Indonesia Starts Legal Fight against Australia''s Tobacco Law

Source from:  The Jakarta Post 10/16/2014

Indonesia has officially submitted a written complaint with the World Trade Organization (WTO) against Australia in a dispute regarding the plain packaging of tobacco.

The move, made last week, marked the initiation of a legal resolution to a dispute that stretches back to implementation of the 2011 Tobacco Plain Packaging Act by Australia in early 2012.

Indonesia has joined four other tobacco-producing nations — Cuba, the Dominican Republic, Honduras and Ukraine — as complainants in the case.

One of the world's biggest manufacturers of tobacco products, Indonesia alleges that the policy violates several WTO trade rules, including an agreement on trade-related aspects of intellectual property rights and an agreement on the technical barriers to trade, according to a press statement circulated on Tuesday.

Trade Ministry director-general Bachrul Chairi said it would be in Indonesia's best interest to ensure that Australia's measures to restrict smoking did not set a bad precedent.

"One of our objections is that Australia has introduced this plain-packaging act without proving scientifically that the measure will be effective and that no better alternative exists," he said in the statement.

Despite its status as an insignificant importer of Indonesian tobacco products, Indonesia is challenging the Australian law with the WTO on the grounds that such an unscientific approach could create a precedent whereby other countries seeking to restrict or prohibit the sale of certain products could do so with ease.

"Imagine that, for instance, sales of palm-oil based products were banned based on reasons that were perhaps scientifically unproven. This would directly disrupt our exports," Bachrul explained.

Several other countries, such as New Zealand and Ireland, have indicated plans to take similar action against Australia. The five current complainants have demanded a suspension of the legislation until the WTO's Dispute Settlement Body (DSB) issues its final ruling.

Bachrul said that Indonesia was not against efforts to reduce smoking, but against the precedent set by Australia's new law. "We do not oppose the effort to reduce the number of smokers because we well understand the dangers of smoking. We only want to prove that Australia's policy is wrong and does not comply with WTO agreements," he said.

Indonesia is the world's sixth biggest producer of tobacco products and the 13th largest producer of tobacco. The country's tobacco industry employs more than 6 million workers.

At home, Indonesia has taken a series of measures to deter smoking, particularly among young people, joining the growing movement to enact stricter controls on tobacco use. In its latest move in June, the government began requiring cigarette manufacturers to use graphic health warnings on packaging.

Following the filing of the initial written submission, all parties will have the opportunity to study the case thoroughly before litigation proceedings commence.

"The substantive litigation proceeding may start in May 2015," Bachrul wrote in a text message.

The plain-packaging case is the second challenge that Indonesia has brought to the WTO in recent years. Earlier, it sought the body's adjudication in a dispute with the United States, which applies discriminatory tobacco-control laws against clove cigarettes.

After four years of litigation, an agreement was reached that was satisfactory to both sides. Enditem