VZCZCXRO6347
RR RUEHCHI RUEHCN RUEHDT RUEHHM
DE RUEHJA #1177/01 1941044
ZNR UUUUU ZZH
R 131044Z JUL 09 ZDK
FM AMEMBASSY JAKARTA
TO RUEHC/SECSTATE WASHDC 2809
INFO RUEHZS/ASSOCIATION OF SOUTHEAST ASIAN NATIONS COLL
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHDC
RUEHKL/AMEMBASSY KUALA LUMPUR 2574
RUEHBK/AMEMBASSY BANGKOK 8762

UNCLAS SECTION 01 OF 02 JAKARTA 001177 
 
 
SIPDIS 
 
SENSITIVE 
 
DEPT PASS TO USTR RKIRK 
DEPT FOR EAP/MTS, EAP/RSP, EB/TPP, EB/TPP/BTA 
COMMERCE FOR NSHALIZEH 
USTR FOR KELHERS, BWEISEL 
TREASURY FOR IA-BAUKOL 
 
E.O. 12598: N/A 
TAGS: BEXP EINV ECON ID
SUBJECT: LETTER FROM MINISTER PANGESTU TO USTR: TOBACCO CONTROL ACT 
 
¶1. (SBU)  On July 10, 2009, Embassy received official correspondence 
from Government of Indonesia (GOI) Minister of Trade Mari Pangestu 
addressed to United States Trade Representative (USTR) Ambassador 
Ron Kirk.  The letter details GOI concerns regarding the ban on 
clove cigarettes contained in the Family Smoking Prevention and 
Tobacco Control Act.  The full text of the letter is included below. 
 
 
¶2.  (SBU) Begin text: 
 
Minister of Trade of the Republic of Indonesia 
 
No. 983/M-DAG/7/2009 
 
Jakarta, July 3, 2009 
 
His Excellency 
Ambassador Ron Kirk 
US Trade Representative 
600 17th Street, N.W. 
Washington, DC 20508 
 
Dear Ambassador Kirk, 
 
I am writing to express my deep concerns regarding the ban on clove 
cigarettes contained in the Family Smoking Prevention and Tobacco 
Control Act - which President Obama has just signed.  The Indonesian 
government has repeatedly communicated our steadfast view that 
Sec.907 of the Act is inconsistent with the general principles of 
the WTO on non-discrimination as well as the WTO Agreement on the 
Technical Barriers on Trade. 
 
On many occasions I have conveyed our view that 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 the 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.  Similar 
obligations exist under the WTO Agreement on Sanitary and 
Phytosanitary Measures (SPS Agreement) and the Most-Favoured Nations 
principles of the General Agreement on Tariffs and Trade 1994. 
 
From my government's perspective, imports of Indonesia's clove 
cigarettes are prohibited under the legislation for no reason other 
than that they contain a natural herbal additive, while US 
cigarettes containing menthol - a synthesized herbal addictive 
derived from mint - are explicitly exempted from the prohibition. 
Clove cigarettes have been a part of Indonesian culture for over a 
century where they have been manufactured since the late 1800's and, 
as a result, Indonesia produces 99 percent of the clove cigarettes 
sold in the U.S. while the U.S. manufactures the bulk of regular and 
menthol cigarettes consumed by Americans.  Therefore, a ban on clove 
cigarettes would unjustifiably discriminate under WTO standards 
against Indonesia's cigarette export to the United States in favor 
of competing, domestically-produced U.S. cigarette products. 
 
Clove cigarettes are estimated to account for a miniscule amount of 
the total number of cigarettes sold in the United States each year - 
approximately 0.09 percent of the total.  Menthol cigarettes account 
for approximately 28.21 percent of the total cigarettes sold.  While 
any amount of youth smoking is unacceptable, clove cigarettes barely 
register statistically in the U.S. among youth smokers compared to 
menthol cigarettes.  Clove cigarettes are estimated to account for a 
small fraction (0.05 percent) of the total number of cigarettes used 
by youth smokers while menthol cigarettes are estimated to account 
for almost half (43.36 percent) of the cigarettes consumed by youth 
in the U.S.  significantly, the clove cigarette industry has done 
such an effective job of keeping the product away from youth 
consumption patterns for clove cigarettes because clove usage is so 
insignificant among youth in the U.S.  Moreover, there is no 
scientifically supportable evidence or risk assessment that has 
established specific human health risks associated with clove 
cigarettes that can be used to justify the U.S. banning clove 
cigarettes while continuing to permit the sale of menthol 
cigarettes. 
 
JAKARTA 00001177  002 OF 002 
 
 
 
As recently as my recent meetings with you last month we expressed 
my government's concern about this matter.  Our concerns have also 
been expressed with your immediate predecessor Mr. Peter Allgeier, 
the Acting United States Trade Representative, in January of this 
year as well as former United States Trade Representative Susan 
Schwab. 
 
We had hoped that Section 907 would be modified by Congress to 
eliminate the discriminatory treatment of clove cigarettes prior to 
final passage of the bill.  Indeed, we understand that as late as 
last week Senator Dodd and Senator Enzi were working on an amendment 
that would have allowed the Secretary of Health and Human Services 
to exempt clove cigarettes from the ban if it were necessary to 
comply with trade agreements.  Unfortunately, Senate leadership 
blocked all amendments from being offered, including our amendment, 
and time ran out. 
 
We are deeply concerned that the passage of The Family Smoking 
Prevention and Tobacco Control Act will become a significant barrier 
to our ongoing bilateral relationship. 
 
Thank you for your kind attention 
 
Yours sincerely, 
Mari Elka Pangestu 
 
CC: 
¶1. Ambassador of the Republic of Indonesia to USA, Washington D.C.; 
¶2. Ambassador of the United States of America, Jakarta; 
¶3. Director General for International Trade Cooperation, MOT; 
¶4. Special Assistant to Minister of Trade for International 
Cooperation, MOT. 
 
End text. 
 
HUME