Cigarette export to US depends on bilateral negotiation

Mon, 04/09/2012 - 09:09

Despite the recent victory at the World Trade Organization, the prospect of Indonesian kretek cigarette producers resuming export to the US will depend on the results of upcoming bilateral negotiation between the two countries.

The WTO has recently ruled in favor of the Indonesian clove cigarette producers, saying that the US regulation which bans the distribution of kretek cigarette in the country is an unfair trade practice.

But Hasan Aoni Aziz, spokesman for the Indonesian Cigarette Manufacturers Association (Gappri), said that whether the producers will be able to resume export to the US would depend on negotiation between the two countries over the next six months.

Hasan said there is three possible scenarios: first, the US agrees to revise the regulation as instructed by the WTO, the US maintains the existing regulation, and the US provides alternative compensation.

He said that the cigarette industry prefers the first option, adding that the industry will support the government in the trade negotiation to reach favorable outcome. 

Hasan said that the WTO victory is a very welcoming development as the US policy could potentially spread to other countries, which may in turn undermine future export.  He said that as the world’s largest cigarette exporter, the US regulation imposed in 2010 has cause potential loss of around US$200 million, and forced local manufacturers to put on shelve plan to invest in a cigarette plant in the Latin America. (rei)

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