Indonesia to Seek Compensation from U.S. over Tobacco

Indonesian workers manufacture clove cigarettes in Malang, East Java province on January 29, 2013

Indonesia will seek compensation from the United States for pulling its clove cigarettes from shelves despite a World Trade Organisation (WTO) ruling that deemed the ban discriminatory.

Indonesia's trade ministry said it had lost between $200 million and $300 million annually from the 2009 ban, aimed at helping prevent youths from taking up smoking.

The WTO found that the U.S. had flouted trade rules in its health act -- under which cinnamon, coffee, grape and strawberry-flavored cigarettes were also banned -- because it allowed menthol-laced tobacco to stay on the market.

The WTO found in favor of Indonesia's claims that allowing domestically-made menthol cigarettes and not its clove-laced cigarettes was discriminatory.

"We will seek compensation. The procedure under the WTO is if one country ignores the recommendation suggested by the dispute panel, compensation should be discussed," trade ministry director general of international trade cooperation Iman Pambagyo told Agence France Presse.

"It's baffling how the U.S., which is always demanding other countries to abide by WTO disciplines and regulations, is now unable to correct its policy, which is clearly in violation of WTO provisions," Pambagyo said in a statement.

Pambagyo said the ministry had not decided how much compensation it would seek, but that it would reflect losses, estimated at between $200 million and $300 million annually.

Indonesia claimed that the livelihoods of over six million citizens depended directly or indirectly on the production of clove-laced tobacco.

While the WTO ruled the ban was discriminatory, it threw out Indonesia's suggestion that a ban on flavored tobacco in general was unnecessary, calling the U.S. effort to curb youth smoking "legitimate".