Global Dispute of the Year, International Litigation: Indonesian Clove Cigarettes
Honorees: Mayer Brown, Government of Indonesia
In Indonesia, clove cigarettes (known as “kretek” for the crackling sound that they make when smoked), have a 90 percent share of the cigarette market—employing some 6 million people directly or indirectly in their manufacture. Outside of Southeast Asia, they’re pretty exotic. But that didn’t stop them being caught by the U.S. Family Smoking Prevention and Tobacco Control Act, which President Barack Obama signed into law in 2009, and which prohibits the sale of flavored tobacco (with the exception of menthol).
It was the menthol exemption that gave the Indonesian government a foothold when it claimed that the ban on kretek constituted a violation of Article 2.1 of the WTO Agreement on Technical Barriers to Trade (“TBT Agreement”).
Hired by Indonesia, Mayer Brown also argued that the United States, as a signatory of the TBT Agreement, was required to provide an interval of at least six months between the passage of the act and its effective date. Further, it said, the United States failed to notify WTO members, including Indonesia, through the WTO Secretariat, as the act required.
It may have had health campaigners fuming, but in September 2011 the WTO dispute settlement panel ruled that Indonesia had won on all three claims. The United States appealed the panel’s ruling to the WTO’s Appellate Body (“AB”), and again, Indonesia, represented by Mayer Brown, won on all counts.
The case presented the WTO panel and the AB with numerous novel questions and issues of first impression. For example, when is one product (e.g., a clove cigarette) “like” another product (e.g., a menthol cigarette)? And is it enough under Article 2.1 of the TBT Agreement to show that a country’s laws ban an imported product, or must the complaining WTO member show that the ban is a veiled form of protectionism?
Mayer Brown’s victory doesn’t mean that the distinctive taste, smell, and indeed the crackle of krekek will become ubiquitous in the United States—but it does prove that a mint-flavored sauce for U.S. goose may be a clove-fragrant jus for the Indonesian gander.