Mr. Speaker, ``The Family Smoking Prevention and Tobacco Control Act,'' which is before us today, contains a so-called ``special rule for cigarettes'' in Section 907 of the bill that would ban…
Mr. Speaker, ``The Family Smoking Prevention and Tobacco Control Act,'' which is before us today, contains a so-called ``special rule for cigarettes'' in Section 907 of the bill that would ban flavored cigarettes--with the exception of menthol flavored cigarettes.
Since the legislation allows the sale of menthol cigarettes, which are produced in the United States and in my home State, while banning clove cigarettes, which are imported primarily from Indonesia, the Indonesian Government has made it clear that it considers this provision an attempt to discriminate against imported clove cigarette products in favor of a competing U.S. product--and thus section 907 in the bill runs contrary to the free-trade commitments the United States has made as part of the WTO.
According to WTO rules Mr. Speaker, an imported ``good'' (clove cigarettes) should receive treatment that is ``no less favorable than that provided to a domestic good.'' Adhering to this principle would appear to require that clove cigarettes be treated no less favorably than menthol cigarettes and thus under this bill both should be exempt from the prohibition on flavored cigarettes or both should be banned in order to ensure there is no unfair discrimination in the treatment of the two products. The latter option is not an option at all in my opinion but neither is ignoring the concerns of our ally Indonesia, a country well known to our President.
For years now, senior officials of the Indonesian Government have repeatedly and doggedly attempted to communicate their country's concerns to U.S. legislators and executive branch policy-makers alike-- to no avail. The communique from the Indonesian Ambassador to Chairman Waxman, as well as the Indonesian Trade Minister's dispatch to former Ambassador Schwab clearly articulate the imperative the Indonesian Government places on the trade violation contained in ``The Family Smoking Prevention and Tobacco Control Act.''
Last year, the HHS Secretary sent a letter to Congress expressing various concerns about Mr. Waxman's bill on behalf of the Administration. Among his concerns he included the following statement about the bill's prohibition on imported clove cigarettes that reflects the concerns expressed by the Indonesian Government:
There is a further issue regarding the bill that I would
like to bring to your attention. Our trading partners believe
that by banning the sale of clove cigarettes but not
prohibiting the sale of menthol cigarettes, the bill raises
questions under U.S. international trade obligations. The
government of Indonesia has repeatedly objected to the bill
on the ground that this disparate treatment is unjustified
and incompatible with WTO trade rules. Accordingly, I would
recommend that the Committee further review the relevant
language in this light to ensure the bill is consistent with
U.S. trade obligations.
Mr. Speaker, Congress is increasingly--and rightly--calling on our United States Trade Representative and the Administration to more strenuously enforce the WTO and other trade agreements to ensure that our trade partners are playing by the rules and not discriminating against our products and services. I think that it is only right that we abide by the same standards that we expect of our trade partners when the question is as clear as this situation. It would have been my hope that the minor changes needed to correct this avoidable trade complication in the bill could have be made before the legislation was brought to the floor for consideration, but that was not the case. Section 907 affects a de facto ban on the importation of clove cigarettes from Indonesia. It is another troublesome example of serious flaws overlooked by Mr. Waxman in his bill.
Embassy of the
Republic of Indonesia,
Washington, DC, July 25, 2008.
Hon. Henry A. Waxman,
Chairman, Committee on Oversight and Government Reform, 1102
Longworth House Office Building, Washington, DC.
Dear Chairman Waxman: I extend my personal best wishes for
your continued service in the United States House of
Representatives and particularly as the Chairman of the
Committee on Oversight and Government Reform. My government
has been communicating with appropriate members of the U.S.
Congress and the Executive Branch since 2004 regarding our
opposition to a proposed prohibition on the sale of clove
cigarettes in the United States. This prohibition has most
recently been included as part of H.R. 1108--the ``Family
Smoking Prevention and Tobacco Control Act''--which was
reported out of the House Energy and Commerce Committee just
this month on July 17th.
In this regard, I am enclosing a letter that the Minister
of Trade in Indonesia, Mari Elka Pangestu, gave to U.S. Trade
Representative Susan Schwab on this issue when they met at
the Asia-Pacific Economic Cooperation (APEC) summit in
Sydney, Australia last September. I also want to bring your
attention to the recent letter U.S. Department of Health and
Human Services Secretary Michael O. Leavitt sent Energy and
Commerce Committee Ranking Member Joe Barton in response to
the Congressman's inquiries about H.R. 1108.
Secretary Leavitt raised the following reservation about
H.R. 1108 regarding Indonesia's grave trade concerns on the
clove cigarette issue:
There is a further issue regarding the bill that I would
like to bring to your attention. Our trading partners believe
that by banning the sale of clove cigarettes but not
prohibiting the sale of menthol cigarettes, the bill raises
questions under U.S. international trade obligations. The
government of Indonesia has repeatedly objected to the bill
on the ground that this disparate treatment is unjustified
and incompatible with WTO trade rules. Accordingly, I would
recommend that the Committee further review the relevant
language in this light to ensure the bill is consistent with
U.S. trade obligations.
As you may know, the U.S. does not produce traditional
clove cigarettes while Indonesia produces over 99% of the
clove cigarettes imported into the U.S. This is why Minister
Pangestu felt it necessary to personally express to
Ambassador Schwab our government's great concern that the
proposed prohibition on clove cigarettes in the U.S. would
unjustifiably discriminate against Indonesia's cigarette
exports to the U.S. in favor of competing, domestically
produced U.S. cigarette products under World Trade
Organization and other international trading standards.
We hope the attached letter from Minister Pangestu to
Ambassador Schwab will help to more fully inform you as to
the international trading standards and rules which serve as
the basis for our objections to the proposed prohibition in
H.R. 1108. In addition, we hope you will also consider
Secretary Leavitt's concerns as a measure of the seriousness
with which your own government views the potential trade
problems in this regard. We respectfully ask that the bill be
modified prior to final passage by the House so that clove
and menthol cigarettes are treated equally under the
legislation.
Sincerely yours,
Sudjadnan Parnohadiningrat.
Minister of Trade
of the Republic of Indonesia,
Jakarta, 28 Agustus 2007.
H.E. Ambassador Susan C. Schwab,
U.S. Trade Representative
Washington, DC.
Re: The ``Family Smoking Prevention and Tobacco Control Act''
(S. 625).
Dear Ambassador Schwab: It was a pleasure meeting with you
a few months ago in Washington DC, in which I had enjoyed
discussing with you about the increasingly strong
relationship between our two countries in trade and
investment sectors. I would like to take this opportunity to
thank you again for the excellent arrangements made during my
visit to Washington, DC.
I am writing to you to raise my Government's concern over
an introduction of a draft legislation entitled the ``Family
Smoking Prevention and Tobacco Control Act'' (S. 625), which
currently is being considered in the U.S. Congress. This
draft Act contains a provision, which if enacted as currently
drafted, will unjustifiably discriminate against Indonesia's
cigarette exports in favor of competing, domestically
produced U.S. cigarette products. We understand that Senator
Kennedy, who has been supportive of addressing our concerns
with appropriate legislative language, has written to you
about this matter.
Specifically, the ``special rule for cigarettes'' in
section 907 of the legislation states that, beginning 3
months after the date of enactment:
(a) In General--
(1) SPECIAL RULE FOR CIGARETTES--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.
The United States does not produce clove cigarettes at all.
Indonesia produces cigarettes containing cloves and over 99%
of the clove cigarettes imported into the United States come
from Indonesia. That entire volume of imports would be
prohibited under section 907 of the proposed bill.
In direct contrast, cigarettes containing menthol sold in
the U.S. are almost exclusively produced in the United States
as imports of menthol cigarettes are negligible. However,
menthol cigarettes are explicitly excluded from the
prohibition in section 907.
The fact that Section 907 would prohibit the importation
and sale of clove cigarettes from Indonesia while arbitrarily
permitting domestic production and sale of menthol cigarettes
reuses serious concerns about the consistency of this
proposed provision with the United States' obligation under
the agreements of the World Trade Organization. In
particular, the WTO Agreement on Technical Barriers to Trade
(TBT Agreement) obligates the United States to ensure that,
in respect of its technical regulations, products imported
from the territory of any WTO Member shall be accorded
treatment no less favorable than that accorded to domestic
like products and to like products originating in any other
country. The Agreement also obligates the United States to
ensure that its technical regulations are not more trade-
restrictive than necessary, thereby creating unnecessary
obstacles to international trade. In that regard, the TBT
Agreement requires that the United States take account of
scientific and technical information, as well as the special
development and trade needs of developing country
Members, such as Indonesia. Similar obligations exist under
the WTO Agreement on Sanitary and Phytosanitary Measures (SPS
Agreement) and the General Agreement on Tariffs and Trade
1994.
A stated purpose of the standards in the proposed U.S.
legislation is to restrict advertising and promotional
practices most likely to entice youth into tobacco use, while
affording ample opportunity to market tobacco products to
adults. Like menthol cigarettes (and unlike other flavored
cigarettes), clove cigarettes are not targeted at youth
smokers. Clove cigarettes are estimated to account for only
0.1% of the total number of cigarettes consumed in the United
States and only approximately 0.8% of youth smokers have
smoked clove cigarettes and that number of youths is
declining based on recent studies. Menthol cigarettes, on the
other hand, are estimated to account for approximately 26% of
the cigarettes consumed in the United States and
approximately 29.7% of youth smokers smoke menthol
cigarettes. Moreover, there is no scientifically supportable
evidence or risk assessment establishing specific human
health risks associated with clove cigarettes that would
justify banning those cigarettes while continuing to permit
the sale of menthol cigarettes.
These facts are compelling. Imports of Indonesia's clove
cigarettes are prohibited for no reason other than they
contain a natural herbal additive, while U.S. cigarettes
containing menthol--a processed herbal additive--are
explicitly exempted from the prohibition. The Government of
Indonesia firmly believes that such discriminatory treatment
is inconsistent with the United States international
obligations and, if enacted, will have a significant adverse
effect on Indonesian trade.
The Government of Indonesia therefore respectfully asks
that you carefully consider our concerns and, in the interest
or our positive trade relationship, ensure that both the
spirit and the requirements of the WTO agreements are
observed, Further, absent elimination of the prohibition on
imports of clove cigarettes, pursuant to Article 2.5 of the
TBT Agreement and Article 5.8 of the SPS Agreement, we ask
the United States to explain how that prohibition is
justified
As you are aware, Indonesia has expressed concern over the
Bill at previous meetings of the Indonesia-U.S. Trade and
Investment Council.
We trust that your government would understand the
difficulties we are faced with, as well as the severity and
the urgency of this matter to our people whose livelihood
very much depends on the existence of the cigarettes
industry. We would be very appreciative of your attention to
this matter and would welcome the opportunity to discuss it
further with you, at your convenience.
We look forward to an opportunity in building and
strengthening the robust relationship between our two
countries. Thank you.
Your sincerely,
Mari Elka Pangestu.
