WT/DS406/R 
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  ANNEX A 
 
EXECUTIVE SUMMARIES OF THE FIRST WRITTEN SUBMISSIONS 
OF THE PARTIES 
 
Contents Page 
Annex A-1 Executive summary of the fi rst written submission of Indonesia A-2 
Annex A-2 Executive summary of the first wr itten submission of the United States A-11 
 WT/DS406/R 
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  ANNEX A-1 
 
EXECUTIVE SUMMARY OF THE 
FIRST WRITTEN SUBMISSION OF INDONESIA 
  
I. INTRODUCTION 
1. The Republic of Indonesia ("Indonesia") cha llenges Section 101 of the Family Smoking 
Prevention and Tobacco Control Act of 2009 (the "Act").  In particular, Indonesia challenges the 
"special rule for cigarettes" in Section 101(b) , which banned the production or sale of certain 
cigarettes it characterized as "flavored" (hereinafter the "Special Rule"). 
2. According to the legislative history of the Act,  the Special Rule was meant to stop cigarette 
manufacturers from targeting underage smokers with  flavours intended to increase the appeal of 
smoking.  One type of flavoured cigarette escaped the ban – menthol cigarettes.   
3. Cigarettes may contain a variety of ingredients and flavours that are added to the tobacco or 
filter.  There is, in short, "no logical difference", according to Professor Michael Siegel of Boston 
University, "between menthol and the hundreds of othe r flavor additives put into cigarettes", and that 
includes clove. 
4. Clove cigarettes have been produced in Indonesia for over a century.  It is estimated that as 
many as 6 million Indonesians are employed directly or indirectly in the manufacture of cigarettes and 
the growing of tobacco.  The cigarette industr y, including clove, accounts for approximately 
1.66 per cent of Indonesia's total gross domestic product ("GDP").  Indonesia has exported clove 
cigarettes to the United States for well over 40 years. 
5. Notwithstanding the importance of clove cigare ttes to its economy and its people, Indonesia 
does not object to the United States regulating the pr oduction or sale of cigarettes within its borders.  
Nor does Indonesia object to reasonable measures designed to keep cigarettes, including clove 
cigarettes, out of the hands of minors.  What Indone sia objects to is a measure, in this case the Special 
Rule, that imposes a complete ban on clove cigarette s from Indonesia, while little or no restrictions 
are placed on regular cigarettes and menthol cigarettes.   
6. The challenged measure is, in short, discrimin atory and a violation of Article 2.1 of the 
Agreement on Technical Barriers to Trade ("TB T Agreement") in Annex 1A of the Marrakesh 
Agreement Establishing the World Trade Organizatio n ("WTO").  For largely the same reasons, the 
challenged measure also violates Article III.4 of  the General Agreement on Tariffs and Trade 1994 
("GATT 1994").  Furthermore, the challenged measur e is more trade restri ctive than necessary to 
achieve the stated goal of reducing youth smoking and is , therefore, in violation of Article 2.2 of the 
TBT Agreement.   
7. Finally, in adopting the Special Rule, the Unite d States failed to follow a number of additional 
requirements of the TBT Agreement.  The Special Rule is inconsistent with Article 2.8 of the 
TBT Agreement because it bans cigarettes solely on the basis of descriptive characteristics.  The 
United States also failed to live up to a number of its procedural obligations under Article 2 the 
TBT Agreement.  Accordingly, the United States acted inconsistently with its obligations under 
Article 2.5, 2.9, 2.10, and 2.12 of the TBT Agreement. 
8. The ban on clove cigarettes in the Special Rule created an unnecessary barrier to exports from 
Indonesia, a developing country Member.  The Un ited States was obliged to take account of the 
special and development and trade needs of Indon esia, a developing country Member of the WTO,  WT/DS406/R 
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  when preparing and implementing the Special Rule.  It  did not do so.  As such, the United States acted 
inconsistently with Article 12.3 of the TBT Agreement. 
9. Because the United States has violated the GATT and the TBT Agreement, its actions are 
considered prima facie to constitute a case of nullification or impairment of Indonesia's rights under 
these agreements.  As such, there is a presumption th at the United States' actions have had an adverse 
impact on Indonesia in adopting and applying the Special Rule.  The burden of proof, therefore, shifts 
to the United States to rebut the charge.   
II. FACTUAL BACKGROUND 
10. In 2007 the total US market for cigarettes was approximately 360 billion cigarettes.  Imports 
of clove cigarettes totalled 398. 8 million or approximately 1/10th of one per cent of the total 
US market.  According to the Tobacco Merchants Asso ciation, all natural clove cigarettes or "kreteks" 
sold in the United States are imported, with  the vast majority coming from Indonesia. 
11. The Act granted the Food and Drug Administration ("FDA") broad authority to regulate 
tobacco products.  Among other things, the Ac t provided FDA with the authority to regulate 
marketing and promotion of tobacco products and to set performance standards for tobacco products 
to protect the public health.   
12. Of concern in this matter is Section 101(b) of the Act, which contains a "special rule for 
cigarettes".  The Special Rule states that, beginni ng three months after the date of enactment: 
a cigarette or any of its component parts (including the tobacco, filter, or paper) shall 
not contain, as a constituent (including a smoke  constituent) or additive, an artificial 
or natural flavor (other than tobacco or  menthol) or an herb or spice, including 
strawberry, grape, orange, clove, cinnamon,  pineapple, vanilla, coconut, licorice, 
cocoa, chocolate, cherry, or coffee, that is a characterizing flavor of the tobacco 
product or tobacco smoke. 
13. The prohibition on characterizing flavours other th an menthol or tobacco established by the 
Special Rule went into effect on 22 September 2009.   Since that time clove cigarettes have been 
prohibited in the United States causing Indonesia' s annual exports of clove cigarettes to the 
United States to fall from approximately $15 milli on before the ban to zero, while menthol- and 
tobacco-flavoured ("regular") cigarettes continue to  be produced and sold in the United States.  
Despite the repeated requests of Indonesia, th e United States has not identified any scientific 
evidence, sound or otherwise, in existence on or before 22 June 2009 that could possibly justify its 
disparate treatment of clove cigarettes and all ot her cigarettes, especially menthol cigarettes.  
III. LEGAL ARGUMENT 
A. THE SPECIAL RULE ACCORDS MORE FAVOURABLE TR EATMENT TO CERTAIN DOMESTIC 
CIGARETTES THAN IT DOES CIGARETTES IMPORTED FROM INDONESIA  
14. Article 2.1 of the TBT Agreement requires Members of the WTO to, "ensure that in respect of 
technical regulations, products imported from the terr itory of any Member shall be accorded treatment 
no less favourable than that accorded to domestic lik e products of national orig in and to like products 
originating in any other country". 
15. The Special Rule, both on its face and as applie d, violates Article 2.1 of the TBT Agreement 
because it is a technical regulation that accords "less favourable" treatment to imports of clove 
cigarettes than it accords to like domestic products – regular and menthol cigarettes. WT/DS406/R 
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  16. The Special Rule constitutes a "technical regula tion" subject to the TBT Agreement.  The 
Appellate Body has interpreted "technical regulati on" as encompassing documents that "regulate the 
'characteristics' of products in a binding or compulsory fashion", having the effect of "prescribing or 
imposing one or more 'characteris tics'. ..."  Product characteristi cs are in turn defined as "any 
objectively definable 'features,' 'qua lities,' 'attributes,' or other 'distinguishing mark' of a product".  
They may be "prescribed or imposed in either a positive or a negative form [-- t]hat is, the document 
may provide, positively, that products must possess  certain 'characteristics', or the document may 
require, negatively, that products must not possess certain characteristics"  In sum, a technical 
regulation must:  (1) lay down "product charac teristics"; (2) make compliance with those 
characteristics mandatory; and (3) be applicable to  an identifiable product or group of products. 
17. The Special Rule meets all of these criteria sin ce it (1) prohibits the addition of characterizing 
flavours – except menthol; (2) compliance with the pr ohibition is mandatory; and (3) the rule applies 
to an identifiable group of products – certain flavour ed cigarettes, especially clove cigarettes.  The 
Special Rule, therefore, constitutes a "technical regulation" within the meaning of the 
TBT Agreement. 
18. Clove cigarettes are "like" domestically produ ced regular and menthol cigarettes in the 
United States.  The general approach used to determin e "likeness" consists of an  analysis that focuses 
on four basic factors:  (1) the physical characteristics of the products; (2) end-uses; (3) consumer 
perceptions and behaviour; and (4) tariff classification.   
19. Clove cigarettes and domestically produced ciga rettes, including menthol cigarettes, have the 
same physical characteristics.  Both cigarettes cont ain cured and blended toba cco in a paper wrapper 
with a filter.  Both contain additional ingredient s and flavourings that create the unique flavour of 
each brand.  Flavourings such as brown sugar or va nilla are not dangerous a nd are added to virtually 
all cigarettes, even those that would be considered  to have a "regular" tobacco flavour.  There are 
literally hundreds of ingredients used by tobacco co mpanies to enhance the a ppeal of cigarettes and 
create the unique flavour of each brand.  In this regard, cigarettes are no different than many other 
consumer products, such as mint-flavoured toothpaste,  that use flavourings to attract consumers.  
Clove cigarettes, like all cigarettes, contain a ble nd of tobacco and other i ngredients (in this case, 
ground clove buds) to give them their unique fl avour.  Clove cigarettes are no different from 
cigarettes that contain a blend of tobacco, s ugar, and vanilla, or of tobacco and menthol. 
20. Clove cigarettes and domestically produced cigarettes are both "Class A" cigarettes for 
US tax purposes, weighing less than three pounds per thousand.  Moreover, both clove cigarettes and 
domestically produced cigarettes satisfy the US governme nt's definition of a "cigarette":  "(1) any roll 
of tobacco wrapped in paper or in any substance not containing tobacco, and (2) any roll of tobacco 
wrapped in any substance containi ng tobacco which, because of its a ppearance, the type of tobacco 
used in the filler, or its packaging and labeling, is  likely to be offered to, or purchased by, consumers 
as a cigarette described in paragraph (1)".  Clove cigarettes and menthol cigarettes share even more 
specific properties in that they both contain tobacco and an added ingredient (i.e. an herb or spice) 
with soothing properties.  Both clove oil (know n chemically as "eugenol") and menthol are widely 
used in consumer products and are r ecognized as having an anesthetic effect. 
21. The panel in EC – Asbestos  noted that toxicity is also relevant to physical characteristics 
when determining whether products are "like".  In that case, one product, chrysotile asbestos fibers, 
was known to be carcinogenic and the type of cancer  concerned had a mortality rate of close to 
100 per cent.  In the current case, there is no evid ence that clove cigarettes are more toxic or pose 
greater health risks than domestically produced so- called "regular" cigarettes or menthol cigarettes.   
22. The end use of all cigarettes, including clove and menthol cigarettes, is the same – that is, 
they are used to smoke tobacco.  WT/DS406/R 
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  23. Consumers perceive regular cigarettes, ment hol cigarettes, and clove cigarettes as an 
"alternative means of performing particular functions in order to satisfy a particular want or demand" 
(i.e. an alternative means of smoking).  Market da ta indicates that 79 per cent of clove cigarette 
smokers do, in fact, smoke "regular" (those with a characterizing flavour of tobacco) and menthol 
cigarettes most frequently and use clove cigarettes as a "special occasion" cigarette.  In short, all 
cigarettes are in a competitive relationship with one  another for access to channels of distribution, 
shelf space, and market share. 
24. Clove cigarettes and domestically produced ciga rettes have the same international tariff 
classification at the 6-digit level, the most detailed level used among Members of the WTO. 
25. Since the Special Rule's ban does not apply to  cigarettes with a characterizing flavour of 
menthol or tobacco, and since clove cigarettes have been shown to be "like" those products, a ban on 
clove cigarettes but not menthol- or tobacco-fla voured cigarettes creates unequal conditions of 
competition in the US market and is, accordingly, "less favourable" treatment. 
26. The Special Rule is also inconsistent with  GATT Article III:4.  Unlike TBT Article 2.1, 
Article III:4 does not require consideration of whet her the Special Rule is a "technical regulation.  
Instead, a measure considered under Article III:4 must simply be a "law, regulation [or] requirement affecting [the] internal sale, offering for sale, purchase, transportation, distribution or use" of an 
imported product.  The Special Rule prohibits a cigarette in the United States from containing a 
characterizing flavour other than menthol or tobacco , which clearly affects the internal sale, offering 
for sale or use of imported clove cigarettes by banning them from the US market altogether. 
27. For the same reasons outlined a bove with respect to TBT Article 2.1, the Special Rule is 
inconsistent with GATT Article III:4.  Clove ciga rettes are like domestically produced cigarettes in 
that they share the same physical characteristi cs, end-uses, consumer perceptions, and tariff 
classification.  The Special Rule accords clove ciga rettes less favourable treatment than domestically 
produced menthol- or tobacco-flavoured cigarettes in that clove cigarettes are banned, while menthol 
and "regular" cigarettes continue to be sold in the US market.   
B. T
HE SPECIAL RULE IS MORE TRADE RESTRICTIVE T HAN NECESSARY TO ACHIEVE THE LEVEL 
OF PROTECTION SOUGHT BY THE UNITED  STATES  
28. The Special Rule is inconsistent with Article  2.2 of the TBT Agreement because it is more 
trade restrictive than necessary to protect huma n health and is thus an unnecessary obstacle to 
international trade. 
29. Indonesia agrees that protection of human health through regulation of t obacco products is a 
legitimate health objective.  Indonesia would also agree that reducing youth smoking is a legitimate 
objective.  But a ban is the most trade restrictive me asure that can be adopted and, therefore, must be 
subject to the highest level of justification.   
30. In determining whether a violation of TBT Article  2.2 exists, the Panel must consider whether 
the ban on some flavours, but not all, contained in the Special Rule is likely to achieve the level of 
protection sought by the United States and whether less-trade restrictive measures are available that 
could also achieve that level of protection. 
31. The Act itself is helpful in understanding the le vel of protection sought by the United States.  
One of the stated objectives of the Act is "to contin ue to permit the sale of tobacco products to adults 
in conjunction with measures to ensure they ar e not sold or accessible to underage purchasers".  
Further, the standards set forth in the Act are inte nded to restrict the advertising and promotional WT/DS406/R 
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  practices most likely to entice youth into tobacco use, while affording ample opportunity to market 
tobacco products to adults. 
32. Even more revealing is what the Act does not in tend to do.  The Act and its supporters claim 
that additional government regulation is essentia l to stop young people from taking up smoking.  
However, while the FDA is given broad authority to  regulate tobacco and set standards for cigarettes, 
the FDA is expressly prohibited by the Act from taki ng a number of actions that would likely be most 
effective at reducing the number of youth who begi n smoking and become addicted.  For example, the 
FDA is prohibited by the Act from banning cigare ttes entirely, removing nicotine from cigarettes, 
raising the legal smoking age to 19, or requiring that ci garette sales be limited to adult-only stores.    
33. Because the Act clearly contemplates continued use of cigarettes by adults, the level of 
protection sought is not the elimination of all risks associated with smoking.  Further, the vast 
majority of cigarettes known to be smoked by youth are not banned by the Act at all.  Based on results 
from the National Survey on Drug Use and Health, a US government funded study, those youth who 
smoke are overwhelmingly smoking "regular" cigarett es or menthol cigarettes, which are not banned 
by the Act.  Thus, the level of protection sought is  not zero access to cigarettes likely to be smoked by 
youth.  By prohibiting the FDA from taking certain actions most likely to reduce youth smoking and dependence, the level of protection sought by the Act is not a dramatic reduction in the number of 
youth who smoke.  Rather, what the Act describes as its desired level of protection is sufficient 
regulation to deter, but not prohibit, th e use of tobacco products by adolescents. 
34. A ban is the most trade-restrictive regulatory t ool available and in certain circumstances may 
be the only option for achieving a health objective, for example where the level of protection needed 
is the elimination  of risk.  The United States could have decided that to prevent people from smoking 
it wanted to ban all cigarettes from its market entirel y.  But that was not the level of protection sought 
by the United States.  The Special Rule does not allow for legitimate sales of clove cigarettes to adults 
and exempts from the ban the cigarettes most likely to be smoked by youth.  Thus, the ban on clove 
cigarettes greatly exceeds the level of protection sought.  
35. Panels have held that the question of whethe r a measure is "necessary" hinges on the degree 
to which the measure achieved th e desired policy objective.  In US – Gambling the Appellate Body 
confirmed that an assessment of the necessity of a measure involves a weighing  and balancing of "the 
'relative importance' of the interests or values fu rthered by the challenged measure", along with other 
factors, which will usually include "the contributio n of the measure to the realization of the ends 
pursued by it [and] the restrictive impact of the measure on international commerce". 
36. TBT Article 2.2 indicates that "necessity" is to  be determined taking into account the risks 
associated with not taking the challenged measure.  Thus, the Panel must consider whether banning 
clove cigarettes, but not menthol or regular ciga rettes, contributes to a reduction in the level of 
smoking by adolescents.  In making its decision, the Panel should evaluate the likely impact of not 
banning clove cigarettes.  The facts clearly show th at failure to ban clove cigarettes would not pose 
any significant risk to the stated objective of the Ac t or to the health of adolescents.  Thus, a ban on 
clove cigarettes is not necessary to reduce youth smoking. 
37. Evidence shows that youth are overwhelmingly mo re likely to smoke cigarettes not banned by 
the Act than clove cigarettes.  In fact, eighty-sev en (87) per cent of high school smokers smoke just 
three heavily marketed brands:  "Marlboro", "Camel", and "Newport".  Menthol cigarettes are used by 62 per cent of new middle school smokers and by 46 per cent of new high school smokers.  By 
contrast, the National Survey on Drug Use and Health  has found minimal levels of clove cigarette use 
by youth.  In 2007, only 0.1 per cent of youth smoke rs used clove cigarettes and by 2008 that number 
had fallen to zero.  WT/DS406/R 
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  38. Another organization, Monitoring the Future , has been conducting annual, nationwide 
surveys of US teens in school for the past 35 years.   The study's investigators have concluded that 
"kretek [clove cigarette] use was a short-term fa d that simply did not catch on with mainstream 
youth". 
39. In fact, youth appear to be totally unaware of  what a kretek is.  In a telephone survey 
conducted 23-26 September 2010 by Opinion Research Corporation, 98 per cent of teens surveyed 
indicated they had never heard of a kretek.  Of th e 2 per cent who claimed to have heard of a kretek, 
25 per cent incorrectly identified it as a type of car and 24 per cent thought it was a drug. Not even 
one of the teens surveyed was able to correc tly identify a kretek as a type of cigarette. 
40. Dr. Michael Siegel, a noted expert on tobacco control, now with Boston University's School 
of Public Health, has refuted claims by the FDA a nd others that flavoured cigarettes are a gateway to 
smoking for youth and that a ban on flavoured cigarettes is necessary to reduce youth smoking:  
It is demonstrably false that flavored ci garettes are a gateway to  cigarette smoking, 
that they contribute significantly to addic tion of youths to tobacco, that the tobacco 
industry uses these flavored cigarettes to  hook children, and that the FDA ban on 
candy-flavored cigarettes will have any im pact whatsoever on youth smoking. (This 
is with the exception of menthol, the one flavouring which is actually used by the tobacco companies to hook kids, but which is exempt from the flavouring ban.) 
The truth is that the predominant gateway to youth smoking is non-flavored cigarettes 
(excluding menthol). The removal of flavored cigarettes from the market by the FDA will have no impact whatsoever on youth smoking . The only thing that would have 
had an impact is the removal of the non-fl avored cigarettes - like Camels, Marlboros, 
and Newports - which are smoked by gr eater than 85% of all youth smokers. 
In fact, the one flavoring that was exempt - menthol - is the one and only  flavoring 
that is actually used to hook kids. There are lite rally tens of thousands of kids using 
menthol-flavored cigarettes, but even prior to  the FDA law, there were virtually none 
using candy-flavored cigarettes that were actually covered by the law.  
41. The above evidence shows that banning clove cigarettes, but not menthol and regular 
cigarettes or other flavoured tobacco products, is unlikely to have any impact whatsoever on youth 
smoking.  The ban on clove cigarettes is, thus, not "necessary". 
42. Panels and the Appellate Body have cons istently endorsed the view expressed in US – 
Section 337 Tariff Act  "that a contracting party cannot justif y a measure inconsistent with another 
GATT provision as 'necessary'…if an alternative measu re which it could reasonably be expected to 
employ and which is not inconsistent with  other GATT provisions is available to it". 
43. Regulation, short of the Special Rule's blanke t ban on flavours, could have achieved the level 
of protection sought by the Act.  The Act itself contains a number of new provisions applicable to 
menthol and regular cigarettes designed to reduce th e ability of cigarette companies to engage in 
practices that target and attract youth.  These measures could also have been applied to clove 
cigarettes: 
 banning all outdoor tobacco advertising with in 1,000 feet of schools and playgrounds;  
 
banning all remaining tobacco-brand sponsorsh ips of sports and entertainment events; 
 banning free giveaways of any non-tobacco items with tobacco products;  WT/DS406/R 
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   limiting advertising in publications with significant teen readership, as well as 
outdoor and point-of sale advertisi ng except in adults-only facilities;  
 restricting vending machines and self-service displays to adult-only facilities; and  
 requiring retailers to verify age for a ll over-the-counter sales and providing for 
federal enforcement and penalties agai nst retailers who sell to minors.  
44. The 2006 consent agreement between R.J. Rey nolds and several State Attorneys General 
includes measures that are not trade-restrictive that could have been included in the Act to decrease 
appeal to youth.  These include prohibiting the us e of fruit-, candy-, or alcoholic beverage-related 
terms or images.  Giving the FDA the authority to approve any new tobacco brands, labels, and 
packaging would give regulators the opportunity to ensure that any objectionable products do not 
come on the market, while allowing flavoured products , such as clove cigarettes, to continue to be 
sold to adults.  
45. Other countries have adopted measures that are not trade-restrictive in order to address youth 
smoking.  Australia, for example, has banned almost  all tobacco advertisi ng and prohibited tobacco 
companies from sponsoring events.  Singapore has significantly increased fines for underage smoking 
and certain retailers are prevented from selling tobacco products to make them less available to youth.  
46. The ban presents an insurmountable obstacle to Indonesia's trade of clove cigarettes, costing 
Indonesia approximately $15 million in exports. The ban on flavoured cigarettes was not "necessary", 
therefore, the ban on the use of some characteriz ing flavours in cigarettes, but not menthol and 
tobacco, is an unnecessary obstacle to international trade.     
C. A
RTICLE XX OF GATT  1994  DOES NOT APPLY BECAUSE THE ME ASURE IS A RESTRICTION ON 
TRADE MASQUERADING AS A MEASURE NE CESSARY TO PROTECT HUMAN HEALTH  
47. Under certain circumstances, GATT Article XX allows Members to take actions that are 
inconsistent with their WTO obligations.  Member s may, for example, adopt certain measures to 
protect human health so long as they are not a "d isguised restriction on trade" or "unjustifiable 
discrimination between countries".  However, for the same reasons discussed with respect to TBT 
Article 2.2, the Special Rule, which applies to only so me flavours but not all, is not justifiable and it is 
certainly not necessary to protect youth from smoki ng.  Therefore, the exceptions provided for in 
Article XX are not available to the United States. 
D. THE UNITED  STATES ' FAILURE TO PROVIDE A JUSTIFICATION FOR THE SPECIAL RULE 
VIOLATED ARTICLE 2.5 OF T THE TBT A GREEMENT  
48. TBT Article 2.5 requires that a WTO Member preparing, adopting or applying a technical 
regulation that will have a significant effect on the trade of another Member must explain the justification for that technical regulation.  At various times, Indonesia re quested a justification, 
including the scientific basis for the Special Rule .  Despite Indonesia's repeated requests, the 
United States has never provided any scientific basis or explanation to Indonesia justifying the Special 
Rule.  Further, the United States has never explaine d why the objectives of the Special Rule could not 
be achieved by a less trade restrictive measure.  For these reasons, the United States has violated its 
obligations under Article 2.5 of the TBT Agreement.  WT/DS406/R 
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  E. THE SPECIAL RULE IS INCONSISTENT WITH ARTICLE 2.8 OF THE TBT A GREEMENT BECAUSE 
THE BAN ON CLOVE CIGARETTES IS BASED ON DESCRIPTIVE CHARACTERISTICS  
49. Article 2.8 of the TBT Agreement requires that, "[w]herever appropriate, Members shall 
specify technical regulations based on product requi rements in terms of performance rather than 
design or descriptive characteristics".  The Special Ru le bans certain cigarettes solely in terms of 
descriptive characteristics.  The Special Rule bans  cigarettes with a "characterizing flavour" but 
provides no definition of "characterizing flavour". The FDA has provide no further guidance on what 
constitutes a "characterizing flavour".  Neither the Act nor the Special Rule specifies the standards, 
performance or otherwise, by which certain ingredients, such as ground clove buds, added for 
purposes of flavour are to be deemed "characterizi ng", while other ingredients also added for flavour, 
such as brown sugar, are not.  Therefore, by basing the ban in the Special Rule on descriptive 
characteristics, the United States has violat ed Article 2.8 of the TBT Agreement. 
F. THE US DID NOT COMPLY WITH THE REQUIREMENTS IN ARTICLE 2 WHEN ADOPTING A 
TECHNICAL REGULATION THAT HAS A SI GNIFICANT EFFECT ON TRADE WITH INDONESIA  
50. Article 2.9 of the TBT Agreement imposes various procedural requirements on Members 
before they adopt certain technical regulations.  The United States failed to  follow several of the 
procedures mandated by Article 2.9.  The United States failed to provide the notification required 
under Article 2.9.2.  Further, the United States acted inconsistently with its obligations under 
Article 2.9.3 when, as noted above in the discussion of  Article 2.5, it failed to respond to Indonesia's 
request for an explanation of particular aspect s of the Special Rule.  For these reasons, the 
United States violated Article 2.9 of the TBT Agreement. 
G. THE US VIOLATED ARTICLE 2.10  IF IT IS ASSERTING THAT ARTICLE 2.9 SHOULD NOT APPLY  
51. Article 2.10 of the TBT Agreement provides Memb ers with an exception to their obligation to 
follow the procedures in Article 2.9 "where urge nt problems of safety, health, environmental 
protection or national security arise or threaten to  arise".  In such cases, paragraph 2.10.1 requires 
Members to "notify immediately other Members thr ough the Secretariat of the particular technical 
regulation and the products covered, with a brief indication of the objective  and the rationale of the 
technical regulation, including the nature of the urgent problems".  If the United States believed that 
urgent problems necessitated the adoption of the Special Rule, it nonetheless violated Article 2.10 
because it failed to provide the require d notification to the TBT Committee.  
H. THE SPECIAL RULE DOES NOT PROVIDE A REASONABLE INTERVAL BEFORE ITS EFFECTIVE 
DATE , WHICH VIOLATES ARTICLE 2.12  OF THE TBT A GREEMENT  
52. Article 2.12 of the TBT Agreement requires Memb ers to allow a reasonable interval between 
the publication of technical regulations and their entr y into force in order to allow time for producers 
in exporting Members to adapt.  For purposes of implementing this article, the TBT Committee has 
stated that "the phrase 'reasonable interval' shall be  understood to mean normally a period of not less 
than 6 months, except when this would be ineffec tive in fulfilling the legitimate objectives pursued".  
The Act was signed on 22 June 2009 and the Special Ru le went into effect 90 days later.  A period of 
90 days falls woefully short of the "reasonable inte rval" standard of six months recommended by the 
TBT Committee.  Neither the Act itself nor any ot her statement by the United States indicates that 
having the Special Rule enter into force 90 days after signing was necessary to fulfil the objectives of 
the Act.  The United States violated its obliga tions under Article 2.12 of the TBT Agreement. WT/DS406/R 
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  I. T
HE SPECIAL RULE VIOLATES ARTICLE 12.3  OF THE TBT A GREEMENT BECAUSE THE BAN 
CREATED AN UNNECESSARY BARRIER TO EXPORTS FROM A DEVELOPING COUNTRY  
53. Article 12.3 of the TBT Agreement requires Memb ers to take into account the special needs 
of developing country Members of the WTO so that technical regulations do not create unnecessary 
obstacles to exports from developing country Member s.  The ban on clove cigarettes in the Special 
Rule was not necessary and completely eliminated ex ports of clove cigarettes from Indonesia, by far 
the most significant producer of clove cigarettes sold  in the United States.  The United States ignored 
Indonesia's repeated concerns and adopted a ban on clove cigarettes when less trade-restrictive 
approaches were available.  Therefore, the United States violated Article 12.3 of the TBT Agreement 
in its preparation and application of the Special Rule. 
J. THE SPECIAL RULE HAS NULLIFIED OR IMPAIRED BENEFITS ACCRUING DIRECTLY OR 
INDIRECTLY TO INDONESIA  
54. GATT Article XXIII:1(a) provides that a Memb er has a cause of action and establishes a 
prima facie case of nullification or impairment of benefits if it establishes "the failure of another 
contracting party to carry out its obligations under th is Agreement ..."  The United States' violations of 
the TBT Agreement and GATT 1994 as demonstrated  above creates a presumption of nullification 
and impairment.  Further, there is compelling factual evidence that the tariff concession on clove 
cigarettes heretofore enjoyed by Indonesia has b een nullified or impaired by the Special Rule. 
IV. CONCLUSION 
55. For the foregoing reasons, Indonesia respectfully requests that the Panel find that the Special 
Rule is inconsistent with the United States' obligations under the TBT Agreement and GATT 1994.  
Indonesia further requests that the Panel recomm end the United States bring its measures into 
conformity with its obligations un der the TBT Agreement and GATT 1994.  
  WT/DS406/R 
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  ANNEX A-2 
 
EXECUTIVE SUMMARY OF THE FIRST WRITTEN SUBMISSION 
OF THE UNITED STATES 
 
I. INTRODUCTION 
1. Indonesia challenges the particular line drawn by Section 907(a)(1)(A) of the Family Smoking 
Prevention and Tobacco Control Act , which prohibits all cigarettes with a characterizing flavour 
(including clove flavour),  but not tobacco or menthol, which tens of millions of Americans smoke 
every day.  This line between these types of cigarettes was not drawn based on the national origin of 
products.  The line was not drawn based on protectionism (the entire law targets US cigarette 
companies after all).  Instead, the line was drawn to protect the public health based on evidence that 
certain products presented a unique risk to youth a nd the negative consequences of banning them were 
slight or non-existent.  The evidence establishes that clove and other-flavoured cigarettes such as 
cherry, chocolate or cola are especially appea ling to young people.  The decision to ban clove 
cigarettes and the other flavoured cigarettes was done to protect the public health.  WTO Members 
never intended that a measure of this sort would ru n afoul of the WTO obligations, and this measure is 
entirely consistent with those rules. 
2. As to the claims in this case,  the Republic of Indonesia ("Indonesia") has failed to satisfy its 
evidentiary burden.  With regard to national treat ment, cloves cigarettes are not like products with 
cigarettes generally and menthol cigarettes specif ically.  Moreover, Indonesia has not provided 
evidence that the difference in treatment provided cl ove cigarettes and the non- banned products is less 
favourable based on origin.  As such, the United St ates has acted consistently with its national 
treatment obligations.  Equally clear is the fact that Indonesia has failed to satisfy its burden under 
Article 2.2 of the Agreement on Technical Barriers to Trade ("TBT Agreement").  In fact, it has not 
adduced any evidence whatsoever that a reasona bly available alternative measure fulfils the 
US legitimate objective at the level that the United States considers appropriate and that is 
significantly less trade restrictive.  Similarly, Indonesia has fallen short of its burden of proving any of 
their other TBT claims as well. 
II. LEGAL ARGUMENT 
A. SECTION  907( A)(1)(A)  IS NOT INCONSISTENT WITH THE NATIONAL TREATMENT PROVISIONS 
CONTAINED IN THE GATT 1994  OR THE TBT A GREEMENT  
3. Indonesia argues that Section 907(a)(1)(A) is inconsistent with Article III:4 of the 
GATT 1994 and Article 2.1 of the TBT Agreement based on a flawed analysis and insufficient 
evidence that Section 907(a)(1)(A) accords less fa vourable treatment to cigarettes imported from 
Indonesia than to cigarettes produced in the United States.  Indonesia's argument boils down to the 
proposition that GATT 1994 Article III:4 precludes the United States from banning a specific class of cigarettes including clove cigarettes unless it also ba ns domestically produced cigarettes sold in the 
United States, without exception.  However, Indonesia does not demonstrate that clove cigarettes are 
"like" domestically produced cigarettes (in partic ular tobacco and menthol cigarettes).  Second, 
Indonesia fails to show that Section 907(a)(1)(A) ac cords less favourable treatment to clove cigarettes 
based on their national origin. 
B. S
ECTION  907( A)(1)(A)  IS NOT INCONSISTENT WITH GATT  ARTICLE  III:4 
4. Indonesia proposes that domestic cigarettes and clove cigarettes are "like" products with 
respect to Section 907(a)(1)(A).  However, the an alysis below will demonstrate that clove cigarettes 
are not in a competitive relationship with tobacco or menthol cigarettes and are not substitutable or WT/DS406/R 
Page A-12  
 
  interchangeable among retailers or consumers.  Additionally, a "likeness" determination – in addition 
to focusing on the competitive relationship of th e products – will need carefully to parse the 
significance of traits that are generally shared among all cigarettes and traits that are significant with 
respect to the public health provision at issue. 
5. Physical composition.  The physical composition of  clove cigarettes is different than tobacco 
and menthol cigarettes.  Clove buds are dried flow er buds harvested from clove trees.  They impart a 
sweet and spicy flavour and aroma.  Clove is a pr ominent ingredient in a clove cigarette.  Clove 
cigarettes typically contain 60% tobacco and 40%  clove buds and cocoa.  Tobacco and menthol 
cigarettes do not contain significant quantities of food ingredient.  In addition, unlike other cigarettes, 
clove cigarettes contain significant quantities of eugenol, which creates an anesthetic and numbing effect reportedly appealing to ne w smokers.  Clove cigarettes also contain a special, proprietary 
"sauce" that is credited with some of their app eal.  The makers of clove cigarettes introduce these 
physically different flavouring additives for the purpose of differentiating clove cigarettes from other 
cigarettes, and they have succeeded in doing so.  In  short, clove cigarettes taste different from other 
cigarettes.  Clove cigarettes also contain the harm ful chemical coumarin, which is no longer found in 
most cigarettes, and a range of other flavour compounds not commonly found in tobacco or menthol cigarettes.  In contrast to clove, which comprises nearly half of clove cigarettes by weight, menthol 
comprises less than 1% of a menthol cigarette.  In addition, menthol cigarettes do not tend to contain 
coumarin or an array of other flavouring co mpounds typically found in clove cigarettes. 
6. End-uses.  Cigarettes have at least two end-uses in the United States, which clove, menthol 
and tobacco cigarettes serve in differing degrees.  Cigarettes serve the end-use of satisfying an 
addiction to nicotine.  Notably, evidence shows th at of the some 46 million Americans who regularly 
smoke, the vast majority smoke tobacco or menthol cigarettes. Cigarettes also serve the end-use of 
creating a pleasurable experience associated with th e taste of the cigarette and the aroma of the 
smoke.  Evidence suggests that clove cigarettes and other cigarettes with characterizing flavours, in 
particular, serve this end use in the United States, primarily among youths.  
7. Consumer tastes and habits.  The Appellate Body has emphasized that where, as here, 
physical properties of the products are very di fferent, an examination of evidence relating to 
consumers' tastes and habits is indispensable to dete rmining "likeness".  The heart of this analysis is 
whether products are "interchangeable" or "substitutabl e" in the view of consumers, demonstrating a 
competitive relationship.  
8. Unlike cases where panels have found that consumers perceive and use products as 
interchangeable and substitutable, in this case, co nsumers clearly differentiate between products.  
Indonesia has presented no evidence to demonstrate that clove cigarettes seek to compete with 
tobacco or menthol cigarettes, or that consumers view them as substitutable.  Clove cigarettes are 
marketed, sold and used as a "s pecial occasion" tobacco product while  tobacco and menthol cigarettes 
are marketed, sold and used as a daily, re gular cigarette.  Clove cigarettes are smoked 
overwhelmingly by young people, who tend to be novice smokers.  Tobacco and menthol cigarettes 
are used regularly by a large population of young people, but especially by adults, who smoke them 
regularly.  Clove cigarettes were not competing for the "regular use" market.  Indonesia asserts, but 
has provided no evidence to demonstrate, that cl ove cigarettes compete with tobacco or menthol 
cigarettes for access to channels of distribution, sh elf space or market share.  Existing evidence with 
respect to consumer tastes and ha bits suggests that clove cigarettes are used "like" the other flavours 
prohibited under Section 907(a)(1)(A).  Clove ciga rettes –  like chocolate or "Midnight Madness" or 
"Mandalay Lime" – are chosen almost exclusively by youths, experimentally or for "special 
occasions".  As such, they have the effect of making tobacco seem appealing, especially to new users.  
Indonesia presents unreliable data to suggest that cl ove cigarettes have a pattern of use similar to 
tobacco or menthol cigarettes, just on a smaller scale.  Moreover – and revealingly – Indonesia does 
not dispute the key fact that clove cigarettes are smoked by an insignificant fraction of adults.    WT/DS406/R 
 Page A-13 
 
 
  9. International tariff classification.  The United St ates submits that the fiscal treatment of two 
different products should have very little weight in the "like product" analysis when the domestic 
measure under consideration is adopted not for fiscal  purposes, but in order to protect human health. 
10. Conclusion on like product.  Indonesia has failed to meet its burden to prove that clove 
cigarettes are "like" tobacco and menthol cigarettes.   As noted, the "four factors" applied above are 
considered by panels to the extent that they aid in  a determination of likeness.  In this case, the factors 
provide a framework to arrive at the crucial c onclusions that (1) clove cigarettes are not in a 
competitive relationship with tobacco or menthol  cigarettes, and (2) clove cigarettes are not 
interchangeable or substitutable with tobacco or menthol cigarettes.  They are not like products. 
11. Less favourable treatment based on origin.  A measure violates the provisions of GATT III:4 
if it accords less favourable treatment to an importe d product than to a like domestic product based on 
national origin.  Even aside from the fact that cl ove cigarettes are not like products to tobacco and 
menthol cigarettes, Indonesia has not met its burden to demonstrate that clove cigarettes are accorded less favourable treatment based on their national or igin.   Article III does not forbid Members from 
making regulatory distinctions between different prod ucts that may fall within a single "like product" 
class for Article III purposes.  Rather, Article III forbids Members from ac cording less favourable 
treatment  – on a de jure or de facto basis – to imported products as compared to domestic products. 
12. No de jure discrimination.  The ban on cigarettes w ith characterizing flavours other than 
tobacco or menthol applies equally to all cigarettes sold in the United States, regardless of where they 
are produced.  In this case, the measu re at issue is facially neutral, and it is Indonesia's burden to 
prove that, as applied, the measure discriminate s between Indonesian and domestic cigarettes based 
on origin and accords less favourable treatment to imported products as compared to domestic products. 
13. No de facto discrimination.  Indonesia has not met its burden to prove de facto discrimination.  
First, Indonesia does not clarify which products it claims are subject to di fferent treatment.  In its first 
written submission, Indonesia argues that clove ciga rettes are "like" domestically produced cigarettes, 
without exception.  It therefore would appear to be Indonesia's position that a US ban on cigarettes 
with a characterizing flavour that includes clove  would discriminate based on origin, unless the 
United States also banned every domestically produced cigarette, flavoured or otherwise.   
14. Second, Indonesia's insistence that Section 9 07(a)(1)(A) violates GATT Article III:4 because 
it draws a distinction between clove cigarettes and, apparently, any domestic ci garette is inconsistent 
with the Appellate Body interpretation of "less favoura ble treatment" – even if were to be determined 
that clove cigarettes and all domestic cigarettes ar e "like" products.  The Appellate Body recognizes 
that a Member may draw distinctions between produc ts determined to be "like" without affording 
protection to domestic production or according less favourable treatment to imported products. 
15. Measures that do not treat prod ucts differently based on orig in, and for which the effects 
resulting from the measure are not a result of the orig in of the product, are not measures that afford 
protection to domestic production.  The application of Section 907(a)(1 )(A) is entirely consistent with 
the object and purpose of the FSPTCA and the approach of the United States to tobacco regulation, in 
general.  An Indonesian product is adversely effect ed under Section 907(a)(1)(A) not as a result of 
origin-based discrimination, but because US health authorities legitimately determined that clove 
cigarettes fall into a category of cigarettes th at should be banned from the US market for the 
protection of the public health.  Section 907(a )(1)(A) distinguishes among cigarettes as appropriate 
for the public health, and not based on the national origin of the products.  
16. Section 907(a)(1)(A) also does not afford protection to domestic production.  
Section 907(a)(1)(A) applies to a wide range of U.S.-made cigarettes that were headed for the WT/DS406/R 
Page A-14  
 
  US market.  The US tobacco industry spent over a decade and untold amounts of money to develop, 
research and market "exotic" flavoured cigarettes for the US market and now can sell none of these 
products to their intended consumers.   In addition, Section 907(a)(1)(A) is part of a broader statute 
which imposes a range of restrictions on all cigarettes sold in the United States, nearly all of which – 
97% – are US-produced.  Article III:4 protects Members from discrimination based on origin – but does not protect foreign products from all adverse effects of a measure which, in pursuit of a 
legitimate objective, has an adverse impact upon a foreign product.   
C. S
ECTION  907( A)(1)(A)  IS NOT INCONSISTENT WITH TBT  ARTICLE  2.1 
17. The United States would note that certain textua l and contextual differences should be taken 
into account in the Panel's analysis of "likeness"  and "less favourable treatment" under Article 2.1 of 
the TBT Agreement.  One such difference that th e Panel should consider is the language in the 
Preamble of the TBT Agreement stating that "no country should be prevented from taking measures 
necessary ... for the protection of human ... life or hea lth".  It also should be noted that Article 2.1 
states, in relevant part, that "Members shall ensure that in respect of technical regulations , products 
imported from the territory of any Member shall be  accorded treatment no less favourable than that 
accorded to like products of national origin ... ."  (emphasis added)  Thus, th e obligation in Article 2.1 
applies "in respect" of a technical regulation.  A like product analysis under the TBT Agreement need 
be careful to distinguish between characteristics that make a product or group of products identifiable 
for purposes of the regulation, and characteristics that demonstrate a competitive relationship or 
substitutability in the marketplace. 
D. SECTION  907( A)(1)(A)  IS NOT INCONSISTENT WITH TBT  ARTICLE  2.2  
18. Indonesia argues that Section 907(a)(1)(A) is mo re trade-restrictive than necessary to meet a 
legitimate objective and therefore is  inconsistent with Article 2.2 of  the TBT Agreement.  Indonesia's 
arguments should be rejected.   
19. As a general matter, Section 907(a)(1)(A) fu lfils the legitimate objective of protecting the 
public health.  Specifically, the legitimate object ive of Section 907(a)(1)(A) is to reduce youth 
smoking as appropriate for the protection of the public health, taking into account the negative 
consequences resulting from banning products that te ns of millions of adults are chemically and 
psychologically dependent on.  Such negative c onsequences may include the unknown, but possibly 
negative, impact on the health of adult smokers a nd the US health care system generally, as well as an 
expansion of the already existing black market for ciga rettes in the United States.  To not take the risk 
of such considerations, which are still being studied by FDA and others, into account could lead to the 
undermining, not improvement, of public health in the United States. 
20. In light of the importance of public health , the United States has chose a high level of 
protection.  Given the US Government's long a nd frustrating experience in trying to limit youth 
smoking, this high level of protection is evidenced by the measure applied – a ban.  As explained 
below, Section 907(a)(1)(A) unques tionably fulfils this legitimate objective at the level the United 
States considers appropriate.  Finally, Indonesia has failed to establish that any alternative measure 
fulfils the US legitimate objective at the level it co nsiders appropriate and is also significantly less 
trade-restrictive than Section 907(a)(1)(A).  As su ch, Indonesia has failed to satisfy its burden to 
establish a breach of Article 2.2.  
21. The measure is generally intended to fulfil th e objective of protecting the public health.  
Specifically, the first part of the measure, the ban, is intended to fulfil the objective of reducing the 
rate of young people becoming smokers by eliminating certain products from the market place that 
have particular appeal to young people.  The second part of the measure, the limited exception to the 
ban, is intended to ensure that a ban that redu ces youth smoking be appropria te for the protection of  WT/DS406/R 
 Page A-15 
 
 
  the public health even when taking into account the risk of negative consequences for adult smokers, 
the US health care system, and society more genera lly from eliminating products from the market that 
tens of millions of adults are addicted to. 
22. The legitimate objective is the protection of human health, which is explicitly listed as a 
legitimate objective in Article 2.2.  Further, Article 2.2's list of legitimate objectives is non-
exhaustive, as confirmed by the inclusion of the term " inter alia ", a point confirmed by the EC – 
Sardines panel that found two objectives not listed in Artic le 2.2 to be legitimate.  The measure seeks 
to reduce youth smoking as appropriate for the protec tion of the public health, taking into account the 
risk of negative consequences (including negatively impacting the health of addicted, adult smokers, 
protecting the integrity of the domestic health  care system, and limiting the expansion of an 
unregulated, and illegal black market). 
23. Section 907(a)(1)(A) fulfils the legitimate objective of protecting the public health by 
reducing youth smoking while avoiding the negative c onsequences that could result from prohibiting 
products that tens of millions of adults are addicted  to by only prohibiting those products that serve as 
"starter"or "trainer" cigarettes for young smokers, an d which are not regularly used by adult smokers.  
This is seen by the evidence that  flavoured cigarettes – except for menthol – are disproportionately 
smoked by novice young smokers (both minors and young adults), rather than already addicted, older 
adult smokers. 
24. A Member is entitled to ensure that its measur es satisfy the Member's level of protection, 
which the Member may set at whatever level it deems appropriate.  Alt hough smoking rates of young 
people, as well as the population at large, had been  in decline for a number of years, Congress has 
found that the number of smokers, particularly  young smokers, remains "unacceptably high".  
Section 907(a)(1)(A) represents a comprehensive rest riction on the sale of these products that appeal 
to youths but have negligible regular use by a dult smokers, and was a necessary step in order to 
further reduce youth smoking given that previous effort s of advertising restrictions and the like had, in 
Congress's own words, "failed".  Accordingly, th e seriousness of the problem of youth smoking is 
evidenced by the type of measure Congress employe d – a ban.  Section 907(a)(1)(A)'s prohibition of 
flavoured cigarettes that are only used as "trainer " products while exempting those products that are 
not uniquely attractive to youth, fulfils the legitima te objective of protecting the public health at the 
level the United States considers appropriate.   
25. Article 2.2 of the TBT Agreement provides that  technical regulations shall not be "more 
trade-restrictive than necessary" to fulfil a legitimate objective.  A measure that fulfils its legitimate 
objective at the level the Member finds appropriate is not, as a matter of law, more trade-restrictive 
than necessary unless the complaining Member prov es that an alternative measure exists that is 
reasonably available, also fulfils the respondent  Member's legitimate objective at the level the 
importing Member finds appropriate and is significantly less trade restrictive than the challenged measure.  Indonesia has not put forth any evidence  that even one of the numerous measures it has 
culled from various sources satisfies this standard, a nd, therefore, has not satisfied its burden of 
establishing a prima facie case of inconsistency. 
26. Indonesia argues that the Panel should import the me aning of the term "necessary", as used in 
Article XX of the GATT 1994 and as understood by th e Appellate Body and previous panels, to 
control the TBT Article 2.2 "more trade restrictive th an necessary" test.  Such an approach is without 
basis and is unwarranted.  The proper interpretation of this test flows from the text of Article 2.2 itself 
and any relevant context in accord ance with Articles 31 and 32 of the 
Vienna Convention on the Law 
of Treaties .  The term "necessary" in Article XX is being used in a different sense to cover a different 
set of circumstances.  Accordingly, it would not  be appropriate to apply the same interpretive 
approach panels and the Appellate Body have undertaken in connection with the word "necessary" as 
it appears in Article XX of the GATT 1994.  WT/DS406/R 
Page A-16  
 
  27. In paragraphs 106-111, Indonesia simply lists a number of different restrictions drawn from 
other parts of the FSPTCA, the 2006 RJ Reynolds Consent Agreement, the laws of Singapore and 
Australia, and the Framework Convention on Tobacco Control .  Indonesia briefly references these 
restrictions without providing any evidence that any of these restrictions fulfil the US objective at the 
level of protection it finds appropriate or that they are significantly less trade restrictive than Section 907(a)(1)(A).  A complaining party do es not discharge its burden of establishing a prima facie  
case by simply making reference to alternative measures – it must adduce by way of sufficient 
evidence a presumption of inconsistency w ith each part of the legal standard.   
E. I
NDONESIA HAS NOT SHOWN THAT THE UNITED STATES ACTED INCONSISTENTLY WITH OTHER 
TBT  ARTICLES  
28. Article 2.5.  Indonesia contends that the Un ited States has acted inconsistently with TBT 
Article 2.5 by not providing "a complete re sponse" to Indonesia's questions regarding 
Section 907(a)(1)(A) that provides "scientific evidence"  and "refers to the terms of TBT Articles 2.2, 
2.3, and 2.4".  Indonesia misunderstands the obligation.  In the instant dispute, the United States acted consistently with Article 2.5 and has explaine d the objectives of its measure and provided its 
justification for the measure's enactment.  In fact, the United States and Indonesia have had numerous 
exchanges on this issue.  For example, the United St ates agreed to make special arrangements to have 
a bilateral discussion with Indonesia in Geneva  on 27 August 2009.  The very next week, the 
US Trade Representative, Ambassador Ronald Kirk , discussed Indonesia's concerns while at a WTO 
Ministerial in India.  This exchange was then itself followed by a discussi on of the issue at the 
November 2009 TBT Committee meeting by the delegations of the respective countries.   
29. Article 2.8.  Indonesia contends that TBT Artic le 2.8 provides that "a Member's technical 
regulations must require products to meet a certain performance level rather than merely specify how 
products must be made or what they must contai n".  Indonesia concludes that "by basing the ban on 
clove cigarettes in the Special Rule on descriptiv e characteristics, the United States has violated 
Article 2.8 of the TBT Agreement".  Indonesia's argument is in error. 
30. Indonesia's argument ignores the key limitation in Ar ticle 2.8 – namely, that the obligation to 
specify technical regulations on performance character istics only applies where it is  "appropriate" to 
do so.  As discussed above, Congress chose to struct ure Section 907(a)(1)(A) in terms of descriptive 
terms given that it is the additives, flavours, herbs, and spices that created the risk that 
Section 907(a)(1)(A) is intended to address.  As su ch, it was "appropriate" for Congress to structure 
Section 907(a)(1)(A) in terms of descriptive character istics.  Moreover, it is Indonesia's burden to 
establish a breach of Article 2.8.  Yet, Indonesia does not even put forth a rationale why it is not 
"appropriate" to structure Section 907(a)(1)(A) in terms of descriptive characteristics.  
31. Article 2.9.  Indonesia contends that the Un ited States has acted inconsistently with TBT 
Article 2.9 by not notifying Section 907(a)(1)(A).  It is Indonesia's burden to prove each element of its 
claim. 
32. Article 2.12.  Indonesia also argues that the United States acted inconsistently with TBT 
Article 2.12 because it only provided a three mont h delay between publication of the FSPTCA and its 
entry of force.  Again, Indonesia's argument is in  error.  Indonesia's argument that the 90 day period 
provided by the United States was not reasonable is  based on a TBT Committee decision.  Indonesia's 
citation to the TBT Committee decision does not establish that the United States breached TBT 
Article 2.12 for numerous reasons.  Given the fact  that the TBT Committee decision does not bind the 
WTO membership, and given the qualified nature of its language, a panel's de termination of whether 
a particular delay is "reasonable" must be cons idered on a case by case basis.   In this instance, 
Indonesia has failed to meet its bur den of demonstrating that the 90 day period provided by the United 
States is not reasonable.   WT/DS406/R 
 Page A-17 
 
 
  33. Article 12.3.  Finally, Indonesia argues that Section 907(a)(1)(A) is inconsistent with TBT 
Article 12.3.  In order to establish a violation of Article 12.3, the complaining party must demonstrate 
the following:  (1) that it is a developing country; (2) that the other Member did not take account of its 
special development, financial or  trade needs during the preparation and application of a technical 
regulation; and (3) that the Member did not take account of these needs with a view  to ensuring that 
the technical regulation does not create unnecessary obstacles to export.  
34. Here, Indonesia has failed to meets its burden to prove any of these elements.  Assuming 
arguendo  that Indonesia is a developing country, Indonesia has not demonstrated that the United 
States failed to take account of one or more sp ecial needs of Indonesia in the enactment of the 
FSPTCA.  To the contrary, in the five years betwee n the initial bill being introduced for consideration 
in the House of Representatives in 2004, and the law being enacted in 2009, Indonesia had ample 
opportunity to make its views known to both Congress and the Executive Branch and, in fact, did 
make its views known.  Indonesia had numerous  communications with both Congress and the 
Executive Branch, making the United States well aware of Indonesia's position.  By allowing 
Indonesia an opportunity to comment on previous iter ations of the legislation, as well as the version 
that was actually enacted into US law, the United States complied with its obligations under 
Article 12.3. 
F. SECTION  907( A)(1)(A)  IS JUSTIFIED UNDER ARTICLE  XX 
35. Indonesia has failed to establish that Sec tion 907(a)(1)(A) breaches US obligations under 
GATT Article III:4.  Should the Panel reach th e issue of GATT exceptions, the application of 
Section 907(a)(1)(A) would be justified under GA TT Article XX(b).  To justify a measure under 
Article XX(b), the Appellate Body has previous ly explained that the responding party must 
demonstrate that the measure: (1) falls under th e scope of the Article XX(b) exception; and (2) 
satisfies the requirements of the Article XX chapeau. 
36. Past panels have indicated that two elements  must be met for a measure to fall under the 
scope of the Article XX(b) exception:  (1) the polic y in respect of the measure for which the provision 
is invoked must fall within the range of policies de signed to protect human, animal or plant life or 
health; and (2) the inconsistent measure for which the exception is invoked must be necessary to fulfil 
the policy objective. 
37. Section 907(a)(1)(A) was enacted in order to protect human life and health from the risk 
posed by smoking.  Further, Section 907(a)(1)(A) w as necessary to ensure that products that are 
predominantly used as "starter" products by youth, l eading to years of addiction, health problems, and 
possibly death, cannot be sold in the United States at  all.  With regard to the latter point, the United 
States believes the Panel should reach the same conc lusion if it follows the method used by past 
panels to determine whether a measure is necessar y under one of the Article XX exceptions.  When 
faced with the question of whether a measure is neces sary, other panels have engaged in "a process of 
weighing and balancing a series of factors", which include (1) the importance of the interests or 
values at stake; (2) the contribution made by the measure to its objective; and (3) the trade 
restrictiveness of the measure.  All three of th ese factors weigh in favour of a determination that 
Section 907(a)(1)(A) was necessary to protect human life and health from the risks posed by smoking, 
particularly youth smoking.    
38. First, one factor panels generally examine to determine whether a measure is necessary is the 
importance of the interests or values at stake.  If the inte rest at stake is of fundamental importance, 
past panels have been more inclined to determin e that a measure is necessary to achieve its stated 
objective.  Such is the case here.  The United States is applying Section 907(a)(1)(A) for the 
protection of the life and health of its popula tion, particularly the protection of its youth. WT/DS406/R 
Page A-18  
 
  39. Second, to determine whether a measure is ne cessary to achieve a certain objective, panels 
have weighed the measure's contribution to the achie vement of that objective.  A contribution exists 
when there is a genuine relationship of the ends  and means between the objective pursued and the 
measure at issue.  As before, if a panel finds a genuine relationship betw een the measure and the 
policy goal it intends to pursue, panels are more inclined to consider the measure in question 
necessary.  Section 907(a)(1)(A) is directly contribut ing to the protection of human life and health by 
ensuring that products that present a unique risk to youths cannot be sold on the market.   
40. Third, to decide whether a measure is necessary to achieve its stated objective, panels have 
considered the measure's trade rest rictiveness.  The more restrictive a measure is, the more carefully it 
may need to be reviewed to determine whether it is necessary to achieve a particular objective.  
However, a restrictive measure may still be consider ed necessary based on the context of the situation 
in which the Article XX(b) defense is invoked.  Th e context here, as explained above, is that youth 
smoking rates remained unacceptably high at the time of the FSPTCA's enactment and Congress found it appropriate to apply more severe restric tions than had been applied up to this date.  
41. To justify a measure under GATT 1994 Article XX(b) , the Appellate Body has explained that 
the responding party must also show that the me asure meets the requirements of the Article XX 
chapeau.  To meet the requirements of the chapeau, past Appellate Body repor ts have explained that 
the responding party must demonstrate that its measur e (1) is not a means of arbitrary or unjustifiable 
discrimination between countries where the same cond itions prevail; or (2) a disguised restriction on 
international trade. 
42. Previous Appellate Body reports have explained that a measur e will be considered to be 
applied in a manner that results in arbitrary or un justifiable discrimination if three conditions are met: 
(1) the application of the measure results in discr imination; (2) the discrimination is arbitrary or 
unjustifiable in character; and (3) the discrimin ation occurs between c ountries where the same 
conditions prevail.  In the instant dispute, these conditions are not met.   
43. First, there is no differential treatment at a ll, and therefore cannot be any "discrimination", 
arbitrary, unjustified, or otherwise.  As discussed  above, the measure at issue is facially neutral 
measure that applies equally to all ci garette products, regardless of origin.  
44. However, even if Section 907(a)(1)(A) is found to "discriminate", such conduct could not be 
considered "arbitrary" or "unjustified".  If a res ponding party provides a rationale for the measure that 
is not capricious, random, or indefe nsible, the measure will not run afoul of this element of the 
chapeau.  Here, that is clearly the case.  As the Un ited States has explained in great detail, the line 
Congress drew in deciding what products would be  banned and what products  would not was without 
question not an arbitrary or capricious one.  Rath er, it was one grounded in the evidence and tailored 
to address a specific public health risk.  As such, Se ction 907(a)(1)(A) does not amount to an arbitrary 
or unjustified act of discrimination.  
45. The final requirement for a measure to be justified under the chapeau and GATT 
Article XX(b) is that it must not be a disguised rest riction on international trade.  An examination of a 
measure's purpose to determine whether it has "protecti onist objectives" is relevant to this issue.  If a 
measure's purpose is protectionist in nature, it will lik ely be considered a disguised restriction on trade 
and will not meet the requirements of the chapeau.  In this instance, the evidence demonstrates that 
Section 907(a)(1)(A) is not a disguised restriction on trade.   
46. Accordingly, Section 907(a)(1)(A) meets the re quirements of the chapeau and is justified 
under GATT Article XX(b).   
_______________   WT/DS406/R 
 Page B-1 
 
 
  ANNEX B 
 
EXECUTIVE SUMMARIES OF THE THIRD PARTY SUBMISSIONS 
 
Contents Page 
Annex B-1 Executive summary of the third party submission of Brazil B-2 
Annex B-2 Executive summary of the oral statement of Brazil at the first substantive meeting B-5 
Annex B-3 Executive summary of the oral stat ement of Colombia at the first substantive 
meeting B-6 
Annex B-4 Executive summary of the third party submission and oral statement of the 
European Union B-10 
Annex B-5 Oral statement of Guatemala at the first substantive meeting B-13 
Annex B-6 Oral statement of Mexico at the first substantive meeting B-16 
Annex B-7 Executive summary of the oral statement of Norway at the first substantive meeting B-20 
Annex B-8 Executive summary of the third party submission of Turkey B-24 
 WT/DS406/R  
Page B-2  
 
  ANNEX B-1 
 
EXECUTIVE SUMMARY OF THE THIRD PARTY SUBMISSION 
OF BRAZIL 
  
I. ARTICLE 2.1 OF THE TBT AGREEMENT AND ARTICLE III.4 OF GATT 1994, 
THE DE FACTO  DISCRIMINATION AND LIKENESS ANALYSIS   
1. In its first written submission, Indonesia submits that the Special Rule is inconsistent with 
Article 2.1 of the TBT Agreement and with Article  III.4 of GATT 1994 because it results in treatment 
that is "less favourable" to imported clove cigarett es than that accorded to the domestic like products. 
The United States rebuts these claims affirming that the Special Rule is consistent with its obligations 
under Article 2.1 of the TBT Agreement a nd with Article III.4 of GATT 1994 because it 
"distinguishes among cigarettes based on their overa ll effects to the public health, and not based on 
their national origin " and it does not present a protection to domestic industry. 
2. Even though Brazil shares the United States concerns regarding smoking among youngsters, 
Brazil agrees with Indonesia th at the Special Rule unjustifiably discriminates against imported 
cigarettes.  
3. Concerning the meaning of "like products", Brazil agrees with Indonesia that the four criteria 
laid down by the Working Party on Border Tax Adjustments, as descr ibed by the Appellate Body in 
EC – Asbestos , may be of relevance, together with the A ppellate Body's remark in that same appeal 
that "the term 'like products' is concerned with competitive relationships between and among 
products", and that "it is important to take account  of evidence which indicates whether, and to what 
extent, the products involved are – or could be – in a competitive relationship in the marketplace". 
4. In the case at hand, there is sufficient evidence to conclude that impor ted clove cigarettes and 
domestically-produced cigarettes in the United States, in particular menthol cigarettes, are like 
products, and, therefore, the imported product mu st be treated no less favourably than the like 
domestic products in the United States marketplace. Given this, Brazil concludes that the Special Rule 
does not provide for an equal competitive opportun ity between imported ciga rettes (clove) and the 
domestic like product (menthol cigarettes), in the United States marketplace, and that the Special Rule 
seems to be, therefore, inconsistent with Article 2.1 of the TBT Agreement and with Article III:4 of 
GATT 1994 as well.  
II. ARTICLE 2.2 OF THE TBT AGREEMENT 
5. In its first written submission, Indonesia argu es that the United States did not comply with 
Article 2.2 of the TBT Agreement because the measu res at issue are more trade restrictive than 
necessary to protect human health. The United States considers that the measure s in question fulfil the 
legitimate objective to an appropriate and acceptabl e level, and alleges that Indonesia did not put 
forward an alternative measure which could have been reasonably available and significantly less 
trade restrictive than the questioned measure.  
6. In what regards Article 2.2 of the TBT Agreem ent, Brazil wishes to focus on two aspects of 
the measure at issue in this dispute: (i) whethe r the Act and the Special Rule pursue a legitimate 
objective as provided under Article 2.2 of the TBT Ag reement; and (ii) whether the Special Rule is 
more trade-restrictive than "necessary" to the fulf ilment of this objective. Brazil understands that 
these two issues are related because, under the text of Article 2.2, a measure "shall" be no more trade-
restrictive than "necessary" in order to achieve a legitimate objective. As the Appellate Body  WT/DS406/R 
 Page B-3 
 
 
  reminded us in Brazil – Retreaded Tyres,  the contribution of the measure  to the achievement of its 
objective is a key element in the analysis of necessity. 
7. Considering the health problems posed by ciga rettes, actions addressed to their control are 
legitimate as a public h ealth policy. However, it must be noted that menthol cigarettes account for 
43 per cent of cigarettes smoked by young smokers in  the United States, and the ban on the cigarettes 
imposed by the Special Rule does not cover menthol ci garettes. Based on the facts of this case, Brazil 
considers that, in order to assess the measure's conf ormity with Article 2.2 of the TBT Agreement, the 
key element to be scrutinized by the Panel is whether the Special Rule is "necessary" to the 
achievement of its legitimate objective.  
8. In addressing Indonesia's claim under Artic le 2.2 of the TBT Agreement and the 
United States' claim for exception un der Article XX(b) of GATT 1994 in this dispute, the Panel must 
evaluate whether the Special Rule is in fact "necessary". Here Brazil sees the case law on Article XX 
of GATT 1994 as especially useful. For Brazil, the inte rpretive question relating to the clarification of 
the meaning of the term "necessary" in Article 2. 2 of the TBT Agreement is not whether the case law 
under Article XX of GATT 1994 applies; rather, it is whether essentially the same reasoning is 
required under Article 2.2 of the TBT Agreemen t as under Article XX of GATT 1994.  Given the 
similarities in the respective texts of the two provisions, and given the similarities of their respective 
purposes, Brazil considers that the reasoning require d is essentially the same, and therefore the case 
law under Article XX of GATT 1994 is highly relevant to the clarification of Article 2.2 of the 
TBT Agreement. 
9. As already noted, the contributio n of a measure to the achievement of its objective is a key 
element to determining whether a trade-restrictive measure is "necessary". Brazil is of the view that 
trade bans face a higher threshold for justification th an other less trade-restrictive measures, and, thus, 
must clearly and significantly contribute to the achie vement of their stated objectives, as the Appellate 
Body in Brazil – Retreaded Tyres  explained.  
10. Brazil sees the interests and values underlying the objective of the Act as of extreme 
importance, but Brazil understands that the exclusion of menthol cigarettes from the scope of the trade 
restrictions imposed by the Special Rule casts doubts on the contribution of the measure to the 
achievement of its stated purpose. From a health policy standpoint, the first option the United States 
could have envisaged to the fulfilment of the Act's legitimate objective was the imposition of a 
measure covering all flavoured cigarettes, domestic  and imported, including menthol cigarettes. The 
Special Rule, however, chose not to ban precisely that  type of flavour which is the most frequently 
used by young smokers. This explicit exclusion of  a like domestic product – equally unhealthy – from 
the scope of the measure, casts doubts on the contribu tion of the measure to the achievement of its 
stated purpose.   
11. Furthermore, in order to comply with Artic le 2.2 of the TBT Agreement, a technical 
regulation must not be "more trade-restrictive than " necessary to the achievement of its legitimate 
objective, what implies inquiring whether there are any less trade-restrictive measures available to the 
same policy purpose. In this matter, Brazil consid ers that the Panel should carefully assess whether 
Indonesia has made a  prima facie case regarding the existen ce of less trade-restrictive measures to 
achieve the stated objective of the Act, and, if so, whether the United States has properly discharged 
itself of the burden of proving that the measures i ndicated by Indonesia are not able to achieve the 
Act's objective.  
III. ARTICLE 2.8 OF THE TBT AGREEMENT  
12. In its first written submission, Indonesia allege s that the United States has acted inconsistently 
with Article 2.8 of the TBT Agreement because the Special Rule established in the Act is based on WT/DS406/R  
Page B-4  
 
  descriptive characteristics, instead of performance. The United States emphasizes that it is imperative 
to analyse the words "wherever appropriate" when in terpreting Article 2.8 of the TBT Agreement, and 
submits that the aforementioned terms allow Me mbers to structure their regulations based on 
descriptive characteristics when "appropriate".  
13. It can be observed, by a simple reading of Article 2.8 of the TBT Agreement, that "descriptive 
characteristics" may not be an appropriate basis fo r technical regulations. However, this obligation 
does not apply in all cases. Article 2.8 of the TBT Agreement applies this obligation only "wherever 
appropriate".  
14. Taking into consideration the ordinary meaning of those words and their context, it can be 
concluded that "appropriate" mu st be understood as somewhere be tween convenient and mandatory. 
Brazil understands the term "w herever appropriate" was incl uded in Article 2.8 of the 
TBT Agreement as acknowledgment that not all produc ts can be measured in terms of performance; 
but where a product can be measured by performance, a technical regulation shall not be based on design or descriptive characteristics. 
15. In sum, when assessing the term "wherever appropr iate" in Article 2.8 of the TBT Agreement, 
the Panel should give especial consideration to the objective and purpose of the provision, in order to 
ensure that it is not rendered less binding th en its text and context seems to imply.  WT/DS406/R 
 Page B-5 
 
 
  ANNEX B-2 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF BRAZIL 
AT THE FIRST SUBSTANTIVE MEETING 
  
I. THE DEMONSTRATION OF D E FACTO  DISCRIMINATION UNDER 
ARTICLE III:4 OF THE GATT 1994 
1. In its first written submission, the United Stat es pursues an interpretation of Article III:4 of 
the GATT that would require evidence of origin-based  detrimental effects to the imported product as a 
pre-requisite for demonstrating a de facto  discrimination. According to this view, if any other factor or 
circumstance other than the foreign origin of  the product were found to be the base for the 
discrimination, there would be no violation of Ar ticle III:4, allegedly because, in such case, the 
measure would not afford protec tion to the domestic production. 
2. The expression "treatment no less favourable", as it appears in Article III:4 of the 
GATT 1994, has been understood by the Appellate Bo dy not to prevent Members to treat imported 
and domestic products differently , but rather to guarantee undist orted conditions of competition 
between imported and domestic like products. Therefore, differential effects of a measure on imported 
and domestic like products can only be  justified if they do not change  the conditions of competition in 
favour of the domestic products.  
3. Brazil is of the view that, in assessing whether a measure modifies the conditions of 
competition between imported and domestic like pr oducts, no single characteristic or effect of the 
measure can be decisive in itself. It is true that not every difference in treatment of imported vis-à-vis 
domestic like products can be  considered as a violation of Article  III:4, in line with the Appellate 
Body decision in Dominican Republic – Import and Sale of Cigarettes . Nevertheless, it also is also 
true that a measure that, by its design, architecture and structure, modifies the conditions of 
competition in disfavour of th e imported like products, is ergo a measure that "affords protection to 
domestic production", even if that measure is not based on the foreign origin of the disfavoured 
product. 
4. Based on the aforementioned considerations, Brazil considers that in an Article III:4 analysis, 
the crucial question is to what extent the applicati on of a measure results in less favourable treatment 
to the imported product, regardless of the measure's stated objective. Accordingly, Brazil believes that 
the panel should focus its  assessment on Indonesia's Article III:4 claim about the characteristics of the 
contended US measure and on its actual effects on comp etition in the US cigarette market as a whole, 
and should carefully weigh all elemen ts involved in this dispute.  WT/DS406/R  
Page B-6  
 
  ANNEX B-3 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT OF COLOMBIA 
AT THE FIRST SUBSTANTIVE MEETING 
  
I. INTRODUCTION 
1. Colombia intervenes in this case given its syst emic interest in the application of several 
provisions of the WTO covered agreements that are discussed in this dispute. 
2. While not taking a final position on the facts of this case –largely relative to scientific 
evidence -, Colombia will provide its views on some of  the legal claims advanced by the Parties to the 
dispute. First, Colombia will address the issue of likeness under the Agreement on Technical Barriers 
to Trade  (the "TBT Agreement") and the GATT Agreem ents. Then Colombia will comment on the 
necessity  requirement under Article 2.2 of the TBT. Subsequently, Colombia will present its 
assessment on the legal standard of interpretati on under Article XX(b) of the GATT 1994. Finally, 
Colombia will provide some comments regarding th e special and differential treatment pursuant to 
Article 12 of the TBT Agreement.  
II. MORE FAVOURABLE TREATMENT TO  CERTAIN CIGARETTES PRODUCED 
OR SOLD IN THE US THAN THE ONE PROVIDED TO CIGARETTES IMPORTED 
FROM INDONESIA 
3. Indonesia claims that Section 101(b) of the Family Smoking Prevention and Tobacco Control 
Act of 2009  (the "Special Rule") accords less favourable treatment to imported clove cigarettes than 
the one given to domestic menthol and regular  cigarettes, both under Article 2:1 of the 
TBT Agreement and Article III:4 of the GATT 1994.
1 In response, the US claims that Indonesia has 
failed to meet its burden of prov ing that clove cigarettes are like products to tobacco and menthol 
cigarettes and that the Special Rule accords less favourable treatment to clove cigarettes than to 
tobacco or menthol cigarettes based on their national origin.2 
4. In order to conclude if clove cigarettes are like to menthol and tobacco cigarettes, Colombia 
states that special attention must be given to consumer's tastes and habits, in a similar manner as was given by the Panel in the case of Indonesia  – Autos , where a balance was drawn between 
acknowledging certain vehicles as like or not. In that  case, the Panel held that: "although consumer's 
brand preferences may exist, the products themselves  are generally recognized to belong to the same 
"sedan" category".
3   
5. In addition, Colombia considers that nonetheless th e US holds that in order to be a breach of 
Article III:4 the discrimination has to be based on the ci garettes origin, it is not clear what is the legal 
source for that requirement to be met. The Appellate Body held in the case of Korea – Various 
Measures on Beef that "[f]or a violation of Article III:4 to be established, three elements must be 
satisfied: that the imported and domestic products at i ssue are 'like products'; that the measure at issue 
is a 'law, regulation or requirement affecting their internal sale, offering for sale, purchase, 
transportation, distribution, or use'; and that the imported products are accorded 'less favourable' 
                                                      
1 Indonesia's first written submission, paras. 36-72. 
2 United States' first written submission, paras. 196-198. 
3 Panel Report, Indonesia – Autos,  para. 5.8.  WT/DS406/R 
 Page B-7 
 
 
  treatment than that accorded to like domestic pr oducts. Only the last element – 'less favourable' 
treatment – is disputed by the parties and is at issue in this appeal."4  
6. In this context, the Panel could take this opportu nity to clarify to what extent the complainant 
who claims a breach of Article III:4 of the GATT 1994,  has to prove that the measure at issue is a 
discrimination based on the cigarettes origin, as an additional requirement to those described by the 
Appellate Body in the case of Korea – Various Measures on Beef .  
III. NECESSITY TEST UNDER ARTICLE 2.2 OF THE TBT AGREEMENT  
7. Indonesia claims that the Special Rule is more trade restrictive than it is  necessary  to fulfil  
the legitimate objective, taking into account the risk that non-fulfilment would create. The 
US responds by arguing that the Special Rule is not  more trade restrictive than necessary pursuant to 
Article 2.2 of the TBT Agreement.  
8. Colombia submits that Article 2.2 of the TBT Agreement requires a necessity  test of the 
measure according to its trade restrictiveness, which should be weighed with respect to the risk that 
non-fulfilment would create. Thus, in order to find a breach of Article 2.2, the Panel should determine 
that the measure at issue is more trade restrictive than it is necessary  to fulfil the legitimate objective; 
and that not complying with such a measure does not  imply a risk to the protection of the legitimate 
objective pursued.  
9. Colombia takes the view that the necessity test can be construed bringing for that purpose the 
necessity test used by several Panels and the Appell ate Body in cases involving the application of 
Articles XX:(b) and XX:(d) of the GATT5, following in this vein basic ru les of interpretation such as 
analogy. In addition, Colombia calls the atte ntion of the Panel to the crucial role of a necessity  test in 
weighing the trade restrictiveness of a measure a nd the policy goals pursued by Members' through 
their national regulations.  
10. Thus, Colombia considers that this type of  test can provide clear elements for the 
compatibility analysis of national measures with va rious provisions of the WTO covered agreements, 
such as Article 2.2 of the TBT Agreement. In that  sense, and as it is proposed by the Complainant 
Party, the Panel could use the reasonably available alternatives  approach as an element of the 
necessity test under Article 2.2 of the TBT Agreement 
11. Therefore, Colombia respectfully requests the Panel to elaborate on a clear necessity  test for 
the proper application of Article 2.2 of the TBT Agreement by the Members.  
IV. JUSTIFICATION OF A MEASURE UNDER ARTICLE XX (B) OF THE GATT  
12. Indonesia asserts that the ban established in th e Special Rule is not justifiable under the 
exception provided for in Article XX(b) of the GATT 1994, because it is not necessary to protect 
youth from smoking. On the contrary, the US s ubmits that the exception provided for in 
Article XX(b) does apply. 
13. In the US – Gasoline6 case, the Panel set out that in order to justify the application of 
Article XX(b), the analysis requires a three-tier test : (i) "that the policy in respect of the measures for 
which the provision was invoked fell within the range of policies designed to protect human, animal 
                                                      
4 Appellate Body, Korea – Various Measures on Beef,  para. 133. 
5 Panel Report, US – Gasoline ; Appellate Body Report, EC – Asbestos ; Appellate Body Report Korea – 
Various Measures on Beef.  
6 Panel Report, US – Gasoline,  para. 6.20. WT/DS406/R  
Page B-8  
 
  or plant life or health"; (ii) "that the inconsis tent measures for which the exception was being invoked 
were necessary  to fulfil  the policy objective"; and (iii) "t hat the measures were applied in conformity 
with the requirements of the introductory clause of Article XX". 
14. Concerning the first element of the test, in Thailand – Cigarettes
7, the Panel recognized that 
"smoking constitutes a serious risk to human heal th and that consequent ly measures designed to 
reduce the consumption of cigarettes fell within th e scope of Article XX(b)". Therefore, as Indonesia 
submits, there is no discussion that the Special Rule falls within the range of measures to protect 
human health.  
15. With respect to the necessity  requirement, the Panel in Thailand – Cigarettes8 came to the 
conclusion that a measure is necessary  only when: (i) there is no altern ative for a GATT-consistent or 
less inconsistent measure; and (ii) it is reasonably ex pected  that Members could employ such sort of 
measures to achieve the public health goal pursued .  According to the Appellate Body in the case of 
EC – Asbestos9, a measure would be deemed necessary under Article XX(b) of the GATT if there are 
no more GATT consistent reasona ble alternatives available for the Member implementing the 
measure. In that case, the Appellate Body also clarified that the alternative measure must be less trade 
restrictive than the measure at issue. 
16. Therefore, Colombia considers that the remaini ng question for the Panel is whether there is an 
alternative measure that: (i) would achieve the same  policy goal, i.e. prevent cigarette smoking by the 
underage population; and  (ii) it is less restrictive to trade than the ban adopted on clove cigarettes.  
17. If the Panel finds that the ban on clove cigarett es imposed by the United States falls within the 
purview of Article XX(b) of the GATT 1994, it also s hould conduct an analysis of those restrictions 
under the chapeau of Article XX of the GATT 1994.10 11  
18. The Appellate Body in the US – Gasoline case stated that, "the fundamental theme – when 
interpreting the chapeau – is to be found in the purpose and object of avoiding abuse or illegitimate 
use of the exceptions to substantiv e rules available in Article XX".12  In other words, the Panel's task 
on this issue is to locate and mark out a line of equilibrium between the rights of the US invoking the 
exception and those of Indonesia.  
19. Thus, the relevant question for the Panel is to determine whether there is a discriminatory 
treatment to imports from Indonesia and if such treat ment in the application of the US measure is 
"unjustifiable" or "arbitrary" between countries where the same conditions apply.13 Based on some 
WTO cases14 15, Colombia emphasizes that the test is not whether this discrimination is considered 
justified , but only that such discrimination is justifiable in the sense that it is defensible, or able to be 
shown to be reasonable and just .  
20. In addition to "arbitrary or unjustifiable discrim ination", the chapeau also provides that the 
measure provisionally justified under, for example, pa ragraph XX (b) is not to be applied such as to 
                                                      
7 GATT Panel Report, Thailand – Cigarettes , para. 73. 
8 Ibid., para. 75. 
9 Appellate Body Report,  EC – Asbestos,  para. 172. 
10 Appellate Body Report, US – Shrimp,  para. 157. In US – Shrimp (Article 21.5 – Malaysia) . 
11 Appellate Body Report, US – Gasoline , pp. 22-23. 
12 Appellate Body Report, US – Gasoline , p. 25. 
13 As stated by the Panel in EC – Asbestos , "if the application of the measure is found to be 
discriminatory, it still remains to be seen whether it is arbitrary and/or unjustifiabl e between countries where the 
same conditions prevail". Panel Report on EC – Asbestos , para. 8.226. 
14 Panel Report on US – Shrimp  (Article 21.5 – Malaysia) , para. 5.124. 
15 Appellate Body Report, Brazil – Retreaded Tyres , para. 225.  WT/DS406/R 
 Page B-9 
 
 
  constitute a "disguised restriction on internationa l trade". Colombia notes that the chapeau does not 
address the substance of the measure, but rather  the manner in which that measure is applied.16 This 
implies that the question is not whether the US meas ure has a restrictive effect on trade, but rather 
whether it is applied in a manner that constitutes a disguised restriction on international trade. 
21. In sum, Colombia submits that this "disguised r estriction" prohibition in the chapeau is, in the 
words of the Appellate Body, 17 really about "avoiding abuse or illegitimate use of the exceptions".18 
V. SPECIAL AND DIFFERENTIAL TREATMENT OBLIGATIONS OF THE 
MEMBERS, ACCORDING TO ARTICLE 12 OF THE TBT AGREEMENT 
22. Indonesia submits that the Special Rule is c ontrary to the obligations of the US under 
Articles 12 of the TBT Agreement, since it did not ta ke due account of Indonesia's  special conditions 
as a development country. In response, the US submits  that Indonesia failed in satisfying the test of 
inconsistency of Article 12. 3 of the TBT Agreement. 
23. In this respect, Colombia considers that Article  12.3 of the TBT Agreement should be read in 
light of the provisions of Article 12.2 of the TBT Agreement.19 In addition, it seems clear to Colombia 
that nonetheless the general rule on the burden of proof set by The US – Wool Shirts and Blouses 
case20, where it was said that whoever asserts a fact has the burden of proving it, it is also clear that 
whenever a party advances evidence that raises a convincing presumption of the truth of the assertion 
made, the burden then shifts to the other party. 
24. Colombia considers that the Panel should assess whether Indonesia has raised a convincing 
presumption on a breach of the TBT Article 12 obligations  of the US. If the Panel is able to find that 
Indonesia has raised a convincing presumption on the brea ch of Article 12, then it is possible to shift 
the burden of proof to the US. Notwithstanding what has been mentioned above, Colombia also 
considers relevant to bear in mind the obliga tions of Member States under Article 12.3 of the 
TBT Agreement, are only verifiable through inform ation available to the Member bound to comply 
with such provision. 
25. Finally, Colombia kindly requests the Panel to co mplete the standard regarding the extent of 
the  special and differential treatment, in accordance to the TBT Agreement.  
26. Mr. Chairman, distinguished Members of the Pa nel, Colombia expects to contribute to the 
legal debate of the parties in this case, and w ould like to express again its appreciation for this 
opportunity to share its points of view regarding the application of Articles 2.1, 2.2, 12.1 and 12.3 of 
the TBT Agreement as well as Article III:4 of th e GATT 1994. We thank you for your kind attention 
and remain at your disposal for any question you may have. 
 
                                                      
16 Appellate Body Report, US – Gasoline , p. 23 (original footnote omitted). 
17 Appellate Body Report, US – Gasoline , p. 25. 
18 Appellate Body Report,  US – Gasoline , p. 25. 
19 Panel Report, EC – Approval and Marketing of Biotech Products , para. 74.7 sub 77. 
20 Appellate Body Report, US – Wool Shirts and Blouses , p. 13. WT/DS406/R  
Page B-10  
 
  ANNEX B-4 
 
EXECUTIVE SUMMARY OF THE THIRD PARTY SUBMISSION 
AND THE ORAL STATEMENT BY THE EUROPEAN UNION 
  
I. THE TERM "LIKE PRODUCTS" IN ARTICLE 2.1 OF THE TBT AGREEMENT 
1. The parties disagree on whether the term "like pr oducts" in Article 2.1 of the TBT Agreement 
needs to be interpreted as in Article III:4 of the GATT 1994 or whether there are relevant textual and 
contextual differences. 
2. In the view of the European Union, a num ber of arguments indicate that it may be 
appropriate, in interpreting and applying the term "like products" in Article 2.1 of the 
TBT Agreement, to have regard to the way in whic h the term "like products" in Article III:4 of the 
GATT 1994 has been interpreted and applied
1. The treaty terms are obviously the same. Furthermore, 
the GATT 1994 and the TBT Agreement are each context for the interpretation of the other. Finally, 
the second recital of the TBT Agreement refers to  the desire to further the objectives of the 
GATT 1994. In the view of the European Union, how ever, one possibly relevant  contextual difference 
is the fact that inconsistencies with Article III:4 of the GATT 1994 may be justified under Article XX 
of the GATT 1994, whereas the applicability of Article XX to claims outside the GATT 1994, 
including Article 2.1 of the TBT Agreement, rema ins unclear. If one were to find that Article XX 
does not apply outside the GATT 1994, the national treatment obligation under Article 2.1 of the 
TBT Agreement would risk being stricter than Article III:4 of the GATT 1994. One way to mitigate 
such discrepancy could potentially be a narrower interpretation of the term "like products" in 
Article 2.1 of the TBT Agreement. 
II. THE CONCEPT OF "DE FACTO LESS  FAVOURABLE TREATMENT" IN 
ARTICLE 2.1 OF THE TBT AGREEMENT AND ARTICLE III:4 OF THE GATT 1994 
3. With regard to Indonesia's claims of a "de f acto less favourable treatment" under Articles 2.1 
of the TBT Agreement and Article III:4 of th e GATT 1994, the European Union notes that the 
Appellate Body has not yet fully clarified this lega l concept. In the absence of clear guidance, panels 
should not lightly assume that any domestic measure that may have an impact on the quantity of 
products imported from another WTO Member should necessarily constitute de facto  "less favourable 
treatment" of such imported products.
2 Regulatory diversity between Members, which neither the 
GATT 1994 nor the TBT Agreement intend to eliminate, may disrupt existing trade flows but it does 
not necessarily mean that there is less favourable tr eatment of imports. Panels rather need to assess 
whether any such detrimental effect on a give n imported product is the result of factors or 
circumstances unrelated to the foreign origin of the product.3 Therefore, the fact that Indonesian 
exports of clove cigarettes to the United States dropped after the entry into force of the US measure is 
not, in itself, sufficient to demonstrate a de facto  less favourable treatment . The Panel should look at 
additional factors, such as to what extent the banned flavoured cigarettes were produced in the 
United States when the US measure was enacted or  whether the different treatment of flavoured 
cigarettes, including clove cigarettes, on the one ha nd, and regular tobacco and menthol cigarettes, on 
the other, can be explained by reasons other than affording protection to the US cigarette industry. 
                                                      
1 See Appellate Body Report, EC – Asbestos , paras. 101-103. 
2 See Appellate Body Report, Dominican Republic – Import and Sale of Cigarettes , para. 96. 
3 See Panel Report, EC – Approval and Marketing of Biotech Products , para. 7.2514.  WT/DS406/R 
 Page B-11 
 
 
  III. THE RELEVANCE OF ARTICLE XX OF THE GATT 1994 FOR THE 
INTERPRETATION OF ARTICLE 2.2 OF THE TBT AGREEMENT 
4. The parties and certain third parties disagree on whether jurisprudence relating to Article XX 
of the GATT 1994  informs the interpretation of Artic le 2.2 of the TBT Agreement. 
5. In the view of the European Union, the relevance of the GATT 1994 to the interpretation of 
the TBT Agreement is, first, indicated by the second r ecital of the Preamble, which refers to the desire 
to further the objectives of the GATT 1994. 
6. Secondly, it would go against the text and the purpose of Article 2.2 of the TBT Agreement to 
disregard the textual and purposive similarities wi th Article XX of the GATT 1994. The profound 
similarities in language – between Article XX of the GATT 1994, and its subparagraph (b) on the one 
hand, and Article 2.2 of the TBT Agreement and its Preamble on the other hand – appear to indicate a 
high degree of correlation between the intended meaning of the two provisions. The drafters 
obviously had Article XX of the GATT 1994 in mind when drawing up the text of Article 2.2 of the 
TBT Agreement. Furthermore, both provisions r espectively seem to pursue similar purposes. Both 
provisions allow WTO Members to have in place me asures which restrict trade (be they technical 
regulations or other measures which are found to be  GATT-inconsistent), so long as (i) they pursue a 
legitimate objective, (ii) are necessary to fulfil or protect that objective, and (iii) are not more trade 
restrictive than necessary to fulfil or protect th at objective, in other words there are no other 
alternative, less trade restrictive measures availabl e which would make an equivalent contribution to 
the objective pursued. As to this latter point, both pr ovisions attempt to ensure that the measure taken 
is proportionate  to the objective pursued. The Appellate Body  has held that "textual similarity" and 
"similar purposes" may render jurisprudence relating to one provision relevant and useful for the 
interpretation of another provision.4 
7. The European Union fails to see how the “func tional” difference between the two provisions 
– Article XX of the GATT 1994 constituting an exception and Article 2.2 of the TBT Agreement  a 
prohibition – could be relevant for the question of  whether jurisprudence under Article XX of the 
GATT 1994 is relevant. This difference affects the bu rden of proof between the parties, but not the 
meaning of the terms of a provision.5 
8. From a systemic point of view, the European  Union believes it important that the covered 
agreements are interpreted carefully  and consistently, with due rega rd to all related provisions, in 
order to achieve harmony between the agreements, and the rights and obligations contained therein. 
For example, the standard should not be more or l ess stringent – for technical regulations over other 
measures which would fall under the GATT 1994 – when  it comes to demonstrating the necessity of a 
measure taken to pursue a legitimate objective. 
9. Therefore, it is appropriate to seek instru ction from well establis hed reasoning developed 
under Article XX(b) of the GATT 1994 when conducti ng an analysis under Article 2.2 of the 
TBT Agreement.   
IV. ADDITIONAL CONSIDERATIONS CONCERNING THE LEGAL TEST UNDER 
ARTICLE 2.2 OF THE TBT AGREEMENT 
10. Indonesia, as the party asserting the affirmative of  Article 2.2 of the TBT Agreement, bears 
the burden of establishing a prima facie case by adducing sufficient evidence and argument to 
                                                      
4 Appellate Body Report, US – Gambling , para. 291; also see Appellate Body Report, EC – 
Bananas III , para. 231. 
5 See Appellate Body Report, EC – Tariff Preferences , para. 98. WT/DS406/R  
Page B-12  
 
  demonstrate inconsistency with each element.
6 The European Union's position that jurisprudence 
under Article XX of the GATT 1994 is relevant to  an analysis under Article 2.2 of the 
TBT Agreement affects the certain aspects of th e appropriate legal standard to be applied. 
11. As a first matter, and with regard to the legitimate objective pursued by the measure, the 
European Union believes that panels should exerci se restraint on the question of whether the objective 
is as stated by the responding party, and whether it is  legitimate within the meaning of Article 2.2 of 
the TBT Agreement. We do not consider it necess ary to debate the degree of regulatory space 
available under the TBT Agreement and it appears clea r for purposes of resolving this dispute that the 
objective of protecting public health is legitimat e, irrespective of the particular ALOP set. 
12. The second, and more important matter which a pa nel has to determine is whether or not the 
measure is "more trade restrictive than necessary to  fulfil the legitimate objective". In order for a 
panel to address this question, the complainant will basically have to advance sufficient evidence and 
argument to show that there are other less trade rest rictive measures which are reasonably available to 
the respondent, and which equally fulfil the legitima te objective. A successful demonstration would 
lead the panel to conclude that the measure at issu e is more trade restrictive than it has to be to 
achieve its objective, and it therefore amounts to  an unnecessary obstacle to trade. The various 
dimensions to this analysis are very similar if not identical to those carried out as part of a "necessity 
analysis" under Article XX. 
13. As further confirmation of this, it is useful to l ook at that test laid out by the Appellate Body 
in Australia – Salmon  in relation to Article 5.6 of the SPS Ag reement, which the United States wishes 
to rely upon in this dispute. Certainly, the role  played by Article 5.6 of the SPS Agreement in the 
operation of the agreement is similar to that of Article 2.2 of the TBT Agreement.  However, the 
European Union is hesitant to accord it too much weight on this basis alone. 
14. In this regard, the European Union would point ou t, first, that the relevant legitimate objective 
to be protected using SPS measures – human hea lth – is of great importance to WTO Members. 
Accordingly, greater deference must be exercised towards regulatory authorities, and a high burden is 
placed on complainants when challenging such meas ures. This is demonstrated through the more 
specific and onerous language used in Article 5.6 of  the SPS Agreement, as compared with Article 2.2 
of the TBT Agreement. This goes to our second poin t: the language used in each provision is very 
different, and the specif ic language relied upon in Australia – Salmon , present in the SPS Agreement, 
is not present here. Article 5.6 of the SPS Agreement places a significantly greater burden on 
complainants through this language. Specifically, with regard to the analysis of alternative measures, 
the clarifying footnote states that only measures which are "significantly less trade restrictive to 
trade", and "technically and economically feasible", will be deemed to be reasonably available.   
15. On the other hand, Article 2.2 of the TBT Agre ement simply states that technical regulations 
should not create "unnecessary obstacles to internationa l trade" and they "should not be more trade 
restrictive than necessary to fulfil a legitimate objective". This language is very similar to that found – 
and already interpreted – in Article XX of the GA TT 1994. In light of these differences, the European 
Union does not consider it appropriate to import the test set out in Australia – Salmon  into the present 
case in order to resolve the interpretive questi on under Article 2.2 of the TBT Agreement.  
                                                      
6 Appellate Body Report, US – Gambling, paras. 138-140.  WT/DS406/R 
 Page B-13 
 
 
  ANNEX B-5 
 
ORAL STATEMENT OF GUATEMALA 
AT THE FIRST SUBSTANTIVE MEETING 
  
1. Mr. Chairman, Members of the Panel, delegations representing the Parties and the Third 
Parties, staff of the WTO Secretariat, good afternoo n. On behalf of the delegation of Guatemala, I 
would like express our appreciation for this opportuni ty to present our views on the matters at issue. 
2. Guatemala has a systemic interest on the legal interpretation of several provisions of the 
TBT Agreement and the GATT 1994.  
3. Therefore, Guatemala will not offer any views with respect to the alleged legitimate objective 
of the United States nor the trade interests of  Indonesia that motivated this dispute. 
4. In particular, Guatemala will not comment on the convenience or inconvenience of banning 
cigarettes with a characterizing flavour in order to reduce the number of young smokers. 
5. Instead, Guatemala would like to offer its view s with regard to the definition of "like 
products" and the relationship between the TBT Agreement and Article XX of the GATT 1994.  
6. Having said that, Guatemala observes that the measure at issue bans the production or sale of 
cigarettes characterized as "flavoured", except for me nthol cigarettes. The alleged legitimate objective 
of the measure, according to the United States, is to protect the public health by prohibiting those 
products that serve as "starter" or "trainer" cigarettes for young smokers.
1  
7. Furthermore, the United States submits that ther e is evidence that flavoured cigarettes – 
except for menthol – are disproportionately smoked by novice young smokers (both minors and 
young adults), rather than alread y addicted, older adult smokers.2  
8. Indonesia asserts that it objects this measure  because it imposes a complete ban on clove 
cigarettes, while little or no restrictions are placed  on regular cigarettes and menthol cigarettes. The 
arguments put forward by Indonesia concern all dome stically produced cigarettes in the United States, 
especially menthol cigarettes.  In the view of Ind onesia, tobacco, menthol and clove cigarettes are like 
products.3 
9. However, the United States argues that cigarett es and menthol cigarettes are different than 
clove cigarettes because they have different phys ical composition, end-uses and respond to different 
consumer tastes and habits.4  
10. Article 2.1 of the TBT Agreement is a "non- discrimination provision". It contains the 
obligation to ensure that "in respect of technical  regulations, products imported from the territory of 
any Member shall be accorded treatment no less fa vourable than that accorded to like products of 
national origin and to like products originating in any other country". 
11. The Appellate Body, in Japan – Alcoholic Beverages II , stated that "[t]he concept of 'likeness' 
is a relative one that evokes the image of an acco rdion. The accordion of 'likeness' stretches and 
                                                      
1 Indonesia's first written submission, paras. 1-3. 
2 Executive summary of the United States' first written submission, para. 23. 
3 Indonesia's first written submission, para. 6. 
4 United States' first written submission, paras. 154-189. WT/DS406/R  
Page B-14  
 
  squeezes in different places as different provisions of the WTO Agreement  are applied. The width of 
the accordion in any one of those places must be de termined by the particular provision in which the 
term 'like' is encountered as well as by the context and the circumstances that prevail in any given 
case to which that provision may apply."
5 
12. In the light of this, Guatemala is of the view  that a Panel, when analysing the concept of 
"likeness", should also consider the "context and the circumstances that prevail in any given case to 
which that provision may apply". 
13. In this dispute, Guatemala submits that the Pane l should relate the concept of "likeness" to the 
context  of a technical regulation; particularly, to the circumstances  of the technical regulation at issue.  
14. Guatemala understands that the United States is banning, through a technical regulation, 
certain types of cigarettes because they serve as "starter" or "trainer" cigarettes for young smokers. 
Therefore, Guatemala is of the view that the Pane l, when analysing the concept of "likeness" in the 
present dispute, should also consider whether othe r cigarettes not included in the prohibition could 
serve as "starter" or "trainer" cigarettes for youn g smokers. In particular, the Panel may want to 
consider whether the only flavoured type of cigarettes not included in the prohibition could, 
eventually, take the place of all other prohibited flav oured cigarettes and serve as "starter" or "trainer" 
cigarette for young smokers.  
15. In the opinion of Guatemala, this analysis w ould be consistent with: i) the context of the 
TBT Agreement (i.e. non-discrimination and technical regulations must not be more trade-restrictive 
than necessary to fulfil a legitimate objective); and ii ) the specific circumstances of this case (i.e. the 
pursuance of the legitimate objectives fr eely decided by the United States). 
16. Now let me turn to Guatemala's comment s regarding the relationship between the 
TBT Agreement and Article XX of the GATT 1994. 
17. The preamble of the TBT Agreement recognizes 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 th at they are not applied in a manner which would 
constitute a means of arbitrary or unjustifiabl e discrimination between countries where the same 
conditions prevail or a disguised restriction on inte rnational trade, and are otherwise in accordance 
with the provision of this Agreement". 
18. Article 2 of the TBT Agreement further devel ops some obligations with respect to the 
preparation, adoption and application of technical  regulations. For example, the obligation of non-
discrimination (Article 2.1); the obligation that t echnical regulations are not prepared, adopted or 
applied with a view to or with the effect of creating unnecessary obstacles to international trade 
(Article 2.2); the obligation that technical regulati ons shall not be maintained if the circumstances or 
objectives giving rise to their adoption no longer exist or can be addressed in a less trade-restrictive 
manner (Article 2.3); etc. 
19. The chapeau of Article XX of the GATT 1994, on the other hand, requires that a measure 
justified under any of the items of such provision" are not applied in a manne r which would constitute 
a means of arbitrary or unjustifiable discrimina tion between countries were the same conditions 
prevail, or a disguised restriction on international tr ade". This is a similar language to that used in the 
preamble of the TBT Agreement, although Article 2. 1 of the TBT Agreement contains an unqualified 
obligation of non-discrimination.  
                                                      
5 Appellate Body Report, Japan – Alcoholic Beverages II , p.21.  WT/DS406/R 
 Page B-15 
 
 
  20. In the light of this, it is unclear when Ar ticle XX of the GATT 1994 might be applied to 
justify an exception on the application of the TBT Agreement in respect of a technical regulation. 
Guatemala is of the opinion that the TBT Agreement contains specific rules for the adoption of trade 
obstacles and provides for specific tests of necess ity. In Guatemala's view, the only foreseeable 
possibility, at this stage, would be the applica tion of Article XX of the GATT 1994 to justify an 
exception to Article 2.1 of the TBT Agreement; that  is, a discrimination between countries were the 
same conditions prevail; of course, if such di scrimination is not arbitrary or unjustifiable. 
21. Having said that, Guatemala does not want to ex clude, nor prejudge, in ge neral, the scope of 
applicability of Article XX of the GATT 1994 in respect of technical regulations. Guatemala's 
intention is simply to draw your attention to the difficulties that the application of an exemption under 
Article XX in respect of a technical regulation wo uld generate. If the Panel were to decide that 
Article XX(b) is applicable to the facts of the present dispute, Guatemala suggests that the Panel 
interprets this provision narrowly.  
22. Mr. Chairman, members of the Panel, we wish you a successful completion of the task before 
you.   WT/DS406/R  
Page B-16  
 
  ANNEX B-6 
 
ORAL STATEMENT BY MEXICO 
AT THE FIRST SUBSTANTIVE MEETING
* 
  
I. INTRODUCTION 
1. It is a privilege for me to appear before you he re today, on behalf of the Mexican delegation, 
to present Mexico's views in this dispute. 
2. Mexico expressed its intention to participate as a third party in these proceedings because 
they involve important systemic issues relating to  the interpretation of the Agreement on Technical 
Barriers to Trade (TBT Agreement) and certain provisions of the General Agreement on Tariffs and 
Trade 1994 (GATT 1994).  At the same time, this dispute is of particular interest to us because 
Mexico is currently participating as complain ant in two cases before the WTO involving the 
interpretation of these same provisions, specifically Article III:4 of the GATT and Articles 2.1 and 2.2 
of the TBT Agreement.  Consequently, Mexico is grateful for the opportunity to express its views on 
some of the issues raised in these proceedings. 
3. We recognize that WTO rules do not prohibit Members from taking measures necessary to 
protect human, animal or plant life or health, provide d they do not constitute a means of arbitrary or 
unjustifiable discrimination or a disguised restrictio n on international trade.  Moreover, WTO rules 
allow for the introduction of technical regulations  as long as they do not constitute an unnecessary 
obstacle to international trade. 
4. In this oral statement, Mexico will be addressing three important aspects of this 
dispute:  (i) the product likeness analysis for the arguments relating to discrimination under 
Articles III.4 of the GATT and 2.1 of the TBT Agre ement;  (ii) less favourable treatment for the 
purpose of those articles;  and (iii) certain matter s relating to Article 2.2 of the TBT Agreement. 
II. ANALYSIS 
A. D
ISCRIMINATION UNDER ARTICLE  III.4  OF THE GATT  1994  AND ARTICLE  2.1 OF THE 
TBT A GREEMENT  
1. Product likeness 
5. Article III:4 of the GATT and Article 2.1 of  the TBT Agreement prohibit WTO Members 
from introducing measures that accord products importe d from any Member treatment less favourable 
than that accorded to like products of national origin. 
6. Mexico considers that the analysis of whet her imported products a nd national products are 
"like products" under the said provisions s hould be conducted on a case-by-case basis1 and in the light 
of the particular circumstances of each dispute. 
7. Panels and the Appellate Body have mainly relie d on four criteria in analysing the "likeness" 
of products, creating a framework that would help  to classify and examine the various qualities and 
characteristics without omitting the consideration of other, or of all relevant evidence.  These 
four criteria include:  (i) the properties, nature and quality of the products;  (ii) the end users of the 
                                                      
* This statement was originally made in Spanish. 
1 Appellate Body Report , Japan - Alcoholic Beverages II , p. 20.  WT/DS406/R 
 Page B-17 
 
 
  products;  (iii) consumers' tastes and habits - more comprehensivel y termed consumers' perceptions 
and behaviour - in respect of the products;  and (iv)the tariff classification of the products.2 
8. In this specific case, although the Panel should cons ider the four criteria, Mexico believes that 
it should focus its analysis in particular on the pr operties, nature and quality of the products and on 
consumers' tastes and habits in respect of the products, because these are the criteria on which the 
parties have conflicting views. 
9. The Appellate Body EC - Asbestos  also stated that "... the word 'like' in Article III.4 is to be 
interpreted to apply to products that are in such  a competitive relation".  The Appellate Body further 
concluded that the scope of Article III:4 of  the GATT, although broader than "... the first sentence of 
Article III:2, is certainly not broader than the combined  product scope of the two sentences of 
Article III:2 of the GATT 1994".3  Thus, to determine whether the two products are similar under the 
legal standard of Article III:4 of the GATT, the Panel may explore whether the products in question 
are in a competitive relationship. 
10. Mexico is not convinced by the US argument that clove cigarettes are not like products with 
menthol cigarettes and regular cigarettes.  We cannot understand what difference there can be - 
according to the US argument - between a regular cigarette and a clove cigarette or between a 
menthol cigarette and a clove cigarette. 
11. It is important that the Panel's interpreta tion should not allow the possibility of imposing 
restrictive measures on a product that could be cons idered a like product by drawing a discriminatory 
distinction and favouring domestic products  to the detriment of foreign products. 
2. Less favourable treatment 
12. Mexico believes that if the Panel were to find that clove cigarettes from Indonesia and 
menthol and regular cigarettes of domestic origin were like products, the existence of a prohibition for 
one product and not for the others would clearly c onstitute less favourable treatment under Article 2.1 
of the TBT Agreement and Article III:4 of the GATT. 
13. Nor would Mexico support the US argument that th e measure is origin-neutral in that it bans 
all characterizing flavours whether in domestically pr oduced or foreign cigarettes, since de facto, the 
ban only affects imports and not the domestic produ ct.  When a measure affects imported cigarettes 
(i.e. it prohibits them) but does have the same ef fect on domestic products (which are excluded from 
the prohibition) because of the type of tobacco produ ced in the Untied States, then what we have is 
less favourable treatment. 
14. In Mexico - Taxes on Soft Drinks , for example, the Panel found that there was de facto 
discrimination.  In that case, the Mexican measure  consisted of a 20 per cent tax on the use of any 
sweetener other than cane sugar (like high fructos e corn syrup), a distribution tax, and certain 
bookkeeping requirements.  The Panel confirmed that  this constituted discrimination against imports, 
since the majority of sweeteners produced in Mexico were cane sugar sweeteners, while imports 
consisted almost entirely of high fructose corn sy rup sweeteners.  Consequently, the imposition by 
Mexico of a 20 per cent tax on sweeteners other than  cane sugar (other than its domestic production), 
a distribution tax, and different bookkeeping require ments was tantamount, in practice, to imposing a 
                                                      
2 See Appellate Body Report, EC - Asbestos , para. 101 (citing the GATT Working Party Report in 
Border Tax Adjustments  and the Appellate Body Report in Japan -  Alcoholic Beverages II ). 
3 See Appellate Body Report, EC - Asbestos , para. 99. WT/DS406/R  
Page B-18  
 
  measure to ensure the withdrawal of all importers of sweeteners from the market by applying a higher 
tax than that imposed on domestic production.
4 
15. The possible discrimination in this case has char acteristics very similar to the discrimination 
found in the aforementioned case, in that according to the data submitted by Indonesia, US production 
of flavoured cigarettes is insignificant, and before  their prohibition, clove cigarettes were imported 
primarily from Indonesia5, so that as a result of this prohibiti on, Indonesia's exports were reduced to 
zero.6 
16. Mexico recognizes that trade may vary under the influence of a number of measures and 
factors.  However, in this dispute the Panel mu st take account of the figures provided by Indonesia 
which show that before the ban, 99 per cent of clove cigarettes marketed in the United States came 
from Indonesia, and the measure had no equivalent e ffect on cigarettes produced in the United States. 
17. As we have seen, a measure may have negativ e effects on trade provided foreign products are 
not accorded treatment less favour able than like national products. 
B. OTHER ARGUMENTS UNDER THE TBT  AGREEMENT  
1. Article 2.2 of the TBT Agreement 
18. Mexico does not understand how a measure can aim to protect the health of young people if, 
assuming the data provided by Indonesia is correct, the majority of cigarettes consumed by young 
people are regular or menthol cigarettes, which are excluded from the prohibition. 
19. Nor is it clear to us how the US measure can achieve its legitimate objective if most young 
people smoke cigarettes other than those covered by the prohibition. 
20. In its first written submission, the United States points out that clove cigarettes are cigarettes 
that are smoked "from time to time"7 and that traditional cigarettes are consumed on a daily basis.  
Would it not be more dangerous to the health of  young people, then, to smoke cigarettes that are 
consumed on a daily basis (regular and menthol) than to smoke another type of cigarettes (i.e. clove 
cigarettes) from time to time? 
21. At the same time, Indonesia has managed to identify less restrictive measures which in 
Mexico's view could serve to meet the United States' objective. 
III. CONCLUSION 
22. Mexico hopes that its views will have contributed  to the Panel's assessment with a view to 
producing a harmonious interpretati on of the relevant provisions of the TBT Agreement and the 
GATT, in accordance with the objectives of these provisions. 
23. Mexico also requests this Panel to take account  of the precedents established by the panels 
and the Appellate Body in the cases cited. 
                                                      
4 See Panel Report, Mexico - Tax Measures on Soft Drinks .  The Panel analysed the tax on soft drinks 
and the distribution tax in the light of paragraphs 2 and 4 of Article III of the GATT 1994 and the bookkeeping 
requirements in the light of paragrap h 4 of Article III of the GATT 1994. 
5 See Indonesia's first written submission, para. 112. 
6 See Indonesia's first written submission, para. 29. 
7 United States' first written submission, para. 172.  WT/DS406/R 
 Page B-19 
 
 
  24. Finally, Mexico would like to thank the Panel fo r its attention and would gladly reply to any 
questions that the Panel may wish to raise. 
 
 WT/DS406/R  
Page B-20  
 
  ANNEX  B-7 
 
EXECUTIVE SUMMARY OF THE ORAL STATEMENT 
BY NORWAY AT THE FIRST SUBSTANTIVE MEETING 
  
1. Norway will set out its views on: (i) the interpretation of the term "like products" under 
Article 2.1 of the TBT Agreement, and (ii) the exis tence of "de facto" discrimination under Article 2.1 
of the TBT Agreement. 
2. Norway supports the objective of reducing youth smoking. This case does not, however, 
revolve around that objective as such , but concerns the means  chosen by the United States to fulfil 
that objective and, in particular, whether those m eans – and their design and effects – conform to the 
obligations of the United States under the GATT and the TBT Agreement. 
1. The four general likeness criteria apply to th e interpretation of the term "like product" 
under Article 2.1 of the TBT Agreement.  
3. The Family Smoking Prevention and Tobacco Contro l Act of 2009 (the "Act"), in its "special 
rule for cigarettes", bans certain  cigarettes which are characteri zed as "flavoured". The stated 
objective of the Act is to protect the public health , including by reducing the number of children and 
adolescents who smoke cigarettes.  However, the Un ited States did not ban all flavoured cigarettes, 
but excluded menthol cigarettes, which are produced in the United States and are apparently highly popular there with both youth and adult smokers.  
4. It does not seem to be disputed th at the "special rule for cigarettes" is a "technical regulation" 
covered by the TBT Agreement. The question is thus  whether the Special Rule is inconsistent with 
Article 2.1 of the TBT Agreement because it results in treatment that is "less favourable" to imported 
clove cigarettes than that accorded to the domestic like products. 
5. Article 2.1 of the TBT Agreement provides that: 
"Members shall ensure that  in respect of technical regulations, pr oducts imported 
from the territory of any Member shall be  accorded treatment no less favourable than 
that accorded to like products of national or igin and to like pro ducts originating in 
any other country."1 
6. The first issue that arises under Article 2.1 of the TBT Agreement is whether clove cigarettes 
from Indonesia are "like" the cigarettes produced in th e United States. Norway considers that the legal 
standards developed under Article III, including Article III:4, are hi ghly relevant in interpreting the 
term "like products" in Article 2.1 of the TBT Agreement. 
7. Norway starts by recalling that "the 'general pr inciple' in Article III seeks to prevent Members 
from applying internal taxes and regulations in a manner which affects the competitive relationship, in 
the marketplace, between the domestic and imported products involved , 'so as to afford protection to 
domestic production'".2  In other words, the national treat ment obligation seeks to ensure that 
government regulation does not interfe re with consumers' choices be tween competing products.  In 
                                                      
1 Emphasis added. 
2 Appellate Body Report, EC – Asbestos , para. 98.  Original emphasis.  WT/DS406/R 
 Page B-21 
 
 
  that regard, the Appellate Body also noted in that  same appeal that "the term 'like products' is 
concerned with competitive relationships betw een and among products ... in the marketplace".3 
8. Norway considers that the four criteria laid down by the Working Party on Border Tax 
Adjustments , which were adopted by the Appellate Body in EC – Asbestos , provide a useful 
framework for analysing the " likeness" of particular products under Article 2.1 of the 
TBT Agreement, and that the competitive relati onship between the products in question is an 
important factor to be considered by this Panel.    
9. Norway notes that the United States does not see m to contest the usage of these criteria when 
establishing likeness. Rather, the United States seems to argue that a technical regulation – even 
though it almost by definition applies to products or groups of products that are "like" – should be 
considered to apply to distinct products based on the regulatory "purposes of the regulation". Norway 
disagrees with the United States in this respect. Norw ay considers that "the regulatory purposes" of a 
technical regulation relate to the justification for the measure, and do not "stretch or squeeze" the like 
product determination under Article  2.1 of the TBT Agreement. 
10. Although Norway takes no position on the facts of the dispute, it does wish to comment on 
the Panel's assessment of the four likeness criteria.  In EC – Asbestos , the Appellate Body noted that 
the scope of the word "like" in Article III:4 of the GATT 1994 is broader than the scope of the word 
"like" in Article III:2.4  This is because Article III:2 applies to like products, as well as directly 
competitive or substitutable, whereas Article  III:4 applies solely to like products.5  Although the 
Appellate Body did not decide if the overall pr oduct scope of each provision was identical, it noted 
that its interpretation prevented Members from using fiscal and non-fiscal regulation to protect 
domestic products.  In Norway's view, the overall pr oduct scope of Article 2.1 should be akin to the 
overall product scope of both Articles III:2 and III:4.  Hence, the word "like" should be interpreted in 
a similar manner to its interpretation in Article III:4. 
11. In that regard, Norway notes that it is accep ted that products need not be identical to 
constitute "like" products under Article III:4, just as they need not be identical  to constitute "directly 
competitive or substitutable" products under Article III: 2.  Rather, the evidence regarding the different 
likeness criteria must be assessed as a whole to determine if the products are "like".  
12. In this dispute, the Parties disagree on whether clove cigarettes are "like" domestic cigarettes. 
For example, the United States has highlighted cer tain alleged physical differences between the 
products and contends that, because the products are ph ysically different, a higher burden is placed on 
Indonesia. It cites to EC – Asbestos , in which the Appellate Body found that there was a " highly 
significant  physical difference" between the fibres at issue.6 
13. Norway considers that the Panel must assess the nature and significance of the physical 
similarities and the differences between the cigare ttes at issue.  Products may have the necessary 
competitive relationship to be covered by Article  III, notwithstanding physical differences between 
them.  
2. "De facto" discrimination under Article 2.1 of the TBT Agreement 
14. It is for this Panel, based on the criteria refe rred to above, to determine whether the products 
at issue in this dispute are like products. Assuming that they are like products, the next question is 
                                                      
3 Appellate Body Report, EC – Asbestos , paras. 99 and 103. 
4 Appellate Body Report, EC – Asbestos , para. 99. 
5 Appellate Body Report, EC – Asbestos , para. 99. 
6 Appellate Body Report, EC – Asbestos , para. 114. WT/DS406/R  
Page B-22  
 
  whether Indonesian clove cigarettes are treated less favourably than cigarettes (including those 
flavoured with menthol) produced in the United States. 
15. Norway is concerned by the legal standard for assessing less favourable treatment set out by 
the United States.  The United States contends that: 
"Measures that do not treat products differe ntly based on origin, and for which the 
effects resulting from the measure are not a r esult of the origin of the product, are not 
measures that afford protection to domestic production." 
16. The United States appears to consider that , because its measure distinguishes between 
cigarettes on the basis of an "objective" criteri on that is not origin-based, its measure is WTO-
consistent.  However, in a dispute involving a f acially neutral measure, a panel must look beyond an 
apparent objective distinction to establish if there is de facto  discrimination against imported goods.   
17. In assessing whether there is de facto  discrimination, panels a nd the Appellate Body have 
examined the design, structure and operation of the measure.
7  The Appellate Body has also said that 
"[i]t is irrelevant that protectionism was not an intended objective "; the issue is "how the measure in 
question is applied ".8 In other disputes, panels a nd the Appellate Body have found de facto  
discrimination if domestically produced products tend ed to be subject to mo re favourable treatment 
than like imported products.9 
18. The United States relies on Chile – Alcoholic Beverages . In that dispute, the Appellate Body's 
examination of Chile's taxation of alcoholic beverages "tends to rev eal that the application of" the 
measure protected like domestic products.10  Against that background, the Appellate Body examined 
whether this apparent de facto  discrimination could be explained by other factors.  It found that there 
were certain "anomalies" in the measure and that  Chile could not reconcile the measure's stated 
objectives with its "protective application".11   
19. In the present case, the parties to the dispute ag ree that the US technical regulation does not 
de jure provide for different treatment of products b ased on nationality.  The Parties also seem to 
agree that the measure bans flavoured cigarettes that  were largely not produced in the United States 
when the ban was introduced, whereas it allows t obacco- and menthol-flavoured cigarettes that are 
produced in large quantities in the Un ited States and that were imported in negligible quantities. As 
Norway understands it, a large proportion of the ci garettes produced domestically when the ban was 
introduced were not affected by the ban, wherea s a large proportion of Indonesia's trade with the 
United States was affected by the ban. 
20. Such a disparate effect is an important factor that Norway considers the Panel should take into 
account when addressing whether the contested measure gives rise to de facto  discrimination under 
Article 2.1 of the TBT Agreement. 
21. The United States appears to argue that it has banned some  cigarettes that appeal to youth 
smokers but has not banned all of them, because doing so would have other negative public health 
effects, in particular a high demand for assistance in giving up smoking and an increase in black market sales. Thus, the United States has banned clove and othe r flavoured cigarettes, but has not 
banned " any type of cigarette favoured by a large portion of US smokers ", such as tobacco- and 
                                                      
7 See, e.g. Appellate Body Report, US – FSC (Article 21.5 – EC) , para. 215. 
8 Appellate Body Report, Japan – Alcoholic Beverages II , p. 28. 
9 Appellate Body Report, Chile – Alcoholic Beverages , paras. 51-53; see also, e.g. Panel Report, 
Mexico – Taxes on Soft Drinks , paras. 8.119-8.121.   
10 Appellate Body Report, Chile – Alcoholic Beverages , para. 66. 
11 Appellate Body Report, Chile – Alcoholic Beverages , para. 71.  WT/DS406/R 
 Page B-23 
 
 
  menthol-flavoured cigarettes. Norway is troubled  by this argument. As Norway understands, 
consumption of all the cigarettes at issue seems to present similar risks for public health. Moreover, 
menthol-flavoured cigarettes are amongst the most  popular cigarettes with youth smokers – much 
more popular than clove cigarettes. Yet, they are excluded from the ban.   
22. Thus, it appears that the United States has a dopted a general ban on flavoured cigarettes; 
however, it has carved out exceptions for tobacco - and menthol-flavoured cigarettes that seem to 
undermine the ban and its objectives. Through the ban and exceptions, the United States seems to 
have chosen winners and losers among different t ypes of cigarettes sold in the US market: some 
cigarettes are banned to promote public health, and other more popular cigarettes are permitted, 
apparently also to promote public health. 
23. Norway considers that the Panel should scr utinize closely such apparent "anomalies"12 in the 
design, structure, and operation of a measure to est ablish whether the combination of the general ban 
and the exceptions favours dom estic over imported products. 
 
                                                      
12 Appellate Body Report, Chile – Alcoholic Beverages , para. 71. WT/DS406/R  
Page B-24  
 
  ANNEX B-8 
 
EXECUTIVE SUMMARY OF THE THIRD PARTY SUBMISSION 
OF TURKEY  
  
I. INTRODUCTION 
1. Turkey thanks the Panel for giving the opportuni ty to present its views in the proceedings of 
the Panel. Turkey aims to contribute to the Panel's analysis by assessing three elements, which are:  (i) 
whether the measure at issue is a technical regulation or not; (ii) whether the measure at issue is more 
trade-restrictive than necessary to fulfil a legitimate objective; and (iii) whether regular cigarettes, 
menthol cigarettes and clove cigarettes are like products.  
II. WHETHER THE MEASURE AT ISSUE IS A TECHNICAL REGULATION OR NOT 
2. According to the definition enclosed in Anne x 1.1 of the TBT Agreement and according and 
to the interpretation of the Appellate Body
1, (a) a technical regulation; must lay down "product 
characteristics"; (b) compliance w ith product characteristics laid down in the regulation must be 
mandatory and (c) the regulation must be applicable to an identifiable product or group of products.  
3. In regard to the first criter ion, Turkey understands from th e reasoning of the Appellate Body 
in EC – Asbestos that, while a simple ban on an import of a product may not be regarded as a 
technical regulation, forbidding usage of a produc t in other products may well fall into the definition 
of a technical regulation. The second criterion determ ined in the Annex I is that compliance with the 
stated characteristics of the product laid down in its technical regulation must be mandatory. This 
means that a technical regulation must regulate the "characteristics" of products in a binding or 
compulsory manner. Finally, the last criterion determ ined in Annex 1 of the TBT Agreement is that 
the regulation must apply to a specific product or product group. Therefore if a regulation applies to a 
determinable specific product or a product group then it can be assumed that the third criterion is met.  
4. In view of the determinations stated above, if  the panel decides that the "special rule for 
cigarettes" in Section 101(b) of the FSPTCA constitu tes a "technical regulation" within the meaning 
of the TBT Agreement, the panel should asses the conformity of the measure with the TBT provisions 
first.2  
III. WHETHER THE MEASURE AT ISSUE IS MORE TRADE-RESTRICTIVE THAN 
NECESSARY TO FULFIL A LEGITIMATE OBJECTIVE OR NOT 
5. In its submission, Indonesia claimed that among others, Section 101(b) of the FSPTCA is 
inconsistent with Article 2.2 of the TBT Agreement. Moreover, Indo nesia argues that the ban in the 
Special Rule can not be justified by Article XX of the GATT. 3 Turkey considers that although not 
identical the "necessity test" envisaged in Article  2.2 of the TBT Agreement and GATT XX are quite 
similar to each other as explained below. 
6. Within the WTO framework, the TBT Agreemen t is intended to ensure that technical 
regulations do not constitute unnecessary barriers to in ternational trade, while recognizing the right of 
members to take regulatory measures to achieve their legitimate objectives. On the other hand, 
                                                      
1 Appellate Body Report, EC – Asbestos , paras. 67-69. 
2 Appellate Body Report, EC – Bananas III,  para. 204; Panel Report, EC – Asbestos, paras. 8.15-8.17; 
Panel Report, EC – Sardines , paras. 7.14-7.19. 
3 Indonesia's first written submission, p. 34.  WT/DS406/R 
 Page B-25 
 
 
  Article 2.2 of the TBT Agreement defines the cond itions that a technical regulation must carry, in 
order to achieve the intention of the Agreement.  
7. According to Article 2.2 of the TBT Agreement,  a technical regulation can not be considered 
as a measure consistent with the TBT Agreement if it creates unnecessary obstacles to international 
trade. The TBT Agreement explains that unnecessary obstacles to trade can result when a regulation is 
more restrictive than necessary  to achieve a given policy objective e.g. national security requirements; 
protection of human health or safety, animal or plant life or health, or the environment, or when it 
does not fulfil a legitimate objective.  
8. Turkey believes that consistency examination th at should be carried out under Article 2.2 of 
the TBT Agreement  is very similar to that of to be carried out under Article XX(b) and the 
introductory clause to Article XX.  
9. Turkey would like to underline that, as emphasize d by the AB, in accordance with Article II:2 
of the WTO Agreement, all WTO Agreement must be  interpreted as a whole, and in a manner that 
gives meaning to all of them harmoniously. This a pproach does not necessarily mean that each term 
should be given the same meaning in all the WTO Agreements or each commitment envisaged in the 
WTO Agreements should create the same level of obligation.  
10. Turkey notes that the preamble of the TBT Ag reement uses the same wording as Article XX 
of GATT. In this regard, Turkey considers that  the preamble of the TBT Agreement should be 
considered in interpreting the obligations stipulated  in the TBT Agreement in general and Article 2.2 
in particular. Such an interpretation should be ca rried out in a harmonious way with that of the 
chapeau of Article XX of the GATT.  
11. Turkey also notes that the wording of Article  2.2 of the TBT Agreement and Article XX (b) 
of GATT is similar.  
12. In Turkey's view, one of the requirements that  should be assessed in determining whether the 
measure is in conformity with Article 2.2 of the TBT Agreement is the necessity of the measure for 
the fulfilment of one of the legitimate objectives mentioned in Article 2.2 of the TBT Agreement. 
13. Turkey believes that the elaboration of the "necessity test" under Article XX of the GATT by 
the Appellate Body and the previous Panels shed  light on the assessment of the "necessity test" 
provided under Article 2.2. Therefore, Turkey cons iders that the "necessity test" under Article 2.2 of 
the TBT Agreement includes consideration of the measure's effectiveness in fulfilling the asserted 
objective, assessment of its degree of trade-rest rictiveness; and reasonably available less trade-
restrictive alternatives. If TBT consistent or less trad e restrictive alternatives ex ist then the measure at 
issue would not be in conformity with Article 2.2. of the TBT Agreement.  
14. On the other hand, a regulation cannot fulfil its le gitimate objective, if the restrictions stated 
in the regulation do not apply to like products th at have the same effect. The objective of the 
challenged measure is stated as "to address the particular problem of youth smoking".4 In Turkey's 
view, to achieve this objective, all like products ap pealing to underage smokers should be included in 
the scope of the challenged measure. In this contex t, the decision of the Panel as to whether regular, 
menthol flavoured and clove flavour ed cigarettes should be considered  as like products or not, shall 
have an important affect in determining the confor mity of the measure at issue with WTO obligations. 
                                                      
4 United States' first written submission, para. 6. WT/DS406/R  
Page B-26  
 
  IV. LIKENESS OF PRODUCTS 
15. Both the TBT Agreement and GATT 1994 obligat e Members of the WTO to accord to 
imported products "treatment no less favourable than that accorded to like products  of national origin. 
Therefore, in Turkey's view, both under the TBT Agreement and the GATT, in order to determine 
whether "less favourable treatment" has been applied to clove cigarettes from Indonesia, the Panel has 
to decide whether clove flavoured cigarettes and; regular and menthol flavoured cigarettes are like 
products, within the scope of this dispute.  
16. Accordingly in determining whether two products  are like products there are four criteria that 
should be taken into consideration which are; (i) th e physical characteristics of the product, (ii) end 
uses of the product, (iii) consumer perception of the products and finally (iv) the tariff classifications 
of products.  
17. Moreover, Turkey would like to draw the Panel' s attention to the statement emphasized by the 
Appellate Body in EC – Asbestos . The Appellate Body stated that "although each criterion addresses, 
in principle, a different aspect of the products involved, which should be examined separately, the 
different criteria are interrelated . For instance, the physical properties of a product shape and limit the 
end-uses to which products can be devoted. Consumer perceptions may similarly influence, modify or 
even render obsolete, traditional uses of the products."
5 
18. In Turkey's view, in the present dispute th e Panel should carefully examine consumer 
(consumers which the Act aims to protect) perceptions, which may in fluence the determinations under 
other criteria. In this regard, the panel should identi fy (i) the consumers of each type of cigarettes, 
namely regular, menthol and clove cigarettes;  (ii) cigarette preferences of consumer groups, 
consumers targeted by the Act specifically, in pe rcentages;  (iii) how the competition relation is 
effected by consumer preference s among the examined products and whether consumer  preferences, 
specifically ones of the consumer group targeted by the Act slide to the other group of products. If the 
transition of consumption is easy, this means th at the competition and likeness between products is 
high.  
19. If the Panel were to determine that, for the sak e of this dispute, regular and/or menthol 
flavoured and clove flavoured cigarettes are like pr oducts, the challenged measu re would be in breach 
of the national treatment obligation under the TBT Agreement and/or under Article III.4 of 
GATT 1994, depending on the other elements of the na tional treatment obligation. However, at this 
stage Turkey will not comment on those elements of  the national treatment obligation. Nevertheless, 
Turkey would like to remind the Panel that it should carefully examine main production places of 
each type of cigarettes i.e. whether they are domestically produced or imported. As the Appellate 
Body noted in Japan – Alcoholic Beverages II  with regard to the first paragraph of the Article III of 
the GATT, which articulates a general principle that internal measures should not be applied so as to 
afford protection to domestic production, this co nsideration informs the application of national 
treatment obligation.6  
V. CONCLUSION  
20. Turkey appreciates this opportunity to present its  views to the Panel. Turkey requests the 
Panel to review the comments stated in this su bmission, in interpreting the TBT Agreement and the 
GATT.  
_______________  
                                                      
5 Appellate Body Report, EC – Asbestos , para. 102. 
6 Appellate Body Report, Japan – Alcoholic Beverages II , pp. 17-18.  WT/DS406/R  
 Page C-1 
 
 
  ANNEX C 
 
EXECUTIVE SUMMARIES OF THE SECOND WRITTEN SUBMISSIONS 
OF THE PARTIES 
 
Contents Page 
Annex C-1 Executive summary of the second written submission of Indonesia C-2 
Annex C-2 Executive summary of the second written submission of the United States C-12 
 WT/DS406/R  
Page C-2  
 
  ANNEX C-1 
 
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION 
OF INDONESIA 
  
I. INTRODUCTION 
1. Indonesia recognizes that WTO rules provide Members with a certain amount of discretion 
regarding their regulatory regimes, especially regardi ng the protection of public health.  Past panels 
and the Appellate Body have found that certain m easures that restrict trade, but are necessary to 
protect human health are consistent with WTO commi tments.  However, WTO rules also clearly state 
that a Member's discretion is not  unlimited and Members must satisfy certain requirements in their 
adoption of measures that restrict trade.  In the in stant case neither the scientific evidence nor the data 
on smoking supports banning clove cigarettes but not menthol- or tobacco-flavoured cigarettes.  Thus 
Section 907(a)(1)(A) of the Federal Food, Drug, and Cosmetic Act (as amended by the Family 
Smoking Prevention and Tobacco Control Act of 20 09 ("FSPTCA")) (hereinafter the "Special Rule") 
is inconsistent with Article 2.1 of the TBT Agre ement and III:4 of the GATT 1994.  Furthermore, the 
evidence shows that the Special Rule is more tr ade restrictive than necessary in violation of 
TBT Article 2.2.  Finally, in adopting the Special Rule, the United States failed to comply with certain 
other provisions of the TBT Agreement, which resulte d in violations of TBT Articles 2.5, 2.8, 2.9, 
2.12, and 12.3. 
II. FACTS 
A. C
LOVE CIGARETTES DO NOT APPEAL  OVERWHELMINGLY TO YOUTH  
2. The United States has claimed that flavoured cigarettes, including clove cigarettes, were 
banned because they "appeal overwhelmingly to youth" .  In considering the results of the various 
surveys put forward by both Indonesia and the United States, the Panel should look carefully at the age ranges used by the United States.  In many case s, while the United States is making claims about 
"youth" use of flavoured cigarettes, they are actua lly using survey data that includes both youth (17 
and under) and young adults (18-25).  The FSPTC A itself and the House Report accompanying the 
legislation both make it clear that the objec tive of the FSPTCA is to reduce smoking by those 
under 18.  The United States cannot "retrofit" a new objective into the measure simply to make the 
data more favourable to its case.  Therefore, smoki ng rates of young adults are not relevant to the 
facts of this case and the Panel should consider only the rates of use by youth (17 and under) and 
adults (18 and over). 
3. The United States has cited survey results from the National Youth Tobacco Study ("NYTS "), 
Monitoring the Future ("MTF "), and the National Survey on Drug Use and Health  ("NSDUH ") as 
supporting its claim that clove cigarettes were " overwhelmingly" and "dis proportionately" used by 
youth.  Indonesia has identified many inconsiste ncies in the survey data relied upon by the 
United States, which, when corrected , reveals a lower rate of use than that initially reported by the 
surveys.  However, even assuming arguendo that the rates reported by the United States were  correct, 
the results still prove that clove cigarettes are not popular with youth at all, much less 
"overwhelmingly" so.  For example, the NYTS  reported that 11 per cent of those smokers surveyed 
(including young adults up to the age of 21) had tried a clove cigarette in the last 30 days.  MTF  found 
that 5.5 per cent of 12th graders (some of whom may be 18) had tr ied a clove cigarette in the last year.  
The NSDUH  – using the survey question from 2003 pref erred by the United States – reported that 
5 per cent of youth smokers had tried a clove cigarette in the past 30 days.  This data shows that, at a 
minimum, close to 90 per cent of youth who smoke ha ve not even touched a clove cigarette.  This is 
consistent with the MTF  researchers' conclusion that, "kretek [clove cigarette] use was a short-term  WT/DS406/R  
 Page C-3 
 
 
  fad that simply did not catch on with mainstream  youth".  The survey data shows that menthol 
cigarettes, pipes, cigars and other tobacco produc ts are even more popular with youth than clove 
cigarettes. 
4. The data further shows that a consistent but  small number of adult smokers (on average 
0.3 per cent) do report using clove cigarettes as the brand smoked "most often". A breakdown of 
NSDUH  clove cigarette smokers by age shows that there are more than ten times as many smokers 
over the age of 30 whose regular brand is clove as there are regular clove smokers under 18 years of 
age.  Adults do use clove cigarettes and this f act cannot be dismissed as the United States has 
suggested. 
5. Furthermore, Indonesia has provided substantial ev idence that the "trainer" cigarettes that are 
familiarizing young people in the United States with smoking are not clove cigarettes, rather they are 
popular US brands, including menthol cigarettes.  Forty-two per cent of youth smokers use menthol 
cigarettes "most often".  The average rate of menthol  use by adults falls to 30 per cent – a significant 
drop from the youth rate, indicating that youth st art on menthol cigarettes and switch to tobacco-
flavoured cigarettes in adulthood.  Sixty per cent of  current adult clove smokers identified "Marlboro" 
or "Camel" as their first brand of cigarette smoked  and two thirds of all current clove cigarette 
smokers reported smoking their first clove cigarett e more than one year after trying their first 
cigarette.  In addition, Menthol cigarettes are used by 62 per cent of new middle school smokers and 
by 46 per cent of new high school smokers.  Eighty- seven per cent of high school smokers smoke just 
three heavily marketed brands: "Marlboro", "Camel",  and "Newport".  Two of the three brands that 
were the subject of the Klein Study , which the United States asserts shows greater appeal of flavoured 
cigarettes to youth, were menthol-based flavours.  
B. CLOVE CIGARETTES HAVE THE SAME HE ALTH RISKS AS OTHER CIGARETTES  
6. Indonesia has provided evidence from the Food and Drug Administration ("FDA") and 
Centers for Disease Control ("CDC") that indicates that  clove cigarettes are just as addictive and have 
the same health risks as other cigarettes.  Ind onesia has also provided  a series of studies by Clark 
(Exhibit IND-30) that conclude that clove cigare tte smoke was no more ha rmful than conventional 
cigarette smoke, and in some cases was less harmful.  In light of the fact that the Department of Health and Human Services ("HHS") has not notifie d Congress of any health risks attributable to 
ingredients found in clove cigarettes, the United Stat es cannot suggest to this Panel that  substances 
such as eugenol, coumarin, and others "possibly" c onstitute an additional health risk posed by clove 
cigarettes.  There is absolutely no scientific eviden ce that any of the ingredients in clove cigarettes 
make them more dangerous than other cigarettes.   
III. THE UNITED STATES HAS NOT AD EQUATELY REBUTTED INDONESIA'S 
NATIONAL TREATMENT CLAIMS  
7. In its first written submission, Indonesia met its burden to establish a prima facie case that the 
Special Rule is inconsistent with both Article 2. 1 of the TBT Agreement and Article III:4 of the 
GATT 1994.  As set out in Indonesia's first written submission, to establish a breach of 
TBT Article 2.1, the complaining party must demons trate: (1) the measure at issue is a technical 
regulation; (2) the imported and domestic products ar e "like" products"; and (3) the imported product 
is accorded less favourable treatme nt than the domestic like product.  The elements for establishing a 
breach of GATT Article III:4 are the same except that  Article III:4 does not require that a measure be 
a technical regulation, but instead "a law, regulat ion, or requirement affe cting the internal sale, 
offering for sale, purchase, transportation, distri bution, or use of the imported and domestic like 
products".  Indonesia established each required elemen t for each national treatment claim in its first 
submission.  WT/DS406/R  
Page C-4  
 
  A. T
HE UNITED  STATES HAS NOT REBUTTED INDONESIA 'S PRIMA FACIE CASE REGARDING 
TBT A RTICLE  2.1  
8. Because Indonesia presented a prima facie case as to its claims under TBT Article 2.1 and 
GATT Article III:4, the burden of proof shifted to the United States to refute Indonesia's allegations 
of inconsistency.  The United States chose, howev er, not to rebut the presumption of the Special 
Rule's inconsistency with TBT Ar ticle 2.1 in its first written submission and instead attempted to 
defend the  prima facie case that Indonesia presented on Article III:4 of the GATT 1994.  As a result 
of the United States' failure to refute Indonesi a's prima facie case as to Article 2.1 of the 
TBT Agreement, the Panel should rule in Indonesia's favour on this claim.  
B. THE SPECIAL RULE VIOLATES GATT  ARTICLE  III:4 
9. In its first submission, Indonesia showed that clove cigarettes are "like" domestically 
produced menthol- and tobacco-flavoured cigarette s using the four criteria for assessing likeness 
established by past panels and the Appellate Body.  For each of these criterion the United States tries 
to draw the smallest of distinctions between cl ove and menthol- and tobacco-flavoured cigarettes in 
an effort to show that they are not "like". The narrow distinctions identified by the United States are 
insignificant and do not detract from the competitive re lationship that exists between clove cigarettes, 
on one hand, and menthol- and tobacco-flavoured cigarettes, on the other hand.  
10. The United States asserts that because the specific ingredients of clove cigarettes are different 
from those of menthol- and tobacco-flavoured ciga rettes, these cigarettes do not share sufficient 
physical characteristics to be "like" products.  Th e relevant question, however, is whether all three 
cigarettes share similar physical "properties" or "characteristics".  Indonesia deomonstrated  in its first 
submission that they do – they all use flavouring s ubstances in combination with tobacco to achieve a 
specific desired flavour, which is presented to the consumer in a paper wrapper with a filter.  
Indonesia has submitted evidence that up to 80 per cent of the tobacco used in clove cigarettes is the 
same kind of tobacco used in US-made cigarettes.  All three types of cigarettes meet the US definition 
of cigarette and all three fall into the same size/weight class for tax purposes.  
11. The United States tries to mask these similar ities by putting forth several alleged physical 
differences between clove cigarettes and menthol- and tobacco-flavoured cigarettes.  These claims 
both mischaracterize the facts about  clove cigarettes and ignore rele vant facts about menthol and 
tobacco cigarettes.  
12. First, the United States asserts that because clove cigarettes are flavoured with cloves and a 
"sauce" of other flavours, they have different physical characteristics from menthol- and tobacco-
flavoured cigarettes.   This overlooks the fact that menthol and tobacco cigarettes each have their own 
flavouring agents, which are also referred to as "sau ce" or "casing".  The so-called "sauce" for clove 
cigarettes is very similar to the flavouring i ngredients used in American cigarettes.  All 
US manufactured cigarettes, not just clove as th e United States claims, add flavourings to their 
cigarettes to differentiate their taste from other cigarettes.   
13. Second, the United States is incorrect that unlike clove cigarettes, menthol- and tobacco-
flavoured cigarettes do not contain significant quantities of food products.  On the contrary, 
US manufacturers have released a list of almost 600 ingredients used in a wide variety of cigarettes.  These ingredients include a number of food material s including cocoa, chocolate, licorice, sugars, 
honey, maple syrup, apple juice, beet juice, grape juic e, pineapple juice, plum juice, coffee, corn oil, 
and vinegar.  Furthermore, menthol itself is a common food flavouring.    WT/DS406/R  
 Page C-5 
 
 
  14. Third, the United States tries to paint the vari ous ingredients in clove cigarettes, such as 
eugenol and coumarin, as more dangerous than ingredients in menthol- or tobacco-flavoured 
cigarettes.  Scientific and other data do not support this claim. 
15. Finally, the United States claims in its first written submission that "the unique physical 
characteristics of clove cigarettes create a different physical experience for smokers than the 
experience created by other cigarettes such as toba cco or menthol".  Indonesia disagrees that the 
design of clove cigarettes is a result of the "unique" physical characteristics of clove cigarettes. 
Cigarette manufacturers design cigarettes to provide a certain level of flavour intensity regardless of 
whether that flavour is clove, menthol, or tobacco. 
16. Indonesia believes the end use of a ll cigarettes is the same – that  is, they are used to smoke 
tobacco.  Delivery of nicotine is a consequence of the end use of smoking tobacco since all tobacco 
products contain nicotine.   
17. Data shows that the amount of nicotine delivered  from a cigarette is determined by how much 
smoke is drawn from a cigarette.  The United Stat es itself provided a study showing that subjects' 
nicotine blood levels and heart rates were exactly  the same after smoking a clove cigarette and a 
regular cigarette. The scientific data shows that flavoured cigarettes, including clove, are as addictive 
as other cigarettes.  To the extent there is any info rmation on the linkage between type of cigarette and 
level of addiction, that evidence indicates that  menthol smokers have a more difficult time quitting 
smoking and may be more addi cted than other smokers.  
18. In its first written submission, Indonesia presen ted evidence that most consumers perceive 
clove cigarettes, menthol- and tobacco-flavoured ci garettes as an alternative means to smoking, as 
demonstrated by consumers actively substituting the three types for the end use of smoking.  Indonesia and the United States agree that a majority of clove cigarette smokers  (75-79 percent) also 
smoke menthol and regular cigarettes.  Yet, despite  its acknowledgment of this fact, the United States 
argues in its first written submission that consumers differentiate between the se cigarettes such that 
they are not in a competitive relationship with one  another.  The facts simply do not support the 
United States' assertion. 
19. First, the United States asserts that clove cigarettes and menthol- and tobacco-flavoured 
cigarettes do not compete with each other because cl ove cigarettes are used as a "special occasion" 
cigarette.  Indonesia disputes that clove cigarett es are used only as an occasional or special-occasion 
cigarette.  The NSDUH  data provided by Indonesia shows that th ere is a small, but consistent, portion 
of adults who report smoking clove cigarettes "most often".  Clove cigarettes have been sold in the 
United States for 40 years and have never been mark eted as a "seasonal" or "limited edition" product.  
What is most relevant is that smokers ar e known to switch among clove, menthol, and tobacco 
cigarettes, which shows that they are, in fact, willingly substituting the products to achieve the same 
end use of smoking.   
20. Second, the United States also tries to draw distinctions in consum er behavior with its 
assertion that young smokers "overwhe lmingly" smoke clove cigarettes, while only a small fraction of 
adults do the same.  According to the United States, this is in stark contrast to menthol- and tobacco-
flavoured cigarettes that "are used regularly by a large population of young people, but especially 
adults, who smoke them regularly". None of the evidence provided by the United States shows this.  
In fact, the data that the United States uses to suppor t its assertion actually proves that, at a minimum, 
almost 90 per cent of youth smokers (under 18 years of age) are not using clove cigarettes.  The 
evidence shows that menthol-flavoured cigarettes are much more popular with youth than clove 
cigarettes.  Further, adults do use clove cigarettes.   There is simply no evidence which suggests that 
clove cigarettes are unlike menthol- and tobacco-flavour ed cigarettes in terms of their use by youth 
and adults.  WT/DS406/R  
Page C-6  
 
  21. Clove cigarettes and domestically produced ciga rettes have the same international tariff 
classification at the 6-digit level (2402.20).  The 6-di git level of tariff classification is the relevant 
classification because it is the most detailed leve l that can be compared internationally.   
22. In sum, Indonesia has established that clove ci garettes have the same physical characteristics, 
end uses, consumer preferences, and tariff classifica tion as menthol- and tobacco-flavoured cigarettes.  
None of the assertions advanced by the United St ates point to significant differences between the 
three types of cigarettes that would render them not "like". 
23. Because they are "like" products, GATT Article  III:4 requires that imported clove cigarettes 
be treated no less favourably than domestically pr oduced menthol- and tobacco-flavoured cigarettes in 
the US marketplace.  While facially ne utral, the Special Rule results in de facto  discrimination against 
imported products.  The ban on characterizing flavours does not include menthol- and tobacco-
flavoured cigarettes.  Both menthol- and tobacco -flavoured cigarettes are produced primarily in the 
United States, while clove cigarettes, which were banned, are predominantly imported from 
Indonesia.  By banning clove cigarettes and not the domestic like products (menthol- and tobacco-
flavoured cigarettes), the United States has modified  the conditions of competition to the detriment of 
imported clove cigarettes.  In fact, virtually all dom estically produced cigarettes were not affected by 
the restrictions imposed by the Special Rule, thus the Special Rule results in de facto  discrimination 
against imported clove cigarettes. 
24. Indonesia and a number of third parties have expressed concern with the argument put 
forward by the United States that Indonesia must de monstrate that the Special Rule accords different 
treatment to clove cigarettes "based on their national origin".  No panel or Appellate Body report has 
ever required both a "less favourable treatment" test and a second "based on national origin" test in 
Art. III.4 of the GATT 1994.  As Indonesia and thir d parties have explaine d, domestic and imported 
products can be treated differently, but that treatment  will be "less favourable" if it has the effect of 
modifying the conditions of competition to the de triment of the imported products.  Indonesia urges 
the Panel to reject the notion proposed by the Unite d States that the Special Rule must discriminate 
"based on national origin" in order to result in  "less favourable treatment" to imported clove 
cigarettes.   
25. The United States also is mistak en that "the fact that domestic cigarettes also fall under the 
ban, and that the vast majority of imported cigare ttes are still permitted for sale in the United States 
means that the Special Rule does not provide "less fa vourable treatment".  A violation of Article III:4 
can be established by showing that there are some imported products that are treated less favourably 
than the most favourably treated domestic like product .  The principle is simple – if the products at 
issue are "like", then a Member may not afford the imported product "less favourable treatment".  In 
the present case, the relevant comparison is whether imported clove cigarettes are "like" any domestic 
cigarettes that were not banned, na mely menthol- or tobacco-flavoured cigarettes.  It is not necessary 
for the Panel to consider whether clove cigarettes are treated less favourably than domestic cigarettes 
that were also banned or imported cigarettes that were not banned.  Furthermore, contrary to the 
United States' suggestions, neither intent to discriminate against imports nor the economic effect of a measure, are part of the Panel's "less favourable treatment" analysis.   
26. In this case, Indonesia has shown that the Unite d States treats imported clove cigarettes less 
favourably than the "like" domestic menthol- and tobacco-flavoured cigarettes. Clove cigarettes are 
banned while menthol- and tobacco-flavoured cigarett es are not.  The United States' claim of a "based 
on national origin" requirement, its reasons for banni ng clove but not the other two "like" kinds of 
cigarettes, and the effect of the ban should not distract the Panel from this simple fact.   WT/DS406/R  
 Page C-7 
 
 
  IV. THE UNITED STATES HAS NOT REBUTTED INDONESIA'S CLAIM THAT THE 
SPECIAL RULE IS INCONSISTENT WITH TBT ARTICLE 2.2  
27. In its first written submission Indonesia established a prima facie case that the Special Rule is 
inconsistent with Article 2.2 of the TBT Agreement because it is more trade restrictive than necessary 
to protect human health taking into account the risks of non-fulfilment and, therefore, is an 
unnecessary obstacle to international trade.  In r esponse, the United States not only disagreed with 
Indonesia on the appropriate framework for the Panel's analysis, but also contended that Indonesia 
failed to establish a violation of Article 2.2.  The United States' proposed test for the analysis of 
Article 2.2 is wrong and its other assertions similarly lack merit.  
A. FRAMEWORK FOR THE PANEL 'S ANALYSIS  
28. In its first written submission Indonesia submitted that the test for applying GATT 
Article XX(b) and the chapeau developed by past pane ls and the Appellate Body is applicable to the 
Panel's analysis of TBT Article 2.2.  The similar ity of the text of Article XX of the GATT 1994 and 
its subparagraph (b), on one hand, and Article 2. 2 of the TBT Agreement and its Preamble, on the 
other hand, would appear to indicate a high degree of correlation between the intended meaning of the 
two provisions.  The purpose of TBT Article 2.2, wh en read with the Preamble, is similar to the 
purpose of Article XX of the GATT 1994 in that bot h provisions allow Members to have in place 
measures that restrict trade, so long as the Member  (i) pursues a legitimate objective; (ii) the measure 
is necessary to fulfil the objective; and (iii) the measu re is not more trade restrictive than necessary to 
fulfil the objective.  It is these three factors that the Panel should evaluate in analysing whether the 
Special Rule is consistent with the United St ates' obligations under TBT Article 2.2.   
29. For its part, the United States calls this propo sed framework "radical" and instead advocates 
the use of Article 5.6 of the Agreement on the A pplication of Sanitary and Phytosanitary Measures 
("SPS Agreement") as relevant context for the interpre tation of TBT Article 2.2.  The United States' 
argument is unpersuasive for several reasons.  Firs t, it is hard to unders tand why the SPS Agreement 
provides relevant context, but the GATT 1994 do es not.  Second, the United States overemphasizes 
the significance of the contextual differences of th e term "necessary" in TBT Article 2.2 and GATT 
Article XX.  The "contextual difference" asserted by  the United States does not speak to the ordinary 
meaning of the term "necessary".  Finally, the languag e used in SPS Article 5.6 is more specific and 
puts a greater burden on Members challenging a measure  than the language in TBT Article 2.2.  In 
contrast, the language in Article 2.2 is very simila r to that found in Article XX of the GATT 1994.  
B. LEGITIMATE OBJECTIVE OF THE SPECIAL RULE  
30. As to what objective the Special Measure pursues, Indonesia believes the Panel should look to 
the House Report accompanying the FSPTCA.  Accord ing to the House Report, the objective of the 
Special Rule is the protection of public health by reducing the number of children and adolescents 
who smoke cigarettes.  Indonesia concedes that bot h protecting human health through the regulation 
of tobacco products and reducing youth smoking are legitimate objectives.   
31. The United States asserts the objective of the Special  Rule is to "protect[ ] public health by 
reducing smoking prevalence among young people  while avoiding the potential negative 
consequences associated with banning  products to which tens of millions  of adults are chemically and 
psychologically addicted due to the potential but unknown consequences for the health of the 
individual users or the overall population".  Thus, this formulation diverges from the House Report in 
several important ways that have implications for th e Panel's analysis of the United States' defenses.   
32. First, the United States refers to "young people"  not "children and adolescents" as used in the 
House Report.  By the United States' own definition it is attempting to capture both "children" (ages WT/DS406/R  
Page C-8  
 
  17 and younger)  and "young adults" (ages 18 to 25 ) in a category of "young people" (ages 12-26).  
By referring to "young people" rather than "child ren and adolescents", or "youth", it appears the 
United States is trying to "retrofit" the objective of the Special Rule to cover a broader population 
than Congress intended.  The House Report plainly stat es that the Special Rule is aimed at reducing 
smoking of children and adolescents (people aged 17 or younger). 
33. Second, before the Panel the United States adds to the objective of the Special Rule "avoiding 
potential  negative health consequences".  In Indonesia's vi ew, this is not part of the objective of the 
Special Rule as stated in the House Report. In any event, the United States presents no evidence, 
scientific or otherwise, of these supposed negative health effects  (e.g . a strain on the health care 
system and the expansion of the cigarette black mark et) that the Special Rule is designed to avoid; 
that is because, as the United States acknowledges, these consequences are "unknown".  In truth, there 
is evidence that an objective ot her than "avoiding potential negativ e health consequences" was at 
work in the design of the Special Rule. Indonesia h as provided evidence that the United States did not 
include menthol cigarettes in the Special Rule becau se a domestic cigarette producer objected to it.  
C. MORE TRADE RESTRICT IVE THAN NECESSARY  
34. However legitimate the objective of the Special  Rule may be, the Special Rule itself is not 
necessary to achieve this objective.  The United St ates' arguments to rebut Indonesia's prima facie 
case must fail because the lynchpin of their defen se – that the Special Rule only bans "trainer" 
cigarettes not regularly used by adults – is not supp orted by the evidence.   As a result, the Special 
Rule does not materially contribute to the objectiv e of reducing youth smoking and, thus, not banning 
clove cigarettes would pose no significant risk to th e fulfilment of the measure's objective to reduce 
youth smoking.  At this point whether there are less- trade restrictive measures is moot as the Special 
Rule cannot be necessary if it does not fulfil its objec tive.  However, as Indonesia demonstrated in its 
first written submission, there were several less -trade restrictive measures available to the 
United States to limit the availability  of clove cigarettes to youth.   
35. In determining whether the Special Rule is "necessary" to achieve its objective, the Panel 
should examine whether it makes a material contri bution toward achieving the objective of reducing 
youth smoking.  Indonesia submits that the Special Rule cannot make a material contribution to the 
high level of protection sought by the United States by  banning the cigarette that youths for the most 
part do not smoke.     
36. TBT Article 2.2 provides that the necessity of a measure is to be determined by taking into 
account the risks associated with no t adopting the challenged measure ( i.e., the risk of non-
fulfilment).  Accordingly, the Panel should evaluate the likely impact of not banning clove cigarettes.  
To answer this the Panel should again consider wh ether banning clove cigarettes, but not menthol- or 
tobacco-flavoured cigarettes, contributes to a reduction in the level of smoking by youth.   Indonesia 
has made a prima facie case that the failure to ba n clove cigarettes would not pose any significant risk 
to the stated objective of the Special  Rule or the health of adolescents.  
37. For its part, the United States asserts that the ri sk of non-fulfilment is that "the smoking rates 
of young people remaining unchange d". As very few adolescents actually smoke clove cigarettes, it is 
hard to comprehend how not banning them would ma ke any difference, significant or otherwise, in 
smoking rates, never mind the 50 per cent reduction sought by the FSPTCA.  The United States 
admits as much when it was not able to provide  any data on reduction in youth smoking since the 
Special Rule went into effect. 
38. As Indonesia has adduced evidence that the Special Rule does not materially contribute to the 
objective of reducing youth smoking and that fail ure to ban clove cigarettes would not pose a 
significant risk to the fulfilment of the objective, th e burden shifts to the United States to rebut this  WT/DS406/R  
 Page C-9 
 
 
  claim.  Since the United States has failed to satisfy this burden, the Special Rule is not necessary.  As 
such, there is no need to examine whether less- trade restrictive measures were available.   
39. However, if the Panel disagrees, Indonesia demonstrated in its first written submission that 
there were several less-trade restrictive measures av ailable to the United States to limit the availability 
of clove cigarettes to youth.  These included limiting sales to adult-only locations, restricting cigarette advertising/labelling, and raising the minimum age required to buy the product.  The United States 
argues that Indonesia failed to prove that its pro posed alternatives would fulfil the objective of the 
measure at the level of protection sought by the United States or that these alternatives were 
significantly less trade restrictive. 
40. As an initial matter, Indonesia does not have to  show that its proposed alternatives are 
"significantly" less trade restrictive, only that they are "less trade restrictive". Any of one of 
Indonesia's proposed alternatives would have been "le ss trade restrictive" than  the measure applied by 
the United States – a complete ban on all imports, produc tion, and sale of clove cigarettes.  All of the 
proposed alternatives were reasonably available to the United States and could achieve a reduction in 
youth smoking as they were either (1) already in  the FSPTCA and considered effective by the 
United States for keeping youth from smoking menthol - or tobacco-flavoured cigarettes; (2) had been 
adopted by the United States in other contexts to  remove flavoured cigarettes from the market and 
could have been incorporated into the FSPTCA; or  (3) are in use by other countries for the same 
purpose of reducing youth smoking.  
41. For instance, the United States could have relied upon the other regulatory powers in the bill 
to prevent youth smoking and achieve the same resu lt as with the Special Rule.  As Indonesia has 
demonstrated, banning clove cigarettes cannot make a significant dent in youth smoking because so few youth smoke them and there is no evidence that th ey are a starter cigarette that leads to smoking 
other cigarettes.  Thus, if the United States cons iders the measures aimed at reducing youth smoking 
of menthol- and tobacco-flavoured cigarettes effective,  they should be equally effective at reducing 
clove cigarette smoking by youth.  To the extent that the United States is worried about tobacco 
companies introducing new flavoured cigarettes, the FSPTCA gives HHS the authority to approve new tobacco products and therefore can prevent ne w flavoured cigarettes from becoming available to 
youth.  The United States has provided no evidence to rebut the reasonable availability of Indonesia's 
proposed alternative measures or their ability to  achieve a reduction in youth smoking.   
D. D
ISGUISED RESTRICTION ON INTERNATIONAL TRADE  
42. The Preamble to the TBT Agreement provides in part that technical regulations are "subject to 
the requirement that they are not applied in a ma nner which would constitute a means of arbitrary or 
unjustifiable discrimination between countries wher e the same conditions prevail or a disguised 
restriction on international trade".  Thus, even if th e Panel finds that the Special Rule was necessary to 
reduce youth smoking, the Panel must also consider  whether it constitutes a disguised restriction on 
international trade.  Indonesia believes it does.  By  tailoring the ban on "characterizing flavours" in 
such a way that virtually no domestic cigarettes,  including those most popular with youth, were 
removed from the market, the United States was ab le to appear to be cracking down on youth 
smoking without actually inflicting any real harm  on US tobacco companies or eliminating any 
domestically produced cigarettes that are popular with  youth.  As discussed above, the scope of the 
ban in the Special Rule was a result of a comp romise with the domestic industry and not solely 
motivated by public health concerns.  In light of th is and the other evidence showing that the Special 
Rule is not "necessary", the Panel should find th at the Special Rule is inconsistent with 
TBT Article 2.2. WT/DS406/R  
Page C-10  
 
  V. THE UNITED STATES HAS FAILED TO ADEQUATELY REBUT INDONESIA'S 
OTHER CLAIMS UNDER THE TBT AGREEMENT 
A. T
HE UNITED  STATES ACTED INCONSISTENTLY WITH ITS OBLIGATIONS UNDER 
TBT A RTICLE  2.5 
43. In its first written submission, Indonesia showed  how the United States failed to explain its 
justification for the Special Rule in accordance with the terms of Article 2.5.  TBT Article 2.5 requires 
a Member to explain its justification "in terms of the provisions of Articles 2-4",  including the 
"scientific and technical information" related to the "risks non-fulfilment [of the health objective] 
would create", and how the measure chosen "fulfils" the objective sought.  It is precisely this content "in terms of Articles 2-4" that was missing from the United States' responses to Indonesia.  As 
Indonesia has established its prima facie case and th e United States has failed to adequately rebut 
these claims, the Panel should find that United Stat es acted inconsistently with TBT Article 2.5. 
B. T
HE UNITED  STATES HAS FAILED TO REBUT INDONESIA 'S CLAIMS UNDER TBT A RTICLE  2.8 
44. The United States contends that, with respect  to the Special Rule, a performance-based 
standard was not appropriate given that it is the a dditives, flavours, herbs, and spices that the Special 
Rule is intended to address.  Indonesia submits that  the ban on cigarettes with a characterizing flavour 
could have been specified in terms of performan ce, rather than descriptive characteristics, and it 
would have been appropriate to do so.  Indonesia has provided evidence that virtually all cigarettes 
include at least some additives, flavours, herbs, a nd spices.  The United States has indicated that the 
presence of constituents or additives do not meet  the definition of "characterizing flavour" per se .  
Without a performance-based standard, a producer ca nnot know which cigarettes are deemed to have 
a characterizing flavour of something other than tob acco or menthol.  In the instant case, the product 
can be defined in terms of performance.  As su ch, the Panel should find that the United States has 
acted inconsistently with TBT Article 2.8 by failin g to specify a performance-based standard in the 
Special Rule.  
C. THE UNITED  STATES ADMITS IT ACTED INCONSISTENTLY WITH TBT A RTICLE  2.9  
45. The United States has admitted it did not prov ide notification of the Special Rule in 
accordance with TBT Articles 2.9 or 2.10.  Therefor e the Panel should find that the United States has 
acted inconsistently with TBT Articles 2.9. 
D. THE UNITED  STATES HAS NOT REBUTTED INDONESIA 'S CLAIMS UNDER TBT A RTICLE  2.12 
46. Since Indonesia has made its prima facie case that  the 90-day interval before the Special Rule 
went into effect was significantly shorter than th e 6 months normally required and the United States 
has not asserted any "urgent circumstances" surrounding the adoption of the Special Rule, the Panel 
should find that the United States has acted inconsistently with TBT Article 2.12. 
E. THE UNITED  STATES HAS FAILED TO REBUT INDONESIA 'S CLAIMS UNDER TBT A RTICLE  12.3 
47. Indonesia submits that it has presented prima facie evidence that th e United States did not 
consider, along with other factors, its special needs as a developing country before reaching a decision 
that creates an unnecessary obstacle to trade.  The only question is whether th e United States' actions 
satisfied the requirements of Article 12.3 of th e TBT Agreement.  TBT Article 12.3 requires a 
Member to affirmatively do something.  The ac tions the United States undertook fall short of the 
requirements of TBT Article 12.3 and, therefore, the Panel should find that the United States acted 
inconsistently with its WTO commitments.   WT/DS406/R  
 Page C-11 
 
 
  VI. THE SPECIAL RULE CANNOT BE JUSTIFIED UNDER GATT ARTICLE XX 
48. In its first written submission, th e United States asserts that if th e Special Rule is found to be 
inconsistent with GATT Article III:4, then it is  justified under GATT Article XX.  Indonesia has 
already demonstrated in Section IV, above, that th e ban in the Special Rule is not necessary to reduce 
youth smoking and is a disguised restriction on intern ational trade.  As such, GATT Article XX does 
not save the Special Rule from a finding of WTO inconsistency.  
VII. THE SPECIAL RULE HAS NULLIFIED OR IMPAIRED BENEFITS TO 
INDONESIA  
49. As Indonesia has established that the United St ates has violated its obligations under the 
TBT Agreement and GATT 1994, there is a presumption that the United States has nullified or 
impaired benefits accruing to Indonesia within  the meaning of GATT ArticleXXIII:1(a).  The 
United States has failed to rebut this presumption and,  therefore, the Panel should find that the Special 
Rule has nullified or impaired benefits accruing to Indonesia.   
VIII.  CONCLUSION 
50. Indonesia has made a prima facie case on its claims under Article III:4 of the GATT 1994 and 
Articles 2.1, 2.2, 2.5, 2.8, 2.9, 2.12, and 12.3 of the TBT Agreement.  The United States has failed to 
rebut Indonesia's claims.  Indonesia respectfully requests the Panel to find that the United States has 
acted inconsistently with its WTO commitments ou tlined above and recommend that the United States 
bring the measure into compliance.  WT/DS406/R  
Page C-12  
 
  ANNEX C-2 
 
EXECUTIVE SUMMARY OF THE SECOND WRITTEN SUBMISSION 
OF THE UNITED STATES  
  
I. INTRODUCTION 
1. Section 907(a)(1)(A) is a public health measure  based on how cigarettes are used by the 
US population as a whole.  Cigarettes with certa in characterizing flavours are prohibited under the 
measure because they are especially enticing to young  people – and are therefore particularly harmful 
as they facilitate addiction – but also are not used by a large number of adults.  As such, from a public 
health perspective, it is both desirable and appr opriate to ban them.  Indonesia's claims against 
Section 907(a)(1)(A) rely on arguments that are e ither vague or wrong as a matter of law, and on 
factual assertions unsupported by evidence and refuted by the evidence submitted by the 
United States.  And instead of engaging on the public health issues involving Section 907(a)(1)(A) 
and youth smoking, Indonesia simply denies they exist.   
2. With respect to national treatment, Indonesia ma intains incorrectly that clove cigarettes are 
"like" tobacco and menthol cigarettes, and that S ection 907(a)(1)(A) accords less favourable treatment 
to Indonesian products because it does not also ban every domestic cigarette.  However, the relevant 
facts support that in the circumstances of this case, clove cigarettes are not "like" tobacco or menthol 
cigarettes.  Moreover, the prohibition on flavours contained in Section 907(a)(1)(A) in fact applies 
both to imported and domestic cigarettes, and does not apply to the vast majority of imported 
cigarettes. 
3. Like its national treatment arguments, Indonesia's arguments with respect to Article 2.2 of the 
TBT Agreement fail.  In particular, Indonesia has not  adduced any, much less sufficient, evidence to 
establish that a reasonably available less trade restri ctive measure exists that fulfils the objective of 
Section 907(a)(1)(A) at the level the United States  considers appropriate.  As such, Indonesia has 
failed to establish a prima facie claim that Section 90 7(a)(1)(A) is inconsistent with TBT Article 2.2.  
II. LEGAL ARGUMENTS 
A. N
ATIONAL TREATMENT CLAIMS UNDER ARTICLE  III:4  OF THE GATT  1994  AND ARTICLE  2.1 
OF THE TBT A GREEMENT  
4. As the United States noted in its Answers to the Panel's First Set of Questions to the Parties, 
the United States considers that  the Panel can consider togeth er the GATT 1994 and TBT national 
treatment claims, with due consideration to the partic ular context and requirement s of each claim.  In 
fact, the United States submits that the TBT Agreemen t provides specific context, which is relevant to 
the national treatment analyses under the TBT Agreement and under the GATT 1994.  The repeated 
theme captured in the Preamble is that technical me asures may make product dis tinctions that affect 
international trade, so long as certain conditions are met. Thus, as illustrated by the text of the 
TBT Agreement, Members recognized that technical  measures often serve the purpose of prescribing 
and proscribing product characteristics, requirements and standards, and that such measures may often 
– legitimately and permissibly – affect internati onal trade and the market access of products, both 
foreign and domestic. Standing alon e, the mere fact that a technical regulation may affect 
international trade is not evidence that the measure is  inconsistent with trade obligations.  This layer 
of context is also relevant in the national treat ment analysis under the GATT 1994, as technical 
regulations are a particular sub-set of  the covered measures under Article III:4.  WT/DS406/R  
 Page C-13 
 
 
  5. Indonesia's "like product" analysis is inconsis tent – shifting from submission to submission – 
and without connection to the facts of the disput e or the context provided by the agreements.  
Indonesia begins in its first written submission by  noting – as it should – the Appellate Body's 
statement that the term "like product" "must be interpre ted in light of its context, and of the object and 
purpose, of the provision at issue, and of the object and purpose of the covered agreement in which the provision appears".  However, after noting the cont extual nature of "likeness", in the immediately 
following paragraphs Indonesia abandons this princi ple and invokes the conclusions reached in two 
disputes with entirely different factual situations as the basis for its claim that "all" cigarettes should 
be deemed "like" products.  In its Answers to th e Panel's First Set of Qu estions to the Parties, 
Indonesia then makes an abrupt shift – suggesting that all cigarettes are not necessarily "like" 
products.  Indonesia offers this characterization in response to a question concerning Indonesia's 
apparently different, less favourable tax treatment of foreign cigarettes.  
6. In addition, in Indonesia's first written subm ission, Indonesia recognized – as it should – that 
cigarettes with characterizing flavours such as berry  or chocolate are relevant to the dispute, and 
Indonesia included them in its like product analysis.  Significantly, Indonesia acknowledged as a 
legitimate "like product" distincti on cigarettes' implications for the public health, which is a primary 
distinction upon which clove and other characterizin g flavours are in fact different from tobacco and 
menthol.  Thus, Indonesia expressly recognized th at, based on their appeal and, implicitly, the 
demographics of their users, different cigarett es may pose a different health risk.  Moreover, 
Indonesia recognized that the health risk posed by ce rtain types of cigarettes is so significant in the 
context of this case that it means that those cigarette s "need not be considered like" other cigarettes.  
The US first written submission showed that clov e cigarettes – like the cigarettes with cherry, 
chocolate and other characterizing flavours mentioned in Indonesia's first submission – presented 
public health risks due to their appeal to younge r smokers.  Indonesia then changed its position on 
flavoured cigarettes.  In addition, Indonesia appro aches the four factors suggested in paragraph 18 of 
the Report  of the Working Party on Border Tax Adjustments (i.e. physical properties, end-uses, 
consumer tastes and habits, and tariff classification)  as a mechanical exercise, lacking any sort of 
compass as to which characteristics are relevant and which are not.  
7. The covered Agreements and the provisions at issue – Article 2.1 of the TBT Agreement and 
Article III:4 of the GATT 1994 – provide the context to determine "which characteristics or qualities 
are important in assessing the 'likeness' of products",  "the degree or extent to which products must 
share qualities or characteristics in order to be ' like products'", and "from w hose perspective 'likeness' 
should be judged".  The Appellate Body employs the traditional four factors, but has emphasized that 
these four factors are just tools to frame the inqui ry, and should not be used as a substitute for the 
analytical task of determining which factors of "likeness" are relevant in particular circumstances.  
The United States has set forth the contextual principles of the GATT 1994 and the TBT Agreement 
that in this case inform a national treatment an alysis under those Agreements.  The like product 
analysis should apply weight to those characteris tics which relate directly to whether the products 
regulated by the measure are competitive in the US  market and which are related to the measure's 
public health basis. 
8. Based on these two guiding principles, the Unite d States submits that certain characteristics 
are especially relevant to the like product analysis.  First, certain physical properties that are different 
among the compared products should be accorded weight, not only to the extent that they are relevant 
in assessing the competitive relationship between and among products, but also because they are 
relevant to the public health basis upon which S ection 907(a)(1)(A) diffe rentiates among products.  
Second, consumer tastes and preferences – which stem  from the relevant physical characteristics and 
which have important public health conse quences – also should be accorded weight. 
9. The physical presence of cloves in clove cigarettes is particularly relevant.  The nearly equal 
mixture of clove and tobacco in clove cigarettes sets  them apart to consumers in terms of their taste WT/DS406/R  
Page C-14  
 
  and aroma.  Consumers select clove cigarettes b ecause they contain clove, and select tobacco and 
menthol because of the flavour that characterizes those cigarettes.  In addition, clove cigarettes 
contain a "special sauce" that manufacturers expr essly tout as a distinguishing physical feature.  
Third, clove (and perhaps other flavours in the "s pecial sauce") contains eugenol, which evidence 
strongly suggests creates a numbing sensation that  differentiates cloves from other cigarettes, 
including menthol.  
10. These physical characteristics, unique to clove cigarettes, are directly related to consumer 
tastes and preferences.  These consumer choices and patterns of use also are particularly relevant to 
the public health basis upon which Section 907( a)(1)(A) distinguishes among cigarettes.  
Section 907(a)(1)(A) is based on the finding that ciga rettes with characterizing flavours (other than 
tobacco or menthol) are especially appealing to yo ung people within the age window of initiation and 
are much less appealing to older adults. 
11. The US position that certain physical traits should carry significant weight because of their 
relationship to consumer tastes and ha bits, patterns of use, and the particular public health risk at issue 
in this case is consistent with the approach in EC – Asbestos .  In that report, the Appellate Body 
considered each of the four criteria in turn, and then applied weight where it deemed appropriate to 
conclude that the particular physical character istic of toxicity was significant in the given 
circumstances.  And the relative toxicity of the prod ucts was directly relevant to the purpose of the 
challenged measure, which sought to protect the public  health by banning asbestos because of its level 
of toxicity.   
12. The characteristics of cloves noted above are the most relevant, and should be accorded 
significant weight.  And even when one examines other factors, those factor do not support 
Indonesia's argument that clove ciga rettes are like other types of ci garettes.  Clove cigarettes are 
different than tobacco or menthol cigarettes in all of the traditional categories – physical properties, 
consumer tastes and habits, end-uses, and tariff treatment.  
13. Indonesia would have the Panel consider th e "less favourable treatment" claim without 
respect to the context of the relevant Agreemen ts and based on an extreme view that has been 
squarely rejected by the Appellate Body.  Indonesia submits that all different types of cigarettes are a 
single "like product", and that if any domestic cigarette is permitted  under Section 907(a)(1)(A), the 
measure accords less favourable treatment to Indo nesian products.  Indonesia bases this view not on 
the text of the WTO Agreement nor on any findings of  the Appellate Body or of a WTO Panel; rather, 
Indonesia relies on a single GATT Panel report (US – Malt Beverages) .   
14. As an initial matter, the circumstances in th is case are different th an the circumstances 
(involving several state measures) in US – Malt Beverages .  In any case, the "best treatment" 
approach advocated by Indonesia is inconsiste nt with the language of GATT Article III:4 and 
Article 2.1 of the TBT Agreement.  The relevant comparison is the treatment accorded to imported "products" and like domestic "products" – not singl e imports and compared to single like domestic 
products.  There is no textual basis to interpret e ither national treatment provisions as providing for 
treatment of "an imported product" that is no less  favourable than the treatment of "a domestic 
product".    
15. Nor is it consistent with the Article III principl e that measures should not be applied so as to 
afford protection to domestic production and the TB T affirmation that Members may take measures to 
protect the public health, including by laying down product characteristics.  Were Indonesia's view to 
prevail – and if national treatment obligations were violated when a single import is restricted by a 
measure and a single like domestic product is not – Members' ab ility to regulate for the protection of 
human health or any other purpose would be seriously encumbered.   WT/DS406/R  
 Page C-15 
 
 
  16. Further,  in EC – Asbestos  the Appellate Body has rejected the "best treatment" approach 
Indonesia advances .  The Appellate Body affirmed that th e relevant comparison for purposes of the 
"less favourable treatment" is not between an import as compared to the "best" treated like domestic 
product, but rather "a complaining Member must [...] establish that the measure accords to the group  
of 'like' imported products 'less favourable treatment' than  that it accords to the group of 'like' 
domestic products".  The Appellate Body ma kes the important observation in EC – Asbestos that, to 
the extent that the term "like product" under Article  III:4 of the GATT is broad, it is tempered or 
hemmed in by the fact that "a Member may draw distinctions between products which have been 
found to be 'like', without, for this reas on alone, according to the group of 'like' imported  products 
'less favourable treatment' than that accorded to the group of 'like' domestic  products".  In other words, 
a measure that accords different treatment to some imported products as compared to some like 
domestic products based, for example, on their characteristics as trainer cigarettes (and not based on 
their origin) is not a measure that accords different treatment to "the group of 'like' imported  products" 
than the "group of 'like' domestic  products".  It is a measure that accords different treatment to the 
group of products that are trainer cigarettes than th at accorded to the group of products that are not 
trainer cigarettes. 
17. Even apart from its misguided "best treatment" argument, Indonesia has failed to demonstrate 
that Section 907(a)(1)(A) accords less favourable treatment to imported cigarettes.  Whether a 
measure accords less favourable treatment turns on how the measure treats imported products as 
compared to domestic products.  For this purpose,  the Appellate Body has examined whether the 
measure alters the conditions of competition to th e detriment of imported products as compared to 
domestic products – but has made clear that a measure does not alter the conditions of competition to 
the detriment of imported products when the al leged detriment is "explained by factors or 
circumstances unrelated to the foreign origin of the product s".  Moreover, "[t]he term 'Less 
favourable treatment' expresses the principle, in Arti cle III:1, that internal regulations 'should not be 
applied ... so as to afford protection to domestic pr oduction".  Accordingly, the guiding principle to 
the analysis is that a measure must not single out  imports based on national origin so as to afford 
protection to domestic product.  This also holds w ith respect to Article 2.1 of the TBT Agreement, 
which must be interpreted so as to permit t echnical regulations based on legitimate product 
distinctions – even where those distinctions ma y have a different impact on different products.  
18. In this case, the fact that Section 907(a)(1)(A) is  a public health measure must be considered 
in examining any allegation of less favourable treatment.  Product distinctions based on how 
consumers use products, and with regard to th e consequences that could result from different 
regulations, are consistent with a pub lic health approach.  Therefore, in  this case, the fact that lesser-
used cigarettes are banned should not be confused with discrimination agai nst imported products as 
compared to domestic products.  The fact that cloves fall under Section 907(a)(1)(A) has nothing to 
do with their national origin and owes solely to how they are used by consumers in the United States 
and other public health factors. 
19. The only evidence that Indonesia has submitted to  demonstrate less favourable treatment is 
the fact that clove cigarettes are prohibited by the measure, and tobacco and menthol cigarettes are 
not.  This evidence is incomplete and otherwise in sufficient to establish less favourable treatment.  
20. The fact that Section 907(a)(1)(A) also affects domestic cigarettes is relevant.  As the 
United States has demonstrated, from 1999 until at least 2006, US cigarette manufacturers, in 
particular R.J. Reynolds, aggressively marketed a ne w line of flavoured products specifically targeted 
at young people, under the business plan of hooking  new cigarette addicts.  Evidence shows that 
US-produced cigarettes with characterizing fla vours were on the market in 2008 and 2009.  The 
United States and Indonesia do not appear to di sagree that, but for government intervention, 
US manufacturers would be selling flavoured cigare ttes on the US market.  Federal legislation was 
critical to remove the threat.  Looking at what flavours were on the market in 2009 only captures a WT/DS406/R  
Page C-16  
 
  small part of the effect of Section 907(a)(1)(A) on US products.  In assessing the market in Mexico – 
Taxes on Soft Drinks , the panel considered a time period of roughly five years before the measure.  In 
this case, it is even more important to gauge the impact of the ban by considering the years leading up 
to it, because of the well-publicized campaign agai nst cigarettes with characterizing flavours that 
culminated in Section 907(a)(1)(A), and the undisputed fact that US producers would sell their products if given the chance.  
21. The United States also takes issue with Indone sia's assertion that the market share of 
US cigarettes with characterizing flavours was not "significant" or "relevant".  Section 907(a)(1)(A) 
applies to a very small percentage of the total of all types and volume of cigarettes sold in the 
United States.  One of the reasons the ban on charact erizing flavours other than tobacco or menthol is 
appropriate for the public health in the United States  is that it applies to a relatively small number of 
cigarettes, which are nonetheless significant from a public health perspec tive, because they are 
especially attractive to young people.  Clove ciga rettes comprised between 0.06% and 0.13% of the 
US market in the years 2000-2009, and the share of other flavours on the market, which also was very 
small, should be considered "relevant" to the extent  that the share of clove cigarettes is considered 
relevant.  Accordingly, both imported and US produc ts are affected by the measure, and in each case, 
it is products with a relatively small market share.   In addition, the vast majority of imported 
cigarettes are still permitted under the measure.  
22. Not only has Indonesia failed to demonstrate that the prohibition in Section 907(a)(1)(A) 
singles out imports, Indonesia also has not demonstrated that any detriment to clove cigarettes is 
dependent upon the foreign origin of clove cigarett es.  As articulated by the Appellate Body in 
Dominican Republic – Import and Sale of Cigarettes , a measure does not alter the conditions of 
competition to the detriment of imported products wh en the alleged detriment is "explained by factors 
or circumstances unrelated to the foreign origin of the product , such as the market share of the 
importer".  Here, the Appellate Body re-affirms the fundamental principal that the "treatment" 
analysis concerns imported products as compared to domestic products, and that  not all detriments 
claimed by imports are evidence of less favourable treatment – the detriment must be determined, 
base on all relevant evidence, to depend on the fore ign origin of the product.  This principal is 
reinforced by the context of the TBT Agreemen t, which recognizes that technical regulations 
legitimately will "lay down product characteristi cs" and thus distinguish  between products.  
23. The panel in EC – Approval and Marketing of Biotech Products  affirms the point.  The panel 
determined that Argentina failed to properly alle ge "less favourable treatment" because it was not 
self-evident that the "alleged less favourable treatm ent of imported biotech pr oducts is explained by 
the foreign origin of these products , rather than, for instance, a perceived difference between biotech 
and non-biotech products in terms of their safety , etc."  The Panel reasoned further that Argentina's 
allegation that imported biotech products were not allowed to be marketed, while corresponding 
non-biotech products were allowed to be marketed, wa s an insufficient basis – in itself – to raise a 
presumption of less favourable treatment.  
24. The United States also notes here that we are not  suggesting that the "subjective intent" of a 
measure is a determining factor.  However, consistent with the Appe llate Body approach in previous 
Article III disputes, it is relevant to conduct a "comprehensive a nd objective analysis of the structure 
and application of the measure in question on domestic as compared to imported products" to 
determine whether the objective of the measure is to  afford protection to domestic production or fulfil 
some other legitimate objective.  In this case evidence shows that the design, architecture, and 
structure of Section 907(a)(1)(A) are consistent with an acceptable public  health approach to 
regulating cigarettes.  Section 907(a)(1)(A) is de signed to prohibit types of cigarettes that are 
especially appealing to young people, but not heavil y used by adults.  The fact that tobacco and 
menthol flavoured cigarettes are not banned under Section 907(a)(1)(A) is not an "anomaly" in the 
design, structure and operation of the measure.  In this case, the facts, taken together, show that  WT/DS406/R  
 Page C-17 
 
 
  Section 907(a)(1)(A) lays out product characteristics th at have nothing to do with the origin of 
products, and therefore do not accord imported ci garettes including Indonesian cigarettes less 
favourable treatment than like domestic products. 
B. INDONESIA HAS FAILED TO ESTABLISH THAT SECTION  907( A)(1)(A)  IS CNCONSISTENT WITH 
TBT  ARTICLE  2.2 
25. To prove a breach of Article 2.2 of the TBT Agreement, a complaining party must establish 
that the measure at issue is "more trade-restrictiv e than necessary to fulfil a legitimate objective".  As 
reviewed in the US first written submission, inte rpreting Article 2.2 in accordance with customary 
rules of interpretation of public international law, a measure is "more trade-restrictive than necessary 
to fulfil a legitimate objective" if: (1) there is a reasonably available alternative measure; (2) that 
fulfils the objective of the measure at the level that the Member imposing the measure considers 
appropriate; and (3) is significantly less trade restri ctive.  Indonesia has not established that such an 
alternative measure exists, nor could it.  Indonesia al so puts forth an interpretation of Article 2.2 that 
is inconsistent with customary rules of treaty inte rpretation reflected in th e Vienna Convention, and 
accordingly should not be followed.   
26. The objective of Section 907(a)(1)(A) is pr otecting public health by reducing smoking 
prevalence among young people while avoiding the pot ential negative consequences associated with 
banning products to which tens of millions of adults are addi cted.  These negative consequences are 
the potential consequences for the individual, the US health care system, and the society at large 
through an expansion of an already existing black  market as elaborated in the US first written 
submission.  The objective of Section 907(a)(1)(A) is  legitimate for all the reasons discussed in the 
US first written submission. 
27. Further, the level at which the United States cons iders is appropriate to protect public health 
is to eliminate from the market, not simply restrict access to, those products that are 
disproportionately used by young people, but not to eliminate from the market those products to 
which tens of millions of adults are addicted, a nd whose precipitous withdrawal from the market may 
cause negative consequences.  This level is reflected  in Section 907(a)(1)(A).  Members are entitled to 
choose for themselves "which policy objectives they wi sh to pursue and the levels at which they wish 
to pursue them".  
28. The means by which Section 907(a)(1)(A) fulfils  its legitimate objective is to ban products 
that are disproportionately used by young people while  not banning products to which tens of millions 
of adults are addicted.  Specifically, in only prohibiting those products that serve as "trainer" 
cigarettes for young smokers and which are not regu larly used by adult smokers, namely cigarettes 
with characterizing flavours that appeal to youn g people, while not prohibiting those products to 
which tens of millions of adults are addict ed, namely menthol and tobacco cigarettes, 
Section 907(a)(1)(A) fulfils its objective to re duce youth smoking while avoiding the potential for 
negative public health consequences that might be ass ociated with banning cigarettes to which tens of 
millions of adults are addicted. 
29. Indonesia appears to hinge its Article 2.2 clai m on the allegation that Section 907(a)(1)(A) 
does not fulfil its legitimate objective, and has only referenced ever briefly the potential existence of 
any alternative measures.  As such , the United States considers that Indonesia has thus far not even 
attempted to establish a prima facie case, much less established one.  It is undisputable that Indonesia 
has the burden of establishing each element of a prima facie case.  This prima facie case must include 
adducing sufficient evidence that a reasonably availabl e alternative measure exists that is significantly 
less trade-restrictive and fulfils the objective of the measure at the level that the United States 
considers appropriate.  WT/DS406/R  
Page C-18  
 
  30. Indonesia repeatedly mischaracterizes the obj ective of Section 907(a)(1)(A) as "reducing 
youth smoking".  That is a gross oversimplification of the objective of Section 907(a)(1)(A), which strikes a balance of different public health consider ations deriving from the use of different classes of 
products.  
31. In determining the objective of a measure, th e Appellate Body has indicated that panels 
should focus on the text, design, architecture, and revealing structure of the measure.  The text, 
design, architecture, and revealing structure of Section 907(a)(1)(B) draws distinctions between 
products, banning some, and allowing ot hers to continue to be produced and sold in the United States.  
The text thus represents a counter-balancing of intere sts, which is entirely consistent with theories of 
sound public health policy making in general and smoking prevention measures in particular.  The 
legislative history of Section 907(a)(1)(B) confirms this complex balancing of interests, a point that 
Indonesia ignores in its analysis.  Indonesia is thus  in error when it ignores this complex consideration 
of various factors when characterizing that the objec tive of Section 907(a)(1)(A) is merely to "reduce 
youth smoking".  
32. Indonesia also appears to argue that Section 907(a)(1)(A) does not fulfil its objective in that it 
does not "reduce youth smoking" enough , given that the measure does not also ban menthol and 
tobacco flavoured cigarettes, the two most popular types of cigarettes with all age groups, including 
those people within the age of initiation.  The Un ited States has discussed in detail in both this and 
previous submissions that nothing in the WTO Agr eements limits the United States – or any Member 
– to pursuing on only those public health measures that eliminate  the risk they target.   Indeed, the 
preamble to the TBT Agreement makes clear that  no Member should not "be prevented from taking 
measures ... for the protection of human ... life or heal th ... at the levels it considers appropriate".   
33. Further, Indonesia cannot establish that Section 907(a)(1)(A) is more trade-restrictive than 
necessary to fulfil its objective by arguing that  Section 907(a)(1)(A) should make a greater 
contribution to its objective.  Indonesia must show  that whatever contribution Section 907(a)(1)(A) 
makes to its objectives it is more trade-restric tive than necessary because there is a reasonably 
available alternative measure that fulfils Secti on 907(a)(1)(A)'s objectives that is significantly less 
trade-restrictive.  Only if a reasonably available a lternative measure is availa ble that (i) fulfils the 
objective of the measure and (ii) is significantly less trade restrictive  can it be concluded that the 
measure is more trade restrictive than necessary to  fulfil its objective.  Indonesia has not made, and 
cannot make, such a showing.   
34. Indonesia also appears to contend that Section 907(a)(1)(A) does not fulfil its objective 
because the United States has not provided any evid ence that smoking rates have declined since the 
ban on September 22, 2009.  Indonesia misunders tands both the proper legal inquiry, and the 
applicable rules for burden of proof.  On the pr oper legal inquiry, Article 2.2 permits Member to 
adopt technical regulations that are designed "to fulfil a legitimate objective"; Article 2.2 does not 
impose a requirement that the adopting Member ha ve evidence that the me asure has succeeded in 
fulfilling that objective.  
35. Indonesia continues to make vague references to "dozens" of different measures that apply to 
all cigarettes, such as advertising restrictions and the like.  Indonesia does not adduce any evidence 
that any of these measures fulfil the legitimate objective at the level the United States considers 
appropriate.  It has, therefore, not met its burden of establishing a prima facie case that Section 907(a)(1)(A) is more trade-restric tive than necessary to fulfil its objective. 
36. The alternative measures Indonesia identifies would not in fact fulfil the objectives of 
Section 907(a)(1)(A) at the level the United States c onsiders appropriate:  those alternatives would all 
continue to allow trainer cigarett es with characterizing flavours of candy, fruit, liquor, etc. to remain 
on the market.  The United States already imposes significant restrictions on the advertising,  WT/DS406/R  
 Page C-19 
 
 
  marketing, and sale of cigarettes.  Section 907(a) (1)(A) together with other restrictions on the 
advertising, marketing and sale of cigarettes in place in the United States form part of a 
comprehensive US strategy to address the public he alth concerns associated with smoking.  If the 
United States substituted one aspect of this comprehe nsive strategy for another – for example to forgo 
Section 907(a)(1)(A) in lieu of restrictions already in place in the United States – this would reduce 
the overall ability of the United States to address th e very serious public health concerns associates 
with smoking.  Any measure that does not eliminat e from the market cigarettes with characterizing 
flavours of candy, fruit, liquor, etc.  that tens of millions of adults do not smoke  does not fulfil the 
legitimate objective at the level the United States considers appropriate.   
37. Indonesia has implicitly suggested, although not  formally identified, three alternative 
measures that would eliminate trainer cigarettes w ith characterizing flavours of candy, fruit, liquor, 
etc.: (1) a measure that bans all cigarettes; (2) a measure that bans all cigarettes except those with a 
characterizing flavour of tobacco ( i.e. menthol, clove and other flavour s would be banned); and (3) a 
measure that bans all cigarettes except those w ith characterizing flavours of tobacco, menthol, and 
clove.  Each alternative measure is flawed , however, and none of them establish that 
Section 907(a)(1)(A) is more trade-restrictive than necessary.  
38. Neither of the first two alternative measures are less trade-restrictive than 
Section 907(a)(1)(A), much less "significantly" so.  This point is sufficient in of itself to establish that 
these possible alternative measures are not reasonably available alternative measures that are 
significantly less trade-restrictive that fulfil the objective of  Section 907(a)(1)(A).   Moreover, neither 
measure fulfils the objective of Section 907(a)(1)(A).   In particular, while they eliminate trainer 
cigarettes from the market, they would also elimin ate from the market cigarettes to which tens of 
millions of adults are addicted.  They would th erefore fail to fulfil a critical component of the 
objective of Section 907(a)(1)(A), specifically a voiding the potential negative health consequences 
associated with banning cigarettes to which tens  of millions of adults are addicted.   
39. Indonesia also makes reference to a third possi ble alternative measure: all cigarettes are 
banned unless they have a characterizing flavour of  tobacco, menthol, or clove.  This alternative 
measure does not fulfil the objective of Section 907(a )(1)(A) in that it would not eliminate from the 
market those products that are disproportionately used by young people; rather it would leave a 
portion of products that are disproportionately used by young people on the market ( i.e. clove 
cigarettes).  
40. Indonesia contends that, given the "similarity of the text of Article XX of the GATT 1994 and 
its subparagraph (b) and Article 2. 2 of the TBT Agreement and its Preamble", the Panel must look at 
the panel and Appellate Body reports that c onsidered GATT Article XX to understand what TBT 
Article 2.2 obliges of Members.  The EU further cont ends that the Panel cannot stop its analysis there, 
however, but must continue and de termine whether the measure is in consistent with the chapeau of 
GATT Article XX to consider whether the Member h as acted consistently with TBT Article 2.2.  
Neither of these arguments are in accordance with  the Vienna Convention, and both should be 
rejected.  
41. The text of Article 2.2 in its context a nd in light of the object and purpose of the 
TBT Agreement, means that a measure is "more trad e-restrictive than necessary to fulfil a legitimate 
objective" if there is a reasonably available alternat ive measure that fulfils the measure's objectives 
that is significantly less trade-restrictive.  Acco rdingly, to prove that the challenged measure is 
inconsistent with Article 2.2 of the TBT Agreem ent, Indonesia must establish that: (1) there is a 
reasonably available alternative measure; (2) that m easure fulfils the objectives of the US provisions 
at the level that the United States has determined is appropriate; and (3) is significantly less trade-
restrictive.   WT/DS406/R  
Page C-20  
 
  42. Rather than applying an interpretation of Ar ticle 2.2 based on Articles 31 and 32 of the 
Vienna Convention, Indonesia instead adopts an in terpretation of Article 2.2 of the TBT Agreement 
based on prior panels' and the Appellate Body's in terpretation of Article XX of the GATT 1994.  It 
would not be appropriate to apply the same interpre tive approach panels and the Appellate Body have 
undertaken in connection with the word "necessary"  as it appears in Article XX of the GATT 1994 in 
analysing whether a measure is "more trade rest rictive than necessary" within the meaning of 
Article 2.2 of the TBT Agreement.  In particular, the term "necessary" is used in Article XX of the 
GATT 1994 in a very different context than in TBT Artic le 2.2.  Further, there is no textual basis to 
apply the panel and Appellate Body's interpretiv e approach to Article XX of the GATT 1994 to 
Article 2.2 of the TBT Agreement.  
43. The EU's position that the Panel must apply the GATT Article XX chapeau when determining 
whether a measure is consistent with Article 2.2 is w ithout merit, for at least four reasons.  First, the 
EU's argument ignores the most fundamental principl e of treaty interpretation – that is, examining the 
text actually used by the drafters.  The chapeau of  Article XX is operative language: it plainly states 
that each one of the Article XX exceptions is "subjec t to the requirement" that the measure meets the 
requirements of the chapeau.  In contrast, the TB T contains similar language in its preamble: the 
preambular language does not trigger any con sequence under the agreement, but rather the 
preambular language may be used as an interpretiv e aid in construing operative provisions of the 
Agreement.  Second, the EU is simply wrong that its view prevents "dispa rate legal evaluations" 
between the two agreements.  To the contrary, the EU's proposed reading would create disparate legal 
evaluations.  The EU would require that each and every TBT measure meet the requirements of the 
Article XX chapeau.  But there is no similar require ment that every measure within the scope of the 
GATT 1994 must meet the requirements of th e Article XX chapeau.  Rather, the chapeau 
requirements only apply in the event that a measure is  inconsistent with a GATT obligation, and if the 
defending member then tries to justify that othe rwise GATT-inconsistent measure under one of the 
Article XX exceptions.  Third, the EU's argume nt ignores that the purpose expressed in the TBT 
chapeau (to prevent measures that unjustifiably discrim inate between Members) in fact is addressed in 
the operative provisions of the TBT Agreement, t hough not in Article 2.2.  Rather, Article 2.1 
addresses such concerns by requiring that techni cal regulations provide to imported products 
treatment no less favourable than that provided to li ke products of national origin and to like products 
originating in any other country.  In fact, if the EU's argument were accepted (and if thereby the 
Article XX chapeau requirements were somehow read  into TBT Article 2.2), it would seem to make 
inutile Article 2.1 of the TBT Agreement.  Four th, it would be neither surprising nor alarming if 
analysis under the GATT 1994 and that under the TBT Agreement reached different results for the 
same measure.  The two agreements contain diffe rent language and differe nt obligations, and as a 
result can apply differently to the same measure.  Indeed, if the GATT 1994 already addressed all of 
the matters covered under the TBT Agreement, th ere would have been no purpose in including the 
TBT Agreement within the Uruguay Round agreements.   
 
_______________ 
 
 
  WT/DS406/R  
 Page D-1 
 
 
  ANNEX D 
 
EXECUTIVE SUMMARIES OF THE ORAL STATEMENTS BY THE PARTIES 
AT THE FIRST AND SECO ND SUBSTANTIVE MEETINGS 
 
Contents Page 
Annex D-1 Executive summary of the opening oral statement of Indonesia at the first 
substantive meeting D-2 
Annex D-2 Executive summary of the opening oral  statement of the United States at the first 
substantive meeting D-7 
Annex D-3 Closing oral statement of Indonesia at the first substantive meeting D-12 
Annex D-4 Closing oral statement of the United States at the first substantive meeting D-13 
Annex D-5 Executive summary of the opening or al statement of Indonesia at the second 
substantive meeting D-15 
Annex D-6 Executive summary of the opening oral statement of the United States at the second 
substantive meeting D-21 
Annex D-7 Closing oral statement of Indonesia at the second substantive meeting D-26 
 WT/DS406/R  
Page D-2  
 
  ANNEX D-1  
 
EXECUTIVE SUMMARY OF THE OPENING STATEMENT 
OF INDONESIA AT THE FIRST SUBSTANTIVE MEETING 
  
I. INTRODUCTION 
1. In this dispute Indonesia has challenged the "sp ecial rule for cigarettes" in Section 101(b), 
which banned the production or sale in the United States of certain cigarettes it characterized as 
"flavoured".  Indonesia does not object to the Un ited States regulating the production or sale of 
cigarettes within its borders.  Nor does Indonesia object to reasonable measures designed to keep 
cigarettes, including clove cigarettes, out of the hands of minors.  What Indonesia objects to is a 
measure, in this case the Special Rule, that imposes a complete ban on clove cigarettes from 
Indonesia, while little or no restrictions are placed  on regular cigarettes and menthol cigarettes, which 
are produced in the United States and quite popular w ith minors.  The Special Rule is discriminatory 
and more trade-restrictive than necessary to address th e United States' concerns with youth smoking.   
II. ARTICLE III.4 GATT AND 2.1 OF TBT AGREEMENT 
A. LESS FAVOURABLE TREATMENT  
2. According to the United States, Article III. 4 only prohibits measures that accord less 
favourable treatment to imports "based on their nati onal origin".  It appears that what the United 
States means by "based on national origin" is "so as  to afford protection to domestic production".  
According to the United States, Members may not accord  less favourable treatment to imports if that 
treatment is intended to afford protection to  domestic production of the like product.   
3. The Appellate Body in Chile – Alcoholic Beverages  (quoting its report in Japan – Alcoholic 
Beverages II ) said panels need not inquire into the "s ubjective intentions inhabiting the minds of 
individual legislators or regulators". How the meas ure in question is "applied" is what matters.  
Certainly no panel or Appellate B ody report has ever said there is a "less favourable treatment" test 
and a second "afford protection to domestic pr oduction" test in Article III.4 of the GATT. 
4. In Korea – Various Measures on Beef  and other cases, the Appellate Body has been quite 
clear about the showing needed to prove a violation of Article III.4: 
"three elements must be satisfied:  that the imported and domestic products at issue 
are 'like products' ; that the measure at issue is a 'law … affecting their internal 
sale …; and that the imported products are accorded 'less favourable' treatment  
than that accorded to like domestic products." 
5. The Appellate Body in Korea – Various Measures on Beef  defined "treatment no less 
favourable" as "according conditions  of competition no less favourable to the imported product than 
to the like domestic product".  The Apellate Body in EC – Asbestos  further found that "if there is less 
favourable treatment of the imported product, there is , conversely, 'protection' of the 'like' domestic 
product".  
6. The panel report in Mexico – Taxes on Soft Drinks  found that a Mexican measure that 
imposed a 20 per cent tax on the use of non-cane suga r sweeteners (such as high fructose corn syrup) 
discriminated against imports because the sweetener s produced in Mexico at the time the tax was 
adopted consisted overwhelm ingly of cane sugar, whereas almost  100 per cent of imported sweeteners 
consisted of high fructose corn syrup.  The panel looked at whether the challenged measure accorded  WT/DS406/R  
 Page D-3 
 
 
  "less favourable treatment" to imports.  In doing so, it did not apply an additional test that looked at 
whether the less favourable treatment was "based on national origin" or whether that treatment was 
intended to "afford protection to domestic productio n of the like product".  Instead, it looked at two 
sets of like products, one primarily imported and one produced in Mexico .  It looked at a tax regime 
that applied to imports and exempted the domestic like product, not on a de jure , but on a de facto  
basis.  And it looked at how the disparate tax treat ment penalized consumers of the imported product.  
Based on this and this alone, it found less favourable treatment.  
7. In this case, if the United States is not comfortable banning menthol cigarettes, then it cannot 
ban clove cigarettes.  So why didn't the US ba n menthol cigarettes?  B ecause Philip Morris opposed 
it.  Philip Morris pressured the Congress … and as one industry analyst put it, the Congress "caved".  
The Chairman of one of the relevant congressiona l committees that considered the bill, Rep. John 
Dingell, when given an opportunity to comment on the suggestion that menthol cigarettes be banned, 
did not express concern about a black market or an  excessive burden on the public health care system 
in the US from people seeking help with quitting.  He  talked about the potential loss of jobs – jobs in 
the United States making menthol cigarettes!   
B. LIKE PRODUCT  
8. A key question before the panel is whether clove  cigarettes are "like" any cigarettes produced 
in the United States not banned by the Special Rule.  In this case, the relative toxicity of clove and 
domestic cigarettes is not an issue.  The US has c onceded that clove cigarettes are no more dangerous 
or toxic than menthol- and tobacco-flavoured cigarettes.  As the Appellate Body stated in EC – 
Asbestos , like products will often share "a number of identical or similar characteristics  or qualities " 
sufficient to be in a competitive relationship with one another. 
9. Clove, menthol, and regular cigarettes have the same physical properties  and characteristics :  
they use special flavouring substances in combinat ion with tobacco to achieve a specific desired 
flavour, which is presented to the consumer in a paper wrapper with a filte r.  All three types of 
cigarettes meet the US definition of a cigarette and al l three fall into the same size/weight class for tax 
purposes.  Tobacco and menthol cigarettes also cont ain significant quantities of food ingredients, such 
as chocolate, licorice, sugars, honey, maple syrup, ju ices, coffee, corn oil and vinegar.  The flavouring 
ingredients used in American blend cigarettes are ve ry similar to what goes in to the "sauce" for clove 
cigarettes:  things like vanilla, sugars, mint, licori ce, fruit concentrates and liquors.  The United States 
alleges that the eugenol in clove cigarettes nu mbs the throat and makes it easier for uninitiated 
smokers to tolerate inhaling smoke.  More recent research on animal s has cast doubt on the premise.  
And most importantly, similar concer ns have also been raised with respect to menthol cigarettes.  
10. Indonesia agrees that the ultimate end use of ciga rettes is to smoke tobacco so that nicotine is 
delivered to the body.  The United States suggested that differences in the physical composition of 
clove cigarettes make the smoking experience different since clove smokers take larger and more frequent puffs.  A 1988 Surgeon General's Report c oncluded that smokers expose themselves to as 
much smoke as necessary to obtain a specific, satisfy ing quantity of nicotine.  Study data confirms 
that nicotine blood levels and heart rates were exact ly the same after smoking a clove cigarette and a 
regular cigarette.  There is no data to show that clove smokers' "experience" is different from menthol 
or regular cigarette smokers or that the delivery of nicotine is different. 
11. As an initial matter let me say that the United St ates is dead wrong when  it alleges that clove 
cigarettes are smoked overwhelmingly by youth (U S para. 185).  Not one shred of the evidence 
provided by the United States shows this.  The Klein Study  focused on the use of three heavily 
marketed brands two of which were menthol-based brands.  None of the three are clove cigarette 
brands.  The Klein Study did not generate any da ta about the use of clove cigarettes by youth or WT/DS406/R  
Page D-4  
 
  adults.  It is not reasonable to conclude that the results of the Klein Study applies to all flavoured 
cigarettes.     
12. The United States cites several other studies as evidence that clove cigarettes are, "smoked 
overwhelmingly by youth".  The National Youth Tobacco Study  and Monitoring the Future  studies 
cited by the United States do not even measure use of cigarettes by adults so that a comparison of 
youth and adult use can be made.  Moreover, the Monitoring the Future  authors state: "The 
investigators conclude that kretek use was a short-te rm fad that simply did not catch on with youth."  
What the evidence shows, including the United St ates' own evidence, is that menthol-flavoured 
cigarettes are much more popular with youth.  In a ll studies provided by the United States, the rate of 
youth menthol use is many times greater than the rate of youth clove use. 
13. Further, with respect to consumer behaviour, Indonesia and the United States agree that users 
of clove cigarettes also smoke regular and me nthol cigarettes.  The Appellate Body in EC – Asbestos  
explained the analysis for consumer behaviour:  "the  extent to which consumers are willing to use the 
two products for the function of their end use".  Th e United States has not provided any evidence that 
consumers are unwilling to use all three cigarettes for the end use of smoking.  In fact, the 
US concedes that 75 per cent of those who smoke tobacco and menthol cigarettes also smoke clove cigarettes.  That should be evidence enough that  consumers are willing to use clove, menthol and 
regular cigarettes to meet the end use of smoking and that the products are "interchangeable" and 
"substitutable".   
14. Clove, menthol and regular cigarettes share the same international tariff classification.   
15. None of the issues raised by the United Stat es point to significant differences between clove, 
menthol, and regular cigarettes that would render the products not "like".  Products do not have to be 
identical to be "like".  The narrow distinctions iden tified by the United States are insignificant.  They 
are effectively asking the Panel to find that a cup of  coffee that contains milk and sugar is not like 
plain coffee or that an automobile with leather seats is somehow not like one with cloth seats.   
III. ADDITIONAL ISSUES WITH ARTICLE 2.1 OF THE TBT AGREEMENT 
16. Indonesia has a number of concerns with arguments put forward by the United States with 
respect to interpretation of Article 2.1 of the TB T Agreement.  The United States does not challenge 
the proposition that Section 907 is a "technical regulati on" within the meaning of the TBT Agreement.  
The United States has tried to add a "based on nationa l origin" requirement into Article III.4.  For the 
reasons outlined earlier, that effort should fail.  Ho w does the US think this same requirement (or test) 
applies to Article 2.1 of the TBT Agreement.  We are at a loss to understand what the alleged 
"textual" and "contextual" differences are between the TBT Agreement and, I guess it is the GATT. 
17. Finally, Indonesia agrees with the proposition see mingly being advanced by the United States 
that simply because a set of products are subject to a technical regulation, it does not automatically 
follow that they are "like" products within the m eaning of the TBT Agreement.  We can well imagine 
a scenario where, for example, a technical regulation covers "food", or say, "toys".  However, here, in 
this case, we should not lose sight of the fact that Section 907 applies to a subset of products as 
specific as "flavoured cigarettes", and not all flavoured  cigarettes, but just certain flavoured cigarettes. 
IV. ARTICLE 2.2 OF THE TBT AGREEMENT   
18. Article 2.2 expresses the view that a technical regulation cannot be more trade restrictive than 
is necessary to fulfil a "legitimate objective".  In  making this assessment, Members and panels may 
consider the risks that non-fulfilment of the objectiv e would create.  One of the specific examples of a 
"legitimate objective" mentioned in Article 2.2 is the "protection of human health".  WT/DS406/R  
 Page D-5 
 
 
  19. The United States states that the "legitimate objective" for banning clove cigarettes was to 
(a) reduce youth smoking in order to protect the public health, while (b) "taking into account" the 
"unknown, but possibly negative", conse quences resulting from banning products ( e.g., menthols) that 
tens of millions of adults are dependent on.  Give n the importance the United States attaches to public 
health, it says it chose a high level of protection – a complete ban on clove ciga rettes and certain other 
flavoured cigarettes.   
20. The United States contends that Indonesia has fa iled to establish that any alternative measure 
fulfils the United States legitimate objective at the level it considers appropriate and is also 
"significantly" less trade-restrictive than Section 907.   According to the United States "a measure that 
fulfils its legitimate objective at the le vel the Member finds appropriate is not, as a matter of law , 
more trade restrictive than necessary unless the co mplaining Member proves that an alternative 
measure exists that is reasonably available, also fulfils the respondent member's legitimate objective 
at the level the importing Memb er finds appropriate and is significantly  less trade restrictive than the 
challenged measure". 
21. There is but a single question under Article 2.2 of the TBT Agreement, was it "necessary" to 
ban clove cigarettes in order to pr otect youth from smoking?  As a matter of simple logic, the answer 
must be "no".  Somewhere between 2.2 and 2.5 million people under the age of 18 smoke cigarettes in 
the United States.  Of that amount, approximately 1.1 million (or 43 per cent) regularly smoke menthol cigarettes.  This compares to only 6,800 minor s that regularly smoke clove cigarettes.  If the 
objective, legitimate or otherwise, of the ban w as to protect youth from smoking and the US did not 
ban the cigarette that youth overw helming smoke, how could it have been truly "necessary" to ban the 
cigarette that they for the most part do not smoke?  Either it is necessary to ban flavoured cigarettes to 
protect the public health or it is not.  The United States cannot have it both ways. 
22. WTO panels and the Appellate Body have held that in dete rmining whether a measure is 
"necessary" to achieve a legitimate public health ob jective, a relevant consideration is the actual 
contribution of the measure toward achieving the objective.  Is not the best evidence of which 
cigarettes are starter or trainer cigarettes the cigarettes kids most often smoke?  How can the measure contribute toward reducing youth smoking, if the cigarettes youth smoke are not banned? 
23. The United States argues that the "necessary" standa rd in Article 2.2 should not be read in 
light of the "necessary" standard in Article XX of th e GATT, but instead, should be read in light of 
Article 5.6 of the SPS Agreement.  In particular , the US believes the Appellate Body report in 
Australia – Salmon  imposes an obligation to show that there is an alternative measure to the Special 
Rule that (1) is reasonably available taking into account technical and economic feasibility; 
(2) achieves the US's appropriate level of protection of human health; and (3) is significantly less 
restrictive to trade than the measure contested.   
24. I am at a loss to understand how the "necessary" standard in Article 5.6 of the SPS Agreement 
is any more instructive for our purposes than the "n ecessary" standard in Article XX of the GATT.  In 
any event, even if Article 5.6 informs the meaning of Article 2.2 of the TBT Agreement, it, at most, 
informs only part of Article 2.2.  Under Article 2. 2 it must be shown that the Member has identified a 
public policy objective and the measure (i.e.  technical regulation) chosen "fulfils" that objective.  If 
the measure bears no rational relationship to the objectiv e and, therefore, does not "fulfil" it, questions 
about necessity and reasonably availa ble alternative measures are moot. 
25. The same holds true under Article 5.6 of the SPS Agreement.  There, one does not get to the 
question of alternatives and less trade restrictive SP S measures if the measure itself is not established 
and maintained at the appropriate level needed to  "achieve" the objective sought, which of necessity 
requires an examination of the scientific basis for the measure in accordance with Article 2.2 of the 
SPS Agreement.  Indonesia is not required to prov e that an alternative to the Special Rule was WT/DS406/R  
Page D-6  
 
  reasonably available that would have accomplished the same things as the Special Rule and been 
"significantly" less trade restrictive than the Special  Rule.  We do not get to that issue because the 
measure in question (i.e , the Special Rule) does not fulfil the objective identified by the US – 
reduction in youth smoking. 
26. The repeated assertion that clove cigarettes are targ eted at youth, are particularly appealing to 
youth, and are a starter or "trainer" cigarette for youth, lacks a foundation in fact, lacks a foundation in 
science, and, therefore, the Special Rule bears no ra tional relationship to the objective, legitimate or 
otherwise, pursued by the United States. 
V. ADDITIONAL CLAIMS UNDER THE TBT AGREEMENT 
27. Indonesia has raised claims under Articles 2.5, 2.8,  2.9, 2.12, and 12.3 of the TBT Agreement.  
Indonesia has shown that the United States failed to  live up to its obligations under each of these 
Articles as the Special Rule was being adopted and implemented.  The United States contends that it 
has satisfied its obligations with  respect to each of these commitments.  But if the minimal actions 
taken by the US are considered sufficient fo r compliance with these commitments, then these 
provisions of the TBT Agreement are largely meaningl ess.  Indonesia submits to the Panel that, if the 
TBT Agreement is to mean anything at all, for each of its claims under Articles 2.5, 2.8, 2.9, 2.12 and 
12.2, surely more is required than what the US believes to be sufficient for compliance.  WT/DS406/R  
 Page D-7 
 
 
 ANNEX D-2 
 
EXECUTIVE SUMMARY OF OPENING ORAL STATEMENT  
OF THE UNITED STATES AT THE FIRST SUBSTANTIVE MEETING  
  
1. Cigarettes are a unique product – they are highly addictive, heavily used, harmful to public 
health, and legal.  The combination of these factors creates complex problems for governments 
charged with protecting the public health, forci ng them to walk a fine line between doing good and 
causing harm.  Given this complex situation, it is no surprise that the United States, like many countries, has addressed the issue incrementally – applying limited requirements and prohibitions for 
particular issues on a measure by measure basis.  
2. The 2009  Family Smoking Prevention and Tobacco Control Act ("Tobacco Control Act") is 
an anti-smoking and public health legislation th at imposes numerous rest rictions on cigarette 
companies as well as others.  All the Tobacco Contro l Act requirements that limit the sale, marketing, 
and advertising of cigarettes are origin neutral.  These provisions are all intended to protect the public 
health by reducing smoking, particularly smoking by youth, and do not protect US companies from 
foreign competition or otherwise economically benefit US companies.   
3. The relevant survey data as highlighted in E xhibit US-53 establishes that both clove and other 
non-menthol flavoured cigarettes have similar use patterns, w ith these products being used 
disproportionately by younger smokers.  Thus, the mo st reliable data indicate that 5.5% of smokers 
between the age of 12-25 smoke clove cigarettes whil e only 1% of smokers ages 26 and above do so.  
Similarly, the age of the smoker is determinative of who smokes other prohibited products, such as 
chocolate, cherry, and vanilla flavoured cigarett es.  Based on the available data, almost 12% of 
smokers age 12-25 smoked these types of flavoured pr oducts, while only slightly more than 6% of 
smokers age 26 and above did the same.  In terms of absolute numbers, th e evidence indicates that 
relatively few adults smoked clove, chocolate, or  other banned flavoured cigarettes as their primary 
cigarette prior to the enactment of  the Tobacco Control Act.  By contrast, one large study found that 
approximately a third of smokers age 12-25 smoke menthols while a similar percentage of smokers 
age 26 and above does as well.  In terms of abso lute numbers, it is estimated that menthols are 
smoked by 1.1 million people age 12-17, a nd 18 million people age 18 and above.  
4. During this debate over statistic s, however, we cannot lose sight of the fact these figures 
represent real people at risk for serious disease and d eath.  If current trends in youth smoking are not 
improved, more than six million current young people  in the United States will die prematurely from 
smoking.  But given that millions of youth smoke or at risk for starting to smoke, even small changes 
in the prevalence of youth smoking translat es to tens of thousands of lives saved.  
5. In addressing the public health crisis of smoki ng, the United States, and all other Members 
considering anti-smoking legislation, must apply me asures that walk a fine line so as to produce 
positive public health results while  avoiding negative consequences.  The fact that the scope of 
Section 907(a)(1)(A) involved difficult public health considerations does not mean that 
Section 907(a)(1)(A) presents difficult issues conc erning WTO-consistency.  To the contrary, 
Members are free under the WTO Agreement to make just these types of difficult decisions with regard to public health measures.  Nothing in  the WTO Agreement prevents the United States from 
choosing the scope of a ban on harmful products  based on public health considerations.   
6. In applying Article III:4 to a measure that ma kes distinctions among similar products, there 
are two basic questions.  First, are the products so  similar that they amount to "like products" for 
purposes of Article III:4?  Second, even where the products are in such a competitive relationship and WT/DS406/R  
Page D-8  
 
 are otherwise similar enough so as to amount to " like products", does the measure accord different 
treatment based on origin?  
7. The Appellate Body has noted that the determination of likeness under Article III:4 of the 
GATT 1994 is, fundamentally, a determination about  the "nature and extent of a competitive 
relationship between and am ong products".  The "like product" anal ysis in this case should be mindful 
that technical regulations by nature draw dis tinctions among broadly si milar products, and such 
products may not be "like" due to that given regul atory context.  Past GATT and WTO reports have 
conducted a like product analysis based on four sep arate "like product" criteria.  The United States 
would recall that the Appellate Body has considered that these criteria are just a tool in examining the 
nature and extent of a competitive relationship between and among products, and in this case, in 
examining the relationship of product character istics to the health objective at issue. 
8. Clove cigarettes are different from tobacco and menthol.  First, with respect to physical 
composition, clove cigarettes have different physical  composition than tobacco or menthol cigarettes, 
and these physical differences are directly relate d to how consumers differentiate them and are 
directly related to their different impact upon th e public heath.  Most fundamentally, clove buds 
comprise roughly 40% of a clove cigarette, which gives clove cigarettes a unique, sweet flavour that is especially attractive to young smokers.  Clove buds also contain an anesthetic, known as eugonol.  
Neither tobacco nor menthol contain eugonol.  Clove cigarettes also contain a special "sauce", which 
clove cigarette manufacturers claim adds to a  "riche r" and "fruitier" taste, sweet scented aroma, and 
pleasant after-taste.   
9. Second, with respect to consumer habits and t astes, the Appellate Body has noted that where, 
as here, physical properties are dissimilar, a "high burden" is placed on the complaining Member to show that all the evidence, taken together, demons trates that products are "like".  Indonesia has not 
met its evidentiary burden on this important factor.  Clove cigarettes were smoked in the United States 
by young, experimental smokers.  Clove cigarettes were smoked by a very small percentage of the 
US population, and this use dramatically skewed to  young people.  In contrast, tobacco and menthol 
cigarettes are the cigarette of choice by nearly all of the 46 million regular adult smokers in the United 
States.  Indonesia has not borne its burden to show n that clove cigarettes sought to compete with 
tobacco or menthol cigarettes in terms of distribution channels, shelf space, or market share.   Rather, 
clove cigarettes were sold in speci alty shops and specifically were ma rketed as a special "indulgence".  
The fact that almost exclusively young people chose to smoke them strongly suggests that they were 
viewed, as intended, as an enticing indulgence fo r young people many of whom would become 
hooked on nicotine.  With respect to establishe d smokers, evidence suggests that smokers who 
reported smoking clove cigarettes tended not to view  them as a substitute for their "regular", daily 
tobacco or menthol cigarettes.   
10. Third, with respect to end-uses, it is worth no ting that different cigarettes serve different end-
uses in varying degrees.  Cigarettes are used to smoke tobacco, and to sustain an addiction to nicotine.  
Survey evidence shows that tobacco cigarettes and menthol cigarettes (and not clove cigarettes) are 
used on a regular basis by a vast majority of smoke rs in the United States.  Cigarettes also serve the 
end-use of creating a pleasurable experience associated  with the taste of the cigarette and the aroma of 
the smoke.  Clove cigarette manufacturers purposefully  design and market clove cigarettes based on 
the unique experience created.  
11. Fourth, on the point of tariff classification, under the US GATT 1994 Schedule, which is an 
integral part of the WTO Agreement, clove cigare ttes and other cigarettes are included in different 8-
digit tariff subheadings.   
12. Article III:4 of the GATT 1994 requires Members to accord treatment no less favourable to 
imported products than that accorded to like domestic products.  It is useful to recall that Article III:1  WT/DS406/R  
 Page D-9 
 
 
 of the GATT 1994 states that internal taxes and regulatory measures "should not be applied to 
imported or domestic products so as to afford pr otection to domestic production".  The Appellate 
Body has explained that Article III:1 sets out a genera l principle that informs the rest of Article III.  
This guiding principle supports that Article III:4 s hould not be interpreted to prohibit measures that 
may result in some imported products being treated  differently than some domestic like products 
where the basis for the different treatment is not national origin. 
13. Indonesia does not appear to allege that Secti on 907 discriminates on its face.  In addition, 
Indonesia has not adduced facts to demonstrate that Section 907 – while origin-neutral on its face – in 
fact discriminates against imported cigarettes.  One indicator of when a facially neutral measure in 
fact accords different treatment based on origin is  when seemingly origin-neutral regulatory criteria 
apply almost exclusively to imported products and not to similar do mestic products.  The 
circumstances here are different than in Mexico – Taxes on Soft Drinks .  Section 907 does not apply 
almost exclusively to Indonesian cigarettes as comp ared to domestic cigarettes, but rather applies to 
groups of both imported and domestic cigarettes.  The result of the US ban on characterizing flavours 
other than tobacco or menthol is that some typ es of imported and domestic cigarettes are prohibited 
from the US market, and some types of imported and domestic cigarettes are allowed on the US market.  The result of Section 907 is that bot h imported and domestic cigarettes are prohibited and 
both imported and domestic products are allowed.  
14. The field of US products to which the ban on characterizing flavours applies is significant.  
Section 907 prevents products from entering the US market that US manufacturers spent decades 
developing specifically for US consumers.  As US industry documents reveal, domestic cigarette 
manufacturers developed product lines of flavoured  cigarettes with a view to recruiting a new 
generation of smokers in Ameri ca.  A federal ban was necessary to prevent US manufacturers from 
putting flavoured cigarette brands on the market.  
15. As we just discussed, Section 907 bans both im ported and domestic produc ts – and the ban on 
domestic products is more than merely symbolic.  However, even in cases where a measure treats 
most imports differently than most similar dome stic products, such different treatment does not 
necessarily constitute less favourable treatment.  Returning to the guiding principle of GATT 
Article III that measures should not be applied so as to afford protection to domestic production, the 
Appellate Body recognized in Chile – Alcoholic Beverages  that a determination of protective 
application must consider the "measure's purposes, ob jectively manifested in the design, architecture, 
and structure of the measure" and possible counter vailing explanations from the responding Member.  
In this case, the measure at issue is consistent w ith, and an integrated part of, broader US tobacco 
legislation, and the United States has a compelling explanation for why clove cigarettes fall under a 
ban that does not apply to other cigarettes.  Ther e is a clear relationship between the structure of 
Section 907 and the broader purpose of the To bacco Control Act to reduce youth smoking while 
avoiding negative public health consequences.  
16. We note that Indonesia has based its less favour able treatment conclusion on the assertion that 
Section 907 "creates unequal conditions of competiti on" by banning one prod uct and not other like 
products.  This claim should be rejected for two r easons.  First, Indonesia has not clarified exactly 
which cigarettes are being compared, and has not prov en that clove cigarettes actually competed with 
the cigarettes that are not affected by the ban.   Second, consistent with the Appellate Body's 
reasoning in Dominican Republic – Import and Sale of Cigarettes , the fact that the application of a 
regulatory distinction may affect the compe titive relationship between imported and domestic 
products does not render the measure a breach of a Member's national treatment obligations.  
17. The national treatment obligation contained in Article 2.1 of the TBT Agreement should be 
interpreted similarly to Article III:4 of the GA TT 1994.  Each Agreement provides context for the 
other, and the analyses developed under Article III are relevant to an interpretation of Article 2.1 of WT/DS406/R  
Page D-10  
 
 the TBT Agreement.  The United States notes th e context provided by the TBT Agreement in 
evaluating the national treatment matters at issue in this dispute.  First, the Preamble to the TBT 
Agreement provides that the TBT Agreement should be  interpreted consistently  with Members' right 
to take measures to protect the public health.  Second, the Panel should give weight in its 
interpretation of Article 2.1 to the fact that the measure at issue in this dispute is a technical 
regulation.  As previously noted, technical regulati ons, by their very nature, differentiate among, and 
establish criteria for, broadly similar products.  Such product distinctions might render generally 
similar products "unlike" in some circumstances, and such product distinctions may often impact 
generally similar products differently. 
18. Indonesia has failed to offer sufficient evid ence to establish each element of its TBT 
Article 2.2 claim.  Specifically, Indonesia has no t produced evidence that establishes that an 
alternative measure:  is reasonably available, fulfils the challenged measure's legitimate objective, and 
is significantly less trade restric tive than Section 907(a)(1)(A).  
19. The objective of the Tobacco Control Act is to protect the public health by reducing smoking, 
particularly youth smoking.  The means by which S ection 907(a)(1)(A) fulfils the legitimate objective 
is to ban "starter" or "trainer" products that are disproportionately used by youth while taking into 
account the negative consequences that could result from banning products to which tens of millions 
of adults are chemically and psychologically addict ed.  The facts bear this out.  The cigarettes banned 
under Section 907(a)(1)(A) – including clove cigarettes – appeal disproportionately to youth, and can 
be properly thought of as "starter" or "trainer" pr oducts for the novice or potential smoker.  Further, 
the measure's allowance that tobacco and menthol-fla voured cigarettes continue to be sold limits the 
scope of the ban and ensures that the ban that re duces youth smoking be appropr iate for the protection 
of the public health by taking into account the ri sk of negative consequences that could result from 
banning a product to which tens of  millions of adults are addicted.  Such negative consequences could 
include a negative impact on the health on adult sm okers, a negative impact on the US health care 
system, and an expansion of an already existing black market for cigarettes, which in turn could result 
in less safe cigarettes, more youth access to cigarettes, and increases in crime.  
20. Indonesia has not met its burden of proving that  an alternative measu re exists that is 
reasonably available, fulfils Section 907(a)(1)(A)' s legitimate public health objective, and is 
significantly less trade restrictiv e than the challenged measure.  A complaining Member does not 
discharge its burden of establishing a prima facie case by simply making reference to alternative 
measures – it must adduce by way of sufficient ev idence that the alternativ e measure satisfies each 
element of the claim.   
21. The proper interpretation of Article 2.2 flows from the text of the article itself, read in its 
context, taking into account the circumstances surr ounding the conclusion of that article.  The United 
States disagrees with Indonesia's attempt to rely on the interpretation of GATT Article XX(b) to inform as to the meaning of TBT Article 2.2.  The term "necessary" is used in GATT Article XX(b) in 
a different context than in TBT Article 2.2, an d it would not be appropriate to use the same 
GATT XX(b) interpretation for TBT Article 2.2.   
22. Indonesia has failed to establish that Sec tion 907(a)(1)(A) breaches US obligations under 
GATT Article III:4.  Should the Panel reach the i ssue of GATT exceptions, however, the application 
of Section 907(a)(1)(A) would be justified under GATT Article XX(b) as it both falls under the scope 
of the subpart (b) exception and satis fies the requirements of the chapeau. 
23. 
Section 907(a)(1)(A) was enacted in order to protect human life and health from the risk 
posed by smoking and therefore falls within the range of policies referenced in subpart (b).  Given the 
grave danger posed by youth smoking and the fact th at youth smoking rates have stubbornly remained 
high, Section 907(a)(1)(A)'s prohibition of certain pro ducts that are best described as starter cigarettes  WT/DS406/R  
 Page D-11 
 
 
 is in fact necessary  to protect human life and health.  While no further analysis is needed to show that 
Section 907(a)(1)(A) is necessary to protect human life and health, the analysis of some prior reports 
confirm that the US measure falls within the scope of  Article XX.  First, the interest at stake here – 
the protection of human life and health – is fund amental.  Second, there is a strong, genuine 
connection between the measure and the policy goal it is intended to serve as it directly contributes to 
the protection of human life and health by ensuring products that present a particular risk to youths 
cannot be sold on the market.  Third, both the danger posed by youth smoking and the fact that youth 
smoking rates have remained unacceptably high despite  the numerous restrictions already in place 
supports  rather than undermines  the necessariness of the ban.  For these reasons Section 907(a)(1)(A) 
falls under the scope of the Article XX(b) exception. 
24. Section 907(a)(1)(A) also satisfies the re quirements of the GATT Article XX chapeau 
because it is neither a means of arbitrary or unj ustifiable discrimination between countries where the 
same conditions prevail, nor a disguised restriction on international trade.  First, Section 907(a)(1)(A) 
does not provide differential treatment between countri es.  And even if the measure could be found to 
discriminate, no such conduct could not be consider ed "arbitrary" or "unjustified" given that the 
measure was tailored to address a specific public hea lth risk.  Second, Section 907(a)(1)(A) is not a 
disguised restriction on international trade.  In pa rticular, and as discussed earlier, the measure has no 
protectionist purpose.  While Section 907(a)(1)(A) ba ns Indonesia's clove cigarettes, it also prohibits 
US companies from marketing an entire product line th at they have spent decades developing.  The 
fact that foreign companies make products that pose the same risks and were likewise affected by the 
measure cannot make the measure a protectionist  one.  As such, Section 907(a)(1)(A) satisfies 
Article XX's chapeau and, given that it falls with in the scope of subpart (b), is justified under 
GATT Article XX(b).   WT/DS406/R  
Page D-12  
 
 ANNEX D-3 
 
CLOSING STATEMENT OF INDONESIA 
AT THE FIRST SUBSTANTIVE MEETING  
  
1. I would like to thank the Panel for its attention to the issues Indonesia has brought forward in this case.  We believe that there are important issu es of law for the Panel's consideration.  There are 
also many facts that are in dispute.  I hope the Panel will pay careful attention to the facts presented 
and look closely to find the truth.  I believe that if the Panel does that, you will find four things to be 
true:  
 
 clove cigarettes are like domestically produced  cigarettes that have not been banned; 
 clove cigarettes are not more dangerous  than any other kind of cigarette; 
 clove cigarettes are not overwhelmingly popular with youth and have not been targeted or 
marketed at youth; and 
 there is no factual or scientific basis for banning clove cigarettes if menthol and other 
cigarettes much more popular with youth are not banned. 
2. If these four things are true, then the Un ited States has acted inconsistently with its 
commitments under the GATT and TBT Agreement and the Panel should recommend that the 
US bring the Special Rule for Cigarettes into  compliance with its WTO commitments.   
 3. I want to be very clear about what Indonesia is asking in this case.  Indonesia is not trying to 
undermine the United States' efforts to fight smoking – especially smoking by minors.  Indonesia is not advocating that clove cigarettes be allowed to be sold in the Un ited States with no restrictions 
whatsoever.  Indonesia would be happy to abide whatever rules the United States has adopted, or 
adopts in the future, regarding marketing, advertisin g, or labelling – rules that that apply to regular 
and menthol cigarettes.  At the very least, we belie ve that clove cigarettes were entitled to the kind of 
careful study that the United States is giving to menthol cigarettes to determine the appropriate 
regulatory approach.    
4. All we are seeking here is fair treatment of an industry that is extremely important to 
Indonesia.  As I mentioned in my opening stat ement, some 6 million people in Indonesia are 
employed directly or indirectly in the production of  cigarettes and the growing of tobacco.  On behalf 
of all of them and the Indonesian government, I thank you.   WT/DS406/R  
 Page D-13 
 
 
 ANNEX D-4 
 
CLOSING STATEMENT OF THE UNITED STATES 
AT THE FIRST SUBSTANTIVE MEETING 
  
1. In closing, we would like to focus on a few points which Indonesia contests or tries to minimize, but that we consider central to understanding the dispute.    2. First, the United States is addressing an inhe rently dangerous product that presents a complex 
public health challenge for the United States, and inde ed for all countries that seek to reduce the harm 
of tobacco.  It is important to bear in mind that  the Tobacco Control Act is a measure designed to 
address this difficult issue and that Section 907(a)(1)(A ) is but one provision of this larger measure.  
Section 907(a)(1)(A) is a public health measure and makes distinctions among products on a public 
health basis.  It addresses the important, yet difficu lt, issue of youth smoking, and its goal is to reduce 
such smoking while taking into account the risk of  negative consequences arising from a broad ban.  
 3. We note that Indonesia raises the possibility, but quickly dismisses, that health considerations 
are relevant here because the United States acknowledg es that all cigarettes are harmful.  This misses 
the point.  At issue in this dispute are the public health consequences of flavoured cigarettes, namely, 
that flavours (including clove) have a particular appeal to young people and encourage young people 
to start using, and become addicted to, this harmful product.  
 4. Second, Indonesia frequently states that Section 907(a)(1)(A) is a ban on clove cigarettes.  It is not.  It is a ban on class of flavoured cigarettes that  appeal to youth.  Clove is one, but not the only, 
type of product that does this, and is thus subject to the ban.   
 
5. Indonesia would also have the Panel believe  that flavoured cigarettes other than clove 
cigarettes are irrelevant to this dispute.  In fact, clove cigarettes bear a number of significant similarities to the other flavoured cigarettes banne d under Section 907(a)(1)(A).  For example, clove 
cigarettes, like other banned flavours, are market ed with emphasis on the special and pleasurable 
experience associated with the characterizing fl avour, and, as intended, are attractive to novice 
smokers.  
 6. Third, we would like to emphasize that the ava ilable survey data indicate that clove cigarettes 
are used by a significant number of younger smokers  who are in the "window of initiation" and are 
used disproportionately by younger smokers when compared to smokers over the age of 26.  Across 
published nation-wide studies, five percent or mo re of younger smokers smoke  clove cigarettes; one 
percent or less of smokers 26 and older smoke them.  This demographic breakdown makes clove 
cigarettes similar to other flavoured cigarettes a nd explains why flavoured cigarettes are a logical 
target when seeking to reduce youth smoking.  7. Fourth, Indonesia claims that the entire  burden of Section 907(a)(1)(A) fell upon clove 
cigarettes.  This is not the case.  The ban negatively affected a range of US cigarettes, and that effect 
began even before Section 907(a)(1)(A) went into force in 2009.  One cannot just look at what was 
being sold in 2009 to analyse the effect of section 907.  Drafts of Section 907(a)(1)(A) were debated 
in Congress starting in 2004, and the US cigarette companies were well aware of it.  In addition, 
flavoured cigarettes heavily marketed by the US cigarette company RJ Reynolds were the subject of a 
high profile dispute with a number of US states in 2006.  
 8. As they say, the writing was on the wall fo r the cigarette companies.  The companies 
recognized that the flavour ban was coming and began to position themselves to address this new 
reality.  It is not uncommon that companies would react to an impending ban before it took effect.  WT/DS406/R  
Page D-14  
 
 Nevertheless, as late as 2008, at least four US ci garette companies were producing at least 26 distinct 
flavoured cigarettes.  The Panel may refer to pa ragraph 51 of the US first written submission and 
Exhibit US-52 for this point.   9. In any event, the true effect of Section 907(a)(1)(A) is that it forced US cigarette companies 
to give up an entire line of products that were aime d at attracting young people to their products.  As 
has been noted many times, young people, both ch ildren and young adults, are the key demographic 
for cigarette companies trying to maintain and grow th eir market share.  The r eal answer is that the 
measure’s burden falls heavily on US companies.   
10. We conclude by noting that while Indonesia h as made broad claims as to the insufficiency of 
the United States’ evidence, it has pr esented very little of its own evidence to substantiate its claims – 
even though it is Indonesia, and not the United States,  that bears the burden of proof in the first 
instance.  Where Indonesia has presented evidence, as  discussed in our written submissions and at this 
meeting, it’s purported evidence is not reliable for the points it purports to support. 
 
11. On behalf of our delegation, I would like to thank the Panel and the Secretariat for their work in this dispute.  We look forward to furthe r addressing the issues we have discussed and other 
questions raised by the Panel in our future submissions. 
  WT/DS406/R  
 Page D-15 
 
 
 ANNEX D-5 
 
EXECUTIVE SUMMARY OF THE OPENING STATEMENT 
OF INDONESIA AT THE SECOND SUBSTANTIVE MEETING 
  
1. Indonesia understands that WTO rules give Me mbers a significant amount of discretion in 
setting their own regulatory policies, particularly on issues as critical as protecting the public health.  
Indonesia has consistently stated throughout this di spute that efforts to reduce smoking, particularly 
youth smoking, are a legitimate public health objective.   However, WTO rules al so clearly state that a 
Member's discretion is not boundless and Members must  satisfy certain requirements in their adoption 
of measures that restrict trade. The United States h as not done so.  The Special Rule is discriminatory 
in violation of Article 2.1 of the Agreement on T echnical Barriers to Trade ("TBT"), is more trade 
restrictive than necessary in violation of TBT Articl e 2.2, and in adopting the Special Rule, the United 
States failed to comply with certain other provis ions of the TBT Agreement, which resulted in 
violations of TBT Articles 2.5, 2.8, 2.9, 2.12, and 12.3. 
I. NATIONAL TREATMENT CLAIMS 
2. Indonesia is not saying that Members cannot pursu e legitimate public policy objectives in an 
incremental fashion.  However, an incremental ap proach to regulation cannot be used if it treats 
imported products less favourably than domestic lik e products.  The United States characterizes  its 
actions as "temporarily" setting aside menthol cigarettes for further study.  TBT Article 2.1 and 
GATT Article III:4 do not allow for "temporary" less  favourable treatment.   Moreover, "temporary" 
does not equate to "incremental".     
A. C
LARIFICATION OF FACTS RELATED TO NATIONAL TREATMENT  
3. The United States says in its second written submission that the Special Rule targets people 
between the ages of 12 and 26 because that is what public health officials consider the "window of 
initiation" for smoking.  Indonesia disagrees with the Unite d States that the Special Rule is targeted at 
people over age 18.  The Special Rule targets people under the age of 18 consistent with the intent of 
the Family Smoking Prevention Tobacco Control Act ("FSPTCA") overall.  Indonesia is not making 
any claims about the general validity of a "window of  initiation" or the potential benefits of targeting 
smoking reduction efforts to people in that age group.  But the plain fact of the matter is that the FSPTCA and the Special Rule itself do not by their own terms target this population.   
4. The House Report plainly states that the objectives of the FSPTCA are "to protect the public 
health and to reduce the number of individuals unde r 18 years of age who use tobacco products".  The 
House Report also explains the purpose of the Sp ecial Rule as banning cigarettes with certain 
"characterizing flavours" that appeal to youth.  
5. This same emphasis on curbing tobacco use by  youth is found consiste ntly throughout other 
provisions of the FSPTCA as well.  These other provisions of the FSPTCA either target youth (age 17 
and under) or adults (18 and over).  There is not a single provision that is targeted at reducing 
smoking by adults between the ages of 18 and 26 a nd there is no reference in the FSPTCA itself or in 
the House Report to reducing smoki ng in the "window of initiation". 
6. The United States argues repeatedly that "clove  cigarettes are used di sproportionately by 
youth and not in large numbers by adults".  Data submitted by both Indon esia and the United States 
show that youth do not disproportionately smoke cl ove cigarettes.  In f act, Indonesia's Exhibit 73 
shows that the average rate of youth clove use and adu lt clove use is the same at 0.3 per cent.  Even if 
the Panel only considers data from studies that the Un ited States deems "reliable", the simple fact is WT/DS406/R  
Page D-16  
 
 that there is nothing unique about the pattern of clove  cigarette use that would distinguish it from the 
use of menthol or regular cigarettes.  The United States points to the 2002 and 2003 NSDUH  which 
show that a higher percentage of youth had tried clove cigarettes than adults.  But the same use pattern 
is also true for menthol and tobacco cigarettes.  Indonesia has provided evidence in its Exhibit 75 that 
51 per cent of youth use menthol cigarettes, but the adult rate of use falls by almost 20 per cent to 
only 32 percent, indicating that youth start on ment hol cigarettes and switch to other cigarettes in 
adulthood.  This trend is true for cigarettes generally as well.  The US Congress noted among its 
findings in the FSPTCA that over 80 per cent of youth smoke one of three heavily marketed brands -- 
"Camel", "Marlboro", and "Newport" – but only 54 per cent of adults smoke those same brands.  
Thus, there is nothing from the survey data re garding youth and adult usage that supports the 
conclusion that clove cigarettes are disproportionately  used by youth but other kinds of cigarettes are 
not.  
7. The United States argues that data reflecti ng those who reported smoking clove cigarettes 
"most often" should not be relied upon because clove  cigarettes are so-called "special occasion" 
cigarettes, therefore, this data will not accurately  capture everyone who has tried or experimented 
with clove cigarettes. Indonesia rejects the premise that clove cigarettes are only a "special occasion" cigarette.  NSDUH  data from 2002-2009 show that there is a sm all, but consistent group of both youth 
and adults who say they smoke clove cigarettes most  often.  Furthermore, to the extent that the 
NSDUH  data on cigarettes smoked "mos t often" does not capture youth who smoke clove cigarettes 
occasionally, it also does not capture adults w ho smoke clove cigarettes occasionally.   
8. The United States also argues that data from the 2002-2003 NSDUH , Monitoring the Future  
("MTF "), and the National Youth Tobacco Study  ("NYTS ") best represent youth use of clove cigarettes 
because these surveys ask about clove cigarette usage in the last month or year.  In its second written 
submission, Indonesia identified many inconsistenci es with the data in these surveys, which, when 
corrected, reveal a lower rate of clove use than that  initially reported by the surveys.  However, even 
assuming arguendo that the rates reported by the United Stat es were correct, the results still prove that 
clove cigarettes are not popular with youth at all, much less "overwhelmingly" so.  For example, the 
NYTS  reported that 11 per cent of those smokers survey ed (including young adults up to the age of 21) 
had tried a clove cigarette in the last 30 days.  MTF  found that 5.5 per cent of 12th graders (some of 
whom may be 18) had tried a clove cigarette in the last year.  The NSDUH  – using the survey question 
from 2003 preferred by the United States – reported th at 5 per cent of youth smokers had tried a clove 
cigarette in the past 30 days.  This data shows th at, at a minimum, close to 90 per cent of youth who 
smoke have not even touched a clove ci garette. This is consistent with the MTF  researchers' 
conclusion that clove cigarette use was "a short-term fad that simply did not catch on with mainstream 
youth".   
9. However, responses to these questions do not tell us several things that are critical to the 
questions before this Panel.  For example, ther e is no way to know from these responses whether the 
person answering "yes" smoked only part of a ciga rette on only one occasion or whether they were 
smoking clove cigarettes regularly.  Similarly, these survey questions tell us absolutely nothing about 
whether the clove cigarette use repor ted was the respondent's first use of  any cigarette or whether they 
were already smoking regular and menthol cigarettes befo re they tried a clove cigarette.  In fact, there 
is no way to know from these survey questions whet her the respondents ever became addicted to 
tobacco at all.  Monitoring the Future  and the National Youth Tobacco Study  do not include adults, so 
these two surveys provide absolutely no ev idence supporting the conclusion that youth 
disproportionately use clove cigarettes and adults  do not.  Limitations like these are why Indonesia 
believes it is important to look at a much wider range of data than just that presented by the United 
States. 
10. The United States continues to assert in its second written submission that clove cigarettes are 
"starter" cigarettes that contribute to the addiction of  youth to cigarettes. The United States is the party  WT/DS406/R  
 Page D-17 
 
 
 that raised the allegation that clove cigarettes are "starter" cigarettes that contribute to youth cigarette 
addiction, and therefore it is the United States' bur den to provide evidence supporting this allegation. 
It has not done so.  What the evid ence in this dispute shows is that other cigarettes, not clove, are the 
"starter" cigarettes.  To Indonesia, the best eviden ce of which cigarettes are starter cigarettes are the 
cigarettes youth smoke most. Youth are smoking me nthol- and tobacco-flavoured cigarettes in far 
greater numbers than clove cigarettes. The data s how youth smoke menthol in large numbers and then 
move to other cigarettes in adulthood.  The data on current adult clove smokers also confirm this. For 
instance, two-thirds of all current clove smokers re port smoking their first clove cigarette more than 
one year after trying their first cigarette, while only 6 per cent reported clove as their first cigarette.   
11. The United States makes several assertions in  its second written submission about the public 
health concerns related to flavoured cigarettes subj ect to the ban in the Special Rule, including clove 
cigarettes. These assertions relate to the appeal of these cigarettes to youth.  In Section D.1 of the 
United States' second written submission, it explains  how cigarette companies developed, designed, 
and marketed new flavours of cigarettes in the 1990s to appeal to youth.  None of the evidence cited 
concerns clove cigarettes.  Clove cigarettes have been sold in the United States for over 40 years. 
They are not a new product designed to attract yo uth smokers.  Clove ciga rettes have never been 
marketed as a "seasonal" or "limited edition" product.    
12. The United States also quotes selectively from the WHO Report in its discussion of public 
health concerns raised by flavoured cigarette s banned by the Special Rule.  The WHO Report 
ultimately recommends different regulatory appr oaches for, on the one hand, candy-flavoured 
cigarettes ( i.e., prohibition on manufacturing and restricted marketing) and on the other hand, kretek 
(or clove) and menthol cigarettes (i.e. education ab out the additives in these cigarettes). The excerpts 
from the WHO Report cited by the United States that  refer to clove cigarettes discuss the potential of 
flavours to appeal to consumers.  Indonesia agrees with the United States that "for purposes of the 
analysis in this dispute, the terms 'appeal' and 'u se' are equivalent".  The data do not show a broad 
consumer appeal of clove cigarett es.  A very small percentage of youth and adult smokers actually use 
clove cigarettes.  
B. LIKE PRODUCT ANALYSIS  
13. Indonesia has presented sufficient evidence and ar guments to establish that clove cigarettes 
are "like" menthol- and tobacco-flavoured cigarettes.   Indonesia has established that clove cigarettes 
have the same physical characteristics, end uses, consumer preferences, and tariff classification as menthol- and tobacco-flavoured cigarettes.  None of  the assertions advanced by the United States 
point to significant differences between the three types of cigarettes that would render them not "like".  
In its second written submission, the United States a sserts that physical characteristics and consumer 
tastes and preferences are particularly relevant as th ey have public health consequences.  However, 
the distinctions the United States raises related to these factors are insignificant and do not detract 
from the competitive relationship that exists betwee n clove cigarettes, on one hand, and menthol- and 
tobacco-flavoured cigarettes, on the other hand.  Thes e differences also do not demonstrate that clove 
cigarettes pose a unique public health risk.    
14. The United States again touts the presence of cloves and a so-called "secret sauce" as a 
significant difference in physical properties be tween clove cigarettes and menthol- and tobacco-
flavoured cigarettes.  It claims that their pr esence creates a difference in taste, and as a result, 
consumers do not view clove cigarettes as substitutabl e for menthol- and tobacco-flavoured cigarettes.  
This overlooks the fact that menthol- and tob acco- flavoured cigarettes each have their own 
flavouring agents, which are also referred to as "sau ce" or "casing".  The so-called "secret sauce" for 
clove cigarettes is very similar to the flavouring ingredients used in American cigarettes.  All 
US manufactured cigarettes add flavourings to their cigarettes to differentiate their taste from other 
cigarettes.  In fact, Indonesia has presented evid ence that consumers activel y substitute these three WT/DS406/R  
Page D-18  
 
 types of cigarettes.  Indeed, Indonesia and the Unite d States even agree that 75-79 per cent of clove 
cigarette smokers also smoke menthol and regular cigarettes. The United States is also wrong that 
flavour differences make clove cigarettes more appea ling to youth and less appealing to adults.  The 
data that the United States uses to support its a ssertion actually proves that, at a minimum, almost 
90 per cent of youth smokers (under 18 years of age) have not tried clove cigarettes.  Furthermore, the 
use of clove cigarettes does not decrease significantly among adults.   
C. L
ESS FAVOURABLE TREATMENT  
15. Indonesia has demonstrated through both its wr itten submissions and in its first appearance 
before the Panel, that the Special Rule treats importe d clove cigarettes less favourably than the "like" 
domestic products.  While facially neutral, the Special Rule results in de facto  discrimination against 
imported products.  The ban on characterizing flavours does not include menthol- and tobacco-
flavoured cigarettes.  Both menthol- and tobacco -flavoured cigarettes are produced primarily in the 
United States, while clove cigarettes, which we re banned, were predominantly imported from 
Indonesia.  By banning clove cigarettes and not the domestic like products (menthol- and tobacco-flavoured cigarettes), the United States has modified  the conditions of competition to the detriment of 
imported clove cigarettes.  In fact , virtually all domestically produced like cigarettes were not affected 
by the restrictions imposed by the Special  Rule, thus the Special Rule results in de facto  
discrimination against imported clove cigarettes. 
16. The United States continues to assert that I ndonesia must show that clove cigarettes are 
subjected to different treatment based on their nationa l or foreign origin. At the first meeting with the 
Panel, Indonesia and a number of third parties expr essed concern with this argument.  No panel or 
Appellate Body report has ever required both a "less favourable treatment" test and a second "based 
on national origin" test.   
17. Indonesia disagrees that the "less favourable treatment" analysis under TBT Article 2.1 and 
GATT Article III:4 requires a separate analysis of whether a measure is applied "so as to afford 
protection to domestic production".  The Appellate Body found in EC – Bananas III  that "Article III:4 
does not specifically refer to Article III:1. Therefore, a determination of whether there has been a 
violation of Article III:4 does not require a separate consideration of whether a measure 'afford[s] 
protection to domestic production.'"  If there is no  need to conduct a separate "so as to afford 
protection to domestic production" inquiry under GA TT Article III:4, then there is no basis to conduct 
such an inquiry under TBT Article 2.1, wh ich does not even contain this language.  
II. ARTICLE 2.2 OF THE TBT AGREEMENT 
18. Indonesia has established a prima facie case that the Special Rule is inconsistent with 
Article 2.2 of the TBT Agreement because it is mo re trade restrictive than necessary to fulfil the 
objective of reducing youth smoking.  According to  the House Report, the objective of the Special 
Rule is the protection of public health by reduci ng the number of children and adolescents who smoke 
cigarettes.   
19. As Norway noted at the first meeting of the Panel, under the Specia l Rule, "some cigarettes 
are banned to promote public health, and other more  popular cigarettes are permitted, apparently also 
to promote public health".  But the United States a ppears to have based its decision not to exclude 
menthol- or tobacco-flavoured cigarettes from the Special Rule on hypothetical, negative 
consequences.  This despite the fact that there is a mountain of evidence that menthol-flavoured 
cigarettes are the real "starter" cigarettes for youth.   
20. The United States tries to add to the objective of the Special Rule "avoiding potential  
negative health consequences".  However, the United States presents no evidence, scientific or  WT/DS406/R  
 Page D-19 
 
 
 otherwise, of these supposed negative health effects that  the Special Rule is designed to avoid; that is 
because, as the United States acknowledges, these consequences are "unknown, but possibly 
negative".  In asserting these negative effects, the Unit ed States assumes without substantiation that if 
menthol cigarettes were banned, everyone who smoked  menthol cigarettes would either just go right 
to the doctor or right to the black market.  Both Parties have noted several other options available for 
menthol cigarette smokers had menthol cigarettes been included in the ban such as switching to 
regular cigarettes or using ot her menthol-flavoured products, e.g. filtered menthol cigars.   
21. Indonesia does not assert that the Special Rule must eliminate youth smoking; rather, the 
Special Rule must make a material contribution to  the objective of the measure.  In this case, the 
Special Rule cannot make a material contribution by only banning the cigarette that youth for the 
most part do not smoke.  Several of the thir d parties have made this same point.   
22. The United States insists that the Special Rule  was necessary to prevent cigarette companies 
from putting new flavoured cigarettes on the market.  However, under Section 910(c) of the FSPTCA, 
HHS must approve the introduction of any new tobacco  products onto the US market.  This provision 
alone is sufficient to prevent new flavoured cigare ttes from entering the mark et if HHS believes such 
cigarettes would be attractive to youth.   
23. The United States' rebuttal arguments to Indonesia's prima facie case under TBT Article 2.2 
must fail because the lynchpin of its defense – that the Special Rule only bans "starter" cigarettes that 
are overwhelming used by youth and not by adults – is not supported by the evidence.  As a result, the 
Special Rule does not materially contribute to th e objective of reducing youth smoking and, thus, not 
banning clove cigarettes would pose no significant risk to the fulfilment of the measure's objective to 
reduce youth smoking.  Since Indonesia has demonstrat ed that the Special Rule  is not necessary, there 
is no need to examine whether less-trade restrictive measures were available.   
24. However, if the Panel disagrees, Indonesia h as submitted several less-trade restrictive 
measures available to the United States to limit the availability of clove cigarettes to youth.  The 
United States contends that "any measure that does not eliminate from the market cigarettes with a 
characterizing flavour of candy, fruit, liquor, etc. that  tens of millions of adults do not smoke does not 
fulfil the legitimate objective at the level the Unite d States considers appropriate".  The United States 
is conflating the objective of the measure with th e means chosen to achieve the objective (i.e. the 
measure itself). The Panel should reject this self- serving pronouncement and carefully consider the 
alternatives proposed by Indonesia.  
25. Any one of Indonesia's proposed alternatives would have been "less trade restrictive" than the 
complete ban on the import of clove cigarettes.  All of the proposed alternatives were reasonably 
available to the United States and could achieve a reduction in youth smoking as they were either (1) 
already in the FSPTCA and considered effective by  the United States for keeping youth from smoking 
menthol- or tobacco-flavoured cigarettes; (2) had been  adopted by the United States in other contexts 
to remove flavoured cigarettes from the market and could have been incorporated into the FSPTCA; 
or (3) are in use by other countries for the same purpose of reducing youth smoking. 
III. OTHER TBT AGREEMENT CLAIMS 
26. Indonesia has made a prima facie case with respect  to its claims under TBT Articles 2.5, 2.8, 
2.9, 2.12, and 12.3.  The United States has failed to  meet its burden to rebut Indonesia's claims with 
respect to these articles of the TBT Agreement.   WT/DS406/R  
Page D-20  
 
 IV. US DEFENSE UNDER ARTICLE XX 
27. In its first written submission the United States a sserts that if the Special Rule is found to be 
inconsistent with GATT Article III:4, it is nonetheless justified under GATT Article XX.  Indonesia 
has demonstrated that the ban in the Special Ru le is not necessary to reduce youth smoking and is a 
disguised restriction on international trade.  As such, GATT Article XX cannot be used to justify the 
Special Rule if there is a finding of inconsistency with GATT Article III:4.  
 
  WT/DS406/R  
 Page D-21 
 
 
 ANNEX D-6 
 
EXECUTIVE SUMMARY OF THE OPENING ORAL STATEMENT 
OF THE UNITED STATES AT THE SECOND SUBSTANTIVE MEETING 
  
1. Given the threat posed by smoking, and the fact  that cigarettes are as addictive as heroin or 
cocaine, it is self-evident  that designing the product to be more appealing, such as adding pungently 
sweet flavourings of candy, fruit, or clove, is harm enhancing .  Thus, not surprisingly, the public 
health scholarship, the World Health Organization, and the US survey data all support the conclusion 
that these flavourings represent a particularly serious public health concern.  Of course, all cigarettes 
present a health concern.  But the fact that cigarett es are so highly addictive an d heavily used makes it 
enormously difficult and complicated to ban them entirel y.  It is simply irresponsible to contend, as 
Indonesia does, that the elimination of a product that is as addictive and heavily used as cigarettes has 
no potential for negative consequences to the individu al smoker, the US health care system, and the 
society as a whole.  The Family Smoking Prevention and Tobacco Control Act ("Tobacco Control Act") is the latest US salvo in the ongoing fight against the problem of smoking, and 
Section 907(a)(1)(A) represents a reasonable, prag matic element of the overall strategy of the 
United States.  
2. In its latest submission Indonesia makes new cr iticisms of the US characterization of the 
survey data.  All of Indonesia's criticisms are without  merit.  Indonesia's techniques of data analysis 
artificially lower the prevalence rates and minimize the role of clove cigarettes in smoking initiation.  
The inescapable fact is that Section 907(a)(1)(A)' s ban of cigarettes with characterizing flavours 
including candy, fruit, and clove is perfectly in line with the available public health science on 
smoking, and Indonesia's criticisms of the su rvey data cannot change this reality. 
I. ARTICLE III:4 OF THE GATT 1994 AND ARTICLE 2.1 OF THE 
TBT AGREEMENT 
3. Indonesia has not established that clove cigarett es are "like" menthol or tobacco flavoured 
cigarettes.  Indonesia has never substantiated its cl aim that clove cigarettes competed with menthol 
and tobacco cigarettes for "access to channels of di stribution, shelf space and market share".  From 
the view of Indonesian clove producers, clove ciga rettes in the United States constitute a "kretek" 
market among themselves. 
4. Indonesia has similarly failed to prove that  US consumers view clove cigarettes as 
interchangeable with tobacco or menthol cigarettes.  Indonesia's sole claim to this effect is that a 
number of individuals who reported smoking clove  cigarettes also reported smoking menthol or 
tobacco cigarettes.  In fact, the statistic on concu rrent use of clove cigarettes and other cigarettes is 
consistent with what survey evidence reveals:  young consumers tend to smoke clove cigarettes 
experimentally, and not as a substitute for other bra nds.  A "trainer" cigarette is not necessarily the 
first or only cigarette a young person tries; it is a cigarette, such as a clove cigarette, that is more 
appealing to inexperienced smoke rs, and thereby encourages further use of all tobacco products.  
Contrary to Indonesia's representation in this dis pute, clove cigarette manufacturers market clove 
cigarettes as a unique clove and tobacco experience. 
5. The differences in competition and consumer perceptions between clove cigarettes and 
menthol and tobacco cigarettes, in this dispute, ar e in sharp contrast to the competitive relationship 
and consumer perceptions among the products at issue in Mexico – Taxes on Soft Drinks .  The panel 
in that dispute placed significance on the fact that  producers and consumers selected one sweetener or 
the other interchangeably, regardless of physical diffe rences.  In this case, consumers clearly perceive 
a difference in taste between clove cigarettes and tobacco and menthol cigarettes.  WT/DS406/R  
Page D-22  
 
 6. Indonesia also has failed to demonstrate that clove cigarettes are "like" tobacco and menthol 
cigarettes from a public health perspective, accord ing to which, patterns of use are a relevant 
"likeness" factor.  The United States has demonstrated  that the patterns of use in the United States are 
different for clove and other flavoured cigarettes than they are for menthol or tobacco flavoured 
cigarettes.  Indonesia's clai m that clove cigarettes have the "same health risks as other cigarettes" is 
inconsistent with the disproportionate appeal of clove cigarettes to younger smokers.  Indonesia itself 
acknowledges that cigarettes that "encourage new,  young smokers" may present a "specific health 
risk" and therefore need not be cons idered "like" other cigarettes.  
7. The United States had a sound basis to conclude that clove cigarettes were disproportionately 
used by young people, and therefore presented a par ticular health risk.  This conclusion is amply 
supported by peer-reviewed research.  Against th ese solid, research-based findings, Indonesia argues 
that it is merely a "myth".  Indonesia bases this a ssertion on a flawed reading of the surveys, and on 
the unsubstantiated views of a handful of selected commentators.  
8. Indonesia's criticisms do not undermine or contradict the reasonable conclusion that clove 
cigarettes pose a particular risk to young people and to the public health.  In EC – Asbestos , the panel 
recognized that it is not the panel's "function to se ttle scientific debate", but to take an objective 
assessment, based on the evidence pr esented, as to whether "a decision-maker responsible for taking 
public health measures might reasonably conclude" the presence of a risk. 
9. As demonstrated in Mexico – Taxes on Soft Drinks and EC – Asbestos, the question for the 
Panel is not whether products are identical in the abstract, but whether the products are "like" in the 
relevant context and circumstances.  In Mexico – Taxes on Soft Drinks , sweeteners derived from 
different plants were deemed to be "like produc ts" despite this physical difference because the 
difference was unnoticeable to producers a nd consumers.  In this case, like in EC – Asbestos, the 
differences among clove cigarettes and tobacco and me nthol cigarettes directly relate to different 
consumer perceptions of the products and to the public health risk at issue. 
10. Even aside from the fact that not all cigarett es are "like" products, Indonesia also has not 
demonstrated less favourable treatment.  In donesia purports to have established a prima facie case of 
"less favourable treatment" based on the assertion that "in practice, virtually all domestically produced 
cigarettes were not affected by the restrictions im posed by the Special Rule, thus the Special Rule 
results in de facto  discrimination against imported clove ciga rettes".  This conclusion is based on a 
flawed and incomplete legal and factual analysis. 
11. In prior disputes under the GATT 1994, where the measures at issue were taxes applied to 
products determined to be "like", the analyses have tended to accord significant weight to the ratio of 
imported products compared to domestic products that are taxed at the higher rate.  Nevertheless, this 
ratio is neither dispositive of "less favourable tr eatment" by itself nor necessarily strong evidence of 
less favourable treatment in every case.   
12. For example, in cases involving product standards, answering the question of whether there is 
de facto  less favourable treatment involves determining whether the product standa rd is legitimate or 
is a means by which to treat imported products less favor ably than domestic products.  In this context, 
the ratio of imported products that fall short of the product standard compared to domestic products 
that fall short is relevant, but is not necessarily as strong an indicator of less favourable treatment as in 
the context described above.  
13. The "less favourable treatment" analysis require s an examination of all relevant evidence, 
including the objective purpose of the measure and whet her the alleged detrimental effects to imports 
depend on their national origin .  The Appellate Body in EC – Asbestos noted that Members may draw 
distinctions between products de termined to be "like" without necessarily according less favourable  WT/DS406/R  
 Page D-23 
 
 
 treatment to imported products.  Similarly, the reports in Dominican Republic – Import and Sale of 
Cigarettes  and EC – Approval and Marketing of Biotech Products  found that where an alleged 
detrimental effect on an imported pr oduct is not attributable to its foreign origin, that effect is not 
evidence of less favourable treatment.  In this dispute, the only evidence of "less favourable 
treatment" that Indonesia has submitted amounts to the fact that Section 907(a)(1)(A) bans some 
lesser-used cigarettes, including bot h foreign and domestic, and does not  ban other more heavily used 
cigarettes, including both foreign and domestic.  I ndonesia has not demonstrated that the objective of 
the measure is to single out imports and to afford protection to domestic production.  In Mexico – 
Taxes on Soft Drinks , it was uncontested that Mexico's measures were designed to penalize 
US products compared to Mexican products.  In this dispute, the measure at issue, 
Section 907(a)(1)(A), is not a fiscal measure designe d to penalize imported products.  It is a public 
health measure, based on US consumers' patterns of use of different types of cigarettes and associated 
public health considerations.  
14. With respect to the facts, Indonesia presents onl y a partial, misleading description of how the 
ban applies to imported compared to domestic ciga rettes.  The ban applies to a small category of 
cigarettes in general, including bot h imported and domestic cigarett es.  Clove cigarettes comprised 
approximately 0.1% of the US cigarette market.  Section 907(a)(1)(A) also bans other flavoured 
cigarettes made in the United States, which, like clove cigarettes, comprised a small portion of the 
US market.  In other words, a relatively small category of both domestic and imported products are 
banned under Section 907(a)(1)(A).  On the othe r hand, Section 907(a)(1)(A) permits tobacco and 
menthol flavoured cigarettes made by both US and foreign producers.  At least 95% of imported 
cigarettes are still permitted under Section 907(a)(1 )(A).  Indonesia also has exported to the 
United States tobacco cigarettes that do not contain clove.  
15. The circumstances in this dispute are not, as Indonesia suggests, directly analogous to the 
circumstances in Mexico – Taxes on Soft Drinks , where nearly 100% of imported sweeteners were 
taxed at a higher rate than nearly 100% of domestic sweeteners.  The Mexico – Taxes on Soft Drinks  
panel considered the fact that imported products as a group were taxed at a higher rate than domestic 
products as a group to be strong evidence of de facto  less favourable treatment.  This approach is 
consistent with the Appellate Body's discussion in EC – Asbestos.   In this case, the line 
Section 907(a)(1)(A) draws between those cigarettes that are banned and those that are not does not 
coincide with the group of cigarettes that are imported versus the group of cigarettes that are 
domestic.    
II. INDONESIA HAS FAILED TO ESTABL ISH THAT SECTION 907(A)(1)(A) IS 
INCONSISTENT WITH TBT ARTICLE 2.2 
16. Indonesia continues to insist that the Panel must  look first and foremost to the interpretation 
of GATT Article XX(b) by panels and the Appellate Body  in interpreting the text of TBT Article 2.2.  
There are a number of problems with Indonesia's approach.  Most obvious, it forces Indonesia to 
include the term "necessary" twice, even though it is only used once in Article 2.2.  Further, the 
second element, in Indonesia's view, imports into the Article 2.2 analysis numerous tests not reflected 
in the text Article 2.2, including whether the measu re makes a material contribution to its objective 
and whether the measure arbitrarily or unjustifiabl y discriminates between countries where the same 
conditions prevail.  Among other things, Indonesia fa ils to explain why Article 2.2 would include this 
element concerning discrimination in light of Article 2.1.  What a Member must do to act consistently 
with Article 2.2 is, as the text says, to ensure that its technical regulation is not more trade-restrictive 
than necessary to fulfil a legitimate objective.  In  accordance with Articles 31 and 32 of the Vienna 
Convention, a measure fails this test if: (1) there is  a reasonably available alternative measure; (2) that 
fulfills the objective of the measure at the leve l that the Member imposing the measure considers 
appropriate; and (3) is significantly less trade restrictive.   WT/DS406/R  
Page D-24  
 
 17. Indonesia makes three new criticis ms of the US characterization of Section 907(a)(1)(A)'s 
objective.  First, Indonesia is wrong to claim that the objective of the measure is not to protect all people who are at risk from becoming addicted smokers, but only those people ages 17 and below.  In 
analysing the objective chosen by the importing Me mber, the Appellate Body has said that it is 
necessary to focus on the text, design, architectur e, and revealing structure of the measure.  
Section 907(a)(1)(A) eliminates from the US market cigarettes with characterizing flavours of candy, 
fruit, clove, etc.  The measure thus helps to pr otect all potential and novice smokers who would be 
attracted to these flavoured cigarettes, which in cludes not only children and adolescents, but young 
adults as well.  Children and adolescents are promin ently referenced in the Tobacco Control Act and 
its legislative history because these age groups play a central role in reducing smoking rates.  But they 
are not the only people that are at risk for beco ming addicted smokers.  Second, Indonesia is wrong to 
claim that avoiding negative con sequences is not part of the objective of Section 907(a)(1)(A).  The 
text, design, architecture, and revealing struct ure of Section 907(a)(1)(A) makes clear that the 
measure draws distinctions between  products, banning some, and allowi ng others to continue to be 
sold in the United States.  Third, Indonesia is wrong to claim that Section 907(a)(1)(A) did not ban 
menthol cigarettes simply because a particular US company opposed it.  Nothing in the text, design, 
architecture, or revealing structure of the measure would indicate that this is so.  
18. Indonesia continues to argue that Section 907( a)(1)(A) is inconsistent with Article 2.2 
because it does not fulfil its objective sufficiently .  If such an argument is accepted, Article 2.2 would 
prohibit Members from regulating incrementally where such measures have an effect on trade.  
Nothing in the TBT Agreement requires Member s to pursue objectives to the maximum extent 
possible.  To the contrary, as confirmed by th e preamble to the TBT Agreement, Members are 
permitted to fulfil their objectives at the level they consider appropriate.  
19. Indonesia claims that as Section 907(a)(1)(A) "do es not materially contribute" to its objective, 
the question of whether a sufficient alternative meas ure exists is "moot".  Indonesia does not establish 
that Section 907(a)(1)(A) is more trade-restrictive than necessary to fulfil its objective by arguing that 
Section 907(a)(1)(A) should fulfil its objective more completely than it does.  Rather, Indonesia must show that at whatever level the United States has determined is appropriate for the objectives that 
Section 907(a)(1)(A) fulfills, the measure is more tr ade-restrictive than neces sary because there is a 
reasonably available alternative measure that is sign ificantly less trade-restrictive and that fulfills the 
objectives of Section 907(a)(1)(A) to at least the same degree.  Indonesia has failed once again to 
adduce any evidence that such an  alternative measure exists. 
20. The reference to non-fulfillment in the second sentence directs the Me mbers to take into 
account these risks.  Moreover, Indonesia is incorr ect that Article 2.2 obligates the importing Member 
to evaluate the risk of the imported product.  Me mbers need not base their technical regulations on 
risk assessments.  The language refers to the risks of nonfulfillment of the objective  would create, not 
the risks posed by a particular product .  
III. INDONESIA HAS NOT SHOWN THAT THE UNITED STATES ACTED 
INCONSISTENTLY WITH TBT ARTICL ES 2.5, 2.8, 2.12, OR 12.3 
21. Indonesia argues that the United States acted incons istently with Article 2.5.  First, Indonesia 
ignores that Article 2.5 provides that "upon request" a Member shall explain the justification for the 
technical regulation in terms of the provisions of Ar ticle 2.2 to 2.4.  Indonesia never made such a 
request.  Indonesia is further inco rrect in believing that Article 2.5 requires importing Members to 
provide, in essence, a full legal analysis of each element as well as provide the exporting Member 
with all the accompanying scientific data.  Second,  Indonesia is wrong to claim that it has suffered 
any prejudice.  Indonesia had ample opportunity, and as far as we are aware, took full advantage of 
that opportunity, to express its view to US Government officials.   WT/DS406/R  
 Page D-25 
 
 
 22. Indonesia's Article 2.8 claim is misplaced.  Firs t, it is entirely specious for Indonesia to imply 
that its producers do not know whether the measure bans  their product.  There is no doubt that clove is 
the characterizing flavour of clove cigarettes.  Sec ond, Indonesia still has not provided one example of 
how the measure could be written in terms of pe rformance, nor provided one reason why it would be 
"appropriate" to do so.  Certainly, Indonesia's Exhi bit IND-70 does not provide an answer to this 
question.  The United States fails to see how a meas ure that incorporates this standard, which only 
purports to provide a means of testing, establish es that the challenged measure could be written in 
fundamentally different terms, and what those terms would be. 
23. Indonesia argues that the United States acted inc onsistently with Article 2.12.  Yet Indonesia 
has failed to provide even one reason why the inte rval should have been doubled to six months, nor 
why the lengthening of the interval would be consiste nt with the objective of the challenged measure.  
The Doha Ministerial Decision, which constitutes, at most, a means of supplemental interpretation 
under Article 32 of the Vienna Convention,  does not require a different result.  
24. Indonesia continues to argue that the United Stat es acted inconsistently with Article 12.3.  A 
risk of unemployment simply cannot be a "special need" given that every  government is concerned 
about the unemployment rate of its citizens.  But even if one were to assume that there was some 
aspect of employment in this instance as a need th at is unique to developing countries, Indonesia has 
provided zero evidence that Section 907(a)(1)(A) has had any impact on employment in Indonesia, 
much less the "severe adverse im pact" that Indonesia repeatedly re fers to.  The United States acted 
consistently with Article 12.3 by providing ampl e opportunity to Indonesia to make its views known 
to the US Government.  Nothing in Article 12.3 re quires the "something" more that Indonesia claims 
it does.  
IV. SECTION 907 IS JUSTIFIED UNDER ARTICLE XX OF THE GATT 1994 
25. The United States has fully explained why S ection 907(a)(1)(A) would be justified under 
Article XX(b) of the GATT 1994.  Section 907(a)(1)( A) was enacted in order to protect human life 
and health from the risk posed by smoking.  And the measure is necessary to ensure that products that 
are predominantly used as trainer products by young people, leading to years of addiction, health 
problems, and possibly death, cannot be sold in the United States at all.  For the reasons explained 
previously, Section 907(a)(1)(A) also meets the requirements of the Article XX chapeau.  
26. The United States has put forward ample scientific  data to support the pragmatic decision by 
the United States to ban cigarettes w ith characterizing flavours such as those of candy, fruit, and clove 
on the one hand, while not banning heavily used products whose precipitous prohibition could have 
serious negative consequences.  Indonesia asks the Panel to take the opposite approach and interpret 
the WTO Agreement as requiring the United States  to choose between two extremes – banning all 
cigarettes or banning none.  In its consideration of the evidence, Indon esia further asks the Panel, in a 
variety of ways, to ignore that cigarettes are highl y addictive, very dangerous, and heavily used by 
tens of millions of people.  Indonesia's approach should be rejected.  WT/DS406/R  
Page D-26  
 
 ANNEX D-7  
 
CLOSING STATEMENT OF INDONESIA 
AT THE SECOND SUBSTANTIVE MEETING 
 
 1. Thank you Mr. Chairman and members of th e Panel.  Before I yield the microphone to 
Ambassador Erwidodo, I want to comment, as part of Indonesia's closing statement, on the closing 
statement just delivered by the United States.  
2. With one exception, Indonesia fundamentally disagrees with everything stated by the 
United States.  The one exception concerns the co mment made about new Panel question 11.  We 
agree with the United States that this is an inter esting question and we appreciate the Panel raising it. 
 3. During the question and answer session earlier t oday we provided a respons e to this question.  
You may recall us talking about two "sliding scal es", one tracking the trade-restrictiveness of a 
measure under Article 2.2 of the TBT Agreement and another tracking the contribution of the measure 
toward achieving its objective under Article 2.2.  4. As we reflected further on new Question 11,  we were struck by the possibility that it may 
relate to another question raised by the Panel, and that is the scope of the measure at issue.  I'm 
referring in particular to question 23(a) raised by the Panel following its first substantive meeting with 
the Parties.  5. That question asked whether it was correct, "s trictly speaking", to say that the measure in 
question applies "to all cigarettes". 
 
6. The Panel should not confuse the alleged objective of the measure put forth by the United States before the Panel with the measure itself.  I ndonesia wishes to reiterate in the strongest possible 
terms that the challenged measure – the so-called "Special Rule" – does not apply to all cigarettes.  It 
applies to only certain flavoured cigarettes and, in practice, it applies to only clove cigarettes from 
Indonesia.  For example, the Special Rule app lies no more to domestically produced (i.e. US-
produced) menthol- and tobacco-flavoured cigarettes than  it does to bicycles, cars, and refrigerators.  
Indeed, the measure specifically exempts menthol- and tobacco-flavoured cigarettes from its reach.   
 7. There has been debate over what else was on the market when the Special Rule went into 
effect.  Yet, when pressed to identify any other cigarettes produced in the United States during 2009 
that were affected by the Special Rule, including any other flavoured cigarettes, the United States 
could not do so with the exception of a small amount  of cigarettes produced by a company called "Nat 
Sherman" that produced a cigarette called "Touch of Clove."  8. Thus, to be clear, the burden of the ban on the production or sale in the United States of 
certain flavoured cigarettes fell almost exclusiv ely on clove cigarettes produced in Indonesia. 
 
9. The Special Rule extinguished U.S. imports of those products in their entirety.  In so doing, it 
treated imports less favourably than a "like" product produced domestically in violation of Article 2.1 
of the TBT Agreement and Article III.4 of the GATT 1994 because it unquestionably modified the 
conditions of competition to the detr iment of the imported product.  
 
10. Ambassador Erwidodo will now continue  with Indonesia's closing statement. 
 
11. Mr. Chairman, again I want to offer Indonesia's sincere thanks to the Panel and the staff of the 
Secretariat for your attention to the concerns ra ised by Indonesia during this meeting and throughout  WT/DS406/R  
 Page D-27 
 
 
 this dispute.  WTO disciplines and the ability to challenge measures through the dispute settlement 
process are critical to ensure that the regulator y policies adopted by one Member do not unfairly 
discriminate against the imports of another Memb er.  This process is especially essential for a 
developing country like Indonesia.   
12. The United States' ban on clove cigarettes ha s had a significant impact on an industry that 
employs as many as 6 million people in Indonesia.  Indonesia believes that th e Special Rule's ban on 
clove cigarettes, but not menthol- or tobacco-flavour ed cigarettes is inconsistent with the United 
States' obligations under both the TBT Agreemen t and GATT 1994.  Indonesia has provided evidence 
and arguments that prove each of the claims that we  have raised before this Panel.  The United States 
has failed to effectively rebut Indonesia's claims—in some cases it has not even attempted to do so.  
As a result, Indonesia asks the Panel to find that  the Special Rule is inconsistent with TBT 
Articles 2.1 and 2.2, and GATT Article III:4.  Indonesi a further asks the Panel to find that in adopting 
the Special Rule, the United States violated its co mmitments under TBT Articles 2.5, 2.8, 2.9, 2.12 
and 12.3.   
 
_______________ 
 
   WT/DS406/R  
 Page E-1 
 
 
  ANNEX E 
 
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY INDONESIA 
  
WORLD TRADE  
ORGANIZATION   
WT/DS406/2 
11 June 2010 
 
 (10-3223) 
 Original:   English 
 
 
UNITED STATES – MEASURES AFFECTING THE PRODUCTION  
AND SALE OF CLOVE CIGARETTES 
 
Request for the Establishment of a Panel by Indonesia 
 
  The following communication, dated 9 June 2010,  from the delegation of Indonesia to the 
Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.  
_______________ 
 
  On 7 April 2010, the Republic of Indonesia re quested consultations with the United States 
pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures Governing the Settlement 
of Disputes  (DSU), Article XXII of the General Agreement on Tariffs and Trade 1994  
("GATT 1994"), Article 11 of the Agreement on the Application of Sanitary and Phytosanitary 
Measures ("SPS Agreement"), and Article 14 of the Agreement on Technical Barriers to Trade  ("TBT 
Agreement") with respect to the measure adopted by the United States banning flavored cigarettes, 
including clove cigarettes. The Republic of Indo nesia and the United States agreed to hold those 
consultations on 13 May 2010. Unfortunately, consultations did not resolve the dispute. 
 
 The measure that was the subject of consu ltations is reflected in Section 907 of the Family 
Smoking Prevention and Tobacco Control Act
1 ("the Act"), which prohibited the production or sale in 
the United States of all cigarettes with a "charact erizing flavor" other than  menthol or tobacco 
beginning 90 days after the Act was signed.  Indon esia believes that the measure discriminate against 
imported clove cigarettes based on the fact that the cl ove cigarettes that were sold in the United States 
were imported (primarily from Indonesia), while virt ually all of the menthol cigarettes sold in the 
United States are produced domestically (imports ar e negligible). Indonesia also believes that the 
measure creates an unnecessary obstacle to trade in th at the United States has available to it less trade-
restrictive means to accomplish the objectives of the Act. 
 
 The Government of Indonesia maintains that banning clove cigarettes in the United States while exempting menthol cigarettes from the ban is  inconsistent with the following provisions of 
GATT 1994:    
                                                      
1 Public Law 111-31. WT/DS406/R  
Page E-2  
 
  (a) Article III: 4 of the GATT 1994 because the measure provides treatment to an 
imported product, clove cigarettes, that is "less favorable" than th at accorded to a like 
domestic product, menthol cigarettes.   
(b) Article XX of GATT 1994 because there is no scientific or technical information 
indicating that clove cigarettes pose a greater health risk than menthol cigarettes and, 
as a result, the measure results in arb itrary and unjustifiable discrimination, a 
disguised restriction on trade, and is more trade restrictive than necessary to achieve a 
legitimate objective, if one were to exist. 
 Indonesia also considers the measure to be inc onsistent with the following provisions of the 
TBT Agreement: 
 
(c) TBT Article 2.1 because the measure results in treatment that is "less favorable" to 
imported clove cigarettes than that accorded to a like domestic product, menthol cigarettes.    
(d) TBT Article 2.2 because there is no scientific or technical information indicating that 
clove cigarettes pose a greater health risk th an menthol cigarettes or that youth smoke 
clove cigarettes in greater numbers than menthol.  As a result, the measure is more trade restrictive than necessary an d constitutes an unnecessary obstacle to 
international trade.   
(e) TBT Article 2.5 because the United Stat es did not respond to questions from 
Indonesia seeking an explanation and jus tification for the ban submitted during 
bilateral discussions held 27 August 2009 and through the TBT Committee on 20 
August 2009 (G/TBT/W/323). 
(f) TBT Article 2.8 because the ban on characterizing flavors is based on descriptive 
characteristics. 
(g) TBT Article 2.9 because the United States did not comply with the requirements of  
Articles 2.9.1, 2.9.2, 2.9.3, and 2.9.4 when  adopting a technical regulation that has a 
significant effect on the trade of Indonesia.   
(h) TBT Article 2.10 because in the event the United States believed there was a 
justification for not following the procedur es in Article 2.9, it did not provide the 
Secretariat with notification of the measure and the urgent nature of the problem. 
(i) TBT Article 2.12 because the effective date was less than six months from the 
enactment of the ban. 
(j) TBT Article 12.3 because the ban created an unnecessary barrier to exports from 
developing countries.   
 Should the United States assert that the flavored cigarette ban is an SPS measure, then it is 
Indonesia's view that the measure is inconsistent with  Articles 2, 3, 5, and 7 of the SPS Agreement.   
 
 Additionally, the measure identified in this re quest has nullified or impaired benefits accruing 
to Indonesia directly or indirectly under the cited agreements.    WT/DS406/R  
 Page E-3 
 
 
   Therefore, the Government of Indonesia respectf ully requests that pursuant to Article 6 of the 
DSU, the Dispute Settlement Body establish a panel to examine the matter, with standard terms of 
reference, as set out in Article 7.1 of the DSU.  
__________