The United States is very disappointed with the outcome of this dispute, Nkenge Harmon, a spokeswoman for the US Trade Representatives Office, said. The ban on cigarettes with flavours is part of landmark US legislation to combat the public health crisis caused by tobacco products.
Indonesia, the worlds top producer of clove cigarettes and the source of the vast majority of those smoked i n the United States, brought the World Trade Organization case in April 2010.
The US Congress passed legislation during president Barack Obamas first year in office in 2009 banning the production and sale of cigarettes with flavours such as clove, cinnamon, strawberry or cherry, but not regular or menthol cigarettes.
The WTO appellate body on Wednesday said the ban on clove cigarettes was discriminatory because a similar product, menthol cigarettes, can still be sold in the United States.
Matthew Myers, president of Campaign for Tobacco-Free Kids, said the WTO wrongly concluded that a decision by the US Congress on how best to protect Americas children from flavoured cigarettes that serve as starter products for youth violates the nations trade obligations.
A California Democrat who played a leading role in passage of the Family Smoking Prevention and Tobacco Control Act, said the decision had serious public health implications for US efforts to reduce teen smoking, but vowed the clove cigarette ban would remain.
I believe the WTOs interpretation is wrong on the merits and wrong in its interference with our efforts to protect the American public from tobaccos devastating effects, Representative Henry Waxman said, noting the US law does not distinguish where cigarettes are made.
Harmon said the US Trade Representatives Office was examining its options for complying with the ruling.
If the ban remains, Indonesia could impose retaliatory duties on the US exports equal to the amount of trade it has lost, which one analyst estimated at about $16 million per year. The US could also comply by offering Indonesia new trade concessions, as it has done in some other disputes where Congress was unwilling to change the law.
Myers urged the Food and Drug Administration to ban menthol cigarettes, noting a scientific advisory committee created by the 2009 law had recommended that more than a year ago. The FDA has had more than enough time to determine how to implement the committees recommendation, Myers said.
EU court to examine global copyright pact
Europes top court will determine whether a global trade agreement on copyright theft breaches citizens fundamental rights including the freedom of expression, the European Commission said on Wednesday.
The European Union executive said it had referred the Anti-Counterfeiting Trade Agreement (ACTA), which is designed to tackle intellectual property theft, to the European Court of Justice for evaluation in response to concerns it could damage people's basic rights. Its decision may complicate and delay the pact's entry into force across the EU. It is backed by the United States and others but many countries in the EU have yet to adopt it.