RI WANTS US TO SCRAP ITS 'KRETEK' CIGARETTE BAN

By Andi Abdussalam

Jakarta, July 1 (ANTARA) - Indonesia has urged the United States to lift its ban on aromatic cigarette imports that would cause Jakarta to cut its 'kretek' (clove-flavored) cigarette exports to that country and reduce its foreign exchange earning.          "Indonesia's foreign exchange income from kretek cigarette exports is expected to drop significantly this year due to the imposition of the ban," Frans Rupang, director for prosecution and prevention of the Directorate General of Customs, said.          The United States has imposed the ban since September 2009 based on its law that prohibits the entry into the country of aromatic tobacco, yet both nations are still negotiating the matter.          According to US Ambassador to Indonesia Cameron R Hume, Indonesia and the US are still negotiating the US ban on Indonesia's kretek cigarette exports to the United States.          Speaking on the sidelines of the US Independence Day anniversary which falls on July 4, in Surabaya, East Java, on Thursday evening, Cameron R Hume said that Indonesia was of the view that the ban violated the World Trade Organization (WTO)'s regulations.          Therefore, the United States and Indonesia were discussing the matter but the envoy said he could predict what would come out of the negotiation process. "Let's wait," he said.          However, if the United States remains to impose the ban, Indonesia's cigarette exports and income from this sector would decline significantly.          Frans Rupang said that in 2009 cigarette exports contributed 6.451 million dollars to the state.  Indonesia's kretek cigarette exports to the United States in 2008 totaled 298.932 million pieces worth US$6.662 million and in 2009 they stood at 267.308 million pieces worth US$6.451 million.          Since the imposition of the ban,  there was practically no Indonesia's kretek exports to the United States this year.          Rupang said that the contribution to the state of the country's kretek cigarette exports to the United States was the biggest one compared to that exported to other countries. Therefore, the ban reduced Indonesia's income from kretek exports significantly, he said.          According to the Ministry of Trade, exports of various kinds of cigarettes to the US in 2007 reached US$11,165,432 and dropped to US$9,703,991 in 2008 and US$8,338,419 in 2009.          The realization of exports of the product from January to March 2010 reached US$2,531,317 higher than in the same period last year that was recorded at US$2,531,989.          During the period however no exports of cigarette tobacco that include clove cigarettes were done. This happened following the implementation of the Family Smoking Prevention and Tobacco Control Act as of September 2009.          The law prohibits sale of all kinds of flavored cigarettes including clove cigarettes in the US except menthol cigarettes.          The Indonesian government has asked the WTO to solve its dispute over the ban of its kretek exports to the United States. Washington has banned the commodity's imports based on its health law which also prohibited the importation of other aromatic cigarettes in an effort to prevent youths from being addicted.          Indonesia has previously taken the ban to Dispute Settlement Body of the WTO with regard to the imposition of the Family Smoking Prevention and Tobacco Control Act of 2009.          The Indonesian government considers the law running against the WTO regulation because it exempts menthol cigarettes while menthol and clove cigarettes are like products according to Article 2.1 of the Agreement on Technical Barriers to Trade or TBT Agreement.          Around 99 percent of clove cigarettes sold in the US are imported from Indonesia while all menthol cigarettes are produced in the US and because of that, according to the Indonesian government, the US implicitly bans imports of clove cigarettes.          The government considers the ban discriminative. As a member of the WTO,  the US must have carried out its international obligation as mentioned in the TBT Agreement and the General Agreement on Tariff and Trade or GATT of 1994.          The director general of international trade cooperation of the ministry of trade, Gusmardi Bustami, said the move to take the matter to the WTO dispute settlement body was the last resort. He said the government has already expressed its opposition to the regulation while it was still being discussed at the US Congress.          Indonesia, he said, has also conveyed its complaint in various bilateral forums at senior official and ministerial levels for more than four years but it had come to no avail.          "This is about principles. There has been discrimination," Gusmardi said.          In the DSB WTO meeting on June 22, 2010 in Geneva, the Indonesian delegation conveyed reasons and legal basis for the need to form a panel to deal with the problem.          He said Indonesia had asked the panel to investigate the violation by the US against Article III of the GATT of 1994 and the use of Article XX of GATT 1994 without providing scientific evidence and meeting the provisions in a number of articles in the TBT and Sanitary and Phythosanitary Act (SPS).          In the meeting the US delegation expressed disappointment over the Indonesian move.          The US has asked Indonesia to reconsider its request for the establishment of a panel to investigate the case.          Gusmardi said the rejection by the US was common, had often happened in a DSB meeting because the US as a disputed party has a right to block the move on the first occasion in line with the WTO's provision on Dispute Settlement Understanding.***2*** (T.A014/H-NG/H-YH) 01-07-2010 22:46: