UNITED STATES – MEASURES AFFECTING THE PRODUCTION AND SALE OF CLOVE CIGARETTES
Document: Notification of an Appeal by the United States under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 20(1) of the Working Procedures for Appellate Review
Date: 10 January 2012
Document codes: WT/DS406/6
Complainant: Indonesia
Respondent: U.S.
Third parties: Brazil, Colombia, Dominican, EU, Guatemala, Mexico, Norway, Turkey
Dispute stage: Mutually Agreed Solution
Agreements cited: Art. III:4, XX  GATT 1994Art. 2.1, 2.2, 2.5, 2.8, 2.9, 2.10, 2.12, 2.3  Technical Barriers to Trade (TBT)Art. 2, 3, 5, 7  Sanitary and Phytosanitary Measures (SPS)

UNITED STATES – MEASURES AFFECTING THE PRODUCTION
AND SALE OF CLOVE CIGARETTES

Notification of an Appeal by the United States
under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 20(1) of the Working Procedures for Appellate Review

 The following notification, dated 5 January 2012 , from the Delegation of the United States, is
being circulated to Members.

Pursuant to Article 16 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") and Rule 20 of the Working Procedures for Appellate Review , the
United States hereby notifies its decision to appeal to the Appellate Body certain issues of law
covered in the Report of the Panel in () ("Panel Report") and certain legal interpretations developed by the
Panel.

1. The United States seeks review of the Pane l's conclusion that Section 907(a)(1)(A) of the
Family Smoking Prevention and Tobacco Control Act (the "Tobacco Control Act"),
1 is inconsistent
with Article 2.1 of the Agreement on Technical Barriers to Trade (the "TBT Agreement"). 2 T h e
United States appeals this finding based on a series of erroneous legal interpretations developed by the
Panel, and on failure by the Panel to make an objective assessment of the facts of the case as called
for by Article 11 of the DSU.

2. The United States seeks review of the Panel's finding that clove cigarettes and menthol
cigarettes are like products.
3 In making this erroneous findi ng, the Panel erred in its legal
interpretation of Article 2.1 by excluding, a priori, evidence related to particular criteria and failing to
analyze each criteria completely. 4 Specifically the Panel erred by failing to perform a complete
analysis of the end-uses 5 of clove cigarettes and menthol cigarettes and failing to perform a complete
analysis of consumer tastes and habits. 6 In developing this faulty lega l interpretation, the Panel also
acted inconsistently with Article 11 of the DSU by failing to make an objective assessment of the
facts in the case by refusing to consider certain evidence related consumer tastes and habits.7

1The Tobacco Control Act was adopted June 2009 an d it went into effect September 2009 as an
amendment to the Federal Food, Drug and Cosmetic Act, 21 U.S.C. §387g(a)(1)(A).
2See, e.g., Panel Report, paras. 7.293, 8.1(b).
4See, e.g., Panel Report, paras. 7.116, 7.119, 7.197-199, 7.206, 7.209-210, 7.214, 7.230-231.
5See, e.g., Panel Report, paras. 7.197-199.
6See, e.g., Panel Report, paras. 7.116, 7.119, 7.206-7.232.

3. The United States also seeks review of the Panel's finding that Section 907(a)(1)(A) accords
less favorable treatment to imported clove cigarettes.
8 In making this finding, the Panel erred in its
legal interpretations that the only products to be compared are imported clove cigarettes and domestic
menthol cigarettes,9 and that the effect of Section 907(a)(1)(A) on U.S. production can be assessed by
looking only at what products were on the market at the time the measure went into effect. 10 T h e
Panel also erred by applying an incorrect legal framework to assess whether the alleged detriment to
the competitive conditions for clove cigarettes coul d be explained by factors or circumstances
unrelated to the foreign origin of the products. 11 In developing these fau lty legal interpretations, the
Panel also acted inconsistently with Article 11 of the DSU by failing to make an objective assessment
of the facts of the case in finding that at the time of the ban, there were no domestic cigarettes with
characterizing flavors other than menthol cigarettes, 12 and that Section 907(a)(1)(A) imposes no costs
on any U.S. entity.13

4. The United States seeks review by the Appella te Body of the Panel's conclusion and related
findings that by not allowing an interval of no l ess than six months between the publication and the
entry into force of Section 907(a)(1)(A), the United States acted inconsistently with Article 2.12 of the
TBT Agreement.
14 This conclusion is in error and is based on erroneous findings on issues of law and
legal interpretations with respect to Article 2.12 of the TBT Agreement.15

5. Finally, the United States also makes a conditio nal appeal regarding the Panel's legal analysis
with respect to Indonesia's claims under Article 2. 2 of the TBT Agreement. Should Indonesia seek
review by the Appellate Body of the Panel's findings with respect to Indonesia's claims under
Article 2.2, the United States seeks review by the Appellate Body of the Pa nel's finding that it could
draw upon jurisprudence develope d under Article XX(b) of the General Agreement on Tariffs and
Trade 1994 when assessing the consistency of Section 907(a)(1)(A) with the requirement that
technical regulations "not be more trade-r estrictive than necessary to fulfill a legitimate
objective …".
16 While the United States agrees with th e ultimate conclusion in the Panel Report
regarding Indonesia's claims under Article 2.2 of th e TBT Agreement, the United States considers the
Panel's analysis on this particular aspect to be based on erroneous findings on issues of law and
related legal interpretations with respect to Article 2.2 of the TBT Agreement.

9See, e.g., Panel Report, paras. 7.274, 7.277.
11See, e.g., Panel Report, paras. 7.269, 7.286-7.291.
14See e.g., Panel Report, paras. 7.595, 8.1(h).
15See e.g., Panel Report, paras. 7.561-7.595.
16Panel Report, paras. 7.351-7.369.