UNITED STATES – MEASURES AFFECTING THE PRODUCTION AND SALE OF CLOVE CIGARETTES RECOURSE TO ARTICLE 22.2 OF THE DSU BY INDONESIA
Document: RECOURSE TO ARTICLE 22
Date: 13 August 2013
Document codes: WT/DS406/12
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
RECOURSE TO ARTICLE 22.2 OF THE DSU BY INDONESIA
 The following communication, dated 12 August 2013, from the delegation of Indonesia to
the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 22.2 of the DSU.

Indonesia respectfully requests that a special meeting of the Dispute Settlement Body
("DSB") be held on or before 23 August 2013 to consider the following agenda item:

United State s - Measures Affecting the Production and Sale of Clove Cigarettes:
Recourse by Indonesia to Article 22.2 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DS406)
On 20 July 2010 the DSB established a panel at the request of Indonesia to examine the
United States' ban on certain flavored cigarettes, including clove cigarettes produced in Indonesia .
The Panel found that Section 907(a)(1)(A) of the Federal Food , Drug and Cosmetic Act was
inconsistent with the United States ' obligations under Articles 2 .1, 2.9.2, and 2 .12 of the
Agreement on Technical Barriers to Trade (''TBT Agreement"). The United States appealed the
Panel's findings with respect to Articles 2.1 and 2.12. On 4 April 2012 the Appellate Body affirmed
the Panel's findings, although on other grounds . On 24 April 2012 the DSB adopted the Appellate
Body Report and the Panel Report, as modified by the Appellate Body Report . In particular, the
DSB recommended that the United States bring its measure into conformity with its obligations

Pursuant to Article 21.3 of the Understanding on the Rules and Procedures Governing the
Settlement of Disputes ("DSU "), Indonesia and the United States agreed that the "reasonable
period of time" for the United States to implement the DSB recommendations and rulings would
expire on 24 July 2013 (WT/DS406/10) . The United States failed to implement the
recommendations and rulings of the DSB with resp ect to Section 907(a)(1)(A) by the end of the
reasonable period of time , and no mutually acceptable arrangement for compensation has been
reached. Therefore, Indonesia is entitled to redress under Article 22 of the DSU.

Pursuant to Article 22.2 of the DSU , Indonesia requests the authorization of the DSB to
suspend the application to the United States of tariff concessions and related obligations. In
considering what concessions or obligations to suspend , Indonesia has followed the principles and
procedures set forth in Article 22.3(a) of the DSU. As required by Article 22.4 of the DSU, the level
of suspension proposed is equivalent on an annual basis to the nullification or impairment of
benefits accruing to Indonesia resulting from the Un ited States' failure to bring its ban on flavored
cigarettes into compliance, by 24 July 2013, with the TBT Agreement or to otherwise comply with
the recommendations and rulings of the DSB in "United States - Measures Affecting the Production
and Sale of Clove Cigarettes." The suspension of concessions and other obligations would consist
of one or more of the following:

(1) suspension of tariff concessions and other related obligations under the General
Agreement on Tariffs and Trade 1994 on a list of U .S. products to be established in
due course;

(2) suspension of concessions and other obligations under the TBT Agreement; and,

(3) suspension of concessions and other obligations under the Agreement on Import
Licensing.

Indonesia is a developing country . The production and sale of clove cigarettes is important
to Indonesia 's economy . Clove cigarettes have a long history in Indonesia and are part of its
culture. When the U.S. banned the sale of certain flavored cigarettes , the burden of that measure
fell almost entirely on Indonesia. As a result of the contested measure, Indonesia's exports of
clove cigarettes to the United States fell to zero . The Indonesian people are following this dispute
closely. They want to know if the rules-based trading system promised by the WTO is real or a
mere illusion.