The United States has long sought ways to reduce smoking by children. In 2009 the United States enacted the Family Smoking Prevention and Tobacco Control Act [the Act] that prohibited the import or sale of cigarettes with any flavor, herb, or spice, including fruit, chocolate, cinnamon, and clove. Of course, menthol cigarettes are produced primarily in the United States, whereas clove cigarettes are produced primarily in Indonesia. This is a complaint by the government of Indonesia that the ban on clove-flavored cigarettes unlawfully discriminated against flavored tobacco products made in other countries. The United States claimed that it had excluded menthol from the regulations, despite the fact that menthol is also known to make cigarettes more appealing to adolescents, because it feared withdrawal by menthol smokers, and by the likely creation of a black market in menthol cigarettes. After consultations at the WTO, Indonesia requested dispute panel resolution. The panel held that the United States had acted in violation of Article 2.1 of the Agreement on Technical Barriers to Trade (TBT Agreement), and the United States appealed to the Appellate Body.
1. Did the U.S. prohibition on clove cigarettes prohibit the import of Indonesian cigarettes on its face, or did it merely prohibit a flavor of cigarette that happens to be produced primarily in Indonesia? Was this de facto or de jure discrimination in this case? How did this affect the Appellate Body's decision?
2. The report (not reproduced here) noted the similarities between Article 2.1 of the TBT Agreement, under which this dispute was decided, and Article III.4 of GATT 1994. Review Article III.4 of GATT 1994 in the last chapter and explain the differences between the two articles. The TBT Agreement applies to "technical regulations" but GATT 1994 applies to a broader range of discriminatory measures. Explain.
3. What were the options left to the U.S. after this report? What action did the United States take in response to the report?