Indonesia antsy over WTO’s expected tobacco ruling in 2017
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The Indonesian government and tobacco farmers are waiting anxiously for the result of a dispute settlement against Australia’s plain tobacco packaging policy that they expect will come out in 2017, more than three years after the government submitted a request for consultations with the World Trade Organization (WTO).
The Trade Ministry’s director general for foreign trade negotiations, Iman Pambagyo, said he hoped that the settlement result would be in favor of tobacco-producing countries.
“We expect WTO panelists to announce the result in the first quarter of 2017. We still think that the policy violates the trade rules,” he said.
He added that while Indonesia fully supported the objectives of improving public health and protecting the environment, it was the country’s right to defend its economy against regulations that violated international trade rules, disciplines and obligations.
According to the WTO, on Sept. 20, 2013, Indonesia requested consultations with Australia concerning certain Australian laws and regulations that impose restrictions on trademarks, geographical indications and other plain packaging requirements on tobacco products and packaging.
The move came nearly a year after Australia became the first country that obliges all cigarettes sold in its jurisdiction to be wrapped in dark brown packaging in December 2012.
The Australian government found that it was the least attractive color, particularly for young people.
The policy went into force along with a tax increase to realize the country’s plan to bring down smoking rates from 16.6 percent in 2007 to less than 10 percent in 2018.
The Australian Bureau of Statistics claims that smoking rates decreased to 12.8 percent a year after the policy took effect, compared to 15.1 percent in 2010.
“The Australian Bureau of Statistics claims that smoking rates decreased to 12.8 percent a year after the policy took effect, compared to 15.1 percent in 2010.”
Australia’s move has been copied by the UK and France, which regulate that all cigarette packages manufactured for those countries must be in plain form.
Singapore considered a similar provision last year as well, but dropped the idea after encountering some technical difficulties.
After Indonesia submitted its consultation request to the WTO, several other countries and blocs requested to join the consultations, namely Brazil, Cuba, Guatemala, Nicaragua and the European Union.
The Indonesian Tobacco Farmers Association (APTI) told The Jakarta Post that although Australia was not the main buyer of Indonesian tobacco, more countries would apply similar policies.
“The policy’s provision will decrease our tobacco exports as antitobacco movements have emerged in other countries,” APTI head Wisnu Brata said.
Djarum, Sampoerna and Gudang Garam are among the companies whose cigarette brands are available in Australia.
Data from the Industry Ministry show that some 6 million people are involved in tobacco farms and businesses across the country. Many of them are export-oriented, such as in West Nusa Tenggara (NTB), East Java and Central Java.
The value of tobacco exports reached US$981 billion in 2015 and $1.02 trillion in 2014.
Questions & Answers
Q.Why is Indonesia pursuing this dispute with Australia at the WTO?
Why is Indonesia pursuing this dispute with Australia at the WTO?
Indonesia believes Australia's plain packaging policy violates international trade rules, disciplines, and obligations. The government aims to defend its economy against such regulations, despite supporting public health objectives.
Q.What impact do Indonesian tobacco farmers expect if more countries adopt plain packaging policies?
What impact do Indonesian tobacco farmers expect if more countries adopt plain packaging policies?
The Indonesian Tobacco Farmers Association expects a decrease in tobacco exports if more countries adopt similar plain packaging policies. They anticipate this due to emerging anti-tobacco movements internationally.
Q.Which other countries have adopted or considered Australia’s plain packaging approach?
Which other countries have adopted or considered Australia’s plain packaging approach?
The UK and France have copied Australia's policy, requiring plain packaging for cigarettes. Singapore also considered a similar provision last year but dropped the idea due to technical difficulties.
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