less favourable treatment analysis.142  Moreover, because neither party argued before the Panel 
that clove cigarettes were like ci garettes with other characterizing flavours, had the Panel included 
cigarettes with characterizing flavours other than clove and menthol in its analysis, it would have 
made a finding on a claim that was not before it, thus acting inconsistently with Article 11 of the 
DSU.143 
51. Indonesia further rejects the United States' cont ention that the Panel incorrectly narrowed the 
scope of products to be compared on the basis of its terms of reference.  Indonesia dismisses this 
                                                      
138Indonesia's appellee's submission, para. 118. 
139Indonesia's appellee's submission, para. 121 (referring to United States' appellant's submission, 
para. 77). 
140Indonesia's appellee's submission, para. 126. 
141Indonesia's appellee's submission, para. 130. 
142Indonesia's appellee's submission, para. 139 (referring to Panel Report, para. 7.277). 
143Indonesia's appellee's submission, paras. 140 and 141;  see also para. 142 (quoting Appellate Body 
Report, Chile – Price Band System , para. 173).  WT/DS406/AB/R 
 Page 21 
 
 
argument as speculative and emphasizes that the Panel re ferred to its terms of reference in the context 
of its like products analysis.144  The Panel never contemplated that flavoured cigarettes other than 
clove and menthol cigarettes could be included in the like products analysis, which would be 
consistent with its terms of re ference.  Moreover, Indonesia's pa nel request and its subsequent 
submissions demonstrate that Indonesia raised no claims and made no arguments with respect to 
cigarettes with characterizing flavours other than clove or menthol.145  Accordingly, the question of 
whether the Panel's terms of reference "could ha ve allowed a finding of likeness" between clove 
cigarettes and other flavoured cigarettes "is moot".146  Indonesia considers that, "absent a finding of 
likeness between clove and cigarettes with other ch aracterizing flavors", the Panel could not have 
included these other flavoured cigarettes in  its less favourable treatment analysis.147 
52. Second, Indonesia argues that the Panel did not  exceed its discretion when considering the 
effect of Section 907(a)(1)(A) on those products that existed at the time the measure went into effect.  
Indonesia characterizes the United States' ar gument in this respect as "irrelevant"148, and adds that the 
Panel acted within the limits of its discretion in  determining the time period for which a comparison 
was to be made.  While Indonesia agrees that there is "no rigid temporal limitation"149 on the 
timeframe for analyzing less favourable treatment, neith er is there a mandate to consider any specific 
timeframe for this analysis.150  Moreover, Indonesia submits that the United States is arguing that the 
Panel should have assessed the treatment of the imported product—clove ci garettes—and a domestic 
product that had not been found to be like—other flavoured cigarettes.  However, the "relevant 
comparison" had to be whether the measure at is sue modified the conditions of competition "to the 
detriment of imported clove cigarettes as compared  to menthol cigarettes, which were not banned".151 
53. Third, Indonesia disagrees with the United Stat es' claim that the Panel acted inconsistently 
with Article 11 of the DSU by failing to consider  evidence demonstrating that cigarettes with 
characterizing flavours other than clove or menthol were being sold in the United States at the time 
the measure went into effect.  According to Indonesia, because the appropriate products for 
comparison in the less favourable treatment analysis were clove and menthol cigarettes, the existence 
of other flavoured cigarettes at the time the ban was imposed is immaterial.  Furthermore, Indonesia 
                                                      
144Indonesia's appellee's submission, paras. 147 and 148 (referring to United States' appellant's 
submission, para. 86;  and Panel Report, paras. 7.124-7.127). 
145Indonesia's appellee's submission, paras. 149 and 150 (referring to Indonesia's panel request, pp. 1-2;  
and Indonesia's responses to Panel Questions 27 and 85). 
146Indonesia's appellee's submission, para. 150. 
147Indonesia's appellee's submission, para. 150. 
148Indonesia's appellee's submission, para. 151. 
149Indonesia's appellee's submission, para. 152 (quoting United States' appellant's submission, para. 89). 
150Indonesia's appellee's submission, para. 152;  see also para. 154 (quoting Panel Report, US – Tuna II 
(Mexico) , paras. 7.299 and 7.300). 
151Indonesia's appellee's submission, para. 157. WT/DS406/AB/R 
Page 22  
 
submits that the Panel did consider and weigh the evidence submitted by the United States regarding 
the availability of other flavoured cigarettes, but eventually did not find it compelling.
152  Indonesia 
also points out that evidence on the record showed  that the domestically produced brand of clove 
cigarettes "accounted for a negligible share of all clove cigarettes sold  in the United States".153  In 
Indonesia's view, the fact that the Panel did not place the same weight on su ch evidence as did the 
United States does not amount to a violation of Article 11 of the DSU. 
54. Fourth, Indonesia takes issue with the United States' claim  that the Panel applied the incorrect 
legal framework in determining whether the less fa vourable treatment accorded to clove cigarettes 
could be explained by factors unrelated to their fo reign origin.  Indonesia observes that the Appellate 
Body jurisprudence regarding Article III:4 of th e GATT 1994 provides useful guidance in the present 
dispute154 and that, under that provision, a less favourable treatment analysis only involves 
determining whether a measure has the effect of  modifying the conditions of competition to the 
detriment of imported products.155  According to Indonesia, the United States' claim that no less 
favourable treatment exists when the detrimental eff ect on an imported product is not attributable to 
its foreign origin, but to some other factor, is based  on a "misreading" of the Appellate Body report in 
Dominican Republic – Import and Sale of Cigarettes .156  On this basis, Indonesia posits, the 
United States is "attempt[ing] to create a new criterion" when it suggests that a finding of less favourable treatment under Article 2.1 of the TBT Agreement  would be possible only if a measure's 
detrimental effects are tied to the forei gn origin of the imported product at issue.
157  In fact, no panel 
or Appellate Body report has ever required u nder Article III:4 of the GATT 1994 "both 'a less 
favourable treatment' test and a second test 'based on national origin'".158  In other words, Indonesia 
contends that the Panel's conclusion that importe d clove cigarettes are treated less favourably than 
domestic menthol cigarettes—because the former are banned from the US market, whereas the latter 
                                                      
152Indonesia's appellee's submission, paras. 158 and 162 (referring to Panel Report, footnote 524 to 
para. 7.289). 
153Indonesia's appellee's submission, para. 164 (referring to Panel Report, paras. 2.26 and 2.27;  and 
letter dated 25 March 2008 from the President of the Tobacco Merchants Association, Inc. (Panel Exhibit IND-12)). 
154Indonesia's appellee's submission, para. 169 (referring to Panel Report, para. 7.269, in turn referring 
to Appellate Body Report, Korea – Various Measures on Beef , para. 137;  and Appellate Body Report, 
Dominican Republic – Import and Sale of Cigarettes , para. 96). 
155Indonesia's appellee's submission, para. 172 (referring to Indonesia's opening statement at the first  
Panel meeting, paras. 26 and 58;  Indonesia's response  to Panel Question 52;  and Indonesia's second written 
submission to the Panel, para. 99). 
156Indonesia's appellee's submission, para. 173 (referring to Appellate Body Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 96). 
157Indonesia's appellee's submission, para. 174 (referring to Brazil's oral statement at the Panel meeting 
with the third parties, para. 11;  and Indonesia's s econd written submission to the Panel, para. 98). 
158Indonesia's appellee's submission, paras. 179-181 (quoting Appellate Body Report, Korea – Various 
Measures on Beef , para. 135;  and Appellate Body Report, Thailand – Cigarettes (Philippines) , paras. 128 
and 134;  and referring to Panel Report, Mexico – Taxes on Soft Drinks , paras. 8.114-8.122).  WT/DS406/AB/R 
 Page 23 
 
 
are not—is per se  sufficient to make a finding that the United States acted inconsistently with 
Article 2.1 of the TBT Agreement .159 
55. In addition, Indonesia disagrees with the United St ates' claim that the Panel failed to make an 
objective assessment of the facts as required by  Article 11 of the DSU when it found that 
Section 907(a)(1)(A) did not impose any costs on an y US entity without an adequate evidentiary 
basis.  Indonesia contends that there was evidence on the record demonstrating that:  (i) the exception 
for menthol cigarettes under the measure at issue w as the result of a political compromise with the 
US tobacco industry and an effort to protect domestic jobs160;  and (ii) that the sole reason for 
excluding menthol cigarettes from the ban was to spare the United States from the costs it might 
otherwise incur.161  In evaluating and weighing such evidence,  the Panel assessed the facts within the 
limits of its discretion, and thus did not act inconsistently with Article 11 of the DSU. 
3. Article 2.12 of the TBT Agreement  – "Reasonable Interval" 
56. Indonesia submits that the Panel assigned the corr ect interpretative value to paragraph 5.2 of 
the Doha Ministerial Decision, and properly found that Indonesia established a prima facie  case of 
inconsistency with Article 2.12 of the TBT Agreement , which the United States failed to rebut.162 
57. First, Indonesia contends that the United States incorrectly claims that the Panel declined to 
formally determine whether paragraph 5.2 of th e Doha Ministerial Decision is an "authoritative 
interpretation" adopted by the Ministerial C onference pursuant to Article IX:2 of the WTO Agreement .  
According to Indonesia, the Panel "clearly conclude d" that paragraph 5.2 of the Doha Ministerial 
Decision is "a binding interpretation".163  Moreover, Indonesia disagrees with the United States that 
the Ministerial Conference, in adopting paragra ph 5.2, did not act upon the recommendation of the 
Council for Trade in Goods, as Article IX:2 of the WTO Agreement  requires.  According to Indonesia, 
the preamble of the Doha Ministerial Decision indicates that the Decision and the interpretations contained therein were adopted on the basis of disc ussions carried out within the General Council and 
the WTO subsidiary bodies. 
                                                      
159Indonesia's appellee's submission, para. 172. 
160Indonesia's appellee's submission, para. 187 (refe rring to Indonesia's seco nd written submission to 
the Panel, para. 118;  S. Saul, "Cigare tte Bill Treats Menthol with Leniency", New York Times , 13 May 2008 
(Panel Exhibit IND-87);  and S. Saul, "Bill to Regulate Tobacco Moves Forward", New York Times , 
3 April 2008 (Panel Exhibit IND-88)). 
161Indonesia's appellee's submission, para. 189 (referring to Panel Report, para. 7.289, in turn quoting 
United States' first written submission to the Panel, pa ras. 23-25;  and United States' response to Panel 
Questions 40, 89, and 109). 
162Indonesia's appellee's submission, para. 195. 
163Indonesia's appellee's submission, para. 196 (referring to Panel Report, para. 7.575). WT/DS406/AB/R 
Page 24  
 
58. In response to the United States ' argument that the Doha Ministerial Decision is "at most"
164 a 
supplementary means of interpretation w ithin the meaning of Article 32 of the Vienna Convention , 
Indonesia submits that the Panel properly determined  that paragraph 5.2 of the Doha Ministerial 
Decision is a "subsequent agreement between the par ties" within the meaning of Article 31(3)(a) of 
the Vienna Convention .165  Moreover, Indonesia argues that the Pa nel did not err in its interpretation 
of the term "normally" in paragraph 5.2 of the D oha Ministerial Decision.  According to Indonesia, 
the Panel correctly concluded that the term "norma lly" must be interpreted as meaning "under normal 
or usual conditions;  as a rule".166 
59. Second, Indonesia submits that the Panel did not  err in finding that Indonesia had established 
a prima facie  case of inconsistency with Article 2.12 of the TBT Agreement .  According to Indonesia, 
the United States incorrectly argues that the Panel b ased its finding that Indonesia had established a 
prima facie  case "exclusively" on the basis of the text of paragraph 5.2 of the Doha Ministerial 
Decision.167  Indonesia contends that the Panel Report cl early shows that the Panel considered both 
Article 2.12 of the TBT Agreement  and paragraph 5.2 of the Doha Ministerial Decision.168  Indonesia 
contends that this is "categorically stated" by the Panel when it noted that "Indonesia ha[d] 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 si x months was not reasonable in the circumstances of 
this case".169 
60. In response to the United States' argumen t that Indonesia provided no evidence or 
argumentation that the three-month interval peri od prejudiced the ability of Indonesian producers to 
adapt to the requirements of Section 907(a)(1)(A) of the FFDCA, Indonesia contends that it adduced 
sufficient argument and evidence to establish a presumption that the United States had acted 
inconsistently with its obl igation under Article 2.12.170  According to Indonesia, it did "establish[] a 
prima facie  case that the 90-day interval provided by the United States was significantly shorter than 
the 6 months" normally required.171  Indonesia submits that, following the elements stipulated in 
Article 2.12 of the TBT Agreement , as well as in the binding interpretation of the term "reasonable 
interval" in paragraph 5.2 of the Doha Ministerial Decision, Indonesia set forth in its written and oral 
submissions, as well as in its Panel exhibits, lega l arguments and evidence to raise the presumption 
                                                      
164Indonesia's appellee's submission, para. 205 (quoting United States' appellant's submission, 
para. 126). 
165Indonesia's appellee's submission, para. 206. 
166Indonesia's appellee's submission, paras. 220 and 221. 
167Indonesia's appellee's submission, para. 223 (referring to United States' appellant's submission, 
para. 128). 
168Indonesia's appellee's submission, para. 227. 
169Indonesia's appellee's submission, para. 230 (quoting Panel Report, para. 7.594). 
170Indonesia's appellee's submission, para. 233. 
171Indonesia's appellee's submission, para. 237.  WT/DS406/AB/R 
 Page 25 
 
 
that its claim against the United States under Article 2.12 was true.172  Accordingly, Indonesia submits 
that the Panel did not commit a legal error in finding that Indonesia had established a prima facie  case 
of inconsistency with Article 2.12 of the TBT Agreement . 
61. Third, with regard to the United States' clai m that, even assuming that the Panel correctly 
found that Indonesia had established a prima  facie case, the Panel committed legal error in finding 
that the United States had not rebutted Indonesia's prima facie  case, Indonesia responds that, since it 
had made out a prima facie case, the onus shifted to the United States "to bring forward evidence and 
arguments to disprove the claim".173  Since the 90-day interval provided by the United States was 
significantly shorter than the six months normally re quired, the burden shifted to the United States to 
refute the claimed inconsistency.  According to  Indonesia, the Panel correctly stressed that the 
United States had failed to explain why it deemed that allowing a longer interval period between the 
publication and the entry into force of Section 907(a) (1)(A) would not have been effective in fulfilling 
the objective pursued by the measure, while a three-month interval was.174  Indonesia also posits that 
the United States did not explain why six months woul d have been ineffective, especially taking into 
account that it did not notify Section 907(a)(1)(A) as an  urgent measure pursuant to Article 2.10 of the 
TBT Agreement .175 
62. According to Indonesia, the Panel weighed a nd balanced the evidence and arguments on the 
record and, while it was "convinced of the validity of the claim advanced by Indonesia", it "was not 
convinced by the rebuttal argumen ts" presented by the United States.176  In Indonesia's view, 
therefore, the Panel acted consistently with its du ties since, "in the absence of effective refutation by 
the defending party, a panel, as a matter of law, is  required to rule in favor of the complaining party 
presenting the prima facie  case".177 
C. Arguments of the Third Participants 
1. Brazil 
63. Brazil generally agrees with the views expressed by the Panel concerning the legal standard 
for the assessment of likeness under Article 2.1 of the TBT Agreement .  For Brazil, the absence of a 
provision similar to Article III:1 of the GATT 1994, co mbined with the sixth recital of the preamble 
                                                      
172Indonesia's appellee's submission, para. 234. 
173Indonesia's appellee's submission, para. 240 (quoting Appellate Body Report, US – Wool Shirts and 
Blouses , pp. 16-17, DSR 1997:I, 323, at 338). 
174Indonesia's appellee's submission, para. 240 (referring to Panel Report, para. 7.593). 
175Indonesia's appellee's submission, para. 241 (referring to Panel Report, para. 7.593). 
176Indonesia's appellee's submission, para. 242. (underlining omitted) 
177Indonesia's appellee's submission, para. 243 (referring to Panel Report, para. 7.591, in turn referring 
to Appellate Body Report, EC – Hormones , para. 104;  Appellate Body Report, Japan – Agricultural 
Products II , paras. 98 and 136;  and Appellate Body Report, Japan – Apples , para. 159). WT/DS406/AB/R 
Page 26  
 
of the TBT Agreement , seems to indicate that the objectives of a technical regulation should play an 
important role in ascertaining the characteristics of products alleged to be like.
178  Despite there being 
no direct reference in Article 2.1 of the TBT Agreement  to the legitimate objectives of the technical 
regulation, Brazil notes that the use of an overarching analytical concept to inform all paragraphs of a 
provision is an issue that has alread y been accepted in WTO jurisprudence.179  In Brazil's view, the 
objective pursued by a Member adopting a technical regulation is a central element of the likeness 
analysis under Article 2.1, given its context and object and purpose.180  However, Brazil posits, it does 
not seem reasonable to require a panel to examine the intentions of the regulator and its implications 
that go beyond the explicit legitimate objective of a measure.  The objectives pursued through 
technical regulations must be assessed as objectively as possible181, looking at the measure's structure, 
architecture, and design.182  Once the legitimate objectives pursued by a Member are properly 
revealed, Brazil is of the view that they should in form the likeness analysis under Article 2.1 of the 
TBT Agreement . 
64. Brazil further notes that the United States pursues an interpretation of the term "treatment no 
less favourable" that would require evidence of or igin-based detrimental effects to the imported 
product as a prerequisite for showing de facto  discrimination.183  Accordingly, Brazil explains, the 
United States considers that if any factor, other th an the foreign origin of the product, were found to 
be the basis for the discrimination, there would be no violation of Article 2.1 of the TBT Agreement .  
In Brazil's view, both under Article III:4 of the GATT 1994 and under Article 2.1 of the 
TBT Agreement , a key question is to what extent the application of a measure results in less 
favourable treatment to the like imported product,  regardless of the measure's stated objective. 184  The 
difference between these two provisions is that, while under Article 2.1 of the TBT Agreement  the 
measure's objectives are relevant in defining whether the products at issue are like, under Article III:4 
of the GATT 1994, likeness is asses sed from a competition perspective.185  Under both provisions, 
Brazil contends, once the imported and domestic products are found to  be like, the manner in which 
the measure is applied and the prevailing circumst ances of the relevant market for the affected 
products are more important in a less favourable  treatment determination than the measure's 
                                                      
178Brazil's third participant' s submission, para. 8. 
179Brazil's third participant's submission, para . 11 (referring to Appellate Body Report, EC – Asbestos , 
para. 98;  and Appellate Body Reports, Philippines – Distilled Spirits , para. 119). 
180Brazil's third participant's submission, para. 14. 
181Brazil's third participant's submission, para. 17. 
182Brazil's third participant's submission, para . 20 (referring to Appellate Body Report, Japan – 
Alcoholic Beverages II , p. 29, DSR 1996:I, 97, at 120;  Appellate Body Report, Chile – Alcoholic Beverages , 
paras. 61 and 62;  and Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 112). 
183Brazil's third participant's submission, para. 23 (referring to United States' appellant's submission, 
paras. 101-106). 
184Brazil's third participant's submission, para. 28 (referring to Appellate Body Report, Japan – 
Alcoholic Beverages II , p. 28, DSR 1996:I, 97, at 119). 
185Brazil's third participant's submission, para. 29.  WT/DS406/AB/R 
 Page 27 
 
 
objectives.  According to Brazil, this conclusion is even  more relevant in the context of an analysis of 
a de facto  discrimination.186 
2. Colombia 
65. Colombia submits that the Panel erred in its le gal interpretation of paragraph 5.2 of the Doha 
Ministerial Decision.  In its view, the Panel decided to give the Doha Ministerial Decision the status of an authoritative interpretation because it was agre ed by all WTO Members meeting in the form of 
the Ministerial Conference, the highest ranking body of the WTO.
187  According to Colombia, 
however, this legal conclusion is incorrect.  Colomb ia notes that the Ministerial Conference did not 
act on the basis of a recommendation by the Council overseeing the functioning of the 
TBT Agreement  as mandated by Article IX:2 of the WTO Agreement , and, consequently, the first 
condition of Article IX:2 was not present in this case.188  Furthermore, the Panel dismissed this 
condition on the basis that it was only a formal requi rement.  Colombia considers such reasoning to be 
in error:  first, because the procedural nature of  a condition does not mean that it can be overlooked189;  
and, second, because the fact that all Members agreed  on a certain interpretation is not sufficient to 
conclude that such interpretation was ad opted pursuant to Article IX:2 of the WTO Agreement .  With 
respect to the latter point, Colombia submits that neither the Ministerial Conference nor the General 
Council have the authority to disregard the previ ously given consent by all WTO Members embodied 
in the covered agreements.190  Colombia further is of the view that the Appellate Body should clarify 
whether the Doha Ministerial Decision could be cons idered to constitute, pursuant to Article 31(3)(a) 
of the Vienna Convention , a "subsequent agreement between th e parties" on the interpretation of 
Article 2.12 of the TBT Agreement .191 
3. European Union 
66. The European Union first submits that the term  "like product" appears to be used by the 
parties and the Panel in two different ways.  The first use relates to the "comparison between the 
import and domestic sides" (the "horizontal line")192, while the second use concerns the "relationship 
among the things that are to be considered t ogether" as a product on both the import and domestic 
sides (the "vertical line").193  In the European Union's view, th e "horizontal line" comparison requires 
the import and domestic categories to be described in terms that are identical in all respects, otherwise 
                                                      
186Brazil's third participant's submission, para. 30. 
187Colombia's third participant's submission, para. 6 (quoting Panel Report, para. 7.576). 
188Colombia's third participant's submission, para. 10. 
189Colombia's third participant's submission, para. 14. 
190Colombia's third participant's submission, para. 15. 
191Colombia's third participant's submission, para. 19. 
192European Union's third participant's submission, para. 17. (original underlining) 
193European Union's third participant's submission, para. 18. (original underlining) WT/DS406/AB/R 
Page 28  
 
one cannot meaningfully test for de facto  discrimination.
194  The "vertical line" comparison, on the 
other hand, does not require that all things within the set of a "product" be identical in all respects 
because the comparison is made on the basis of a market definition (that is, by reference to 
cross-elasticity of supply and demand), hence quite heterogeneous things can be taken together as a 
single product.195  The European Union is of the view  that, to determine whether there is de facto  
discrimination, it is necessary to consider whether th e regulatory distinction is related to the foreign 
origin of the product.196  For this reason, the European Union contends that even if clove and menthol 
cigarettes would be reasonably grouped together as part of a "product", this does not mean that the situation in respect of menthol cigarettes and yout h smoking, and clove cigarettes and youth smoking, 
is necessarily the same or similar.
197 
67. With respect to the less favourable treatment analysis under Article 2.1 of the 
TBT Agreement , the European Union stresses that the relationship between trade and regulation is 
complex.198  In its view, the problem is to distinguish between the exercise of regulatory autonomy 
that is acceptable, and that which is not.199  This necessarily entails looking at whether the design of 
the measure is, expressly or by proxy, related to the foreign origin of the regulated products.  The 
European Union also considers that any "counterva iling explanations" should be  considered together 
with the inquiry into whether ther e is some relation with foreign origin, because such  an approach 
provides for the most flexibility when consideri ng a wide range of potential factual situations.200  In 
addition, the European Union raises concerns regard ing the Panel's approach in allocating the burden 
of proof under Article 2.1 of the TBT Agreement .201  In particular, according to the European Union, 
the Panel seems to reason that, because both menthol  and clove cigarettes app eal to youth, the only 
plausible explanation for the failure to extend the ban to menthol cigarettes is de facto  
discrimination.202  However, this reasoning overlooks the possibility advocated by the United States 
that the attractiveness of clove cigarettes to yout h is more pronounced than in the case of menthol 
cigarettes.203  The European Union contends that the Panel did not explain how Indonesia had 
discharged its burden of proving that the situatio n with respect to menthol cigarettes and youth 
smoking was the same as or similar to the situation with respect to clove cigarettes.204  If Indonesia 
                                                      
194European Union's third participant's submission, para. 19. 
195European Union's third participant's submission, para. 20. 
196European Union's third participant's submission, para. 21. 
197European Union's third participant's submission, para. 23. 
198European Union's third participant's submission, para. 32. 
199European Union's third participant's submission, para. 33. 
200European Union's third participant's submission, para. 44. 
201European Union's third participant's submission, para. 51. 
202European Union's third participant's submission, para. 54. 
203European Union's third participant's submission, para. 54 (referring to United States' appellant's 
submission, paras. 32-36, 54, 55, and 61-63). 
204European Union's third participant's submission, para. 56.  WT/DS406/AB/R 
 Page 29 
 
 
failed to provide evidence in that respect, th e European Union wonders how Indonesia may be 
considered to have discharged its  burden of proof with respect to an alleged "in fact" breach of 
Article 2.1 of the TBT Agreement .205 
68. Lastly, with respect to Article 2.12 of the TBT Agreement , the European Union considers that 
paragraph 5.2 of the Doha Ministerial Decision is re levant either pursuant to Article 31(3)(a) of the 
Vienna Convention , or as a fact.206  It further contends that Indon esia had the burden of proving, under 
Article 2.12 of the TBT Agreement , that the time actually allowed by the measure was not 
reasonable.207  With respect to the question of whether or not six months would be ineffective in 
fulfilling the legitimate objective pursu ed, the European Union finds nothing in the Doha Ministerial 
Decision that expressly reverses the burden of proof.208  It recalls, in that regard, that the Appellate 
Body in EC – Sardines  placed the burden of proof on the complainant under Article 2.4 of the 
TBT Agreement .209 
4. Mexico 
69. Mexico submits that it is difficult to incorpor ate the objective of a technical regulation into 
the like products analysis.  In its view, when the purpose of a technical regulation is to protect the 
highest values, such as human life or health, the analys is of the four criteria will itself be sufficient to 
reach a correct interpretation of likeness becau se "the product differences themselves will have 
inspired the objective of the technical regulation, and not the opposite".210  Mexico contends, in 
particular, that the consumer tastes and habits crite rion needs to be approached  very carefully because 
regulatory intervention by a Member can "shape consumer perceptions".211  Moreover, Mexico 
submits that the creation of sub-categories of like products on the basis of different end-uses, as 
suggested by the United States, could lead to circum vention of the disciplines in Article 2.1 of the 
TBT Agreement .212  Mexico further stresses that, if regulator y distinctions could be used to determine 
like products, this could "render the concept of de facto  discrimination meaningless".213 
70. With respect to the Panel's less favourable tr eatment analysis, Mexico disagrees with the 
United States that the group of like imported pr oducts should include like imported products from all 
WTO Members and not just from the complaining Member.  According to Mexico, the term "any 
                                                      
205European Union's third participant's submission, para. 57. 
206European Union's third participant's submission, para. 62. 
207European Union's third participant's submission, para. 63. 
208European Union's third participant's submission, para. 66. 
209European Union's third participant's submission, para. 67 (referring to Appellate Body Report, EC – 
Sardines , paras. 259-282). 
210Mexico's third participant's submission, para. 15. 
211Mexico's third participant's submission, para. 16. 
212Mexico's third participant's submission, paras. 17-19. 
213Mexico's third participant's submission, para. 21. WT/DS406/AB/R 
Page 30  
 
[Member]" under Article 2.1 of the TBT Agreement  provides "considerable flexibility" when assessing 
conformity with this provision, and hen ce the focus can be on like products from " one Member, some  
Members or all Members".
214  In Mexico's view, the Panel co rrectly focused on the treatment 
accorded to like products from Indonesia.  In addition,  contrary to the United States' argument that the 
Panel should have compared the treatment accord ed to imported and like domestic products as a 
group, Mexico submits that the Panel's "efficient approach" to applying the "group" comparison when 
determining less favourable treatment was "not a legal error".215  On the contrary, the Panel properly 
found that the "vast majority" of imports of Indon esian cigarettes with characterizing flavours were 
banned while "all or almost all" of the US cigare ttes with characterizing flavours were excluded from 
the ban.216 
71. Mexico lastly addresses three additional issues  concerning the less favourable treatment 
analysis.  First, it agrees with the Panel's reasoning that a measure is discriminatory when it minimizes 
the costs for the domestic producers while triggeri ng costs to the foreign producers.  In Mexico's 
view, the Panel's approach is also applicable to any case where the technical regulation is designed in 
such a way that, either de facto  or de jure , avoids or minimizes costs for the domestic producers and 
triggers costs to the foreign producers.217  Second, with respect to the United States' argument that 
there is no temporal limitation on the analysis of de facto  less favourable treatment218, Mexico posits 
that the date of a panel's establishment is "the key date" when assessing whether de facto  
discrimination exists.219  Mexico considers that, although past and possibly future events may inform 
an assessment of de facto  discrimination at the time of the establis hment of the panel, "great care must 
be taken when incorporating such facts into the assessment".220  Third, Mexico is concerned with the 
interpretation that the non-discriminati on obligations in Article 2.1 of the TBT Agreement  are not 
violated if the adverse impact is primarily the result  of factors "unrelated to the foreign origin of the 
product".221  According to Mexico, de facto  discrimination precisely occurs, by its very nature, when 
the challenged measure does not, on its face, discriminate on the basis of origin. 
                                                      
214Mexico's third participant's submission, para. 40. (original emphasis) 
215Mexico's third participant's submission, para. 43. 
216Mexico's third participant's submission, para. 48 (referring to Panel Report, paras. 7.276-7.279). 
217Mexico's third participant's submission, paras. 53 and 54. 
218Mexico's third participant's submission, para. 56 (referring to United States' appellant's submission, 
paras. 91-94). 
219Mexico's third participant's submission, para. 57. 
220Mexico's third participant's submission, para. 59. 
221Mexico's third participant's submission, para. 65 (quoting United States' appellant's submission, 
para. 101;  and referring to Panel Report, para. 7.259, in turn referring to Appellate Body Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 96).  WT/DS406/AB/R 
 Page 31 
 
 
5. Norway 
72. Norway agrees with the United States that a pane l's terms of reference are not limited by the 
products listed in a panel request.222  In this regard, Norway is not convinced by the Panel's reasoning 
that "the identification of the specific products at issue in a panel request pe rtains to the claim at 
issue".223  In Norway's view, since the product scope  of the likeness analysis may influence the 
outcome of a discrimination claim, a panel should be  entitled to define "the product scope of its own 
analysis" to determine the existence of discriminati on, "without being subject to limitations chosen by 
the complainant, for whatever reason, in its panel request".224 
73. With respect to the analysis of less favourab le treatment, Norway first notes that the Panel 
compared " one like product (i.e. clove cigarettes), from one source (i.e. Indonesia), to one like 
domestic product in the United States (i.e. menthol cigarettes)".225  In its view, however, the Panel 
should have compared the impact of the measure at issue on " all like imported products, from all 
WTO Members" vis-à-vis its impact "on all like domestic products".226  According to Norway, the 
correct starting point for the analysis should be  "the entire group of products identified as like 
products".227  Second, Norway disagrees with the United  States' assertion that , because its measure 
distinguishes between cigarettes "on the basis of an origin-neutral criterion derived from a legitimate 
regulatory purpose ", it is WTO-consistent.228  In Norway's view, the United States appears to "stretch 
the Appellate Body's statement in Dominican Republic – [Import and Sale of ] Cigarettes  too far"229, 
to circumstances that differ from those prevaili ng in that dispute.  A proper assessment of de facto  
discrimination turns on whether the like importe d products are predominantly subject to less 
favourable treatment, while like domestic products are predominantly subject to more favourable 
treatment.  If there is such de facto  discrimination, whether a measure's policy objective justifies that 
discrimination belongs more properly to th e analysis under an applicable exception.230 
                                                      
222Norway's third participant's submission, para. 5. 
223Norway's third participant's submission, para. 6 (quoting Panel Report, para. 7.139). 
224Norway's third participant's submission, para. 7. 
225Norway's third participant's submission, para. 12 (referring to Panel Report, paras. 7.274 and 7.275). 
(original emphasis) 
226Norway's third participant's submission, para. 12. (original emphasis) 
227Norway's third participant's submission, para. 13 (referring to Panel Report, US – Tuna (II) (Mexico) , 
para. 7.295, in turn referring to Appellate Body Report, EC – Asbestos , para. 100). (original underlining) 
228Norway's third participant's submission, para. 15. (original emphasis) 
229Norway's third participant's submission, para . 20 (referring to Appellate Body Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 96). 
230Norway's third participant's submission, para. 21. WT/DS406/AB/R 
Page 32  
 
6. Turkey 
74. Turkey considers that the Panel did not commit a legal error in its genera l interpretation of the 
term "like products" in Article 2.1 of the TBT Agreement .  In its view, the Panel properly considered 
the TBT Agreement  as immediate context while also taki ng into account the jurisprudence on 
Article III:4 of the GATT 1994.231  Turkey thus contends that th e Panel correctly found that the 
declared legitimate public health objective of th e measure, namely, reducing youth smoking, "must 
permeate and inform [its] likeness analysis".232  Regarding the general assessment of the criteria for 
determining likeness, Turkey notes that the Appellate  Body has rejected a "one-fits-all" approach and 
has advocated a case-by-case analysis.233  As for the end-use criterion, Turkey believes that a 
competition-based approach to determine liken ess should not be as influential under the 
TBT Agreement  as under Article III of the GATT 1994.  In stead, the public health aspect of the 
measure "creates the immediate context".234  With respect to consumer tastes and habits, Turkey 
considers the Panel's focus on the relevant group of consumers—young smokers—not to be 
erroneous.  In its view, it is not necessary to s how that consumers are " actually substituting one 
product for the other";  rather, it is sufficient to  show that consumers "can potentially substitute" 
them.235 
75. Turkey further submits that the Panel did not co mmit legal error in limiting its analysis to a 
comparison between treatment of menthol cigare ttes and clove cigarettes under Section 907(a)(1)(A) 
of the FFDCA.  In its view, the Panel was under an obligation to make a comparison between the 
products specified in its terms of reference becau se, "at least in this case", the product specification 
was part of Indonesia's claim itself.236  In addition, Turkey notes that, in a less favourable treatment 
analysis, detrimental effects stemming from factors ot her than the origin of a product are "an essential 
issue".237  In assessing this key issue, Turkey contends , the critical benchmark is whether imported 
and domestic products are treated equally, taking account  of all economic and social factors.  Turkey 
therefore considers that the Panel was corr ect in concluding that the purpose of the TBT Agreement  
would be defeated if Members were  "allowed to remove their dome stic products" from the application 
of technical regulations "to avoid potential costs that it might otherwise incur".238 
                                                      
231Turkey's third participant's submission, para. 4 (referring to Panel Report, para. 7.117). 
232Turkey's third participant's submission, pa ra. 5 (quoting Panel Report, para. 7.116). 
233Turkey's third participant's submission,  para. 7 (quoting Appellate Body Report, EC – Asbestos , 
para. 101). 
234Turkey's third participant's submission, para. 11. 
235Turkey's third participant's submission, para. 15. 
236Turkey's third participant's submission, paras. 18 and 19. 
237Turkey's third participant's submission, para. 21. 
238Turkey's third participant's submission, para. 22 (quoting Panel Report, para. 7.291).  WT/DS406/AB/R 
 Page 33 
 
 
III. Issues Raised in This Appeal 
76. The following issues are ra ised in this appeal: 
(a) Whether the Panel erred in finding that  Section 907(a)(1)(A) of the FFDCA is 
inconsistent with Article 2.1 of the TBT Agreement , and in particular: 
(i) Whether the Panel erred in finding that clove cigarettes and menthol 
cigarettes are like products within th e meaning of Article 2.1 of the 
TBT Agreement , and in particular: 
- whether the Panel performed an incomplete analysis of the different 
end-uses of the products at issue; 
- whether the Panel erred in its analys is of consumer tastes and habits;  
and 
- whether the Panel acted inconsistently with Article 11 of the DSU in 
its assessment of consumer tastes and habits; 
(ii) Whether the Panel erred in finding th at Section 907(a)(1)(A) accords to 
imported clove cigarettes less favourable treatment than that accorded to domestic menthol cigarettes within the meaning of Article 2.1 of the TBT Agreement , and in particular: 
- whether the Panel improperly narrowed the product scope of its 
analysis by comparing treatment accorded to imported clove cigarettes and to domestic menthol cigarettes; 
- whether the Panel erred in assessing less favourable treatment at the 
time the ban on flavoured cigarettes came into effect; 
- whether the Panel erred in finding that the detrimental impact on 
competitive opportunities of imported clove cigarettes could not be explained by reasons unrelated to  the foreign origin of those 
products;  and 
- whether the Panel acted inconsistently with Article 11 of the DSU in 
finding that Section 907(a)(1)(A) accords to imported clove WT/DS406/AB/R 
Page 34  
 
cigarettes less favourable treatment than that accorded to domestic 
menthol cigarettes;  and 
(b) Whether the Panel erred in finding that, by fa iling to allow an interval of not less than 
six months between the publication and the entry into force of Section 907(a)(1)(A) of the FFDCA, the United States acted inc onsistently with Article 2.12 of the 
TBT Agreement , and in particular: 
(i) whether the Panel attributed an in correct "interpretative value" to 
paragraph 5.2 of the Doha Ministerial Decision in interpreting the term "reasonable interval" in Article 2.12 of the TBT Agreement ;  and 
(ii) whether the Panel incorrectly foun d that Indonesia had established a 
prima facie  case of inconsistency with Article 2.12 of the TBT Agreement  
that the United States failed to rebut. 
IV. Background 
77. Before commencing our analysis of the issues of law and legal interpretations raised in this 
appeal, we briefly outline certain pertinent facts a nd background information.  This dispute concerns 
Section 907(a)(1)(A) of the United States Federal Food, Drug and Cosmetic Act
239 (the "FFDCA").  
Section 907(a)(1)(A) was added to the FFDCA by S ection 101(b) of the Family Smoking Prevention 
and Tobacco Control Act240 (the "FSPTCA")241, and became law on 22 June 2009.242 
78. Under Section 907(a)(1)(A), beginning thr ee months after the enactment of the FSPTCA 
—that is, as from 22 September 2009: 
… a cigarette or any of its components (including the tobacco, filter, 
or paper) shall not contain, as a constituent … or additive, an 
artificial or natural flavour (other than tobacco or menthol) or an herb or spice, including strawberry, grape, orange, clove, cinnamon, pineapple, vanilla, coconut, liquorice, cocoa, chocolate, cherry, or 
coffee, that is a characterizing flavour of the tobacco product or 
tobacco smoke. 
79. The specific objective of Section 907(a)(1)(A) is not set forth in the FSPTCA itself.  
However, a report prepared by the House Energy and Commerce Committee
243 (the "House Report") 
                                                      
239Supra , footnote 2. 
240Supra , footnote 3. 
241Panel Report, para. 2.4. 
242Panel Report, para. 2.5 (referring to Indonesia's fi rst written submission to the Panel, footnote 1 to 
para. 1). 
243H.R. Rep. No. 111-58, Pt. 1 (2009) (Panel Exhibits IND-2 and US-67).  WT/DS406/AB/R 
 Page 35 
 
 
articulates both the objectives of the FSPTCA overall,  and of Section 907(a)(1)(A) in particular.  
According to the House Report, "[t]he objectives of  [the FSPTCA] are to provide the Secretary with 
the proper authority over tobacco products in orde r to protect the public health and to reduce the 
number of individuals under 18 years of age who use tobacco products."244  The House Report also 
explains the purpose of Section 907(a)(1)(A) as follows: 
Consistent 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.
245 
80. According to the Guidance for Industry and FDA Staff246 ("FDA Guidance"), 
Section 907(a)(1)(A) applies to all flavoured tobacco products247 that meet the definition of a 
"cigarette" in Section 3(1) of the Fede ral Cigarette Labeling and Advertising Act248, that is:  "(A) any 
roll of tobacco wrapped in paper or in any substa nce not containing tobacco";  or "(B) any roll of 
tobacco wrapped in any substance 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 [under] (A)."249  The ban contained in Section 907(a)(1)(A) also 
extends to flavoured loose tobacco and rolling papers, and filters intended to be used in 
"roll-your-own" cigarettes.250 
81. The Panel identified the products at issue in th is dispute as being clove cigarettes and menthol 
cigarettes.251  Clove cigarettes are composed of tobacco combined with flavouring additives, which is 
presented to the consumer in a paper wrapped with a filter.252  More specifically, clove cigarettes are 
generally manufactured with 60 to 80 per cent t obacco content, usually resulting from a blend of 
                                                      
244House Report, p. 14. 
245House Report, p. 37. 
246"General Questions and Answers on the Ban of Cigarettes that Contain Characterizing Flavors 
(Edition 2)", 23 December 200 9 (Panel Exhibit IND-41). 
247The Panel noted that, in referring to cigarettes not containing any characterizing flavours , the parties 
often used the terms "regular" and "tobacco-flavoured" cigarettes interchangeably, and found this ambiguity to 
be "susceptible of causing confusion".  The Panel observed that referring to tobacco-flavoured cigarettes may confuse the reader into believing th at 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, kreteks, 
bidis, and so on, contain, as well, an additive that impa rts a characterizing flavour to cigarettes.  Therefore, the 
Panel decided to use the term "regular" cigarettes, and not "tobacco-flavoured" cigarettes, as it better describes 
the fact that they do not include additional  characterizing flavours. (Panel Report, para. 7.131) 
248United States Code , Title 15, Chapter 36. 
249FDA Guidance, answer  to Question 2. 
250FDA Guidance, answers to Questions 3 and 4. 
251Panel Report, para. 7.147. 
252Panel Report, para. 7.157 (referring to Indonesia's first written submission to the Panel, para. 54;  
and Indonesia's second written subm ission to the Panel, para. 67). WT/DS406/AB/R 
Page 36  
 
different varieties of tobacco.
253  As for the additives, clove cigarettes contain approximately 20 to 40 
per cent cloves, either in the form of clove buds or ground/minced cloves.254  They also generally 
include a "sauce" as part of the flavouri ng ingredients chosen by each manufacturer255, as well as 
other components inherent to cloves, such as benzyl  acetate, methyl salicylate, trans-anethole, and 
methyl eugenol.256  Before the Panel, the parties did not  dispute that clove cigarettes contain 
eugenol257—a substance that the United States defined as "a common topical anesthetic used in dental 
procedures"258—and they also agreed that the Polzin paper, a study on certain ingredients of 
Indonesian clove cigarettes, shows that 19 of 33 clov e cigarette brands analyzed contained coumarin, 
a flavouring additive.259 
82. Menthol cigarettes, in contrast, have approximate ly 90 per cent tobacco content by weight and 
are composed of a blend of Virginia, Maryla nd burley, Oriental, and reconstituted tobacco.260  The 
Panel noted that the March 2011 report by the To bacco Products Scientific Advisory Committee to 
the FDA261 (the "March 2011 TPSAC Report") specifies that "[m]enthol cigarettes are typically 
blended using more flue-cured a nd less burley tobacco … because some of the chemicals in burley 
tobaccos create an incompatible taste character with menthol."262  The main additive in menthol 
cigarettes is menthol oil, a chemical co mpound extracted from the peppermint plant ( Mentha 
piperita ), the corn mint plant ( Mentha arvensis ), or produced by synthetic or semi-synthetic means.  
Menthol is added to cigarettes in several different ways263 and diffuses throughout the cigarette, 
irrespective of the means of application.264  According to the March 2011 TPSAC Report, menthol is 
added to cigarettes both as a characterizing fla vour and for other taste reasons, which include 
brightening the flavour of tobacco blends and/or smoothing the taste of the blend.  Menthol amounts 
                                                      
253Panel Report, para. 7.158 (referring to S. Farrer,  "Alternative Cigarettes May Deliver More Nicotine 
Than Conventional Cigarettes" (August 2003) 18(2) National Institute on Drug Abuse (NIDA) Notes  (Panel 
Exhibit IND-29);  United States' first written submission to the Panel, para. 163;  and Indonesia's and United 
States' responses to Panel Question 33). 
254Panel Report, para. 7.159. 
255Panel Report, para. 7.160 (re ferring to United States' first written su bmission to the Panel, para. 165). 
256Panel Report, para. 7.164 (referring to Indonesia's response to Panel Question 30). 
257Panel Report, para. 7.162. 
258Panel Report, para. 7.161 (quoting United States' fi rst written submission to the Panel, para. 38). 
259Panel Report, para. 7.163 (referring to Polzin et al., "Determination of eugenol, anethole, and 
coumarin in the mainstream cigarette smoke of Indonesian clove cigarettes" (October 2007) 45(10) Food 
& Chemical Toxicology  (Panel Exhibit US-45);  and Indonesia's  and United States' responses to Panel 
Question 34). 
260Panel Report, para. 7.166 (referring to United States' response to Panel Question 31).  The Panel 
noted that Indonesia did not provide any sp ecific information in that respect. ( Ibid., footnote 357 to para. 7.166) 
261Available at http://www.fda.gov/downloads/A dvisoryCommittees/CommitteesMeetingMaterials/ 
TobaccoProductsScientificAdvi soryCommittee/UCM247689.pdf. 
262Panel Report, para. 7.166. 
263The different ways in which menthol is added to cigarettes are the following:  (a) by spraying the 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 inse rting a crushable capsule in the filter;  (f) by placing a menthol thread in the 
filter;  or (g) any combination of the above. (Panel Report, para. 7.167) 
264Panel Report, para. 7.167.  WT/DS406/AB/R 
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to roughly 1 per cent of the content of the cigare tte, although the specific amount varies from brand to 
brand.265  Moreover, menthol may have cooling, analgesic,  or irritating properties, and is reported to 
reduce sensitivity to noxious chemicals, including nicotine.266 
83. In this Report, we first consider the United St ates' claim that the Panel erred in finding that 
clove and menthol cigarettes are like products within the meaning of Article 2.1 of the TBT Agreement .  We then address the United States' claim that the Panel erred in finding that the 
United States acted inconsistently with Article 2.1 of the TBT Agreement  by according to imported 
clove cigarettes less favourable treatment than that accorded to domestic menthol cigarettes.  Lastly, 
we consider the United States' claim that the Panel erred in finding that, by not allowing a period of 
not 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 . 
V. Article 2.1 of the TBT Agreement  
A. Introduction 
84. The Panel found that Section 907(a)(1)(A) of the FFDCA is a "technical regulation" within 
the meaning of Annex 1.1 of the TBT Agreement , and that it is inconsistent with Article 2.1 of the 
TBT Agreement  because it accords to imported clove cigare ttes less favourable treatment than that 
accorded to like menthol cigarettes of national origin.
267  In particular, the Panel found that "clove 
cigarettes and menthol cigarettes are 'like products' for the purpose of Article 2.1 of the TBT Agreement "
268, and that, "by banning clove cigarettes while exempting menthol cigarettes from 
the ban, Section 907(a)(1)(A) does accord importe d clove cigarettes less favourable treatment than 
that accorded to domestic menthol cigarett es, for the purpose of Article 2.1 of the TBT Agreement ".269 
85. The United States appeals the Panel's finding that  Section 907(a)(1)(A) is  inconsistent with 
Article 2.1 of the TBT Agreement , and argues that the Panel erred in finding that clove and menthol 
cigarettes are like products and th at Section 907(a)(1)(A) accords to imported clove cigarettes less 
favourable treatment than that accorded to like pro ducts of national origin within the meaning of 
Article 2.1 of the TBT Agreement .  We address separately in this Report the United States' claims in 
respect of the Panel's findings on like products and on  less favourable treatment under Article 2.1 of 
                                                      
265According to Indonesia, the menthol content can range up to 3 per cent. (Panel Report, para. 7.169 
(referring to Indonesia's response to Panel Question 32)) 
266Panel Report, para. 7.168 (referring to March 2011 TPSAC Report, pp. 18-20 and 22). 
267Panel Report, paras. 7.293, 8.1(a), and 8.1(b). 
268Panel Report, para. 7.248. 
269Panel Report, para. 7.292. WT/DS406/AB/R 
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the TBT Agreement .  Before doing so, however, we consider Article 2.1 as a whole in its context and 
in the light of the object and purpose of the TBT Agreement . 
86. Article 2.1 of the TBT Agreement  provides that, with respect to their central government 
bodies: 
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 origin and to  like products originating in any 
other country. 
87. Article 2.1 of the TBT Agreement  contains a national treatment and a most-favoured nation 
treatment obligation.  In this dispute, we are called upon to clarify the meaning of the national 
treatment obligation.  For a violation of the na tional treatment obligation in Article 2.1 to be 
established, three elements must be satisfied:  (i) the measure at issue must be a technical regulation;  (ii) the imported and domestic pr oducts at issue must be like pr oducts;  and (iii) the treatment 
accorded to imported products must be less favourable  than that accorded to like domestic products.  
The United States' appeal concerns only the second and the third elements of this test of 
inconsistency, namely, whether the products at issu e are like and whether the treatment accorded to 
clove cigarettes imported from Indonesia is less fa vourable than that accorded to like domestic 
products in the United States.
270 
88. In sections V.B and V.C of this Re port, we interpret Article 2.1 of TBT Agreement  and, in 
particular, the terms "like products" and "treatment no  less favourable".  However, before engaging in 
this interpretative effort, we wish to make some observations of general import on:  the preamble of 
the TBT Agreement ;  the definition of "technical regulation";  the relevance of Article III:4 of the 
GATT 1994 in interpreting Article 2.1 of the TBT Agreement ;  and the absence among the provisions 
of the TBT Agreement of a general exception provision sim ilar to Article XX of the GATT 1994. 
89. The preamble of the TBT Agreement  is part of the context of Article 2.1 and also sheds light 
on the object and purpose of the Agreement.  We find guidance for the interpretation of Article 2.1, in 
particular, in the second, fifth, and si xth recitals of the preamble of the TBT Agreement . 
90. The second recital links the TBT Agreement  to the GATT 1994.  It states: 
Desiring to further the objectives of GATT 1994; 
                                                      
270We recall that it was not disputed before the Panel that Section 907(a)(1)(A) is a technical regulation 
and that the United States has not app ealed the Panel's finding that Section 907(a)(1)(A) is a technical regulation 
within the meaning of Annex 1.1 to the TBT Agreement (Panel Report, paras. 7.21 and 7.41).  WT/DS406/AB/R 
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91. While this recital may be read as suggesting that the TBT Agreement  is a "development" or a 
"step forward" from the disciplines of the GATT 1994271, in our view, it also suggests that the 
two agreements overlap in scope and have si milar objectives.  If this were not true, the 
TBT Agreement  could not serve to "further the objectives" of the GATT 1994.  The second recital 
indicates that the TBT Agreement  expands on pre-existing GATT disciplines and emphasizes that the 
two Agreements should be interpreted in a coherent  and consistent manner. 
92. The fifth recital reflects the trade-liberalization objective of the TBT Agreement  by expressing 
the "desire" that technical regulations, technical standards, and conformity assessment procedures do not create unnecessary obstacles to international trade.  It states: 
Desiring however to ensure that technical regulations and standards, 
including packaging, marking and labelling requirements, and procedures for assessment of conformity with technical regulations and standards do not create unnecessary obstacles to international trade; 
93. We see the fifth recital reflected in those TBT provisions that aim at reducing obstacles to 
international trade and that limit Members' right to regulate, for instance, by prohibiting 
discrimination against imported products (Article 2. 1) or requiring that technical regulations be no 
more trade restrictive than  necessary to fulfil a legitimate objective (Article 2.2). 
94. The objective of avoiding the creation of unnecessary obstacles to international trade through 
technical regulations, standards, and conformity assessment procedures is, however, qualified in the 
sixth recital by the explicit recognition of Member s' right to regulate in order to pursue certain 
legitimate objectives.  The sixth recital states: 
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 prevention 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 countries where the same conditions prevail or a disg uised restriction on international 
trade, and are otherwise in accordance with the provisions of this 
Agreement; 
95. We read the sixth recital as counterbalancing the trade-liberalization objective expressed in 
the fifth recital.  The sixth recital "recognizes" Members' right to regulate versus the "desire" to avoid 
creating unnecessary obstacles to international trade,  expressed in the fifth recital.  While the 
fifth recital clearly suggests that Members' right to  regulate is not unbounded, the sixth recital affirms 
                                                      
271Panel Report, para. 7.112. WT/DS406/AB/R 
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that such a right exists while en suring that trade-distortive effects of regulation are minimized.  The 
sixth recital suggests that Members' right to regulate should not be constrained if the measures taken 
are necessary to fulfil certain legitimate policy objec tives, and provided that they are not applied in a 
manner that would constitute a means of arbitrar y or unjustifiable discrimination or a disguised 
restriction on international trade, and are othe rwise in accordance with the provisions of the 
Agreement.  We thus understand the sixth recita l to suggest that Members have a right to use 
technical regulations in pursuit of their legitimat e objectives, provided that they do so in an 
even-handed manner and in a manner that is othe rwise in accordance with the provisions of the 
TBT Agreement . 
96. The balance set out in the preamble of the TBT Agreement  between, on the one hand, the 
desire to avoid creating unnecessary obstacles to in ternational trade and, on the other hand, the 
recognition of Members' right to regulate, is not, in principle, different from the balance set out in the 
GATT 1994, where obligations such as national treat ment in Article III are qualified by the general 
exceptions provision of Article XX. 
97. We observe that Article 2.1 of the TBT Agreement applies only in respect of technical 
regulations, which are defined in Annex 1.1 as "[d]ocument[s] which lay[] down product 
characteristics or their related processes and production methods, including the applicable 
administrative provisions, with which compliance is mandatory".
272  Product characteristics laid down 
in a technical regulation may themse lves be relevant to the determin ation of whether products are like 
within the meaning of Article 2.1.  Thus, we cons ider that, in the case of technical regulations, the 
measure itself may provide elements that are relevant to the determination of whether products are 
like and whether less favourable treatment has been accorded to imported products. 
98. The definition of technical regulations as documents laying down product characteristics 
gives an indication that, under the TBT Agreement , measures making distinctions based on product 
characteristics are in principle permitted.  However,  the fact that a technical regulation defines a 
product's characteristics with a view to fulfilling a legitimate policy objective does not mean that it 
may do so by treating imported products less favourably than like domestic products. 
99. We note that the language of the national tr eatment obligation of Article 2.1 of the 
TBT Agreement closely resembles the language of Article III:4 of the GATT 1994.  Article III:4 of the 
GATT 1994 reads, in relevant part: 
                                                      
272The second sentence of Annex 1.1 r eads as follows:  "It may also in clude or deal exclusively with 
terminology, symbols, packaging, marking or labelling requirements as they apply to a product, process or 
production method".  WT/DS406/AB/R 
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The products of the territory of any Member imported into the territory of any other Member shall be accorded treatment no less favourable than that accorded to like products of national origin in 
respect of all laws, regulations and requirements affecting their 
internal sale, offering for sale, pur chase, transportation, distribution 
or use. 
100. The national treatment obligations of Article  2.1 and Article III:4 are built around the same 
core terms, namely, "like products" and "treatment no  less favourable".  We fu rther note that technical 
regulations are in principle subject not only to Article 2.1 of the TBT Agreement , but also to the 
national treatment obligation of Article III:4 of the GATT 1994, as "laws, regulations and 
requirements affecting the internal sale, offering for sale, purchase, transportation, distribution or use" 
of products.  The very similar formulation of the provisions, and the overlap in their scope of 
application in respect of technical regulations, c onfirm that Article III:4 of the GATT 1994 is relevant 
context for the interpretation of the national treatment obligation of Article 2.1 of the 
TBT Agreement .
273  We consider that, in interpreting Article 2.1 of the TBT Agreement , a panel should 
focus on the text of Article 2.1, read in the context of the TBT Agreement , including its preamble, and 
also consider other contextual elements, such as Article III:4 of the GATT 1994.274 
101. Finally, we observe that the TBT Agreement  does not contain among its provisions a general 
exceptions clause.  This may be contrasted with the GATT 1994, whic h contains a general exceptions 
clause in Article XX. 
102. With these observations of general import in mind,  we turn to the United States' appeal of the 
Panel's findings that clove and menthol cigarett es are like products, and that Section 907(a)(1)(A) 
accords imported clove cigarettes from Indonesia less fa vourable treatment than that accorded to like 
domestic menthol cigarettes, within the meaning of Article 2.1 of the TBT Agreement . 
B. The Panel's Finding that Clove Cigarettes and Menthol Cigarettes are 
"Like Products" within the Meaning of Article 2.1 of the TBT Agreement  
103. We begin our analysis by addressing the Pane l's interpretation of the concept of "like 
products" under Article 2.1 of the TBT Agreement .  We then turn to the Un ited States' claims that the 
                                                      
273We recall that, in EC – Asbestos , the Appellate Body found that the terms used in one provision 
"must be interpreted in light of the context, and of the ob ject and purpose, of the provision at issue, and of the 
object and purpose of the covered agreement in which the provision appears" and that the meaning attributed to 
the same terms in other provisions of the same agreement or in other covered agreements, may also be relevant context. (Appellate Body Report, EC – Asbestos , paras. 88-89) 
274In setting out its interpretative approach to Article 2.1 of the TBT Agreement , the Panel considered 
that, "[e]ven 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" and that "an interpreter should first assess the immediate 
context of the provision subject to interpretation befo re reaching for an interpre tative aid that is further 
removed." (Panel Report, para. 7.103) WT/DS406/AB/R 
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Panel erred in its interpretation and application of the "likeness" criteria of end-use and consumer 
tastes and habits, as well as to its claim that the Pa nel acted inconsistently with Article 11 of the 
DSU in its assessment of consumer tastes and habits.  The United States does not appeal the Panel's 
findings concerning the products' physical ch aracteristics and tariff classification. 
1. "Like Products" under Article 2.1 of the TBT Agreement  
104. The Panel found that clove cigarettes and ment hol cigarettes are like products within the 
meaning of Article 2.1 of the TBT Agreement .275  The Panel reached this conclusion after having 
evaluated the traditional "likeness" criteria (physical  characteristics, end-uses, consumer tastes and 
habits, and tariff classification), "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".276  Before addressing the United States' 
appeal of the Panel's specific findings in respect of the "likeness" criteria of end-uses and consumer 
tastes and habits, we first consider the Panel's appr oach to interpreting "like products" in the context 
of Article 2.1 of the TBT Agreement . 
105. The Panel considered that "it is far from clea r that it is always 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 " in the absence of a general principle such as that expressed in 
Article III:1 of the GATT 1994.277  The Panel also noted 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 latte r applies to a much broader range of measures.278  
The Panel stated that Article III:4 of the GATT 1994 could not be regarded as immediate context to 
Article 2.1 of the TBT Agreement  and noted that the Appellate Body's reference to an "accordion" of 
"likeness" 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 .279 
106. The Panel turned to what it considered the i mmediate context of the term "like products" in 
Article 2.1 of the TBT Agreement , namely, Article 2.1 itself and the TBT Agreement  as a whole, and to 
that Agreement's object and purpose as set out in its pr eamble.  The Panel considered that the fact that 
Section 907(a)(1)(A) of the FFDCA is a technical re gulation within the meaning of Annex 1.1 of the 
TBT Agreement , which has the immediate purpose of regulating cigarettes with characterizing 
flavours with the view to attaining the legitimat e objective of reducing youth smoking, should have 
                                                      
275Panel Report, para. 7.248. 
276Panel Report, para. 7.244. 
277Panel Report, para. 7.99. 
278Panel Report, para. 7.106. 
279Panel Report, para. 7.105.  WT/DS406/AB/R 
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"some weight and potentially cons iderable weight" in the determination of whether the products at 
issue are like.280  The Panel also noted that the sixth recital of the preamble of the TBT Agreement , 
which recognizes Members' right to take measure s for legitimate objectives, and Article 2.2 could 
justify a different interpretation of "likeness" under Article 2.1 of the TBT Agreement  from that 
developed under Article III:4 of the GATT 1994.281 
107. The Panel thus found that, in the circumstances of this case, the interpretation of Article 2.1 of 
the TBT Agreement should not be approached primarily from a competition-oriented perspective, but 
that the weighing of the evidence relating to the "lik eness" criteria should be influenced by the fact 
that Section 907(a)(1)(A) is a technical regula tion having the immediate purpose of regulating 
cigarettes with a characterizing fl avour for public health reasons.282  Having developed this 
interpretative approach, the Panel tu rned to the analysis of the trad itional "likeness" criteria, namely, 
the physical characteristics of the products, end- uses, consumer tastes and habits, and tariff 
classification.  The Panel gave particular weight to the health objective of Section 907(a)(1)(A) in its 
assessment of the products' physical characteristics and of consumer tastes and habits.283 
108. We agree with the Panel that the interpretation of  the term "like products" in Article 2.1 of the 
TBT Agreement  should start with the text of that provision in the light of the context provided by 
Article 2.1 itself, by other provisions of the TBT Agreement , and by the TBT Agreement  as a whole.  
We also agree that the relevant context includes the fact that Article 2.1 applies to technical 
regulations, which are documents laying down the ch aracteristics of products.  We further note that 
the preamble of the TBT Agreement  recognizes Members' right to regulate through technical 
regulations.  As explained below, however, we are not persuaded that these contextual elements and 
the object and purpose of the TBT Agreement  suggest that the interpretation of the concept of "like 
products" in Article 2.1 of the TBT Agreement cannot be approached from a competition-oriented 
perspective. 
109. As we have observed above, the balance that the preamble of the TBT Agreement  strikes 
between, on the one hand, the pursuit of trade liberali zation and, on the other hand, Members' right to 
regulate, is not, in principle, different from the balance that exists between the national treatment 
obligation of Article III and the general exceptions  provided under Article XX of the GATT 1994.  
The second recital of the preamble links the two Ag reements by expressing the "desire" "to further the 
objectives of the GATT 1994", while the "recognition"  of a Member's right to regulate in the 
sixth recital is balanced by the "desire" expressed  in the fifth recital to ensure that technical 
                                                      
280Panel Report, para. 7.109. 
281Panel Report, para. 7.114. 
282Panel Report, para. 7.119. 
283Panel Report, para. 7.119. WT/DS406/AB/R 
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regulations, standards, and conformity assessmen t procedures do not create unnecessary obstacles to 
international trade.  We note, however, that in  the GATT 1994 this balance is expressed by the 
national treatment rule in Article III:4 as qualified by the exceptions in Article XX, while, in the 
TBT Agreement , this balance is to be found in Article 2.1 it self, read in the light of its context and of 
its object and purpose. 
110. The Panel was also of the view that the ab sence of a provision like Article III:1 of the 
GATT 1994 in the TBT Agreement  would prevent the transposition of the GATT competition-oriented 
approach to likeness to Article 2.1 of the TBT Agreement .
284  Article III:1 provides that internal fiscal 
and regulatory measures "should not be applied to imported or domestic products so as to afford 
protection to domestic production".  We observe, in this respect, that, in EC – Asbestos , the Appellate 
Body considered that the "general  principle" articulated in Article III:1 of the GATT 1994 "seeks to 
prevent Members from applying internal taxes a nd regulations in a manner which affects the 
competitive relationship, in the marketplace, between the domestic and im ported products involved , 
'so as to afford protection to domestic production'".285  However,  the Appellate Body did not base its 
conclusion that "likeness" in Article III:4 is about the "nature and extent of a competitive relationship 
between and among products"286 exclusively on the "general princi ple" expressed in Article III:1.  
Rather, the Appellate Body further clar ified that "the word 'like' in Article III:4 is to be interpreted to 
apply to products that are in … a competitive rela tionship", because it is "products that are in a 
competitive relationship in the marketplace [that]  could be affected through treatment of imports  'less 
favourable' than the treatment accorded to domestic  products".287 
111. We agree that the very concept of "treatment  no less favourable", which is expressed in the 
same words in Article III:4 of the GATT 1994 and in Article 2.1 of the TBT Agreement , informs the 
determination of likeness, suggesting that likeness is  about the "nature and extent of a competitive 
relationship between and among products".  Indeed , the concept of "treatment no less favourable" 
links the products to the marketplace, because it is  only in the marketplace that it can be determined 
how the measure treats like imported and domestic pr oducts.  We note, however, that, in determining 
likeness based on the competitive relationship be tween and among the products, a panel should 
discount any distortive effects that the measure  at issue may itself have on the competitive 
relationship, and reserve the consideration of such ef fects for the analysis of less favourable treatment.  
In such cases, a panel should determine the nature and the extent of the competitive relationship for 
                                                      
284Panel Report, para. 7.99. 
285Appellate Body Report, EC – Asbestos , para. 98. (original emphasis) 
286Appellate Body Report, EC – Asbestos , para. 99. 
287Appellate Body Report, EC – Asbestos , para. 99. (original emphasis)  WT/DS406/AB/R 
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the purpose of determining likeness in isolation from the measure at issue, to the extent that the latter 
informs the physical characteristics of th e products and/or consumers' preferences. 
112. In the light of the above, we disagree with the Panel that the text and context of the 
TBT Agreement  support an interpretation of the concept of "likeness" in Article 2.1 of the 
TBT Agreement  that focuses on the legitimate objectives a nd purposes of the technical regulation, 
rather than on the competitive rela tionship between and among the products. 
113. We further observe that measures often pursue a multiplicity of objectives, which are not 
always easily discernible from the text or even fro m the design, architecture, and structure of the 
measure.  Determining likeness on the basis of the re gulatory objectives of the measure, rather than on 
the products' competitive relationship, would require the identification of all the relevant objectives of 
a measure, as well as an assessment of which obj ectives among others are relevant or should prevail 
in determining whether the products ar e like.  It seems to us that it would not always be possible for a 
complainant or a panel to identify all the objectives of a measure and/or be in a position to determine 
which among multiple objectives are relevant to the determination of whethe r two products are like, 
or not.288 
114. The appeal by the United States of the Panel's determination of consum er tastes and habits, 
which we address further below, highlights the diffi culties that arise when attempting to determine 
likeness based on the regulatory purposes of the meas ure rather than on the competitive relationship 
between and among products.  The Panel relied on th e objective of the measure at issue, which it 
identified as reducing youth smoking, to de termine the likeness of the products.289  The United States 
questions the basis for the Panel's narrow fo cus on the immediate objective of the measure290 and cites 
to other regulatory objectives related to health cons iderations associated with heavily used cigarettes 
to draw further distinctions between menthol and clove cigarettes.291 
115. Measures, such as technical regulations, may have more than one objective.  However, a 
panel that is tasked with determining whether tw o products are like may not be able to reach a 
coherent result if, in determining likeness, it has to  rely on various possible regulatory objectives of 
the measure.  If a panel were to focus on one of the objectives of a measure to the exclusion of all 
others that are equally important, it may reach a so mewhat arbitrary result in the determination of 
what are the like products at issue which, in turn , has implications for the determination of whether 
                                                      
288See Panel Report, Japan – Alcoholic Beverages II , para. 6.16. 
289Panel Report, para. 7.119. 
290United States' appellant's submission, para. 60. 
291The United States cites to "possible countervailing public health factors" associated with banning 
heavily used cigarettes, such as "possible increases in  unregulated black market cigarettes or strain to the 
healthcare system". (United States' appellant's submission, para. 61) WT/DS406/AB/R 
Page 46  
 
less favourable treatment has been accorded.  Moreov er, we note that a purpose-based approach to the 
determination of likeness does not, necessarily, leave more regulatory autonomy for Members, 
because it almost invariably puts panels into the po sition of having to determ ine which of the various 
objectives purportedly pursued by Members are more  important, or which of these objectives should 
prevail in determining likeness or less favourable tr eatment in the event of conflicting objectives. 
116. More importantly, however, we do not consider  that the concept of "like products" in 
Article 2.1 of the TBT Agreement  lends itself to distinctions betw een products that are based on the 
regulatory objectives of a measure.  As we see it, the concept of "like products" serves to define the 
scope of products that should be compared to establish whether less favourable treatment is being 
accorded to imported products.  If products that are in a sufficiently strong competitive relationship to 
be considered like are excluded from the group of like  products on the basis of a measure's regulatory 
purposes, such products would not be compared  in order to ascertain whether less favourable 
treatment has been accorded to imported products.  This would inevitably distort the less favourable 
treatment comparison, as it would refer to a "marketplace" that would include some like products, but not others.  As we consider further below in respec t of the United States' appeal of the Panel's less 
favourable treatment finding, distin ctions among products that have b een found to be like are better 
drawn when considering, subsequently, whether le ss favourable treatment has been accorded, rather 
than in determining likeness, because the latter appr oach would alter the scope and result of the less 
favourable treatment comparison. 
117. Nevertheless, in concluding that the determ ination of likeness should not be based on the 
regulatory purposes of technical regulations, we are not suggesting that the regulatory concerns 
underlying technical regulations may not play a role in the determination of whether or not products 
are like.  In this respect, we recall that, in EC – Asbestos , the Appellate Body found that regulatory 
concerns and considerations may play a role in applying certain of the "likeness" criteria (that is, 
physical characteristics and consumer preferences) and, thus, in the determination of likeness under 
Article III:4 of the GATT 1994. 
118. In EC – Asbestos , the Appellate Body found that, in examining whether products are like, 
panels must evaluate all relevant evidence, includi ng evidence relating to the health risks associated 
with a product, which was the underlying concern of the challenged measure in that dispute.  The 
Appellate Body found that such evidence would not  be examined as a separate criterion but, rather, 
under the traditional "likeness" criteria.  In particular , the Appellate Body stated that a product's health 
risks are relevant to the determination of the competitive relationship between products, and 
addressed health risks as part of the products' physical  characteristics and of the tastes and habits of  WT/DS406/AB/R 
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consumers.292  In respect of physical characteristics, the Appellate Body considered that a panel 
should examine fully the physical properties of produc ts, in particular, those physical properties that 
are likely to influence the competitive relationshi p between products in the marketplace.  These 
include those physical properties that make a product toxic or otherwise dangerous to health.293  In 
respect of consumer tastes and habits, the Appellate Body found that the health  risks associated with a 
product could influence the preference of consumers.294 
119. Similarly, we consider that the regulatory con cerns underlying a measure, such as the health 
risks associated with a given product, may be releva nt to an analysis of the "likeness" criteria under 
Article III:4 of the GATT 1994, as well as under Article 2.1 of the TBT Agreement , to the extent they 
have an impact on the competitive relationship between and among the products concerned. 
120. The interpretation of the concept of "likeness" in Article 2.1 has to be based on the text of that 
provision as read in the context of the TBT Agreement  and of Article III:4 of the GATT 1994, which 
also contains a similarly worded national treatment  obligation that applies to laws, regulations, and 
requirements including technical regulations.  In the light of this context and of the object and purpose 
of the TBT Agreement , as expressed in its preamble, we consider that the determination of likeness 
under Article 2.1 of the TBT Agreement , as well as under Article III:4 of the GATT 1994, is a 
determination about the nature and extent of a competitive re lationship between and among the 
products at issue.  To the extent that they are rele vant to the examination of certain "likeness" criteria 
and are reflected in the products' competitive rela tionship, regulatory concerns underlying technical 
regulations may play a role in the determination of likeness. 
121. With this interpretative approach in mind, we now  turn to the claims by  the United States that 
the Panel committed errors in its assessments of th e end-uses of clove and menthol cigarettes and of 
the tastes and habits of consumers of clove and me nthol cigarettes, as well as to the United States' 
claim that the Panel acted inconsistently with Ar ticle 11 of the DSU in its assessment of consumer 
tastes and habits.  We begin by examining the Pane l's finding that clove and menthol cigarettes have 
the same end-use. 
                                                      
 292Appellate Body Report, EC – Asbestos , para. 113. 
293The Appellate Body noted that a characteristic of chrysotile asbestos fibres was that the microscopic 
particles and filaments of these fibres were carcinogenic for humans when inhaled.  Thus, the Appellate Body 
concluded that the carcinogenicity, or toxicity, constitu ted a defining aspect of the physical properties of 
chrysotile asbestos fibres as opposed to polyvinyl alcohol, cellulose, and glass (PCG) fibres, which did not present the same health risk. (Appellate Body Report, EC – Asbestos , para. 114) 
294The Appellate Body found that the health risks associated with chrysotile asbestos fibres influenced 
the behaviour of both manufacturers (who incorporate fibres into another product) and ultimate consumers.  The Appellate Body noted that a manufacturer cannot ignore the preferences of the ultimate consumers of a product 
and, if the risks posed by a particul ar product are sufficiently  great, the ultimate consumers may simply cease to 
buy that product. (Appellate Body Report, EC – Asbestos , para. 122) WT/DS406/AB/R 
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2. End-Uses 
122. In examining the end-uses of clove and menthol cigarettes, the Panel found that both clove 
and menthol cigarettes have the same  end-use, that is, "to be smoked"295, and disagreed with the 
United States that the end-uses of a cigarette incl ude "satisfying an addi ction to nicotine" and 
"creating a pleasurable experience associated with the taste of the cigarette and the aroma of the smoke".  The Panel considered that the end-uses pres ented by the United States relate to the reasons 
why people smoke, but that does not mean that cigarettes have several end-uses.
296  In particular, the 
Panel considered that the United States' comments on the appeal of flavours to certain smokers relate 
more properly to consumer tastes and habits than to end-use.297 
123. The United States claims that a panel, when conducting an end-use analysis, must consider 
the different uses of the products and not just the u se that is a "common denominator" of the products 
in question.298  According to the United States, it is undis puted that both clove and menthol cigarettes 
are used for smoking, but the Panel improperly limit ed its analysis to considering only this common 
use between the products while ignoring other rele vant end-uses.  Menthol cigarettes, the United 
States posits, are used to "satisfy the nicotine addic tions of millions of smokers in the United States", 
whereas clove cigarettes are primarily used "for experimentation and special social settings" and generally are not smoked to satisfy nicotine addiction in the US market.
299 
124. Indonesia responds that the Panel did not err in finding that the end-use of clove and menthol 
cigarettes is "to be smoked".  In Indonesia's view, moreover, even assuming arguendo  that the 
end-uses put forward by the United States were pertinent ones, the United States presented no 
evidence showing that clove and menthol cigarettes were not both capable  of performing the end-uses 
of satisfying a nicotine addiction a nd creating a pleasurable experience.300 
125. We observe that end-uses describe the possible f unctions of a product, while consumer tastes 
and habits reflect the consumers' appreciation of these functions.  In EC – Asbestos , the Appellate 
Body described end-uses as "the extent to which products are capable  of performing the same, or 
similar, functions" and consumer t astes and habits as "the extent to which consumers are willing to 
                                                      
295Panel Report, para. 7.199. 
296Panel Report, para. 7.198. 
297Panel Report, para. 7.197. 
298United States' appellant's submission, para. 45. 
299United States' appellant's submission, para. 46. 
300Indonesia's appellee's submission, para. 73.  WT/DS406/AB/R 
 Page 49 
 
 
use the products to perform these functions".301  That a product is not principally used to perform a 
certain function does not exclude that it may nevertheless be capable  of performing that function. 
126. The Appellate Body has also considered that, while each criterion addresses, in principle, a 
different aspect of the products involved, which shoul d be examined separately, the different criteria 
are "interrelated"302 and "not mutually exclusive", so that certain evidence may well fall under more 
than one criterion.303  Thus, in our view, that consumers smoke  to satisfy an addiction or that they 
smoke for pleasure are relevant to the examinati on of both end-uses and consumer tastes and habits, 
although different aspects are addressed in the an alysis of these two separate "likeness" criteria. 
127. We do not consider that it is correct to charact erize "satisfying an addiction to nicotine" and 
"creating a pleasurable experience associated with the taste of the cigarette and the aroma of the smoke" as consumer tastes and habits and not end-u ses.  To the extent that  they describe possible 
functions of the products, rather th an the consumers' appreciation of these functions, they represent, in 
fact, different end-uses of the products at issue, ra ther than consumer tastes and habits.  Consumer 
tastes and habits should indicate to what extent consumers are willing to su bstitute clove cigarettes 
and menthol cigarettes to "satisfy an addiction to nicotine" and/or to "create a pleasurable experience 
associated with the taste of the cigarette and the aroma of the smoke". 
128. We also recall that, in EC – Asbestos , the Appellate Body found that the panel had not 
provided a complete picture of the various end-uses of the different fibres at issue, because its analysis was based on a "small number of applications" for wh ich the products were s ubstitutable, and because 
it had failed to examine other, different end-uses fo r the products.  The Appellate Body noted that it is 
only by forming a complete picture of the various end-uses of a product that a panel can assess the significance of the fact that products share a limited number of end-uses.
304 
129. An analysis of end-use should be comprehe nsive and specific enough to provide meaningful 
guidance as to whether the products in question are like products.  It is not disputed that both clove 
and menthol cigarettes are "to be smoked".  Ne vertheless, "to be smoked" does not exhaustively 
describe the functions of cigarettes.  As a consequen ce, to find, as the Panel did, that the end-use of 
both clove and menthol cigarettes is  "to be smoked" does not, in our view, provide sufficient guidance 
as to whether such products are like products  within the meaning of Article 2.1 of the TBT Agreement .  
                                                      
301Appellate Body Report, EC – Asbestos , para. 117. (emphasis added) 
302Appellate Body Report, EC – Asbestos , para. 102. 
303Appellate Body Reports, Philippines – Distilled Spirits , para. 131.  In that dispute, the Appellate 
Body considered that factors such as the perceptibility of differences among the products and the products' 
presentation and labelling concern both physical ch aracteristics and consumer tastes and habits. ( Ibid., 
paras. 128 and 132) 
304Appellate Body Report, EC – Asbestos , para. 119. WT/DS406/AB/R 
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Also cigars, loose tobacco, and herbs share the sa me end-use of being "sm oked", although this does 
not say much as to whether all these products are like.
305 
130. In our view, the Panel did not perform an analysis of the end-uses of clove and menthol 
cigarettes that was sufficiently comprehensive and sp ecific to provide significant indications as to the 
likeness of these products.  We agree with the United States that there are more specific permutations 
and functions of "smoking", which ar e relevant to the end-uses of cigarettes, such as "satisfying an 
addiction to nicotine" and "creating a pleasurable e xperience associated with the taste of the cigarette 
and the aroma of the smoke".  The Panel should have  considered these permutations and functions in 
its evaluation of whether the products at issue ar e like.  We also note, however, the argument by 
Indonesia that, even assuming that the end-uses put  forward by the United States were "legitimate 
end-uses", the United States did not show that clove and menthol cigarettes were not both capable  of 
performing the functions of "satisfying an addi ction to nicotine" and "creating a pleasurable 
experience associated with the taste of the cigarette and the aroma of the smoke".306 
131. The United States argues on appeal that menthol cigarettes are used to satisfy the nicotine 
addictions of millions of smokers in the United States, while clove cigarettes are primarily used for 
experimentation and special social se ttings and generally are not used to  satisfy addiction.  The Panel, 
however, found that "both menthol and clove cigarettes appeal to youth because of the presence of an 
additive that gives them a characterizing flavour  having the effect of masking the harshness of 
tobacco".307  Both types of cigarettes are capable of pe rforming a social/experimentation function and, 
thus, share the end-use of "creating a pleasurable e xperience associated with the taste of the cigarette 
and the aroma of the smoke".  At the same time, both clove and menthol cigarettes are capable of performing the function of "satisfying an addicti on to nicotine", considering that both types of 
cigarettes contain nicotine, whose addictiveness is scientifically proven.
308  The fact that more 
"addicts" smoke menthol than clove cigarettes does not mean that clove cigarettes cannot be smoked 
to "satisfy an addiction to nicotine".  As we have observed above, what matters in determining a 
product's end-use is that a product is capable  of performing it, not that such end-use represents the 
principal or the most common end-use of that product. 
                                                      
305Similarly, to state that the end-use of alcoholic beverages is "to be drunk" would not distinguish 
alcoholic beverages from water, milk, or orange juice that are also consumed by drinking.  In contrast, in 
Philippines – Distilled Spirits , the specific end-use of alcoholic bevera ges was described as "thirst quenching, 
socialization, relaxation, pleasant intoxication". (Appellate Body Reports, Philippines – Distilled Spirits , 
para. 171 (quoting Panel Reports, Philippines – Distilled Spirits , para. 7.81)) 
306Indonesia's appellee's submission, para. 73. 
307Panel Report, para. 7.231. 
308In its response to Panel Question 37, the United States notes that, "[w]ith respect to the addictive 
effects of regular, menthol and clove cigarettes, all of these products contain nicotine and are thus addictive." 
(United States' response to Panel Question 37, para. 85)  WT/DS406/AB/R 
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132. In the light of the above, we disagree with the Panel that the end-use of cigarettes is simply 
"to be smoked" and agree with the United States th at there are more specific end-uses of cigarettes 
such as "satisfying an addiction to  nicotine" and "creating a pleasurable experience associated with 
the taste of the cigarette and the aroma of the sm oke".  We consider, however, that, based on the 
Panel's findings referred to above, it  can be concluded that both clove and menthol cigarettes share the 
end-uses of "satisfying an addiction to nicotine"  and "creating a pleasurable experience associated 
with the taste of the cigarette and the aroma of the smoke".  Accordingly, we consider that the more 
specific products' end-uses put forward by the United States also support the Panel's overall finding that clove and menthol cigarettes are like products. 
3. Consumer Tastes and Habits 
133. In addressing consumer tastes and habits in resp ect of clove and menthol cigarettes, the Panel 
stated that the legitimate objective of Secti on 907(a)(1)(A) of the FFDCA, namely, reducing youth 
smoking, delimited the scope of the consumers whos e tastes and habits should be examined under this 
criterion.309  Accordingly, the Panel considered it appropr iate to examine the substitutability of clove 
and menthol cigarettes from the perspective of the relevant group of c onsumers, which included 
young smokers and those ready to become smokers (potential consumers).310  The Panel found that 
the evidence submitted by the parties showed that bot h clove and menthol cigarettes, because of their 
characterizing flavours, which help to mask the ha rshness of tobacco, appeal to youth and are better 
vehicles for youth to start smoking than regular cigarettes.311  Therefore, the Panel concluded that, 
from the point of view of the consumers at issue in this case, menthol-flavoured and clove-flavoured 
cigarettes are "similar for the purpose of starting to smoke".312 
134. The United States claims that the Panel erred in considering the tastes and habits of only 
young smokers and potential young smokers, and not of current adult smokers.  The United States 
notes that Section 907(a)(1)(A) makes regulatory di stinctions among cigarettes based not only on their 
appeal to young and potential smokers, but al so on their use by current adult smokers.313  The United 
States argues that nothing in the text of Article 2.1 of the TBT Agreement  provides a basis for the 
Panel to have limited its consid eration of the public health dis tinctions drawn under the measure 
according to what the Panel construed to be the immediate objective of the measure.314 
                                                      
309Panel Report, para. 7.206. 
310Panel Report, para. 7.214. 
311Panel Report, para. 7.217. 
312Panel Report, para. 7.232. 
313United States' appellant's submission, para. 54. 
314United States' appellant's submission, para. 60. WT/DS406/AB/R 
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135. The United States contends that a like product an alysis under Article 2.1 must take account of 
the regulatory distinctions drawn under the measure at issue, which are not limited to the immediate 
or primary objective of a measure, but that often refl ect a balancing of other c onsiderations relevant to 
the public welfare.  In particular, the United Stat es argues that, even though the primary or immediate 
purpose of Section 907(a)(1)(A) is to reduce yout h smoking, the measure was developed based on a 
consideration of the health benef its, risks, and consequences to th e population as a whole, including 
the possible negative consequences of banning a type  of cigarette, such as menthol cigarettes, to 
which millions of adults are chemi cally and psychologically addicted.
315 
136. We have disagreed with the Panel's approach to interpreting the concept of "likeness" in 
Article 2.1 of the TBT Agreement  in the light of the regulatory obj ectives of the measure, rather than 
based on the competitive relationship between and among the products.316  In particular, we have 
observed that the context of the TBT Agreement  and its object and purpose do not suggest that the 
regulatory objectives of a technical regulation should play a role that is separate from the determination of a competitive relationship between  and among products.  We have also noted that 
determining likeness primarily in the light of th e regulatory objectives of the measure is further 
complicated by the fact that measures, including t echnical regulations, often have multiple objectives.  
In contrast, we have considered that the de termination of likeness under Article 2.1 of the 
TBT Agreement  is a determination about the nature a nd the extent of a competitive relationship 
between and among products, and th at the regulatory concerns that underlie a measure may be 
considered to the extent that they have  an impact on the competitive relationship.
317 
137. In the light of the above, we also consider th at the Panel was wrong in confining its analysis 
of consumer tastes and habits to those consumer s (young and potential young smokers) that are the 
concern of the objective of the regulation (to reduce youth smoking).  In an analysis of likeness based 
on products' competitive relationship, it is the mark et that defines the scope of consumers whose 
preferences are relevant.  The proportion of youth and adults smoking different types of cigarettes 
may vary, but clove, menthol, and regular cigarette s are smoked by both young and adult smokers.  
To evaluate the degree of substitutability among th ese products, the Panel should have assessed the 
tastes and habits of all relevant consumers of the products at issue, not only of the main consumers of 
clove and menthol cigarettes, particularly where it is clear that an important proportion of menthol 
cigarette smokers are adult consumers. 
                                                      
315United States' appellant's submission, para. 62.  The United States cites in particular to "possible 
increases in unregulated black market cigarettes or strain to the healthcare system". (United States' 
appellant's submission, para. 61) 
316Section V.B.1 of this Report. 
317See supra , para. 119.  WT/DS406/AB/R 
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138. Moreover, without at this stage entering into  the merits of the other objectives of the 
regulation advocated by the United States, the Panel' s approach discounts the f act that the technical 
regulation at issue may also have other objectives that concern other actual and potential consumers of 
the products at issue.  Therefore, we disagree with the Panel that the legitimate objective of 
Section 907(a)(1)(A), that is, reducing youth smoki ng, delimits the scope of the consumers whose 
tastes and habits should be examined to young smokers and potential young smokers.318 
139. Having determined that the Panel was wrong in co nfining its analysis of consumer tastes and 
habits to young and potential young smokers, we now consider whether the Panel's failure to evaluate 
the tastes and habits of current adult consumers of menthol cigarettes undermines the proposition that 
there is a sufficient degree of substitutability be tween clove and menthol cigarettes to support an 
overall finding of likeness under Article 2.1 of the TBT Agreement . 
140. The United States claims that "[e]vidence co mparing the tastes and habits of younger, 
potential smokers and the tastes and habits of older,  established smokers is directly relevant to the 
issue of consumer tastes and habits", because clove cigarettes are smoked disproportionately by 
youth, while menthol cigarettes are smoked mo re evenly among young and adult smokers.  
Accordingly, the United States argues, clove ciga rettes present a unique risk to young, uninitiated 
smokers and have little to no impact on adults, wh ile menthol cigarettes are a risk to young, 
uninitiated smokers, but also have a significant impact on adults.319 
141. Indonesia submits that the United States failed to present evidence showing that consumers, 
whether adult or youth, would be unwilling to subs titute clove and menthol cigarettes for the end-use 
of smoking.  Indonesia argues that the United States  is wrong in presuming that consumer tastes and 
habits must be identical to be like, considering that the Appellate Body found that products that are 
close  to being perfectly substitutable can be like products .  Indonesia contends that there is sufficient 
evidence on record supporting the fact that yo ung smokers and pre-smoki ng youth view clove and 
menthol cigarettes "as at least close to substitutable".320 
142. We consider that, in order to determine wh ether products are like under Article 2.1 of the 
TBT Agreement , it is not necessary to demonstrate that th e products are substitutable for all consumers 
or that they actually compete in the entire market.  Rather, if th e products are highly substitutable for 
some consumers but not for others, this may also support a finding that the products are like.  In 
Philippines – Distilled Spirits , the Appellate Body considered that the standard of "directly 
                                                      
318Panel Report, paras. 7.206. 
319United States' appellant's submission, para. 55. 
320Indonesia's appellee's submission, para. 82 (referring to Appellate Body Reports, Philippines – 
Distilled Spirits , para. 149). WT/DS406/AB/R 
Page 54  
 
competitive or substitutable" relating to Article III:2, second sentence, of the GATT 1994 is satisfied 
even if competition does not take place in the whole ma rket but is limited to a segment of the market.  
The Appellate Body found that "it was reasonable for the [p]anel to draw, from the Philippines' 
argument that imported distilled spirits are only ava ilable to a 'narrow segment' of its population, the 
inference that there is actual competition between impo rted and domestic distilled spirits at least in the 
segment of the market that the Philippines adm itted has access to both imported and domestic distilled 
spirits".
321  In that same dispute, the Appellate B ody found that Article III:2, second sentence, does 
not require that competition be assessed in relation to  the market segment that is most representative 
of the "market as a whole", and that Article III of the GATT 1994 "does not protect just some 
instances or most instances, but rather, it protects all instances of direct competition".322 
143. Although the Appellate Body's finding in Philippines – Distilled Spirits  concerned the 
second sentence of Article III:2 of the GATT 1994, we  consider this interpretation of "directly 
competitive or substitutable products" to be relevant to  the concept of "likeness" in Article III:4 of the 
GATT 1994 and 2.1 of the TBT Agreement , since likeness under these provisions is determined on the 
basis of the competitive relationshi p between and among the products.323  In our view, the notion that 
actual competition does not need to take place in th e whole market, but may be limited to a segment 
of the market, is separate from the question of the degree of competition that is required to satisfy the standards of "directly competitive or su bstitutable products" and "like products". 
144. The Panel's consideration of cons umer tastes and habits was too limited.  At the same time, 
the mere fact that clove cigarettes are smoked di sproportionately by youth, while menthol cigarettes 
are smoked more evenly by young and adult smoke rs does not necessarily affect the degree of 
substitutability between clove and me nthol cigarettes.  The Panel found that, from the perspective of 
young and potential young smokers , clove-flavoured cigarettes and menthol-flavoured cigarettes are 
similar for purposes of starting to smoke.
324  We understand this as a finding that young and potential 
young smokers perceive clove and me nthol cigarettes as sufficiently substitutable.  This, in turn, is 
sufficient to support the Panel's finding that those products are like within the meaning of Article 2.1 of the TBT Agreement , even if the degree of substitutability is  not the same for all adult smokers. 
                                                      
321Appellate Body Reports, Philippines – Distilled Spirits , para. 220. 
322Appellate Body Reports, Philippines – Distilled Spirits , para. 221 (referring to Panel Report, Chile – 
Alcoholic Beverages , para. 7.43). (original emphasis) 
323In EC – Asbestos , the Appellate Body, while not defining th e precise scope of th e concept of "like 
products" in Article III:4, found that Article III:4 applie s to products that are in a competitive relationship and 
that "the scope of 'like' in Article III:4 is broader th an the scope of 'like' in Article III:2, first sentence". 
(Appellate Body Report, EC – Asbestos , para. 99) 
324Panel Report, para. 7.232.  WT/DS406/AB/R 
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145. In the light of the above, we are of the view that, while the Panel should not have limited its 
analysis of consumer tastes and habits to youn g and potential young smokers to the exclusion of 
current adult smokers, this does not undermine th e Panel's finding regarding consumer tastes and 
habits and its ultimate finding of likeness.  This is so because the degree of competition and 
substitutability that the Panel found for young and potential young smokers is sufficiently high to 
support a finding of likeness under Article 2.1 of the TBT Agreement . 
146. Finally, we turn to the claim by the United St ates that the Panel acted inconsistently with 
Article 11 of the DSU when it reached the conclusi on that clove cigarettes and menthol cigarettes are 
perceived similarly by the consumers at issue in th is case, and that it disregarded critical evidence on 
how consumers actually use and perceive the products at issue in the relevant market.325 
147. The United States emphasizes that clove cigare ttes are smoked disproportionately by young, 
novice smokers while menthol cigarettes are smoked more evenly by young people and adults.  It 
recalls that both parties presented evidence—in part icular a set of surveys—aimed at shedding light 
on the tastes and habits of consumers in the United St ates in respect of clove and menthol cigarettes.  
However, the United States argues, the Panel disr egarded this evidence after having erroneously 
concluded that it could not "rely on the information provide[d]" in the surveys on the basis that this 
information was "not directly comparable".326  The United States submits that the survey data before 
the Panel were "directly relevant to the question"  before it because the data provided evidence on how 
consumers and potential consumers "used  and perceived different cigarettes in the United States "327, 
that is, the relevant market.  The United States furt her argues that, after disregarding this evidence, the 
Panel proceeded to base its c onclusions "entirely on speculation and conjecture", without any 
evidentiary support as to how consumers in the rele vant market actually use the cigarettes at issue.328 
148. Indonesia responds that, given that the research pa rameters varied from survey to survey, the 
Panel properly concluded that the survey data di d not provide clear guidance on "consumer tastes and 
habits".  In its view, the Panel's approach to that evidence "hardly amounts to excluding it a priori ".329  
Instead, the Panel "clearly articulated the difficu lties it encountered in comparing the survey data"330 
and simply did not place the same weight on the evidence as did the United States.  Indonesia further argues that the Panel identified and relied on eviden ce showing that both clove and menthol cigarettes 
                                                      
325United States' appellant's submission, para. 64. 
326United States' appellant's submission, para. 66 (quoting Panel Report, para. 7.210). 
327United States' appellant's submission, para. 67. (original emphasis) 
328United States' appellant's submission, para. 68. 
329Indonesia's appellee's submission, para. 106. 
330Indonesia's appellee's submission, para. 115. WT/DS406/AB/R 
Page 56  
 
are "trainer" or "starter" cigarettes that appeal to youth.
331  Based on this evidence on record, the Panel 
properly found that "all these flavoured cigarettes are perceived as vehicles to start smoking".332 
149. We observe that Article 11 of the DSU requires a panel to make an objective assessment of 
the matter before it, including an objective assessment of the facts of the case.  Thus, Article 11 requires a panel to "consider all the evidence pres ented to it, assess its cr edibility, determine its 
weight, and ensure that its factual findings have a proper basis in that evidence."
333  In addition, panels 
"are not required to accord to factual evidence of  the parties the same meaning and weight as do the 
parties."334  In this respect, the Appellate Body will not "interfere lightly" with a panel's fact-finding 
authority, and will not "base a finding of inconsiste ncy under Article 11 simply on the conclusion that 
[it] might have reached a different factual finding".335  Instead, for a claim under Article 11 to 
succeed, the Appellate Body must be satisfied that  the panel has exceeded its  authority as the initial 
trier of facts.  As the initial trier of facts, a pa nel must provide "reasoned a nd adequate explanations 
and coherent reasoning"336, must base its finding on a sufficient evidentiary basis337, and must treat 
evidence with "even-handedness".338  Moreover, a participant claiming that a panel disregarded 
certain evidence must explain why the evidence is so material to its case that the panel's failure to 
address such evidence has a bearing on the obj ectivity of the panel's factual assessment.339 
150. Both the United States and Indonesia relied on a series of surveys addressing smoking 
patterns in the United States in order to support their respective arguments.340  The Panel observed, 
                                                      
331Indonesia's appellee's submission, para. 111. 
332Indonesia's appellee's submission, para. 113 (quoting Panel Report, para. 7.231). 
333Appellate Body Reports, Philippines – Distilled Spirits , para. 135 (quoting Appellate Body Report, 
Brazil – Retreaded Tyres , para. 185, in turn referring to Appellate Body Report, EC – Hormones , paras. 132  
and 133). 
334Appellate Body Report, Australia – Salmon , para. 267. 
335Appellate Body Reports, Philippines – Distilled Spirits , para. 136 (quoting Appellate Body Report, 
US – Wheat Gluten , para. 151). 
336Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , footnote 618 to para. 293. 
337See Appellate Body Report, US – Carbon Steel , para. 148. 
338Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , para. 292. 
339See Appellate Body Report, EC – Fasteners (China) , para. 442. 
340Indonesia relied on the following four surveys:  (i) the 2006-2008 National Survey on Drug Use and 
Health;  (ii) the 2009 Western Watts  Survey;  (iii) the 2009 Monitoring the Future Survey;  and (iv) a 
2010 telephone survey conducted by Opinion Research Corporation. (Panel Report, footnote 426 to para. 7.210 
(referring to National Survey on Drug Use and Health  2006-2008, "Essential Facts About Clove Cigarettes" 
(Panel Exhibit IND-3);  Western Wa tts Data Collection, "Clove Ciga rettes Attitude, Awar eness and Usage 
Survey", 16-19 February 2009 (Panel Exhibit IND-26);  L.D. Johnston et al., "Smoking continues gradual decline among U.S. teens, smokele ss tobacco threatens a comeback," University of Michigan News Service , 
14 December 2009 (Panel Exhibit IND-33);  and Op inion Research Corporation, Teen CARAVAN Study 
No. 719381, 23-26 September 2010 (Panel Exhibit IND-34)))  The United States based its arguments on two surveys:  (i) the 2002-2003 National Survey on Drug Use and Health;  and (ii) the National Youth Tobacco 
Survey. (Panel Report, footnote 426 to para. 7.210 (referring to FDA Survey Assessment, "Patterns of Use 
Among Menthol, Clove, and Other Flavored Cigarettes (Panel Exhibit US-53)))  WT/DS406/AB/R 
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however, that these surveys "do not sh are the same research parameters"341;  instead, they "examine[d] 
different age groups", "pose[d] different questi ons", and were "based on different methodological 
approaches".342  Consequently, in the Panel's view, the in formation contained in the different surveys 
was "not directly comparable".  On this basis, the Panel reached the conclusion that it could not "rely 
on the information [that the surveys] provide on market shares for the purposes of analyzing the 
consumers' tastes and habits criterion"343, and that "the evidence on consumer preferences submitted 
by the parties may not provide clear guidance" as to whether clove and menthol cigarettes are 
substitutable from the perspective of young smokers and potential young smokers.344 
151. We acknowledge that extracting meaningful  information from surveys that differ 
considerably in terms of research parameters might not be an easy task.  Likewise, we do not suggest 
that panels must always be capable of engaging in  sophisticated statistical exercises to solve data 
discrepancies that ultimately cannot be resolved.  However, the fact  that evidence relied on by the 
parties may be difficult to compare cannot excuse the panel from examining it.  A panel has the 
obligation to "consider all the evidence presented to it"345, and it should at least attempt to extract 
potentially relevant information contained therein.  It is only after such an examination that a panel 
might be able to provide "reas oned and adequate explanations"346 as to why it cannot or chooses not to 
rely on specific evidence submitted by the parti es.  In our view, a panel cannot determine a priori  that 
some pieces of evidence are not reliable for the purposes of its analysis solely on the basis of a 
difference in the parameters and methodology used. 
152. We recall, however, that not every error allegedly committed by a panel amounts to a 
violation of Article 11 of the DSU.  A participant claiming that a panel ignor ed certain evidence must 
explain why that evidence is so material to its case that the panel's failure to address such evidence 
has a bearing on the objectivity of the panel's factual assessment.347  In that respect, the United States 
submits that, because the Panel did not examine the evidence related to consumers' tastes and habits, 
the Panel's finding with respect to this criterion "was fatally flawed".348  In the United States' view, the 
survey data presented by the parties "show that consumers and potential cons umers use and perceive 
                                                      
341Panel Report, para. 7.210. 
342Panel Report, para. 7.210. 
343Panel Report, para. 7.210. 
344Panel Report, para. 7.209. 
345Appellate Body Reports, Philippines – Distilled Spirits , para. 135 (quoting Appellate Body Report, 
Brazil – Retreaded Tyres , para. 185, in turn referring to Appellate Body Report, EC – Hormones , paras. 132 
and 133). 
346Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , footnote 618 to para. 293. 
347Appellate Body Report, EC – Fasteners (China) , para. 442. 
348United States' appellant's submission, para. 68. WT/DS406/AB/R 
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clove and menthol cigarettes differently—even thou gh they are both cigarettes with characterizing 
flavors that appeal to youth".
349 
153. We have considered above, in respect of the cl aim by the United States that the Panel erred in 
the application of the consumer tastes and habits  criterion, that, although the Panel should not have 
limited its analysis to young and potential young c onsumers, to the exclusion of current adult 
consumers, this did not affect its finding that th ere is sufficient substitutability between clove and 
menthol cigarettes to support its overall finding that the products are like.  The Panel's findings show 
that, while clove and menthol cigarettes do not compete in the whole market, these products are substitutable for young and potential young consumers. 
154. Therefore, in our view, the fact that the Pane l did not rely on evidence demonstrating that 
clove cigarettes are disproportionally smoked by yo uth while menthol cigarettes are smoked by both 
youth and adults, does not have mate rial consequences for the Panel's finding on consumer tastes and 
habits.  This is so because the Panel found that ther e is a sufficient degree of substitutability, at least 
in some segments of the market, between clove and menthol cigarettes, to support a finding of 
likeness under Article 2.1 of the TBT Agreement . 
155. In sum, we are not persuaded that the reasons  advanced by the Panel for not relying on the 
surveys submitted by the parties justify the cursory treatment given by the Panel to these surveys.  
Even if this evidence was not directly comparable  or based on different methodological approaches, 
the Panel was required to consider this evidence and extract relevant information that it contained.  
The Panel did not provide an  adequate explanation as to why this  was not possible.  Nevertheless, in 
our view, the Panel's error does not amount to a viol ation of Article 11 of the DSU, considering that 
the evidence that the Panel did not engage with doe s not have material consequences for the Panel's 
finding that consumer tastes and habits indicate th at clove and menthol cigarettes are sufficiently 
substitutable in certain segments of the market, a nd does not, therefore, undermine the Panel's finding 
that clove and menthol cigarettes are like products under Article 2.1 of the TBT Agreement . 
4. Conclusion on "Like Products" 
156. We have disagreed with the Panel's interpre tation of the concept of "like products" in 
Article 2.1 of the TBT Agreement , which focuses on the purposes of the technical regulation at issue, 
as separate from the competitive relationship betwee n and among the products.  In contrast, we have 
concluded that the context provided by Artic le 2.1 itself, by other provisions of the TBT Agreement , 
by the TBT Agreement  as a whole, and by Article III:4 of the GATT 1994, as well as the object and 
                                                      
349United States' appellant's submission, para. 69.  WT/DS406/AB/R 
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purpose of the TBT Agreement , support an interpretation of the concept of "likeness" in Article 2.1 
that is based on the competitive relationship between  and among the products and that takes into 
account the regulatory concerns underlying a technical re gulation, to the extent that they are relevant 
to the examination of certain likeness criteri a and are reflected in the products' competitive 
relationship. 
157. As a consequence of our interpretative appr oach to the concept of "like products" in 
Article 2.1 of the TBT Agreement , we have also disagreed with the Panel's decision to examine the 
extent of substitutability of clove and menthol ci garettes from the perspective of a limited group of 
consumers, that is, young smokers and potential yo ung smokers.  We have, nevertheless, considered 
that the Panel's error does not vitiate the conclusion that there is a sufficient degree of substitutability 
between clove and menthol cigarettes to support an overall finding of likeness under Article 2.1 of the 
TBT Agreement .  We have also determined that the Panel' s decision that it could not rely on certain 
evidence submitted by the parties did not amount to an error under Article 11 of the DSU. 
158. In respect of end-use, we have disagreed with the Panel's conclusion that the end-use of clove 
and menthol cigarettes is simply "to be smoked".  Nevertheless, we have considered, based on the 
Panel's findings, that both clove and menthol cigarettes are capable  of performing the more specific 
end-uses put forward by the United States, that is, "s atisfying an addiction to nicotine" and "creating a 
pleasurable experience associated with the taste of the cigarette and the aroma of the smoke".350  We 
have thus concluded that the different end-uses of clove and menthol cigarettes support the Panel's 
overall finding of likeness. 
159. Finally, we observe that the United States has not appealed the Panel's findings regarding the 
physical characteristics and the tariff classification of clove and menthol cigarettes.  The Panel found 
that clove and menthol cigarettes are physically similar as "they share their main traits as cigarettes, that is, having tobacco as a main ingredient, and an additive which imparts a characterizing flavour, 
taste and aroma, and reduces the harshness of tobacco"
351;  and that they are both classified under 
subheading 2402.20 of the Harmonized Commodity Description and Coding System.352 
160. In the light of all of the above, while we disag ree with certain aspects of  the Panel's analysis, 
we agree with the Panel that th e "likeness" criteria it examined support its overall conclusion that 
clove and menthol cigarettes are like products within the meaning of Article 2.1 of the 
TBT Agreement .  Therefore, we uphold , albeit for different reasons, the Panel's finding, in 
                                                      
350Panel Report, para. 7.231;  United States' response to Panel Question 37, para. 85. 
351Panel Report, para. 7.187. 
352Panel Report, para. 7.239. WT/DS406/AB/R 
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paragraph 7.248 of the Panel Report, that clove cigarettes and menthol cigarettes are like products 
within the meaning of Article 2.1 of the TBT Agreement . 
C. The Panel's Finding that Section 907(a)(1 )(A) of the FFDCA Accords Imported Clove 
Cigarettes Less Favourable Treatment than That Accorded to Domestic Menthol 
Cigarettes, within the Meaning of Article 2.1 of the TBT Agreement  
1. Introduction 
161. In this section, we address the United States ' appeal of the Panel's finding that the 
United States acted inconsistently with Article 2.1 of the TBT Agreement by according to clove 
cigarettes imported from Indonesia less favourable tr eatment than that accorded to domestic like 
products. 
162. Having concluded that clove and menthol cigare ttes are like products within the meaning of 
Article 2.1 of the TBT Agreement , the Panel undertook a four-step an alysis to determine whether 
Section 907(a)(1)(A) of the FFDCA accords to clove cigarettes imported from Indonesia less 
favourable treatment than that accorded to like domestic products.  First, the Panel sought to 
determine the products to be compared in its analysis.353  The Panel found that Article 2.1 called for a 
comparison between treatment accorded to, on the one hand, clove cigarettes imported from 
Indonesia, and, on the other hand, domestic menthol cigarettes.354  Second, the Panel determined that 
under Section 907(a)(1)(A) clove and menthol ciga rettes are treated differently, in that clove 
cigarettes are banned while menthol cigarettes are excluded from the ban.355  Third, the Panel found 
that such difference in treatment modifies the c onditions of competition to the detriment of the 
imported products, insofar as impor ted clove cigarettes are banned wh ile domestic menthol cigarettes 
are allowed to remain in the market.356  Fourth and finally, the Panel rejected the United States' 
argument that such detrimental impact could be "exp lained by factors or circumstances unrelated to 
the foreign origin of the products"357, because Section 907(a)(1)(A) imposes costs on foreign 
producers, notably producers in Indonesia, while  at the same time imposing no costs on any 
US entity.358 
163. On appeal, the United States claims th at the Panel improperly narrowed the product scope  of 
its analysis by focusing exclusively on treatme nt accorded to imported clove cigarettes and to 
                                                      
353Panel Report, para. 7.270. 
354Panel Report, paras. 7.275-7.277. 
355Panel Report, paras. 7.279 and 7.280. 
356Panel Report, para. 7.281. 
357Panel Report, para. 7.283 (referring to United States' second written submission to the Panel, 
para. 127, in turn referring to Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , 
para. 96). 
358Panel Report, para. 7.289.  WT/DS406/AB/R 
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domestic menthol cigarettes.  The United States pos its that the Panel should have compared the 
treatment accorded to the group of imported and to the group of domestic like products.  The 
United States also claims that the Panel improperly narrowed the temporal scope  of its analysis by 
focusing exclusively on the effects of Section 907( a)(1)(A) on domestic like products at the time the 
ban on flavoured cigarettes came into  effect.  The United States claims further that the Panel erred in 
finding that the less favourable treatment accorded to imported clove cigarettes was related to the 
origin of the products, because Section 907(a)(1)(A ) imposes costs on foreign producers while at the 
same time imposing no costs on any US entity.  Fina lly, the United States claims that the Panel acted 
inconsistently with Article 11 of the DSU in reaching these findings. 
164. Indonesia responds that the Panel properly identif ied the products to be compared in its less 
favourable treatment analysis, and did not err in  establishing the appropriate timeframe for its 
comparison.  Indonesia also asserts that the Panel correctly found that the less favourable treatment 
accorded to clove cigarettes could not be explained by  factors unrelated to the foreign origin of the 
imported products.  Finally, Indonesia claims that the Panel acted in accordance with Article 11 of the 
DSU in performing its analysis. 
165. Before turning to the specific i ssues raised by the United States on appeal, we find it useful to 
interpret the "treatment no less favourable" requirement of Article 2.1 of the TBT Agreement  in the 
light of the conflicting interpretations of th is phrase offered by the participants on appeal. 
2. "Treatment No Less Favourable" under Article 2.1 of the TBT Agreement  
166. Referring to the Appellate Body's interp retation of Article III:4 of the GATT 1994359, the 
United States and Indonesia agree that the "treatment  no less favourable" standard of Article 2.1 of the 
TBT Agreement requires a panel to determine whether the technical regulation at issue modifies the 
conditions of competition in the relevant market to the detriment of the impor ted products.  However, 
Indonesia considers that the existence of any detrimental effect on competitive opportunities for 
imported products is sufficient to establish less favourable treatment under Article 2.1.360  In contrast, 
the United States argues that the existence of a detrimental effe ct on competitive opportunities for 
imports is necessary, but not sufficient, to establis h a violation of Article 2.1.  Referring to the 
Appellate Body report in Dominican Republic – Import and Sale of Cigarettes , the United States 
                                                      
359See Appellate Body Report, Korea – Various Measures on Beef , para. 137. 
360Indonesia's appellee's submission, para. 172. WT/DS406/AB/R 
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argues that Article 2.1 requires further inquiry into whether "the detrimental effect is explained by 
factors or circumstances unrelated to the foreign origin of the product".
361 
167. Article 2.1 of the TBT Agreement  provides that, with respect to their central government 
bodies: 
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 origin and to  like products originating in any 
other country. 
168. As already set out above, for a violation of th e national treatment obligation in Article 2.1 to 
be established, three elements must be satisfied:  (i) the measure at issue must be a "technical 
regulation";  (ii) the imported a nd domestic products at issue must be like products;  and (iii) the 
treatment accorded to imported products must be le ss favourable than that accorded to like domestic 
products.  In this part of its appeal, the Un ited States challenges only the Panel's finding that 
Section 907(a)(1)(A) of the FFDCA violates the nati onal treatment obligation provided in Article 2.1 
of the TBT Agreement , insofar as it accords to imported clove cigarettes less favourable treatment than 
that accorded to like domestic products. 
169. The "treatment no less favourable" requirement of Article 2.1 of the TBT Agreement  applies 
"in respect of technical regulations".  A technical  regulation is defined in  Annex 1.1 thereto as a 
"[d]ocument which lays down product characterist ics or their related processes and production 
methods … with which compliance is mandatory".  As such, technical regulations are measures that, 
by their very nature, establish distinctions between  products according to their characteristics or their 
related processes and production meth ods.  This suggests, in our view, that Article 2.1 should not be 
read to mean that any distinction, in particular those that are based exclusively  on particular product 
characteristics or their related pr ocesses and production methods, would per se  accord less favourable 
treatment within the meaning of Article 2.1. 
170. We next observe that Article 2.2 of the TBT Agreement  provides, in relevant part, that: 
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, technical regulations shall not be more trade-restrictive than necessary to fulfil a legitimate objective, taking account of the risks 
non-fulfilment would create. 
                                                      
361United States' appellant's submission, para. 101 (referring to Panel Report, para. 7.269;  and 
Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 96).  WT/DS406/AB/R 
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171. The context provided by Article 2.2 suggests that  "obstacles to international trade" may be 
permitted insofar as they are not found to be "unn ecessary", that is, "more trade-restrictive than 
necessary to fulfil a legitimate objective".  To us, this supports a reading that Article 2.1 does not 
operate to prohibit a priori  any obstacle to international trade.  Indeed, if any obstacle to international 
trade would be sufficient to establish a violation of Article 2.1, Article 2.2 would be deprived of its 
effet utile . 
172. This interpretation of Article 2.1 is buttressed by the sixth recital of the preamble of the 
TBT Agreement , in which WTO Members recognize 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 
prevention of deceptive practices, at the levels it considers 
appropriate, subject to the requirement that they are not applied in a manner that would constitute a mean s of arbitrary or unjustifiable 
discrimination between countries wh ere the same conditions prevail 
or a disguised restriction on international trade, and are otherwise in accordance with the provisions of this Agreement. 
173. The language of the sixth recital expressly acknowledges that Members may take measures 
necessary for, inter alia , the protection of human life or health, provided that such measures "are not 
applied in a manner which would constitute a means of  arbitrary or unjustifiable discrimination" or a 
"disguised restriction on international trade" and ar e "otherwise in accordance with the provisions of 
this Agreement".  We consider that the sixth recital of the preamble of the TBT Agreement  provides 
relevant context regarding the ambit of the "treatment no less favourable" requirement in Article 2.1, 
by making clear that technical regulations may pursu e the objectives listed therein, provided that they 
are not applied in a manner that would constitute a means of arbitrary or unjustifiable discrimination 
between countries where the same cond itions prevail, or a disguised r estriction on international trade, 
and are otherwise in accordance with the provisions of the TBT Agreement . 
174. Finally, as noted earlier
362, the object and purpose of the TBT Agreement is to strike a balance 
between, on the one hand, the objective of trade liber alization and, on the other hand, Members' right 
to regulate.  This object and purpose therefore s uggests that Article 2.1 should not be interpreted as 
prohibiting any detrimental impact on competitiv e opportunities for imports in cases where such 
detrimental impact on imports stems exclusively from legitimate  regulatory distinctions. 
175. Accordingly, the context and object and purpose of the TBT Agreement weigh in favour of 
reading the "treatment no less favourable" requirement of Article 2.1 as prohibiting both de jure  and 
                                                      
362Supra , paras. 94 and 95. WT/DS406/AB/R 
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de facto  discrimination against imported products, wh ile at the same time permitting detrimental 
impact on competitive opportunities for imports that  stems exclusively from legitimate regulatory 
distinctions. 
176. Like the participants, we also find it useful to consider the context provided by the other 
covered agreements.  In particular, we note that th e non-discrimination obligation of Article 2.1 of the 
TBT Agreement is expressed in the same terms as that of Article III:4 of the GATT 1994.
363  In the 
context of Article III:4, the "treatment no less fa vourable" requirement has be en widely interpreted by 
previous GATT and WTO panels and by the Appe llate Body.  Beginning with the GATT panel in 
US – Section 337 Tariff Act , the term "treatment no less favourable" in Article III:4 was interpreted as 
requiring "effective equality of opportunities for imported products".364  Subsequent GATT and 
WTO panels followed a similar approach, and f ound violations of Article III:4 in cases where 
regulatory distinctions in enforcement procedures365, distribution channels366, statutory content 
requirements367, and allocation of import licenses368 resulted in alteration of the competitive 
opportunities in the market of the regulating Member to the detriment of imported products vis-à-vis 
domestic like products. 
177. In Korea – Various Measures on Beef , the Appellate Body agreed that the analysis of less 
favourable treatment under Article III:4 focuses on th e "conditions of competition" between imported 
and domestic like products.369  The Appellate Body further clarified that a formal difference in 
treatment between imported a nd like domestic products is: 
… neither necessary, nor sufficient, to show a violation of 
Article III:4.  Whether or not imported products are treated "less 
favourably" than like domestic products should be assessed instead by examining whether a measure modifies the conditions of 
competition in the relevant market to the detriment of imported 
products.
370 (original emphasis) 
178. Subsequently, in EC – Asbestos , the Appellate Body explained th at imports will be treated 
less favourably than domestic like products when regulatory distinctions disadvantage the group of 
                                                      
363Article III:4 of the GATT 1994 reads: 
The products of the territory of any Member imported into the territory of any other Member shall be accorded tr eatment no less favourable than that 
accorded to like products of nationa l origin in respect of all laws, 
regulations and requirements affecting their internal sale, offering for sale, 
purchase, transportation, distribution or use. 
364GATT Panel Report, US – Section 337 Tariff Act , para. 5.10. 
365GATT Panel Report, US – Section 337 Tariff Act , para. 5.20. 
366GATT Panel Report, Canada – Provincial Liquor Boards (US) , paras. 5.12-5.16. 
367Panel Report, US – Gasoline , para. 6.10. 
368Panel Reports, EC – Bananas III , paras. 7.179-7.180. 
369Appellate Body Report, Korea – Various Measures on Beef , para. 136. 
370Appellate Body Report, Korea – Various Measures on Beef , para. 137.  WT/DS406/AB/R 
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imported products vis-à-vis the group of domestic li ke products.  The Appellate Body reasoned that 
the "treatment no less favourable" clause of Article III:4: 
… expresses the general principle, in Article III:1, that internal 
regulations "should not be applied … so as to afford protection to 
domestic production."  If there is "less favourable treatment" of the 
group of "like" imported products, th ere is, conversely, "protection" 
of the group of "like" domestic pr oducts.  However, a Member may 
draw distinctions between products  which have been found to be 
"like", 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.371 (original emphasis) 
179. Thus, the "treatment no less favourable" standa rd of Article III:4 of the GATT 1994 prohibits 
WTO Members from modifying the conditions of comp etition in the marketplace to the detriment of 
the group of imported products vis-à-vis  the group of domestic like products.372 
180. Although we are mindful that the meaning of the term "treatment no less favourable" in 
Article 2.1 of the TBT Agreement  is to be interpreted in the light of the specific context provided by 
the TBT Agreement , we nonetheless consider these previous fi ndings by the Appellate Body in the 
context of Article III:4 of the GATT 1994 to be instructive in assessing the meaning of "treatment no 
less favourable", provided that the specific context in which the term appears in Article 2.1 of the 
TBT Agreement is taken into account.  Similarly to Article  III:4 of the GATT 1994, Article 2.1 of the 
TBT Agreement requires WTO Members to accord to the group of imported products treatment no less 
favourable than that accorded to the group of like domestic products.  Article 2.1 prescribes such 
                                                      
371Appellate Body Report, EC – Asbestos , para. 100. 
372We disagree with the United States to the extent that it suggests that Dominican Republic – Import 
and Sale of Cigarettes  stands for the proposition that, under Article III:4, panels should inquire further whether 
"the detrimental effect is unrelated to the foreign origin of the product". (United States' appellant's submission, para. 101 (referring to Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 96))  
Although the statement referred to by the United States, wh en read in isolation, could be viewed as suggesting 
that further inquiry into the rationale for the detrimental impact is necessary, in that dispute the Appellate Body 
rejected Honduras' claim under Article III:4 because: 
… the difference between the per-unit co sts of the bond requirement alleged 
by Honduras is explained by the fact that the importer of Honduran cigarettes has a smaller market shar e than two domestic producers (the 
per-unit cost of the bond requirement being the result of dividing the cost of 
the bond by the number of cigarette s sold on the Dominican Republic 
market). 
(Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 96) 
Thus, in that dispute, the Appellate Body merely held that the higher per unit costs of the bond 
requirement for imported cigarettes did not conclusively demonstrate less favourable treatment, because it was 
not attributable to the specific m easure at issue but, rather, was a function of sales volumes.  In Thailand – 
Cigarettes (Philippines) , the Appellate Body further clarified that for a finding of less favourable treatment 
under Article III:4 "there must be in every case a genuine relationship between the measure at issue and its 
adverse impact on competitive opportunities for imported versus like domestic products to support a finding that imported products are treated less favo urably". (Appellate Body Report, Thailand – Cigarettes (Philippines) , 
para. 134)  The Appellate Body esch ewed an additional inquiry as to wh ether such detrimental impact was 
related to the foreign origin of the products or explained by other factors or circumstances. WT/DS406/AB/R 
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treatment specifically in respect of technical regula tions.  For this reason, a panel examining a claim 
of violation under Article 2.1 should seek to ascer tain whether the technical regulation at issue 
modifies the conditions of competition in the market of the regulating Member to the detriment of the 
group of imported products vis-à-vis the group of like domestic products. 
181. However, as noted earlier, the context and object and purpose of the TBT Agreement  weigh in 
favour of interpreting the "treatment no less favourab le" requirement of Article 2.1 as not prohibiting 
detrimental impact on imports that stems exclusively from a legitimate regulatory distinction.  Rather, 
for the aforementioned reasons
373, the "treatment no less favourable" requirement of Article 2.1 only 
prohibits de jure and de facto  discrimination against the group of imported products. 
182. Accordingly, where the technical regulation at issue does not de jure discriminate against 
imports, the existence of a detrimental impact on competitive opportunities for the group of imported 
vis-à-vis the group of domestic like products is not dispositive of less favourable treatment under 
Article 2.1.  Instead, a panel must further analyze whether the detrimental impact on imports stems exclusively from a legitimate regulatory distinction rather than reflecting discrimination against the 
group of imported products.  In ma king this determination, a panel must carefully scrutinize the 
particular circumstances of the case, that is, the design, architecture, revealing structure, operation, 
and application of the technical regulation at issue, and, in particular, whether that technical regulation 
is even-handed, in order to determine whether it discriminates against the group of imported products. 
3. Product Scope of the "Treatment No Less Favourable" Comparison 
183. We now turn to the specific issues raised by the United States on appeal.  We begin with the 
United States' appeal of the scope of products cons idered by the Panel to determine whether imported 
clove cigarettes are treated less favourably than US domestic like products within the meaning of 
Article 2.1 of the TBT Agreement . 
184. Before the Panel, Indonesia argued that the "treatment no less favourable" requirement of 
Article 2.1 calls for a comparison between, on the one hand, treatment accorded to imported clove 
cigarettes and, on the other hand, treatment accord ed to any like domestic cigarettes that are not 
banned by Section 907(a)(1)(A) of the FFDCA (that is , menthol or regular cigarettes, but not other 
flavoured cigarettes, which are prohibited under Section 907(a)(1)(A)).374  The United States 
responded that the Panel should compare treatme nt accorded under Section 907(a)(1)(A) to all 
                                                      
373See supra , paras. 97-101. 
374Panel Report, para. 7.271.  WT/DS406/AB/R 
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imported cigarettes (to the extent they are like) a nd not just clove cigarettes, with the treatment 
accorded to all domestically produced like cigarettes.375 
185. The Panel determined that the comparison s hould be between the treatment accorded to 
imported clove cigarettes and that accorded to th e domestically produced cigarettes that it had earlier 
found to be like products, that is, me nthol cigarettes.  It reasoned that: 
Article 2.1 of the TBT Agreement  calls for a comparison of "products 
imported from the territory of any Member" with "like products of 
national origin".  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.
376 (original emphasis;  footnote 
omitted) 
On the domestic side, we recall that we have found that menthol 
cigarettes are "like" clove cigarette s for the purpose of Article 2.1 of 
the TBT Agreement  because, inter alia , they both contain an additive 
that provides them with a characterizing flavour which makes them appealing to youth.  We have not en tered into an analysis of whether 
domestic regular cigarettes are "like"  imported clove cigarettes as we 
consider that we would be exceeding our terms of reference.
377 
186. On appeal, the United States claims that the Panel erred in a priori limiting its less favourable 
treatment comparison to one imported product (Ind onesian clove cigarettes) and one domestic like 
product (menthol cigarettes).  Referring to the Appellate Body report in EC – Asbestos and the panel 
report in US – Tuna II (Mexico) , the United States argues that Article 2.1 required the Panel to 
compare the treatment accorded to all im ported and domestic like products as a group.378  F o r  t h e  
United States, a proper comparison would have dem onstrated that Section 907(a)(1)(A) does not alter 
the conditions of competition between impor ted and domestic like products as a group.379 
187. With respect to the imported products, the Unite d States argues that the Panel erred in failing 
to consider the treatment accorded to menthol cigarettes imported from other countries.380  According 
to the United States, the refere nce to imported products of " any other Member" in Article 2.1 does not 
justify the Panel's focus on Indonesian clove cigarettes, because Article 2.1 aims at discerning 
                                                      
375Panel Report, para. 7.272. 
376Panel Report, para. 7.275. 
377Panel Report, para. 7.277. 
378United States' appellant's submission, paras. 75-77 (referring to Appellate Body Report, EC – 
Asbestos , para. 100;  and quoting Panel Report, US – Tuna II (Mexico) , para. 7.295). 
379United States' appellant's submission, para. 81. 
380United States' appellant's submission, para. 79. WT/DS406/AB/R 
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legitimate regulatory distinctions from those that ser ve as a proxy for singling out the like products of 
the complaining Member
381 for less favourable treatment. 
188. With respect to like domestic products, the Unite d States argues that the Panel erred in failing 
to consider the treatment accorded to domestic flavoured cigarettes.382  To the extent that the Panel 
limited its analysis to domestic menthol cigarettes by virtue of the product scope of Indonesia's panel 
request, the United States maintains that a panel's terms of reference do not limit the scope of the 
products to be considered in a discrimination claim.383 
189. For its part, Indonesia responds that the Panel di d not err in comparing the treatment accorded 
to imported clove cigarettes with the treatment a ccorded to domestic menthol cigarettes.  Indonesia 
argues that the Panel correctly limited its less fa vourable treatment comparison to those imported and 
domestic products that it reviewed in its likeness analysis.384  Whereas the Appellate Body in EC – 
Asbestos and the panel in US – Tuna II (Mexico)  engaged in a likeness analysis on the basis of groups 
of products, the Panel in this case correctly limited its analysis to the specific products at issue, 
namely, imported clove cigarettes and domestic menthol cigarettes.385  Indonesia further maintains 
that the Panel did not rely on its terms of refe rence to limit the product scope of its less favourable 
treatment comparison, but rather on its determ ination of the scope of its likeness analysis.386 
190. Article 2.1 provides that "products imported from the territory of any Member"387 shall be 
accorded treatment no less favourable than that accord ed to "like products of national origin and like 
products originating in any other country".  The te xt of Article 2.1 thus calls for a comparison of 
treatment accorded to, on the one hand, products imported from any Member alleging a violation of 
Article 2.1, and treatment accorded to, on the ot her hand, like products of  domestic and any other 
origin.  Therefore, for the purposes of the less fa vourable treatment analysis, treatment accorded to 
products imported from the complaining Member is to be compared with that accorded to like 
domestic products and like produc ts of any other origin. 
191. In determining what are the "like products of na tional origin and like products originating in 
any other country", a panel must seek to establish,  based on the nature and extent of the competitive 
relationship between the products in the market of  the regulating Member, the products of domestic 
(and other) origin(s) that are like the products imported from the complaining Member.  In 
                                                      
381United States' appellant's submission, para. 84. 
382United States' appellant's submission, para. 79. 
383United States' appellant's submission, para. 87. 
384Indonesia's appellee's submission, paras. 138 and 139. 
385Indonesia's appellee's submission, paras. 123-130. 
386Indonesia's appellee's submission, paras. 147 and 148. 
387Emphasis added.  WT/DS406/AB/R 
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determining what the like products at issue are, a pa nel is not bound by its te rms of reference to limit 
its analysis to those products identified by the complaining Member in its panel request.  Rather, 
Article 2.1 requires the panel to identify the dom estic products that stand in a sufficiently close 
competitive relationship with the products imported from the complaining Member to be considered 
like products within the meaning of that provision. 
192. To be clear, a panel's duty under Article 2.1 to  identify the products of domestic and other 
origins that are like the products imported fro m the complaining Member does not absolve the 
complainant from making a prima facie  case of violation of Article 2.1.  Ordinarily, in discharging 
that burden, the complaining Member will iden tify the imported and domes tic products that are 
allegedly like and whose treatment needs to be compared for purposes of establishing a violation of 
Article 2.1.  The products identified by the comp laining Member are the starting point in a panel's 
likeness analysis.  However, Article 2.1 requires panels to assess objectively, on the basis of the 
nature and extent of the competitive relationship be tween the products in the market of the regulating 
Member, the universe of domestic products that ar e like the products imported from the complaining 
Member.388 
193. Once the imported and domestic like products ha ve been properly identified, Article 2.1 
requires a panel dealing with a national treatment claim to compare, on the one hand, the treatment 
accorded under the technical regulation at issue to  all like products imported from the complaining 
Member with, on the other hand, that accorded to  all like domestic products.  However, the national 
treatment obligation of Article 2.1 does not require Members to accord no less favourable treatment to 
each and every imported product as compared to each  and every domestic like product.  Article 2.1 
does not preclude any regulatory distinctions betwee n products that are found to be like, as long as 
treatment accorded to the group  of imported products is no less favourable than that accorded to the 
group  of like domestic products.  As noted by the Appella te Body in the context of Article III:4 of the 
GATT 1994: 
[A] Member may draw distinctions between products which have 
been found to be "like", 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.389 
(original emphasis) 
194. In sum, the national treatment obligation of Ar ticle 2.1 calls for a comparison of treatment 
accorded to, on the one hand, the group of products  imported from the complaining Member and, on 
the other hand, the treatment accorded to the grou p of like domestic products.  In determining what 
                                                      
388See Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 1131. 
389Appellate Body Report, EC – Asbestos , para. 100. WT/DS406/AB/R 
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the scope of like imported and domestic products is, a panel is not limited to those products 
specifically identified by the complaining Member.  Rather, a panel must objectively assess, based on 
the nature and extent of their competitive relations hip, what are the domestic products that are like the 
products imported from the complaining Member.  Once the universe of imported and domestic like 
products has been identified, the treatment acco rded to all like products imported from the 
complaining Member must be compared to th at accorded to all like domestic products.  The 
"treatment no less favourable" standard of Article  2.1 does not prohibit regulatory distinctions 
between products found to be like, provided th at the group of like products imported from the 
complaining Member is treated no less favourably  than the group of domestic like products. 
195. Against this analytical framework, we turn to th e United States' specific allegations of error.  
The United States essentially claims that the Panel impermissibly narrowed the scope of products to 
be compared for the purpose of assessing Indonesi a's claim that Section 907(a)(1)(A) violates the 
national treatment obligation of Article 2.1. 
196. With respect to the group of imported products, th e United States claims that the Panel erred 
in failing to include in its analysis  treatment accorded to menthol cigarettes imported into the United 
States from all Members.  We cannot agree.  As noted earlier, the national treatment obligation of 
Article 2.1 calls for a comparison of treatment a ccorded to the group of like products imported from 
the Member alleging a violation of Article 2.1, and treatment accorded to the group of like domestic 
products.  It follows that the Panel did not err in  finding that a determination of Indonesia's claims 
under Article 2.1 required an examination of whet her Section 907(a)(1)(A) accords to the group of 
products imported  from Indonesia less favourable treatment than that  accorded to the group of like 
products of US origin.
390 
197. In determining the group of pr oducts imported from Indonesia who se treatment n eeded to be 
compared with the treatment a ccorded to like domestic products, the Panel found that it was 
uncontested that the "vast majority" of cigarettes that were imported from Indonesia into the United 
States were clove cigarettes.391  The Panel also observed that only "a small percentage of non-clove 
cigarettes" was imported from Indonesia into the United States.392  Accordingly, the Panel did not err 
in finding that the group of products imported from Indonesia essentially consisted of clove cigarettes. 
198. With respect to the group of like domestic produc ts, the United States' challenge focuses on 
the Panel's exclusion of domestically produced flav oured cigarettes from its less favourable treatment 
                                                      
390Panel Report, paras. 7.275-7.276. 
391Panel Report, para. 7.275. 
392Panel Report, footnote 503 to para. 7.275 (referring to United States' response to Panel Question 81, 
in turn referring to World Trade Atlas, Indonesia Ci garette Exports to the United States, 1998-2009 (Panel 
Exhibit US-134)).  WT/DS406/AB/R 
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analysis.  The Panel felt bound by its terms of refe rence to limit its likeness analysis to two categories 
of products regulated under Section 907(a)(1)(A)— imported clove cigarettes and domestic menthol 
cigarettes393—and accordingly limited its less favourable treatment analysis to a comparison of the 
treatment accorded to those two product groups.394  The Panel did not address domestic flavoured 
cigarettes at either the likeness or the less favourable treatment stage of its analysis. 
199. We note, however, that the United States does not  challenge on appeal the Panel's exclusion 
of domestically produced flavoured cigarettes from the likeness stage of its analysis.  Rather, the 
United States' challenge focuses exclusively on the Panel's exclusion of domestically produced 
flavoured cigarettes from the less favourable treatme nt stage of the Panel's analysis.  Because 
Article 2.1 expressly limits the scope of the less favourable treatment comparison to imported and 
domestic like products, in the absence of specific findings by the Panel that domestically produced 
flavoured cigarettes other than menthol are like cl ove cigarettes, we cannot determine whether the 
Panel erred in failing to include domestically pr oduced flavoured cigarettes in its less favourable 
treatment comparison. 
200. Even assuming, for the sake of argument, that the Panel had found that domestic flavoured 
cigarettes are like clove cigarettes imported from I ndonesia, we are not persuaded that this would 
have changed the Panel's ultimate conclusion that  Section 907(a)(1)(A) modifies the conditions of 
competition to the detriment of the group of im ported products vis-à-vis like domestic products.  
Aside from the Panel's finding that, "at the time of the ban, there were no domestic cigarettes with 
characterizing flavours other than menthol cigarettes"395 in the US market—which is challenged by 
the United States and addressed below—the Panel did not have evidence on the record that flavoured 
cigarettes other than menthol cigarettes had "any si zeable market share in the United States prior to 
the implementation of the ban in 2009".396  To the contrary, in response to a Panel question, the 
United States confirmed that the non-clove-flavour ed cigarettes banned unde r Section 907(a)(1)(A) 
"were on the market for a relatively short period of time and represented a relatively small market 
share".397  Therefore, we consider it safe to assume that, given their relatively low share in the 
US market, the inclusion of domestically produced flavoured cigarettes in the comparison would not 
have altered the Panel's ultimate conclusion that  the group of like domestic products essentially 
consisted of domestic  menthol cigarettes. 
                                                      
393Panel Report, para. 7.147. 
394Panel Report, para. 7.277. 
395Panel Report, para. 7.289. 
396Panel Report, para. 2.28. 
397United States' response to Panel Question 17, para. 43. WT/DS406/AB/R 
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4. Temporal Scope of the "Treatment No Less Favourable" Comparison 
201. To the extent that the Panel's exclusion of domestic flavoured cigarettes other than menthol 
cigarettes from its analysis stemmed from its finding th at those products were not on the market at the 
time when the ban came into effect, the United Stat es submits that this constitutes legal error.  In 
particular, the United States claims that the Panel erred in a priori excluding from its analysis 
evidence concerning the effects of Section 907( a)(1)(A) of the FFDCA on domestic like products 
prior to the entry into force of the ban on flavour ed cigarettes.  Moreover,  the United St ates claims 
that the Panel acted inconsistently  with Article 11 of the DSU in ignoring evidence demonstrating that 
there were domestic flavoured cigare ttes other than menthol cigarettes on the US market at the time of 
the ban.398 
(a) Application of Article 2.1 of the TBT Agreement  
202. The United States argues that Article 2.1 of the TBT Agreement does not establish a rigid 
temporal limitation in relation to the evidence that a panel may consider in performing a less 
favourable treatment analysis.  For this reason, th e United States argues that the Panel should have 
taken into account evidence demonstrating that ther e were domestically produced flavoured cigarettes 
on the market "in the years closely preceding the effective date of the ban".399  Section 907(a)(1)(A) 
was enacted specifically to respond to an "emergi ng trend of products", and closed off a "potential 
market" that US producers were ac tively exploring as recently as 2008.400  Therefore, the fact that the 
ban on flavoured cigarettes went into effect before US producers were able to "saturate" the market 
with those products should not be construed as evid ence that US producers were not affected by the 
ban.401 
203. Indonesia responds that the United States' ap peal of the relevant timeframe for the 
Panel's analysis is irrelevant, because the Panel pr operly compared only the treatment accorded to the 
products found to be like in th is dispute—imported clove and dom estic menthol cigarettes—both of 
which were on the market before the ban went into effect.402  Indonesia agrees with the United States 
that Article 2.1 establishes "no rigid temporal limita tion" on the timeframe of the analysis, and affords 
panels discretion in selecting the appropriate period.403 
                                                      
398United States' appellant's submission, paras. 97 and 98. 
399United States' appellant's submission, para. 92. 
400United States' appellant's submission, para. 93. 
401United States' appellant's submission, para. 94. 
402Indonesia's appellee's submission, para. 151. 
403Indonesia's appellee's submission, para. 152 (quoting United States's appellant's submission, 
para. 92).  WT/DS406/AB/R 
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204. The United States' challenge is direct ed at the Panel's statement that: 
… at the time of the ban , there were no domestic cigarettes with 
characterizing flavours other than menthol cigarettes which accounted for approximately 25 per cen t of the market and for a very 
significant proportion of the cigarettes smoked by youth in the United States. (emphasis added;  footnote omitted) 
205. In the present dispute, the Panel's mandate was established by its terms of reference, as 
defined in Indonesia's panel request.  These terms of reference required the Panel to determine 
whether Section 907(a)(1)(A) was consis tent with various provisions of the TBT Agreement and of the 
GATT 1994 at the date of the Panel's establishment.   Accordingly, the Panel was required to assess 
whether there existed a violation of those Agre ements at that time and, if so, to make a 
recommendation that the United States bring its measure  into compliance.  It follows that, in relation 
to Indonesia's claim under Article 2.1 of the TBT Agreement , the Panel was required to assess, as of 
the date of its establishment, whether Section 907( a)(1)(A) is a technical regulation that accords to 
products imported from Indonesia less favourable treatment than that accorded to like domestic 
products. 
206. We agree with the participants that Article 2.1 does not establish a rigid temporal limitation 
on the evidence that the Panel could review in asse ssing Indonesia's claim under Article 2.1.  Nothing 
in Article 2.1 enjoins panels from taking into account evidence pre-dating  the establishment of a panel 
to the extent that such evidence informs the panel's assessment of the consistency of the measure at 
that point in time.  This is particularly so in the case of a de facto discrimination claim, where a panel 
must base its determination on the totality of fact s and circumstances before it, including the design, 
architecture, revealing structure, operation, and ap plication of the technical regulation at issue.  
Therefore, evidence that Section 907(a)(1)(A) had "chilling" regulatory effects on domestic producers 
of flavoured cigarettes prior to the entry into force of the ban on those cigarettes could be relevant in 
the Panel's assessment of Indonesia's claim under Article 2.1. 
207. In the present dispute, it is not clear that the Pa nel considered Article 2. 1 to prohibit review of 
evidence pre-dating the entry into force of Section 907(a)(1)(A).  As noted earlier, the Panel did not 
explain why it did not include domestic flavoured ci garettes other than menthol cigarettes in the group 
of like domestic products.  In any event, the Panel's st atement that, "at the time of the ban, there were 
no domestic cigarettes with characterizing flavours ot her than menthol" on the US market, was not the 
basis for the Panel's exclusion of domestic flavour ed cigarettes from the less favourable treatment 
analysis.  Rather, it was the basis for its finding that Section 907(a)(1)(A) imposes "costs on producers 
in other Members, notably producers in Indonesia,  while at the same time imposing no costs on any WT/DS406/AB/R 
Page 74  
 
US entity."
404  This finding by the Panel is challenged by the United States on appeal, and addressed 
in subsection V.C.5 of this Report. 
(b) Article 11 of the DSU 
208. The United States claims that the Panel acted in consistently with Article 11 of the DSU in 
disregarding evidence demonstrating that, at the time of the ban , domestic flavoured cigarettes other 
than menthol cigarettes were marketed in the United States.405 
209. Indonesia responds that the Panel did consider the evidence submitted by the United States in 
this regard but was ultimately not persuaded by it.406  According to Indonesia, in weighing the 
evidence before it, the Panel did not act in consistently with Article 11 of the DSU. 
210. We recall that Article 11 of the DSU requires a panel to "consider all the evidence presented 
to it, assess its credibility, determine its weight, and ensu re that its factual findings have a proper basis 
in that evidence".407  Within these parameters, "it is generally  within the discretion of the [p]anel to 
decide which evidence it chooses to utilize in making findings"408, and panels "are not required to 
accord to factual evidence of the parties the same meaning and weight as do the parties".409 
211. We observe that, in finding that "at the time of the ban there were no domestic cigarettes with 
characterizing flavours other than menthol ciga rettes which accounted for 25 per cent of the 
market"410, the Panel noted: 
The United States argues that there is evidence showing that 
U.S.-produced cigarettes with char acterizing flavours were on the 
market in 2008 and 2009 (United St ates' second written submission, 
para. 132).  In this regard, the Un ited 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 
                                                      
404Panel Report, para. 7.289. 
405United States' appellant's submission, paras. 97 and 98. 
406Indonesia's appellee's submission, paras. 158 and 162. 
407Appellate Body Reports, Philippines – Distilled Spirits , para. 135 (quoting Appellate Body Report, 
Brazil – Retreaded Tyres , para. 185, in turn referring to Appellate Body Report, EC – Hormones , paras. 132  
and 133). 
408Appellate Body Report, EC – Hormones , para. 135. 
409Appellate Body Report, Australia – Salmon , para. 267. 
410Panel Report, para. 7.289.  WT/DS406/AB/R 
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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.
411 
212. Thus, it appears that the Panel did not di sregard the evidence that, according to the 
United States, demonstrated the presence of domesti cally produced flavoured cigarettes other than 
menthol cigarettes on the US market at the time of th e ban.  Rather, the Panel reviewed that evidence 
but was ultimately not persuaded by it.  In determin ing the weight to be attributed to the evidence 
before it, the Panel did not act inconsistently with Article 11 of the DSU.  In particular, the Panel did 
not exceed its authority under Article 11 of DSU mere ly by attributing to the evidence a weight and 
significance different from that attributed to it by the United States. 
5. Detrimental Impact on Imported Products 
213. Finally, the United States claims that, even if  the Appellate Body were to agree with the 
comparison undertaken by the Panel in its less fa vourable treatment analysis, the Panel nonetheless 
erred in finding that the detrimental effect on co mpetitive opportunities for imported clove cigarettes 
was not "explained by factors unrelated to the foreign origin of those products".412 
214. The United States does not challenge on appeal the Panel's findings that Section 907(a)(1)(A) 
of the FFDCA accords different treatment to im ported clove cigarettes and to domestic menthol 
cigarettes, and that such differential treatment is to the detriment of the imported product, insofar as 
clove cigarettes are banned while menthol cigarettes are permitted.413  Accordingly, the Panel's 
conclusion that Section 907(a)(1)(A) modifies the c onditions of competition in the US market to the 
detriment of imported cl ove cigarettes stands. 
215. However, as noted earlier414, the existence of a detrimental impact on competitive 
opportunities in the relevant market for the grou p of imported products vis-à-vis the group of 
domestic like products is not sufficient to establish a violation of the national treatment obligation 
contained in Article 2.1 of the TBT Agreement .  Where the technical regulation at issue does not 
de jure discriminate against imports, a panel must carefully scrutinize the particular circumstances of 
the case, that is, the design, architecture, revea ling structure, operation, and application of the 
technical regulation at issue, and, in particular, wh ether that technical regulation is even-handed, in 
                                                      
411Panel Report, footnote 524 to para. 7.289. 
412United States' appellant's submission, para. 99 (referring to Appellate Body Report, Dominican 
Republic – Import and Sale of Cigarettes , para. 96). 
413Panel Report, paras. 7.279-7.281. 
414See supra , paras. 174 and 175. WT/DS406/AB/R 
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order to determine whether the detrimental impact  on imports stems exclusively from a legitimate 
regulatory distinction rather than reflects discr imination against the group of imported products. 
216. Before the Panel, the United States argued that  the exemption of menthol cigarettes from the 
ban on flavoured cigarettes is unrelated to the or igin of the products, because it addresses two distinct 
objectives:  one relates to the potential impact on the US health care system associated with the need 
to treat "millions" of menthol cigarette addicts with  withdrawal symptoms;  and the other relates to 
the risk of development of a black market and sm uggling to supply the needs of menthol cigarette 
smokers.
415 
217. The Panel considered that "the potential impa ct on the health care system and the potential 
development of a black market and smuggling of menthol cigarettes"416 did not constitute legitimate 
objectives, because: 
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, but rather because of the costs that might be incurred as a result of 
such a ban.  We recall that at the time of the ban, there were no 
domestic cigarettes with characteriz ing flavours other than menthol 
cigarettes which accounted for a pproximately 25 per cent of the 
market and for a very significant proportion of the cigarettes smoked by youth in the United States.  It seems to us that the effect of banning cigarettes with characterizing flavours other than menthol is 
to impose costs on producers in othe r Members, notably producers in 
Indonesia, while at the same time imposing no costs on any U.S. entity.
417 (footnotes omitted) 
218. On appeal, the United States claims that the Pa nel erred in concluding that any detriment to 
the competitive opportunities for imported clove cigarett es could not be explained by factors unrelated 
to the foreign origin of the products.418  In addition, the United States claims that the Panel failed to 
make an objective assessment of the matter under Artic le 11 of the DSU in finding that there were no 
costs imposed on any US entity.419 
                                                      
415Panel Report, para. 7.289 and footnote 522 thereto. 
416Panel Report, para. 7.289. 
417Panel Report, para. 7.289. 
418United States' appellant's submission, para. 99. 
419United States' appellant's submission, para. 109.  WT/DS406/AB/R 
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(a) Application of Article 2.1 
219. We begin with the United States' claim that th e Panel erred in concluding that any detriment 
to the competitive opportunities for imported clove cigarettes could not be explained by factors 
unrelated to the foreign origin of the products.420  The United States argues that, "even where a 
technical regulation adversely affects the competitive situation of imported pro ducts compared to like 
domestic products, this does not c onstitute less favourable treatment when the detrimental effect is 
unrelated to the foreign origin of the product."421  According to the United States, many factors affect 
the costs associated with a technical regulation, such as transportation costs, production methods, the 
age of the producer's facility, size, efficiency, pr oductivity, and marketing strategy.  As a result, 
Article 2.1 does not prohibit the imposition of co sts on imported products as compared to domestic 
products, where those costs are not related to the origin of the product.422  The Panel did not examine 
the "architecture, structure and design" of Secti on 907(a)(1)(A), including the fact that it allows 
Indonesia to import and sell regular and menthol cigarettes in the United States.423  For the United 
States, reference to unspecified "costs" on forei gn producers does not establish that the effects of 
Section 907(a)(1)(A) on competitive opportunities for im ported products are rela ted to their origin.424  
The United States underscores that the costs that Section 907(a)(1)(A) allegedly avoids would be incurred by the US regulatory enforcement and h ealth care systems (and not by domestic menthol 
cigarette producers), even if all menthol cigarettes were imported.
425 
220. For Indonesia, the Panel's finding that Section 907(a)(1)(A) modifies the conditions of 
competition in the United States to the detriment of imported clove cigarettes vis-à-vis domestic menthol cigarettes was sufficient to establish a violation of Article 2.1.
426  Although Indonesia 
maintains that an additional "national origin " test was not required, Indonesia argues that, 
nevertheless, the Panel was correct in concludi ng that Section 907(a)(1)(A) had a "discriminatory 
intent", because menthol cigarettes accounted for 25 per cent of the market, and for a significant 
proportion of the cigarettes smoked by youth in the United States.427  The Panel correctly rejected the 
potential costs on the US health care and enforcem ent systems as "legitimate reasons" for exempting 
menthol cigarettes from the ban on flavoured cigarett es.  The Panel also appr opriately found that the 
                                                      
420United States' appellant's submission, para. 99. 
421United States' appellant's submission, para. 101. 
422United States' appellant's submission, para. 101. 
423United States' appellant's submission, para. 103. 
424United States' appellant's submission, para. 106. 
425United States' appellant's submission, para. 107. 
426Indonesia's appellee's submission, para. 172. 
427Indonesia's appellee's submission, para. 183. WT/DS406/AB/R 
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disproportionate allocation of costs betw een Indonesian and US  entities evidenced de facto 
discrimination against imports.
428 
221. At the outset, we agree with the United States that the Panel did not clearly articulate its 
reasons for concluding that "the effect of banning cigarettes with characterizing flavours other than 
menthol is to impose costs on producers in other Memb ers, notably producers in Indonesia, while at 
the same time imposing no costs on any US entity."429  To the extent that actual or potential costs are 
relevant to the analysis of less favourable treatme nt under Article 2.1, the Panel did not elaborate on 
why, in its view, Section 907(a)(1)(A) does not impose costs "on any US entity" beyond observing that, "at the time of the ban, there were no domes tic cigarettes with characterizing flavours other than 
menthol cigarettes"
430 on the US market.431 
222. Nonetheless, we are not persuaded that th e Panel erred in ultimately finding that 
Section 907(a)(1)(A) is inconsistent  with Article 2.1.  By design,  Section 907(a)(1)(A) prohibits all 
cigarettes with characterizing flavours other than toba cco or menthol.  In relation to the cigarettes that 
are banned under Section 907(a)(1)(A), the Panel ma de a factual finding that "virtually all clove 
cigarettes" that were imported into the United Stat es in the three years prior to the ban came from 
Indonesia.432  The Panel also noted that the "vast majori ty" of clove cigarettes consumed in the United 
States came from Indonesia.433  Although the United States stated th at it was "unable to attain market 
share data for all non-clove produc ts banned under Section 907(a)(1)(A)"434, the Panel did not find 
evidence that these products had "any sizeable ma rket share in the United States prior to the 
implementation of the ban in 2009".435  In response to a Panel question, the United States confirmed 
that non-clove-flavoured cigarettes banned under Section 907(a)(1)(A) "were on the market for a 
relatively short period of time and repre sented a relatively small market share".436 
                                                      
428Indonesia's appellee's submission, paras. 184-185. 
429Panel Report, para. 7.289. 
430Panel Report, para. 7.289. 
431Moreover, to the extent that the Panel's finding could be read as suggesting that reducing potential 
costs of regulation per se constitutes an illegitimate regulatory objective, we disagree.  Nothing in Article 2.1 
prevents a Member from seeking to mi nimize the potential costs arising from technical regulations, provided 
that the technical regulation at issue does not overtly or covertly discriminate against imports. 
432Panel Report, para. 2.26 (referring to Indonesia's first written submission to the Panel, para. 18;  
United States' first written submission to the Panel, para. 35;  World Trade Atlas, United States – Imports, Clove 
Cigarette Market Share Data (Panel Exhibit US-100);  and World Trade Atlas, Indonesia Cigarette Exports to 
the United States, 1998-2009 (Panel Exhibit US-134)). 
433Panel Report, para. 2.27.  The Panel nonetheless was able to identify at least one US company that 
manufactured clove cigarettes prior to th e entry into force of the FSPTCA. ( Ibid. (referring to United States' first 
written submission to the Panel, para. 35)) 
434Panel Report, footnote 58 to para. 2.28. 
435Panel Report, para. 2.28. 
436United States' response to Panel Question 17, para. 43.  WT/DS406/AB/R 
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223. With respect to the cigarettes that are not banned under Section 907(a)(1)(A), the record 
demonstrates that, in the years 2000 to 2009, between 94.3 and 97.4 per cent of all cigarettes sold in 
the United States were domestically produced437, and that menthol cigarettes accounted for about 
26 per cent of the total US cigarette market.438  Information on the record also shows that 
three domestic brands dominate the US market fo r menthol cigarettes:  Kool, Salem (Reynolds 
American), and Newport (Lorillard), with Marlboro having a smaller market share.439 
224. Given the above, the design, architecture, revea ling structure, operation, and application of 
Section 907(a)(1)(A) strongly suggest that the detr imental impact on competitive opportunities for 
clove cigarettes reflects discrimina tion against the group of like products imported from Indonesia.  
The products that are prohibited under Section 907( a)(1)(A) consist primarily of clove cigarettes 
imported from Indonesia, while the like products that are actually permitted under this measure 
consist primarily of domestica lly produced menthol cigarettes. 
225. Moreover, we are not persuaded that the de trimental impact of Section 907(a)(1)(A) on 
competitive opportunities for imported clove cigarettes does stem from a legitimate regulatory distinction.  We recall that the stated objective of Section 907(a)(1)(A) is to reduce youth smoking.  
One of the particular characteristics of flavoured  cigarettes that makes them appealing to young 
people is the flavouring that masks the harshness of  the tobacco, thus making them more pleasant to 
start smoking than regular cigarettes.
440  To the extent that this partic ular characteristic is present in 
both clove and menthol cigarettes441, menthol cigarettes have the same product characteristic that, 
from the perspective of the stated objective of Sec tion 907(a)(1)(A), justified the prohibition of clove 
cigarettes.  Furthermore, the reasons presented by the United States for the exemption of menthol cigarettes from the ban on flavoured cigarettes do not,  in our view, demonstrate that the detrimental 
impact on competitive opportunities for imported clove cigarettes does stem from a legitimate 
regulatory distinction.  The United States argues th at the exemption of menthol cigarettes from the 
ban on flavoured cigarettes aims at minimizing:  (i) the impact on the US health care system 
associated with treating "millions" of menthol cigare tte smokers affected by withdrawal symptoms;  
                                                      
437Cigarettes:  Domestic and Imported, 2000-2009 (Panel Exhibit US-31). 
438United States' first written submission to the Pa nel, para. 27 (referring to US Federal Trade 
Commission, Cigarette Report for 2006 , Table 1A (2009) (Panel Exhibit US-29);  and P.S. Gardiner, "The 
African Americanization of menthol cigarette use in the United States" (February 2004) 6(1) Nicotine 
& Tobacco Research  S55 (Panel Exhibit US-30)). 
439See United States' first written submission to the Panel, para. 29 and P.S. Gardiner, "The African 
Americanization of menthol cigarette use in the United States" (February 2004) 6(1) Nicotine & Tobacco 
Research  S55 (Panel Exhibit US-30), p. 58. 
440Panel Report, paras. 7.216-7.221. 
441Panel Report, para. 7.221 (referring to "Use of Menthol Cigarettes", The National Survey on Drug 
Use and Health Report, 19 November 2009 (Panel Exhibit IND-66);  and American Lung Association, Tobacco 
Policy Trend Alert, From Joe Camel to Kauai Kolada – the Marketing of Candy-Flavored Cigarettes  (2006) 
(Panel Exhibit US-35), p. 1, available at <http://sla ti.lungusa.org/reports/CandyFl avoredUpdatedAlert.pdf>). WT/DS406/AB/R 
Page 80  
 
and (ii) the risk of development of a black mark et and smuggling of menthol cigarettes to supply the 
needs of menthol cigarette smokers.  Thus, according to the United States, the exemption of menthol 
cigarettes from the ban on flavoured cigarettes is justified in order to avoid risks arising from 
withdrawal symptoms that would afflict menthol cigarette smokers in case those cigarettes were banned.  We note, however, that the addictive in gredient in menthol cigarettes is nicotine, not 
peppermint or any other ingredient that is exclus ively present in menthol cigarettes, and that this 
ingredient is also present in a group of products that is likewise permitted under Section 907(a)(1)(A), 
namely, regular cigarettes.  Therefore, it is not cl ear that the risks that the United States claims to 
minimize by allowing menthol cigarettes to remain  in the market would materialize if menthol 
cigarettes were to be banned, insofar as regul ar cigarettes would remain in the market. 
226. Therefore, even though Section 907(a)(1 )(A) does not expressly distinguish between 
treatment accorded to the imported and domestic like products, it operates in a manner that reflects 
discrimination against the group of like products im ported from Indonesia.  Accordingly, despite our 
reservations on the brevity of the Panel's analysis, we  agree with the Panel that, by exempting menthol 
cigarettes from the ban on flavoured cigarettes, Section 907(a)(1)(A) accords to clove cigarettes 
imported from Indonesia less favourable treatment th an that accorded to domestic like products, 
within the meaning of Article 2.1 of the TBT Agreement . 
(b) Article 11 of the DSU 
227. Finally, the United States argues that the Pane l acted inconsistently with Article 11 of the 
DSU because it found that Section 907(a)(1)(A) avoids  costs on any US entity, in the absence of any 
basis in the Panel record that would have allowed it to reach such conclusion.
442  The United States 
argues that the measure imposed enforcemen t costs on the United States Food and Drug 
Administration (the "FDA"), and on domestic produ cers of cigarettes with characterizing flavours 
whose potential market was closed off.  By reducing youth smoking, Section 907(a)(1)(A) also 
reduces subsequent demand for cigarettes.  Therefor e, it also shrinks the "adult" cigarette market, 
which is comprised almost entirely of domestic producers.443 
228. Indonesia responds that the Panel did not act in consistently with Article 11 of the DSU in 
reaching its finding, which is supported by evidence showing that the exemption of menthol cigarettes 
from the ban was the result of a political compromise with the US tobacco industry.444 
                                                      
442United States' appellant's submission, para. 110. 
443United States' appellant's submission, para. 111. 
444Indonesia's appellee's submission, para. 189.  WT/DS406/AB/R 
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229. We recall that, in EC – Fasteners (China) , the Appellate Body considered that "[i]t is … 
unacceptable for a participant effectively to recast its  arguments before the panel under the guise of an 
Article 11 claim" and that "a claim that a panel fa iled to comply with its duties under Article 11 of the 
DSU must stand by itself and should not be made me rely as a subsidiary argument or claim in support 
of a claim that the panel failed to apply corr ectly a provision of the covered agreements."445  With 
these considerations in mind, we turn to review  the United States' appeal that the Panel acted 
inconsistently with Article 11 of the DSU in fi nding that Section 907(a)(1)(A) imposed no costs on 
any US entity. 
230. As noted above, we believe that the Panel did not  fully explain the basis for the statement that 
Section 907(a)(1)(A), while impos ing "costs" on foreign producers, imposed "no costs on any 
US entity".  However, the Panel's statement should  be read in the light of the fact that, in 
paragraph 7.289 of its Report, the Panel considered the costs imposed on producers "at the time of the 
ban" and that it equated the concept of "entity" wi th that of "producer", thus comparing the costs 
imposed on producers in Indonesia with the costs imposed on US producers, to the exclusion of 
government entities such as the FDA. 
231. It seems to us that the United States' claim is concerned with the Panel's less favourable 
treatment comparison, rather than with the allege d absence of evidence in the Panel record justifying 
the lack of costs on any US entity.  We note that  the United States argues that the Panel erred, under 
Article 2.1 of the TBT Agreement , in limiting the scope of its less favourable treatment analysis to the 
effects of Section 907(a)(1)(A) on all domestic cigare ttes at the time the measure entered into force, to 
the exclusion of flavoured cigarettes that were produc ed in the United States before the ban came into 
force.446  In our view, the United States' argument that the Panel erred in not considering the impact of 
Section 907(a)(1)(A) on US producers before the entr y into force of the ban also implies that the 
Panel was wrong in stating that the measure imposed no costs on any US producers.  We thus 
consider that the claim by the United States that the Panel violated Article 11 of the DSU because it 
found that Section 907(a)(1)(A) imposed "no costs on an y US entity" is subsidiary to its claim that the 
Panel erred in concluding that Section 907(a)(1)(A ) accords less favourable treatment to imported 
clove cigarettes than to like menthol cigarettes of na tional origin within the meaning of Article 2.1 of 
the TBT Agreement . 
232. In the light of the above, we do not consider  that the Panel acted inconsistently with 
Article 11 of the DSU in finding that Section 90 7(a)(1)(A) accords imported clove cigarettes less 
                                                      
445Appellate Body Report, EC – Fasteners (China) , para. 442.  See also Appellate Body Report, US – 
Steel Safeguards , para. 498;  and Appellate Body Report, Chile – Price Band System (Article 21.5 – Argentina) , 
para. 238. 
446United States' appellant's submission, para. 96. WT/DS406/AB/R 
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favourable treatment than that accorded to domes tic menthol cigarettes, within the meaning of 
Article 2.1 of the TBT Agreement.  
6. Conclusion on "Treatment No Less Favourable" 
233. Given the above, we uphold , albeit for different reasons,  the Panel's finding, in 
paragraph 7.292 of the Panel Report, that, by banning clove cigarettes while exempting menthol 
cigarettes from the ban, Section 907(a)(1)(A) of the FFDCA accords imported clove cigarettes less 
favourable treatment than that accorded to domes tic menthol cigarettes, within the meaning of 
Article 2.1 of the TBT Agreement . 
D. Conclusions under Article 2.1 of the TBT Agreement  
234. In the light of the foregoing c onsiderations with regard to the Panel's findings on likeness and 
less favourable treatment, we therefore uphold , albeit for different reasons, the Panel's finding, in 
paragraphs 7.293 and 8.1(b) of the Panel Report,  that Section 907(a)(1)(A) of the FFDCA is 
inconsistent with Article 2.1 of the TBT Agreement  because it accords to imported clove cigarettes 
less favourable treatment than that accorded to  like menthol cigarettes of national origin. 
235. In reaching this conclusion, we wish to clarify the implications of our decision.  We do not 
consider that the TBT Agreement  or any of the covered agreements is to be interpreted as preventing 
Members from devising and implementing public health policies generally, and tobacco-control policies in particular, through the regulation of the content of tobacco products, including the 
prohibition or restriction on the use of ingredients that increase the attractiv eness and palatability of 
cigarettes for young and potential smokers.  Moreover, we recognize the importance of 
Members' efforts in the World Health  Organization on tobacco control. 
236. While we have upheld the Panel's finding that the specific measure at issue in this dispute is 
inconsistent with Article 2.1 of the TBT Agreement , we are not saying that a Member cannot adopt 
measures to pursue legitimate health objectives such  as curbing and preventing youth smoking.  In 
particular, we are not saying that the United States cannot ban clove cigarettes:  however, if it chooses 
to do so, this has to be done consistently with the TBT Agreement .  Although Section 907(a)(1)(A) 
pursues the legitimate objective of reducing youth smoking by banning cigarettes containing flavours 
and ingredients that increase the attractiveness of t obacco to youth, it does so in a manner that is 
inconsistent with the national treatme nt obligation in Article 2.1 of the TBT Agreement  as a result of 
the exemption of menthol cigarettes, which similarl y contain flavours and ingredients that increase the 
attractiveness of tobacco to youth, from the ban on flavoured cigarettes.  WT/DS406/AB/R 
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VI. Article 2.12 of the TBT Agreement 
A. Introduction 
237. We turn now to the United States' appeal of the Panel's finding that, by failing to allow a 
period of not less than six months between the publication and the entry into force of Section 907(a)(1)(A) of the FFDCA, the United States acted inconsistently with Article 2.12 of the 
TBT Agreement . 
238. The FSPTCA was enacted on 22 June 2009.  The me asure at issue, Section 907(a)(1)(A), 
entered into force three months thereafter.  Before  the Panel, Indonesia argued that paragraph 5.2 of 
the Doha Ministerial Decision on Impl ementation-Related Issues and Concerns
447 ("the Doha 
Ministerial Decision")—which defined the term "reasonable interval" in Article 2.12 of the 
TBT Agreement  as at least six months—constitutes a legally binding interpretation pursuant to 
Article IX:2 of the WTO Agreement .  Thus, according to Indonesia, 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 acted inconsis tently with its obligations under Article 2.12 of 
the TBT Agreement .448  The Panel framed the question before  it as whether the United States acted 
inconsistently with its obligations  under Article 2.12 by allowing an interval of three months between 
the enactment of the FSPTCA and the entry into for ce of Section 907(a)(1)(A).  In particular, the 
Panel considered whether, as Indonesia claimed, Article 2.12 "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)".449 
239. In its analysis of Indonesia's claim under Article 2.12 of the TBT Agreement , the Panel 
considered the interpretative valu e of paragraph 5.2 of the Doha Ministerial Decision.  The Panel took 
the view that, although the United States and Indonesia disagreed on the categorization of 
paragraph 5.2 as an authoritative inte rpretation under Article IX:2 of the WTO Agreement , it would 
"be guided by [the Doha Ministerial Decision] in its  interpretation of the phrase 'reasonable interval' 
as [the Doha Ministerial Decision] was agreed by all WTO Members meeting in the form of 
Ministerial Conference, the highest ranking body of th e WTO".  Moreover, the Panel stated that, in its 
view, "paragraph 5.2 of the Doha Ministerial Decisi on could be considered as a subsequent agreement 
                                                      
447Decision of 14 November 2001, WT/MIN(01)/17, para. 5.2. 
448Panel Report, para. 7.552. 
449Panel Report, para. 7.561. (original emphasis) WT/DS406/AB/R 
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of the parties", within the meaning of Article 31(3)(a) of the Vienna Convention , on the interpretation 
of the term "reasonable interval" in Article 2.12 of the TBT Agreement .
450 
240. The United States claims on appeal that:  (i) the Panel attributed an incorrect "interpretative 
value" to paragraph 5.2 of the Doha Ministerial De cision in its interpretation of Article 2.12 of the 
TBT Agreement ;  and (ii) the Panel erred in finding that Indonesia had established a prima facie  case 
of inconsistency with Article 2.12 of the TBT Agreement , that the United States failed to rebut. 
B. The Interpretative Value of Paragraph 5. 2 of the Doha Ministerial Decision 
241. We recall that, with regard to the interpretative value of paragraph 5.2 of the Doha Ministerial 
Decision, the Panel stated that it "must be guided by  [paragraph 5.2] in its interpretation of the phrase 
'reasonable interval', as [paragraph 5.2] was agr eed by all WTO Members meeting in the form of 
Ministerial Conference, the highest ranking body of the WTO".451 
242. According to the United States, the Panel "d eclined to formally determine" whether 
paragraph 5.2 constitutes an author itative interpretation of Article 2. 12, "only saying that it 'must be 
guided' by paragraph 5.2" because it was agreed  by all WTO Members meeting in the form of 
Ministerial Conference, the highest ranking body of the WTO.452  The United States submits that, 
despite not having found that paragraph 5.2 has the legal status of an authoritative interpretation 
adopted pursuant to Article IX:2 of the WTO Agreement , the Panel erred by applying paragraph 5.2 as 
a "rule" that amended the text of Article 2.12 of the TBT Agreement .453  The United States claims that 
the legal value of paragraph 5.2 is at most a supplementary means of interpretation within the 
meaning of Article 32 of the Vienna Convention .454 
243. Indonesia responds that "the Panel did establish that paragraph 5.2 of the Doha Ministerial 
Decision is a binding interpretation as per Article IX:2 of the WTO Agreement ", and that it may also 
be considered a subsequent agreement between the pa rties, within the meaning of Article 31(3)(a) of 
the Vienna Convention , on the interpretation of the term "reas onable interval" in Article 2.12 of the 
TBT Agreement .455 
244. In paragraph 7.575 of its Report, the Panel stat ed that the wording of paragraph 5.2 of the 
Doha Ministerial Decision " appears to suggest  that the intention of the Ministerial Conference, and 
thus the highest level organ of the WTO where all Members meet, was that paragraph 5.2 is 
                                                      
450Panel Report, para. 7.576. 
451Panel Report, para. 7.576. 
452United States' appellant's submission, para. 124 (referring to Panel Report, para. 7.576). 
453United States' appellant's submission, para. 129. 
454United States' appellant's submission, para. 126. 
455Indonesia's appellee's submission, para. 222. (original emphasis)  WT/DS406/AB/R 
 Page 85 
 
 
binding".456  On appeal, Indonesia relies on this latter st atement made by the Panel and argues that the 
Panel found that paragraph 5.2 of the Doha Minist erial Decision is a binding interpretation "as per" 
Article IX:2 of the WTO Agreement .457 
245. In paragraph 7.576 of its Report, the Panel stated that, although the United States and 
Indonesia disagreed on the categorization of paragraph 5.2 of the Doha Ministerial Decision as an authoritative interpretation under Article IX:2 of the WTO Agreement , it would be "guided by 
[paragraph 5.2] in its interpretation 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".  On appeal, the United States relies on this statement of the Panel and argues that the Panel 
did not find that paragraph 5.2 constitutes an aut horitative interpretation adopted by the Ministerial 
Conference pursuant to Article IX:2 of the WTO Agreement .
458 
246. As we see it, in paragraph 7.575 of its Repor t, the Panel identified certain features of the 
Doha Ministerial Decision that suggest  that Members intended to adopt a "binding" interpretation of 
the term "reasonable interval" in Article 2.12 of the TBT Agreement .  The Panel's statement in 
paragraph 7.575 was, by its own terms, tentative.   Moreover, the Panel's statement was not followed 
by any "finding" that paragraph 5.2 constitutes an in terpretation adopted pursuant to Article IX:2 of 
the WTO Agreement .  Thus, we do not agree with Indonesia that the Panel found  that paragraph 5.2 of 
the Doha Ministerial Decision "is a binding interpretation as per Article IX:2 of the 
WTO Agreement ".459 
247. Despite our conclusion that the Panel did not fo rmally determine whether paragraph 5.2 of the 
Doha Ministerial Decision constitutes a multilatera l interpretation under Article IX:2 of the 
WTO Agreement , we will consider, nevertheless, whether paragr aph 5.2, in fact, has that legal status.  
Before doing so, we set forth some general consid erations on the role a nd function of multilateral 
interpretations adopted pursuant to Article IX:2 of the WTO Agreement . 
                                                      
456Emphasis added. 
457Indonesia's appellee's submission, para. 222. 
458United States' appellant's submission, para. 124. 
459Indonesia's appellee's submission, para. 222. WT/DS406/AB/R 
Page 86  
 
248. Article IX:2 of the WTO Agreement  provides: 
The Ministerial Conference and th e General Council shall have the 
exclusive authority to adopt interpre tations of this Agreement and of 
the Multilateral Trade Agreements.  In  the case of an interpretation of 
a Multilateral Trade Agreement in Annex 1, they shall exercise their authority on the basis of a recommendation by the Council overseeing the functioning of that Agreement.  The decision to adopt 
an interpretation shall be taken by  a three-fourths majority of the 
Members.  This paragraph shall not be used in a manner that would undermine the amendment provisions in Article X. 
249. In EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) , the 
Appellate Body opined that multilateral interpreta tions adopted pursuant to Article IX:2 of the 
WTO Agreement  are "meant to clarify the meaning of existing obligations, not to modify their 
content".
460  Article IX:2 establishes that a decision to  adopt a multilateral interpretation can only be 
taken by Members sitting in the form of the Minist erial Conference or the General Council, and that 
such decisions must be taken by a three-fourths ma jority of Members.  With regard to decisions 
adopting multilateral interpretations of a Multilatera l Trade Agreement contained in Annex 1 to the 
WTO Agreement , Article IX:2 requires the Ministerial Conf erence or the General Council to exercise 
its authority on the basis of a recommendation by the Council overseeing the functioning of that 
Agreement.  Thus, while Article IX:2 confers upon the Ministerial Conference and the General 
Council the exclusive authority to adopt  multilateral interpretations of the WTO Agreement , the 
exercise of this authority is situated within defined parameters estab lished by Article IX:2. 
250. Multilateral interpretations adopted pursuant to Article IX:2 of the WTO Agreement  have a 
pervasive legal effect.  Such interpretations are bi nding on all Members.  As we see it, the broad legal 
effect of these interpretations is precisely the r eason why Article IX:2 subjects the adoption of such 
interpretations to clearly articulated and strict decision-making procedures. 
251. Turning to the question of whether paragraph 5.2 of the Doha Ministerial Decision can be 
characterized as a multilateral interpretation of Article 2.12 of the TBT Agreement , we recall that 
Article IX:2 of the WTO Agreement  establishes two specific requirem ents that apply to the adoption 
of multilateral interpretations of the Multilateral Trade Agreements contained in Annex 1 to the 
WTO Agreement :  (i) a decision by the Ministerial Conference or the General Council to adopt such 
interpretations shall be taken by a three-fourths majo rity of Members;  and (ii) such interpretations 
shall be taken on the basis of a recommendation by the Council overseeing the functioning of the 
                                                      
460Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 – US) , para. 383.  WT/DS406/AB/R 
 Page 87 
 
 
relevant Agreement.  Thus, we will consider whet her the decision to adopt  paragraph 5.2 conforms 
with these specific decision-making procedures. 
252. With regard to the first requirement, the Pa nel observed that the Ministerial Conference 
decided on the matters addressed in the Doha Ministerial Decision by consensus .  The issue of 
whether the first requirement was met has not been raised in this appeal.  With regard to the 
second requirement, the Panel noted that, "it appears  that when adopting the Doha Ministerial 
Decision, the Ministerial Conference did not comply with the preliminary requirement under 
Article IX:2 of the WTO Agreement " to exercise its authority on the basis of a recommendation from 
the Council for Trade in Goods.461  The Panel stated, further, that "it could be argued" that the absence 
of this "formal requirement" is insufficient to conc lude that paragraph 5.2 of the Doha Ministerial 
Decision is not an authoritative interp retation under Article IX:2 of the WTO Agreement .462  O n  
appeal, the United States argues that "[a] panel is  not authorized to waive the requirements of 
Article IX:2 or to impose on Members an interpreta tion that is not adopted in the manner required."463 
253. We do not agree with the Panel to the exte nt that it suggested that the absence of a 
recommendation from the Council for Trade in Goods "i s insufficient to conclude that paragraph 5.2 
of the Doha Ministerial Decision is not an auth oritative interpretation under Article IX:2 of the 
WTO Agreement ".464  While Article IX:2 of the WTO Agreement  confers upon the Ministerial 
Conference and the General Council the exclusive aut hority to adopt multilateral interpretations of the 
WTO Agreement , this authority must be exercised within the defined parameters of Article IX:2.  It 
seems to us that the view expressed by the Panel does not respect a specific decision-making 
procedure established by Article IX:2 of the WTO Agreement .  In our view, to characterize the 
requirement to act on the basis of a recommendati on by the Council overseeing the functioning of the 
relevant Agreement as a "formal requirement" neither permits a panel to read that requirement out of a 
treaty provision, nor to dilute its effectiveness. 
254. Although the Panel's reasoning may be read as s uggesting that the Ministerial Conference 
could dispense with a specific requirement  established by Article IX:2 of the WTO Agreement , the 
terms of Article IX:2 do not suggest that compliance with this requirement is dispensable.  In this 
connection, we recall that, pursuant to Article IX:2 of the WTO Agreement , the Ministerial 
Conference or the General Council " shall " exercise their authority to adopt an interpretation of a 
Multilateral Trade Agreement c ontained in Annex 1 to the WTO Agreement  "on the basis of a 
                                                      
461Panel Report, para. 7.574 (referring to United States' response to Panel Question 6, para. 5). 
(emphasis added) 
462Panel Report, para. 7.575. 
463United States' appellant's submission, para. 125. 
464Panel Report, para. 7.575. WT/DS406/AB/R 
Page 88  
 
recommendation" by the Council overseeing the functioning of that Agreement.  We consider that the 
recommendation from the relevant Council is an esse ntial element of Article IX:2, which constitutes 
the legal basis upon which the Ministerial Conferen ce or the General Council exercise their authority 
to adopt interpretations of the WTO Agreement .  Thus, an interpretation of a Multilateral Trade 
Agreement contained in Annex 1 to the WTO Agreement  must  be adopted on the basis of a 
recommendation from the relevant Council over seeing the functioning of that Agreement. 
255. We note that, before the Panel, Indonesia relie d on paragraph 12 of the Doha Ministerial 
Declaration
465 and on the preamble of the Doha Ministerial Decision, and argued that the 
interpretation of Article 2.12 of the TBT Agreement  was reached on the basis of discussions carried 
out within the General Council and the WTO subsidiary bodies.466  Whereas the content of 
paragraph 5.2 of the Doha Ministerial Decision might very well have been based on discussions 
within the Committee on Technical Barriers to Trade, we are not persuaded that this is sufficient to 
establish that the Ministerial Conference exercised its authority to adopt an interpretation of the 
TBT Agreement  on the basis of a recommendation  from the Council for Trade in Goods.  Accordingly, 
we find that, in the absence of evidence of th e existence of a specific recommendation from the 
Council for Trade in Goods concerning the interpretation of Article 2.12 of the TBT Agreement , 
paragraph 5.2 of the Doha Ministerial Decision does not constitute a multilateral interpretation 
adopted pursuant to Article IX:2 of the WTO Agreement .467 
256. In the light of our finding that paragraph 5.2 of the Doha Ministerial Decision does not 
qualify as a multilateral interpretation within  the meaning of Article IX:2 of the WTO Agreement , we 
address whether, as the Panel found, paragraph 5.2 "c ould be considered as a subsequent agreement of 
the parties within the meaning of Article 31(3)(a) of the [ Vienna Convention ], on the interpretation of 
'reasonable interval' [in] Article 2.12 of the TBT Agreement ".468 
257. We note that, in response to questioning at the oral hearing, the United States argued that a 
decision by the Ministerial Conference that does not conform with the specific decision-making 
procedures established by Article IX:2 of the WTO Agreement  cannot constitute a "subsequent 
agreement between the parties" within the meaning of Article 31(3)(a) of the Vienna Convention .  We 
observe that multilateral interpretations a dopted pursuant to Article IX:2 of the WTO Agreement , on 
                                                      
465Adopted on 14 November 2001, WT/MIN(01)/DEC/1. 
466Panel Report, para. 7.574 (referring to Indonesia 's response to Panel Question 6, para. 27). 
467In reaching this finding, we are not saying that  the Ministerial Conference failed to comply with a 
specific decision-making procedure es tablished by Article IX:2 of the WTO Agreement .  Rather, we are saying 
that the absence of a recommendation from the Council for Trade in Goods concerning the interpretation of 
Article 2.12 of the TBT Agreement  supports a conclusion that paragraph 5.2 of the Doha Ministerial Decision 
does not constitute a multilateral interpretation adopted pursuant to Article IX:2 of the WTO Agreement . 
468Panel Report, para. 7.576. (footnote omitted)  WT/DS406/AB/R 
 Page 89 
 
 
the one hand, and subsequent agreements on interpre tation within the meaning of Article 31(3)(a) of 
the Vienna Convention , on the other hand, serve different functi ons and have differe nt legal effects 
under WTO law.  Multilateral interpreta tions under Article IX:2 of the WTO Agreement  provide a 
means by which Members—acting through the hi ghest organs of the WTO—may adopt binding 
interpretations that clarify WTO law for all Me mbers.  Such interpretations are binding on all 
Members, including in respect of all disput es in which these interpretations are relevant. 
258. On the other hand, Article 31(3)(a) of the Vienna Convention  is a rule of treaty interpretation, 
pursuant to which a treaty interpreter uses a s ubsequent agreement between the parties on the 
interpretation of a treaty provision as an interpretativ e tool to determine the meaning of that treaty 
provision.  Pursuant to Article 3.2 of the DSU, pa nels and the Appellate B ody are required to apply 
the customary rules of interpretation of public in ternational law—including the rule embodied in 
Article 31(3)(a) of the Vienna Convention —to clarify the existing provisions of the covered 
agreements.  Interpretations deve loped by panels and the Appellate  Body in the course of dispute 
settlement proceedings are binding only on the parties to a particular dispute.469  Article IX:2 of the 
WTO Agreement  does not preclude panels and the Appe llate Body from having recourse to a 
customary rule of interpretation of public internatio nal law that, pursuant to Article 3.2 of the DSU, 
they are required to apply. 
259. We also recall that, in EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 – US) , the Appellate Body stated that "multilate ral interpretations are meant to clarify 
the meaning of existing obligations"470, and that "multilateral interp retations adopted pursuant to 
Article IX:2 of the WTO Agreement  are most akin  to subsequent agreements within the meaning of 
Article 31(3)(a) of the Vienna Convention ".471  Thus, given the specific function of multilateral 
interpretations adopted pursuant to Article IX:2, a nd the fact that these interpretations are adopted by 
                                                      
469In US – Stainless Steel (Mexico) , the Appellate Body stated: 
It is well settled that Appellate Body reports are not binding, except with 
respect to resolving the particular dispute between the parties.  This, 
however, does not mean that subsequent panels are free to disregard the legal interpretations and the ratio decidendi  contained in previous Appellate 
Body reports that have been adopted by the DSB. 
… Thus, the legal interpretation embodied in adopted panel and Appellate 
Body reports becomes part and parcel of the acquis of the WTO dispute 
settlement system.  Ensuring "security and predictability" in the dispute 
settlement system, as contemplated in Article 3.2 of the DSU, implies that, 
absent cogent reasons, an adjudicatory body will resolve the same legal question in the same way in a subsequent case. 
(Appellate Body Report, US – Stainless Steel (Mexico) , paras. 158 and 160 (footnotes omitted)) 
470Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 – US) , para. 383. 
471Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 – US) , para. 390. (emphasis added) WT/DS406/AB/R 
Page 90  
 
Members sitting in the form of the highest organs of  the WTO, such interpretations are most akin to, 
but not exhaustive of , subsequent agreements on interpretation within the meaning of Article 31(3)(a) 
of the Vienna Convention . 
260. We consider, therefore, that a decision adopted by Members, other than  a decision adopted 
pursuant to Article IX:2 of the WTO Agreement , may constitute a "subsequent agreement" on the 
interpretation of a provision of a covere d agreement under Article 31(3)(a) of the Vienna Convention .  
Accordingly, we turn to the issue of whether para graph 5.2 of the Doha Ministerial Decision can be 
considered to be a subsequent agreement, w ithin the meaning of Article 31(3)(a) of the Vienna 
Convention , on the interpretation of the term "reas onable interval" in Article 2.12 of the 
TBT Agreement . 
261. Article 31(3)(a) of the Vienna Convention  provides: 
There shall be taken into account, together with the context: 
(a) any subsequent agreement be tween the parties regarding the 
interpretation of the treaty or the application of its provisions[.] 
262. Based on the text of Article 31(3)(a) of the Vienna Convention , we consider that a decision 
adopted by Members may qualify as a "subsequent agreement between the parties" regarding the 
interpretation of a covered agreement or the applicati on of its provisions if:  (i) the decision is, in a 
temporal sense, adopted subsequent to the relevant covered agreement;  and (ii) the terms and content 
of the decision express an agreement  between Members on the interpretation or application  of a 
provision of WTO law. 
263. With regard to the first element, we note that  the Doha Ministerial Decision was adopted by 
consensus on 14 November 2001 on the occasion of the Fourth Ministerial Conference of the WTO.  Thus, it is beyond dispute that paragraph 5.2 of the Doha Ministerial Decision was adopted 
subsequent to the relevant WTO agreement at issue, the TBT Agreement .  With regard to the 
second element, the key question to be answered is  whether paragraph 5.2 of the Doha Ministerial 
Decision expresses an agreement  between Members on the interpretation  or application  of the term 
"reasonable interval" in Article 2.12 of the TBT Agreement . 
264. We recall that paragraph 5.2 of the Doha Ministerial Decision provides: 
Subject to the conditions specified in  paragraph 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.  WT/DS406/AB/R 
 Page 91 
 
 
265. In addressing the question of whether paragraph 5.2 of the Doha Ministerial Decision 
expresses an agreement between Members on the interp retation or application of the term "reasonable 
interval" in Article 2.12 of the TBT Agreement , we find useful guidance in the Appellate Body reports 
in EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III (Article 21.5 – US) .  The 
Appellate Body observed that the International La w Commission (the "ILC") describes a subsequent 
agreement within the meaning of Article 31(3)(a) of the Vienna Convention  as "a further authentic 
element of interpretation to be taken into account together wi th the context".  According to the 
Appellate Body, "by referring to 'a uthentic interpretation', the ILC reads Article 31(3)(a) as referring 
to agreements bearing specifically upon the interpretation of the treaty. "472  Thus, we will consider 
whether paragraph 5.2 bears specifically upon the interpretation of Article 2.12 of the TBT Agreement . 
266. Paragraph 5.2 of the Doha Ministerial Decisi on refers explicitly to the term "reasonable 
interval" in Article 2.12 of the TBT Agreement  and defines this interval as "normally a period of not 
less than 6 months, except when this would be in effective in fulfilling the legitimate objectives 
pursued" by a technical regulation.  In the light of  the terms and content of paragraph 5.2, we are 
unable to discern a func tion of paragraph 5.2 other than  to interpret the term "reasonable interval" in 
Article 2.12 of the TBT Agreement .  We consider, therefore, that paragraph 5.2 bears specifically  
upon the interpretation of the term "reas onable interval" in Article 2.12 of the TBT Agreement .  We 
turn now to consider whether paragraph 5.2 of th e Doha Ministerial Decision reflects an "agreement" 
among Members—within the meaning of Article 31(3)(a) of the Vienna Convention —on the 
interpretation of the term "reasonable interval" in Article 2.12 of the TBT Agreement . 
267. We note that the text of Article 31(3)(a) of the Vienna Convention  does not establish a 
requirement as to the form which a "subsequent ag reement between the parties" should take.  We 
consider, therefore, that the term "agreement" in Article 31(3)(a) of the Vienna Convention  refers, 
fundamentally, to substance rather than to form.  Thus, in our view, paragraph 5.2 of the Doha 
Ministerial Decision can be characterized as a "s ubsequent agreement" within the meaning of 
Article 31(3)(a) of the Vienna Convention  provided that it clearly expresses a common understanding, 
and an acceptance of that understanding among Member s with regard to the meaning of the term 
"reasonable interval" in Article 2.12 of the TBT Agreement .  In determining whether this is so, we find 
the terms and content of paragraph 5.2 to be disp ositive.  In this connection, we note that the 
understanding among Members with regard to the meaning of the term "reasonable interval" in 
Article 2.12 of the TBT Agreement  is expressed by terms—" shall be understood to mean "—that 
cannot be considered as merely hortatory. 
                                                      
472Appellate Body Reports, EC – Bananas III (Article 21.5 – Ecuador II) / EC – Bananas III 
(Article 21.5 – US) , para. 390. (emphasis added) WT/DS406/AB/R 
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268. For the foregoing reasons, we uphold  the Panel's finding, in paragraph 7.576 of the Panel 
Report, that paragraph 5.2 of the Doha Minist erial Decision constitutes a subsequent agreement 
between the parties, within the meaning of Article 31(3)(a) of the Vienna Convention , on the 
interpretation of the term "reasonable interval" in Article 2.12 of the TBT Agreement . 
269. In the light of our characterization of paragraph 5.2 of the Doha Ministerial Decision as a 
subsequent agreement between the parties with in the meaning of Article 31(3)(a) of the Vienna 
Convention , we turn now to consider the meaning of Article 2.12 of the TBT Agreement  in the light of 
the clarification of the term "reasonable interval" pr ovided by paragraph 5.2.  We observe that, in its 
commentaries on the Draft articles on the Law of Treaties , the ILC states that a subsequent agreement 
between the parties within the meaning of Article 31(3)(a) "must be read into the treaty for purposes 
of its interpretation".
473  As we see it, while the terms of paragraph 5.2 must be "read into" 
Article 2.12 for the purpose of interpreting that provision, this does not mean that the terms of 
paragraph 5.2 replace or override the terms contai ned in Article 2.12.  Rather, the terms of 
paragraph 5.2 of the Doha Ministerial Decision cons titute an interpretative clarification to be taken 
into account in the interpretation of Article 2.12 of the TBT Agreement . 
270. Article 2.12 of the TBT Agreement  provides: 
Except in those urgent circumstances referred to in paragraph 10, 
Members shall allow a reasonable interval between the publication 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. 
271. Paragraph 5.2 of the Doha Ministerial Decision provides: 
Subject to the conditions specified in  paragraph 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. 
272. We note, as did the Panel, that Article 2.12 of the TBT Agreement  explains that "the reason 
for allowing an interval between th e publication and the entry into for ce of a technical regulation is to 
allow time for producers in exporting Members, and particularly in developing country Members, to 
                                                      
473Draft articles on the Law of Treaties with commentaries .  Text adopted by the ILC at its 
eighteenth session, in 1966, and submitted to the United Nations General Assembly as a part of the Commission's report covering the work of that session (at para. 38).  The ILC report, which also contains 
commentaries on the draft articles, appears in the Yearbook of the International Law Commission, 1966 , Vol. II, 
p. 221, para. 14.  WT/DS406/AB/R 
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adapt their products or methods of production" to the requirements of the importing Member's 
technical regulation.474  In our view, the term "normally" in pa ragraph 5.2 relates to  the rationale of 
the obligation articulated in Article 2.12 of the TBT Agreement .  Seen in this light, the term 
"normally" provides the interpretative link between Ar ticle 2.12, on the one hand, and paragraph 5.2, 
on the other hand.  Thus, we consider that, taking into account the interpretative clarification provided 
by paragraph 5.2 of the Doha Ministerial Decision, Article 2.12 of the TBT Agreement  establishes a 
rule that "normally" producers in exporting Members require a period of "not less than 6 months" to 
adapt their products or production methods to the requirements of an importing Member's technical 
regulation. 
273. On appeal, the United States argues that the use of  the term "normally" in paragraph 5.2 of the 
Doha Ministerial Decision does not support the c onclusion that paragraph 5.2 represents a rule.475  We 
observe that the ordinary meaning of the term " normally" is defined as "under normal or ordinary 
conditions;  as a rule".476  In our view, the qualification of an obligation with the adverb "normally" 
does not, necessarily, alter the characterization of that  obligation as constituting a "rule".  Rather, we 
consider that the use of the term "normally" in pa ragraph 5.2 indicates that the rule establishing that 
foreign producers require a minimum of "not less than 6 months" to adapt to the requirements of a 
technical regulation admits of der ogation under certain circumstances. 
274. The obligation imposed on Members by Article 2.12 to provide a "reasonable interval" 
between the publication and the entr y into force of their technical regulations carefully balances the 
interests of, on the one hand, the exporting Member whose producers might be affected by a technical 
regulation and, on the other hand, the importing Me mber that wishes to pursue a legitimate objective 
through a technical regulation.  With regard to the former, Article 2.12 of the TBT Agreement , as 
clarified by paragraph 5.2 of the Doha Ministeria l Decision, establishes a rule that, "normally", 
producers in exporting Members require a period of at  least six months to adapt their products or 
production methods to the requirements of the im porting Member's technical regulation.  Thus, 
Article 2.12 presumes that foreign producers in ex porting Members, and particularly in developing 
country Members, require a minimum of at least six months to adapt to the requirements of an importing Member's technical regulation. 
275. With regard to the interests of the importi ng Member, we recall that paragraph 5.2 of the 
Doha Ministerial Decision tempers the obligation to  provide a "reasonable interval" of not less than 
six months between the publication and the entry into force of a technical regulation by stipulating 
                                                      
474Panel Report, para. 7.582. 
475United States' appellant's submission, para. 127. 
476Shorter Oxford English Dictionary , 6th edn, A. Stevenson (ed.) (Oxford University Press, 2007), 
Vol. 2, p. 1945. WT/DS406/AB/R 
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that this obligation applies "except when this would be ineffective in fulfilling the legitimate 
objectives pursued" by the technical regula tion.  Thus, while Article 2.12 of the TBT Agreement  
imposes an obligation on importing Members to provide a "reasonable interval" of not less than 
six months between the publication and entry into force of a technical regulation, an importing Member may depart from this obligation if this inte rval "would be ineffective to fulfil the legitimate 
objectives pursued" by the technical regulation. 
C. The Panel's Finding that the United States Ac ted Inconsistently w ith Article 2.12 of 
the TBT Agreement 
276. We turn now to consider the United States' claim that the Panel erred in finding that Indonesia 
had established a prima facie  case of inconsistency with Article 2.12 of the TBT Agreement  that the 
United States failed to rebut.  The United States a dvances, essentially, two arguments in support of its 
claim that the Panel incorrectly f ound that Indonesia had established a prima facie  case of 
inconsistency with Article 2.12 of the TBT Agreement .  First, the United States argues that the Panel 
erred in finding that Indonesia had established a prima facie  case because Indonesia did not establish 
that the three-month interval between the publicati on and entry into force of Section 907(a)(1)(A) of 
the FFDCA was unreasonable in the light of its impact  on the ability of Indonesian producers to adapt 
to the requirements of that measure.
477  Second, the United States argues that, even assuming 
arguendo that the Panel was correct in d eciding that the elements of a prima facie case may be drawn 
exclusively from paragraph 5.2 of the Doha Minist erial Decision, the Panel erred in finding that 
Indonesia had "succeeded in making such a case".478 
277. According to the United States, in view of th e elements contained in paragraph 5.2 of the 
Doha Ministerial Decision, Indonesia "would have  to establish with evidence and argument" a prima 
facie  case that:  (i) "urgent circumstances" did not exist;  (ii) the interval period was less than 
six months;  (iii) "this is a 'normal' situation";  a nd (iv) allowing an interval of at least six months 
would not render the fulfilment of the objectiv e pursued by Section 907(a)(1)(A) ineffective.479  
Indonesia, in response, argues that it did establish "a prima facie  case that the 90-day interval 
provided by the United States was significantly shorter than the 6 months" normally required.480 
278. The United States and Indonesia do not agree on the elements of a prima facie  case that a 
complaining Member is required to establish under Article 2.12 of the TBT Agreement .  Moreover, it 
appears that the divergence stems from the fact that the United States and Indonesia attribute a 
different interpretative value to pa ragraph 5.2 of the Doha Ministeria l Decision.  In this connection, 
                                                      
477United States' appellant's submission, paras. 132-134. 
478United States' appellant's submission, para. 135. 
479United States' appellant's submission, para. 136. 
480Indonesia's appellee's submission, para. 237.  WT/DS406/AB/R 
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we note that the United States argues that the elements of a prima facie  case of inconsistency with 
Article 2.12 are to be drawn from the text of Article 2.12, but that, "[e]ven assuming arguendo  that 
the Panel" could draw the elements of a prima facie  case from paragraph 5.2, the Panel erred in 
finding that Indonesia had made such a case.481 
279. We do not consider that the elements of a prima facie  case of inconsistency with Article 2.12 
of the TBT Agreement  are to be drawn exclusively from eith er the terms of Article 2.12, on the 
one hand, or of paragraph 5.2 of the Doha Minist erial Decision, on the other hand.  Article 2.12 
imposes an obligation on importing Members to allo w a "reasonable interval" between the publication 
and the entry into force of their technical regulati ons.  We recall our finding above that paragraph 5.2 
of the Doha Ministerial Decision constitutes a subs equent agreement between the parties, within the 
meaning of Article 31(3)(a) of the Vienna Convention , on the interpretation of the term "reasonable 
interval" in Article 2.12 of the TBT Agreement .  Thus, it seems to us that the elements of a prima facie  
case of inconsistency with Article 2.12 of the TBT Agreement  are to be drawn from a proper 
interpretation of Article 2.12,  taking into account—pursuant to Article 31(3)(a) of the Vienna 
Convention —the interpretative clarification provided by  the terms of paragraph 5.2 of the Doha 
Ministerial Decision. 
280. We further recall our finding above that Article 2.12 of the TBT Agreement , properly 
interpreted in the light of paragraph 5.2 of the Do ha Ministerial Decision, establishes a rule that, 
"normally", producers in exporting Members require a period of at least six months to adapt their 
products or production methods to the requirements of  the importing Member's technical regulation.  
Based on our interpretation of Article 2.12 of the TBT Agreement , we consider that a prima facie  case 
of inconsistency with Article 2.12 is establishe d where it is shown that an importing Member has 
failed to allow an interval of not less than six m onths between the publication and the entry into force 
of the technical regulation at issue. 
281. In accordance with the general rules on burden of proof reflected in US – Wool Shirts and 
Blouses , we consider that, under Article 2.12 of the TBT Agreement , it is for the complaining Member 
to establish that the responding Member has not allowed an interval of not less than six months
                                                      
481United States' appellant's submission, para. 135. WT/DS406/AB/R 
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between the publication and the entry into fo rce of the technical regulation at issue.
482  If the 
complaining Member establishes this prima facie  case of inconsistency, it is for the responding 
Member to rebut the prima facie  case of inconsistency with Ar ticle 2.12.  We recall that, in US – 
Wool Shirts and Blouses , the Appellate Body stated that "precisely how much and precisely what kind 
of evidence" will be required to establish a prima facie  case "will necessarily vary from measure to 
measure, provision to provision, and case to case".483  We consider that, similarly, this reasoning 
applies with regard to the quantity and nature of evidence required to rebut  a prima facie  case of 
inconsistency. 
282. The text of Article 2.12 of the TBT Agreement  read in the light of paragraph 5.2 of the Doha 
Ministerial Decision provides an indication of the nature of evidence that is required to rebut a prima 
facie  case of inconsistency with that provision.  First, Article 2.12 of the TBT Agreement  excludes 
from the obligation to provide a "reasonable interval " between the publication and the entry into force 
of technical regulations "those urgent circumstances" referred to in Article 2.10 of the TBT Agreement .  Thus, where "urgent problems of safety, health, environmental protection or national 
security" arise for a Member that is implementing a technical regulation, a period of six months or 
more cannot be considered to be a "reasonable interv al" within the meaning of Article 2.12.  Second, 
Article 2.12 expressly states that the rationale for providing a "reasonable interval" between the 
publication and the entry into force of a technical  regulation is "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's technical regulation.  If these 
producers can adapt their products or production methods to the requirements of an importing 
Member's technical regulation in less than six months, a period of six months or more cannot be considered to be a "reasonable interval" within th e meaning of Article 2.12.  Third, paragraph 5.2 
allows an importing Member to depart from the obligation to provide a "reasonable interval" of, 
"normally", not less than six months between the pub lication and entry into force of their technical 
regulation, if this interval would be "ineffectiv e to fulfil the legitimate objectives pursued" by its 
technical regulation.  Therefore, a period of "not less than six months" cannot be considered to be a 
"reasonable interval", within the meaning of Article 2.12, if this period would be ineffective to fulfil 
the legitimate objectives pursued by the technical regulation at issue. 
                                                      
482In US – Wool Shirts and Blouses , the Appellate Body outlined the general rules on burden of proof 
by stating that: 
… the burden of proof rests upon the party, whether complaining or defending, who asserts the affirmative of a particular claim or defence.  If 
that party adduces 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. 
(Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, 323, at 335) 
483Appellate Body Report, US – Wool Shirts and Blouses , p. 14, DSR 1997:I, 323, at 335.  WT/DS406/AB/R 
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283. Thus, in the light of the above, we consider that, in order to rebut a prima facie  case of 
inconsistency with Article 2.12 of the TBT Agreement , a responding Member that has allowed an 
interval of less than six months between the publica tion and entry into force of its technical regulation 
must submit evidence and argument sufficient to establish  either :  (i) that the "urgent circumstances" 
referred to in Article 2.10 of the TBT Agreement  surrounded the adoption of the technical regulation at 
issue;  (ii) that producers of the complaining Memb er could have adapted to the requirements of the 
technical regulation at issue within the shorter interval that it allowed;  or (iii) that a period of "not 
less than" six months would be ineffective to fulfil th e legitimate objectives of its technical regulation. 
284. The Panel found that Indonesia had 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 
fulfilment of the objective pursued by  Section 907(a)(1)(A) ineffective."484  Thus, in the Panel's view, 
the burden was on Indonesia to establish a prima facie  case of inconsistency with Article 2.12 of the 
TBT Agreement  that included establishing that a period of at least six months between the publication 
of Section 907(a)(1)(A) and its entry into force would not render the fulfilment of the objective pursued by Section 907(a)(1)(A) ineffective.  The United States argues that Indonesia failed to 
establish such a prima facie  case.  Relying on the Appellate Body's ruling on the burden of proof 
under Article 2.4 of the TBT Agreement in EC – Sardines , the United States argues on appeal that the 
burden rests with the complaining Member to a dduce sufficient evidence and argument to establish 
that an interval of not less than six months w ould be effective in fulfilling the objectives of the 
technical regulation at issue.
485 
285. In EC – Sardines , the Appellate Body was considering th e allocation of the burden of proof in 
the context of a claim of incons istency with Article 2.4 of the TBT Agreement .  As we see it, the fact 
that two provisions manifest a degree of structural similarity does not, necessarily , support a 
conclusion that the allocation of th e burden of proof in respect of each provision must be identical.486 
286. We recall our view expressed above that the elements of a prima facie  case of inconsistency 
with Article 2.12 of the TBT Agreement  are to be drawn from a proper interpretation of Article 2.12, 
taking into account—pursuant to Article 31(3)(a) of the Vienna Convention —the interpretative 
clarification provided by the terms of paragraph 5.2 of the Doha Ministerial Decision.  In much the 
                                                      
484Panel Report, para. 7.592. 
485United States' appellant's submission, para. 143 (referring to Appellate Body Report, EC – Sardines , 
para. 288). 
486We are not saying that the fact that the burden of  proof is allocated in a particular manner with 
respect to a particular provision of the covered agreements is not a relevant consideration in discerning how the burden of proof is allocated under a similar provision of the covered agreements.  Rather, we are saying that the 
conceptual or structural similarity between two provisions does not, by itself, necessitate a conclusion that the 
burden of proof in respect of both provisions must be allocated in an identical manner. WT/DS406/AB/R 
Page 98  
 
same way, the manner in which the burden of proof is allocated under Article 2.12 of the 
TBT Agreement  must be informed by an interpretation that properly canvasses the text, context, and 
object and purpose of Article 2.12.  In our view, the burden of proof in respect of a particular 
provision of the covered agreements cannot  be understood in isolation from the overarching logic of 
that provision, and the function which it is designed to serve.  On the contrary, it is by having regard 
for the function and rationale of a particular provi sion that an adjudicator can, adequately, assess the 
manner in which the burden of proof should be allocated under that provision. 
287. We recall that Article 2.12 of the TBT Agreement  explains that the reason for allowing an 
interval between the publication and the entry into force of a technical regulation is "to allow time for producers in exporting Members, and particularly in developing country Members, to adapt their 
products or methods of production" to the requi rements of the importing Member's technical 
regulation.  By its own terms, Article 2.12 si ngles out producers in exporting Members, and 
particularly in developing country Members, as th e beneficiaries of a "reasonable interval" between 
the publication and the entry into force of an impo rting Member's technical regulation.  Thus, the 
concept of a "reasonable interval" within the meani ng of Article 2.12 is meant to provide a degree of 
certainty to producers in exporting Members, and par ticularly in developing country Members, with 
regard to the time within which an importing Me mber's technical regulation can reasonably be 
expected to enter into force. 
288. Paragraph 5.2 of the Doha Ministerial Decisi on provides interpretative clarification of the 
concept of a "reasonable interval" within the mean ing of Article 2.12 by establishing a rule that 
producers in exporting Members require a period of at  least six months to adapt their products or 
production methods to the requirements of the im porting Member's technical regulation.  Thus, 
paragraph 5.2 enhances the degree of certainty that the concept of a "reasonable interval" is meant to 
provide to producers in exporting Members, and par ticularly in developing country Members, with 
regard to the time within which an importing Me mber's technical regulation can reasonably be 
expected to enter into force. 
289. The rule in Article 2.12, as clarified by paragr aph 5.2 of the Doha Ministerial Decision, is 
expressly designed to allow producers in the complain ing Member, and in particular in a complaining 
developing country Member, sufficient time to ad apt their products or production methods to the 
requirements of the responding Member's technical regulation.  Thus, it seems to us that, where a 
responding Member seeks to deviate from this rule, wh ich, by its own terms, singles out producers in 
the complaining Member as the beneficiaries of a "reasonable interval" between the publication and 
the entry into force of a technical regulation, the responding Member must shoulder the burden of 
establishing a prima facie  case that the conditions under which derogations from the rule are  WT/DS406/AB/R 
 Page 99 
 
 
permitted are extant.  Thus, we disagree with th e Panel that it was for Indonesia to establish a prima 
facie  case that a period of at least six months betw een the publication of Section 907(a)(1)(A) and its 
entry into force would not render the fulfilment of the objective pursued by Section 907(a)(1)(A) 
ineffective.  Instead, we consider that, under Article 2.12 of the TBT Agreement , as clarified by 
paragraph 5.2 of the Doha Ministerial Decision,  the burden rests upon the responding Member to 
make a prima facie  case that an interval of not less than six months "would be ineffective to fulfil the 
legitimate objectives pursued" by its technical regulation. 
290. In sum, under Article 2.12 of the TBT Agreement , as clarified by paragraph 5.2 of the Doha 
Ministerial Decision, a complaining Member is required to establish a prima facie  case that the 
responding Member has failed to allow for a period of  at least six months between the publication and 
the entry into force of the technical regulation at issue.  If the complaining Member establishes such a 
prima facie  case, the burden rests on the responding Member that has allowed for an interval of less 
than six months between the publication and the entry into force of its technical regulation to establish 
either :  (i) that the "urgent circumstances" referred to in Article 2.10 of the TBT Agreement  
surrounded the adoption of the technical regulation at issue;  (ii) that producers of the complaining 
Member could have adapted to the requirements of th e technical regulation at issue within the shorter 
interval that it allowed;  or (iii) that a period of "not less than" six months would be ineffective to 
fulfil the legitimate objectives of its technical regulation. 
291. In order to establish a prima facie  case of inconsistency w ith Article 2.12 of the 
TBT Agreement , Indonesia was required to establish that the United States did not allow an interval of 
at least six months between the publication and the entr y into force of the technical regulation at issue.  
In this connection, we note the Panel's finding that  the actual interval allowed by the United States 
between the publication and the entry into force of Section 907(a)(1)(A) was a "90-day period or a three-month period".
487  Thus, we agree with the Panel that Indonesia established a prima facie  case of 
inconsistency with Article 2.12 of the TBT Agreement . 
292. In order to rebut the prima facie  case of inconsistency w ith Article 2.12 of the TBT Agreement  
made by Indonesia, the United States was require d to submit evidence and argument sufficient to 
establish either :  (i) that the "urgent circumstances"  referred to in Article 2.10 of the TBT Agreement  
surrounded the adoption of Section 907(a)(1)(A);  (ii)  that producers in Indonesia could have adapted 
to the requirements of Section 907(a)(1 )(A) within a three-month interval;  or (iii) that a period of 
"not less than" six months would be ineffe ctive to fulfil the legitimate objectives of 
Section 907(a)(1)(A). 
                                                      
487Panel Report, para. 7.567. WT/DS406/AB/R 
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293. With regard to whether the "u rgent circumstances" referred to in Article 2.10 of the 
TBT Agreement  surrounded the adoption of Section 907(a)(1 )(A), we note that the Panel found that 
"[i]n the absence of any evidence or argument th at such urgent problems of safety, health, 
environmental protection or national security arose or threatened to arise upon adoption of Section 907(a)(1)(A)", it could "onl y conclude that these urgent circumstances were not present".
488  
Thus, the United States did not contend that the "urg ent circumstances" referred to in Article 2.10 
surrounded the adoption of Section 907(a)(1)(A). 
294. With regard to the question of whether produ cers in Indonesia could have adapted to the 
requirements of Section 907(a)(1)(A) within a three- month period, the United States argued before the 
Panel that "Indonesian producers have been a nd are able to market tobacco-flavoured and 
menthol-flavoured cigarettes in the United States' market", and that "Indonesian producers, even 
16 months after the enactment of [Section 907(a )(1)(A)] have not adjusted their product lines to 
produce tobacco or menthol-flavoured cigarettes."489  Thus, according to the United States, whether it 
waited "three months or six months after the measu re's enactment to allow it to enter into force 
appears not to have affected Indonesia producers in any way".490  On appeal, the United States 
submits that "[t]his evidence and argument" was sufficient to rebut the prima facie case that the Panel 
found Indonesia to have established.491  We are not persuaded that the evidence and argument 
submitted by the United States before the Panel was sufficient to establish that producers in Indonesia 
could have adapted to the requirements of Secti on 907(a)(1)(A) within a three-month period.  
Contrary to what the United States argues, the fact that Indonesian producers had not adjusted to the 
requirements of Section 907(a)(1)(A) sixteen months after its entry into for ce is evidence that points 
in the direction of Indonesian producers requiring a significantly longer period than the three months 
allowed by the United States.  Thus, the United St ates failed to establish that producers in Indonesia 
could have adapted to the requirements of Sec tion 907(a)(1)(A) within a three-month period. 
295. We turn now to consider whether the United St ates established, with sufficient evidence and 
argument, that a period of at least six months between the publication and the entry into force of Section 907(a)(1)(A) would be ineffective in fulfilling the legitimate objective pursued by Section 907(a)(1)(A).  We note that the Panel stated that the United States had not explained "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 fulfillin g the objective pursued by Section 907(a)(1)(A), 
while a six month interval would be".
492  Before the Panel, the United States argued that the 
                                                      
488Panel Report, para. 7.507. 
489Panel Report, para. 7.583 (re ferring to United States' first written su bmission to the Panel, para. 303). 
490Panel Report, para. 7.583. 
491United States' appellant's submission, para. 153. 
492Panel Report, para. 7.593.  WT/DS406/AB/R 
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FSPTCA "directly addresses a serious problem—youth smoking" and that "Congress intended to limit 
this behaviour as much as practicable".493  While the arguments advanced by the United States before 
the Panel identify the legitimate objective of Sec tion 907(a)(1)(A), these arguments are insufficient to 
establish that allowing a period of not less than si x months between the publication and entry into 
force of Section 907(a)(1)(A) would have been ineffective to fulfil the legitimate objective of 
Section 907(a)(1)(A). 
296. Thus, while we disagree with the Panel that it was for Indonesia to establish a prima facie  
case that an interval of at least six months betw een the publication of the FSPTCA and the entry into 
force of Section 907(a)(1)(A) would not render the fulfilment of the objective pursued by Section 907(a)(1)(A) ineffective, we nevertheless sh are the Panel's view that the United States failed 
to establish that an interval of at least six mont hs between publication and entry into force would be 
ineffective in fulfilling the legitimate objective pur sued by Section 907(a)(1)(A).  Accordingly, we 
agree with the Panel that the Un ited States failed to rebut the prima facie  case of inconsistency that 
Indonesia established under Article 2.12 of the TBT Agreement . 
297. In the light of the foregoing reasons, we uphold , albeit for different reasons, the Panel's 
finding, in paragraphs 7.595 and 8.1( h) of the Panel Report, that, by failing to allow an interval of not 
less than six months between the publication and the entry into force of Section 907(a)(1)(A) of the 
FFDCA, the United States acted incons istently with Article 2.12 of the TBT Agreement . 
VII. Findings and Conclusions 
298. For the reasons set out in this Report, the Appellate Body: 
(a) With respect to Article 2.1 of the TBT Agreement : 
(i) upholds, albeit for different reasons, the Panel's finding, in paragraph 7.248 
of the Panel Report, that clove cigarettes and menthol cigarettes are "like 
products" within the meaning of Article 2.1 of the TBT Agreement ; 
(ii) finds that the Panel did not act inconsis tently with Article 11 of the DSU in 
its analysis of consumer tastes and habits; 
(iii) upholds, albeit for different reasons, the Panel's finding, in paragraph 7.292 
of the Panel Report, that, by banning clove cigarettes while exempting 
menthol cigarettes from the ban, Section 907(a)(1)(A) of the FFDCA accords imported clove cigarettes less favourable treatment than that accorded to 
                                                      
493Panel Report, para. 7.588 (re ferring to United States' first written su bmission to the Panel, para. 302). WT/DS406/AB/R 
Page 102  
 
domestic menthol cigarettes, within the meaning of Article 2.1 of the 
TBT Agreement ; 
(iv) finds that the Panel did not act inconsis tently with Article 11 of the DSU in 
its less favourable treatment analysis;  and, therefore, 
(v) upholds, albeit for different reasons, the Panel's finding, in paragraphs 7.293 
and 8.1(b) of the Panel Report, that Section 907(a)(1)(A) of the FFDCA is 
inconsistent with Article 2.1 of the TBT Agreement  because it accords to 
imported clove cigarettes less favourable treatment than that accorded to like 
menthol cigarettes of national origin;  and 
(b) With respect to Article 2.12 of the TBT Agreement : 
(i) upholds the Panel's finding, in paragra ph 7.576 of the Panel Report, that 
paragraph 5.2 of the Doha Ministerial Decision constitutes a subsequent 
agreement between the parties, within the meaning of Article 31(3)(a) of the 
Vienna Convention , on the interpretation of the term "reasonable interval" in 
Article 2.12 of the TBT Agreement ;  and 
(ii) upholds, albeit for different reasons, the Panel's finding, in paragraphs 7.595 
and 8.1(h) of the Panel Report, that, by failing to allow an interval of not less 
than six months between the publication and the entry into force of 
Section 907(a)(1)(A) of the FFDCA, the United States acted inconsistently 
with Article 2.12 of the TBT Agreement . 
299. The Appellate Body recommends that the DSB re quest the United States to bring its measure, 
found in this Report, and in the Panel Report as modifi ed by this Report, to be inconsistent with the 
TBT Agreement , into conformity with its oblig ations under that Agreement. 
 
  
  WT/DS406/AB/R 
 Page 105 
 
 
ANNEX I 
 
WORLD TRADE  
ORGANIZATION   
WT/DS406/6 
10 January 2012 
 
 (12-0103) 
 Original:   English 
   
UNITED STATES – MEASURES AFFECTING THE PRODUCTION 
AND SALE OF CLOVE CIGARETTES 
 
Notification of an Appeal by the United States 
under Article 16.4 and Article 17 of the Understanding on Rules 
and Procedures Governing the Settlement of Disputes (DSU), 
and under Rule 20(1) of the Working Procedures for Appellate Review  
 
  The following notification, dated 5 January 2012 , from the Delegation of the United States, is 
being circulated to Members. 
 
_______________ 
 
 
Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the 
Settlement of Disputes  ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the 
United States hereby notifies its decision to appeal  to the Appellate Body certain issues of law 
covered in the Report of the Panel in United States – Measures Affecting the Production and Sale of 
Clove Cigarettes  (WT/DS406/R) ("Panel Report") and certain legal interpretations developed by the 
Panel.  
1. The United States seeks review of the Pane l's conclusion that Section 907(a)(1)(A) 
of the Family Smoking Prevention and Tobacco Control Act (the "Tobacco Control Act"),
1 is 
inconsistent with Article 2.1 of the Agreement on Technical Barriers to Trade  (the 
"TBT Agreement").2  The United States appeals this finding based on a series of erroneous legal 
interpretations developed by the Pa nel, and on failure by the Panel to  make an objective assessment of 
the facts of the case as called for by Article 11 of the DSU. 
 2. The United States seeks review of the Panel's finding that clove cigarettes and menthol cigarettes are like products.
3  In making this erroneous findi ng, the Panel erred in its legal 
interpretation of Article 2.1 by excluding, a priori , evidence related to particular criteria and failing to 
analyze each criteria completely.4  Specifically the Panel erred by failing to perform a complete 
analysis of the end-uses5 of clove cigarettes and menthol cigarettes and failing to perform a complete 
                                                      
1The Tobacco Control Act was adopted June 2009 an d it went into effect September 2009 as an 
amendment to the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §387g(a)(1)(A). 
2See, e.g. , Panel Report, paras. 7.293, 8.1(b). 
3See, e.g. , Panel Report, para. 7.248. 
4See, e.g. , Panel Report, paras. 7.116, 7.119, 7.197-199, 7.206, 7.209-210, 7.214, 7.230-231. 
5See, e.g. , Panel Report, paras. 7.197-199. WT/DS406/AB/R 
Page 106  
 
analysis of consumer tastes and habits.
6  In developing this faulty lega l interpretation, the Panel also 
acted inconsistently with Article 11 of the DSU by failing to make an objective assessment of the 
facts in the case by refusing to consider certa in evidence related consumer tastes and habits.7 
 3. The United States also seeks review of the Panel's finding that Section 907(a)(1)(A) accords 
less favorable treatment to imported clove cigarettes.
8  In making this finding, the Panel erred in its 
legal interpretations that the only products to be compared are imported clove cigarettes and domestic 
menthol cigarettes,9 and that the effect of Section 907(a)(1)(A) on U.S. production can be assessed by 
looking only at what products were on the market at the time the measure went into effect.10  The  
Panel also erred by applying an incorrect legal framework to assess whether the alleged detriment to 
the competitive conditions for clove cigarettes coul d be explained by factors or circumstances 
unrelated to the foreign origin of the products.11  In developing these fau lty legal interpretations, the 
Panel also acted inconsistently with Article 11 of  the DSU by failing to make an objective assessment 
of the facts of the case in finding that at the time of the ban, there were no domestic cigarettes with 
characterizing flavors other than menthol cigarettes,12 and that Section 907(a)(1)(A) imposes no costs 
on any U.S. entity.13 
 4. The United States seeks review by the Appella te Body of the Panel's conclusion and related 
findings that by not allowing an interval of no l ess than six months between the publication and the 
entry into force of Section 907(a)(1)(A), the United St ates acted inconsistently with Article 2.12 of the 
TBT Agreement.
14  This conclusion is in error and is ba sed on erroneous findings on issues of law and 
legal interpretations with respect to  Article 2.12 of the TBT Agreement.15 
 5. Finally, the United States also makes a conditio nal appeal regarding the Panel's legal analysis 
with respect to Indonesia's claims under Article 2. 2 of the TBT Agreement.  Should Indonesia seek 
review by the Appellate Body of the Panel's findings with respect to Indonesia's claims under 
Article 2.2, the United States seeks review by the Appellate Body of the Pa nel's finding that it could 
draw upon jurisprudence develope d under Article XX(b) of the General Agreement on Tariffs and 
Trade 1994  when assessing the consistency of Section 907(a)(1)(A) with the requirement that 
technical regulations "not be more trade-r estrictive than necessary to fulfill a legitimate 
objective …".
16  While the United States agrees with th e ultimate conclusion in the Panel Report 
regarding Indonesia's claims under Article 2.2 of th e TBT Agreement, the United States considers the 
Panel's analysis on this particular aspect to be  based on erroneous findings on issues of law and 
related legal interpretations with respect  to Article 2.2 of the TBT Agreement. 
 
__________ 
 
                                                      
6See, e.g. , Panel Report, paras. 7.116, 7.119, 7.206-7.232. 
7See, e.g. , Panel Report, para. 7.210. 
8See, e.g. , Panel Report, para. 7.292. 
9See, e.g. , Panel Report, paras. 7.274, 7.277. 
10See, e.g. , Panel Report, para. 7.289. 
11See, e.g. , Panel Report, paras. 7.269, 7.286-7.291. 
12See, e.g. , Panel Report, para. 7.289. 
13See, e.g. , Panel Report, para. 7.289. 
14See e.g. , Panel Report, paras. 7.595, 8.1(h). 
15See e.g. , Panel Report, paras. 7.561-7.595. 
16Panel Report, paras. 7.351-7.369.