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April 16, 2012

Brazil's flavored cigarette ban now targeted

Unless you're an avid reader of Spanish and Portuguese language news wires, you probably missed Brazil's announcement last month of a ban on all flavored cigarettes: cloves, chocolates, and even menthols. Both importers and domestic firms are subject to the same limits.

Here's the announcement in Portuguese, and some of the earlier history from February, including the draft. The text of the final Brazilian measure reads (rough tranaslation courtesy of Google translate):

CHAPTER IV
ADDITIVES
Article 6
It shall be prohibited the importation and marketing in the country of smoking products derived from tobacco that contain any one of the following additives:
I - natural and synthetic substances, in any form of presentation (pure substances, extracts, oils, absolutes, balsams, among others), with flavoring properties that may confer, enhance, modify or enhance the flavor or aroma of the product, including additives identified as flavoring agents or flavors:
a) by the Joint FAO / WHO Expert Committee on Food Additives - JECFA (Joint Committee of the United Nations Food and Agriculture Organization (FAO) / World Health Organization Health Organization (WHO) Expert Committee on Food Additives), or
b) by the Flavor and Extract Manufacturers Association – FEMA (Manufacturers Association of Flavors and Extracts).
II - supporting technology (or process aids) for flavoring;
III - additives with nutritional properties, including:
a) amino acids;
b) vitamins;
c) essential fatty acids, and
d) minerals, except those essential to the manufacturing of tobacco products.
IV - additives associated with alleged stimulating properties, including taurine, guarana, caffeine and glucuronolactone;
V - pigment (or dyes);
VI - fruits, vegetables or any product originating from processing fruit and vegetables, except activated carbon and starch;
VII - sweeteners, sweeteners, honey, molasses or any other substance that can impart sweet odor or taste, other than sugars;
VIII - spices, herbs and spices or any substance that can impart odor or flavor of spices, herbs and spices;
IX - amelioratives, and
X - and all ammonia compounds and their derivatives.

Article 7
It is permissible to use the following additives in tobacco products:
I - sugars, exclusively for restoration of the sugar content originally present in the tobacco sheet before the process of drying;
II - adhesives;
III - binders;
IV - agents of combustion;
V - supporting technology (or process aids) other than for flavoring and flavoring;
VI - pigments (or dyes) used in the bleaching paper or filter to mimic the pattern of the cork wrapper tip and those used to print logos or trademarks;
VII - glycerol and propylene glycol, and
VIII - potassium sorbate.

The legislation goes on to say that companies seeking to add sugars under clause 1 must petition the authorities to do so. It goes on, “The Board may, by legislative act, approve the use of other additives, considering the justifications made by companies about their need for product derived from tobacco smoke, from which do not alter their flavor or aroma.”

Now, one would think that this would make Indonesia happy. The country, a major exporter of clove cigarettes, prevailed in a WTO case against the United States, on the grounds that menthol was permitted, while cloves were not. (Nevermind that both domestic and foreign manufacturers were banned from selling the same products, which went beyond clove and also included other like flavored cigarettes like cola, chocolate and more.) Some have suggested that the U.S. "comply" by banning menthol too. (Nevermind that this is probably politically impossible for the forseeable future.)

Brazil's ban applies to menthols too, so Indonesia would be happy, right?

Wrong.The Jakarta Post last week reported that Indonesia is opposing the Brazilian ban:

The Indonesian government should hold immediate bilateral talks with Brazil, which recently banned sales of cigarettes containing certain ingredients, including cloves, despite insignificant local demand for clove cigarettes, Hasan Aoni Aziz, the Indonesian Cigarette Manufacturers Association’s (Gappri) spokesman, said on Thursday...

Gappri demanded that the central government ask the US to open its market to clove cigarettes after the World Trade Organization (WTO) ruled last week in favor of Indonesia, which claimed that a US ban on Indonesian clove cigarettes was discriminatory...

“For producers, the most important thing is to gain access to a market that we have lost for the last two years,” he said, claiming that Indonesian firms lost $200 million in sales a year due to the ban...

On Wednesday, Trade Minister Gita Wirjawan said that Indonesia would demand that the US comply with the WTO ruling by amending its laws.

The ruling would likely discourage other countries from enacting similar bans.

“We will also request that other countries that want to follow the US’ move to ban the products suspend their moves,” he said.

There you have it, folks. The challenge on the U.S. policy was just the beginning of a campaign against health policies in other countries. As I argued last week, so long as a ban on cloves is in effect (regardless of what happens to menthols), Indonesia is unlikely to be satisfied. 

There's a range of other provisions of WTO agreements that Indonesia could invoke against a broader ban, perhaps under the General Agreement on Tariffs and Trade, rather than the Technical Barriers to Trade agreement. While the relatively shallow and new TBT jurisprudence has shown itself to be stacked against national regulation, the GATT record is little better.

As this latest attack on Brazil shows, the gap between "elegant trade law solutions" (i.e. end alleged trade discrimination by extending the ban to menthol) and political economic realities is as wide as ever.

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