Monday, 31 August 2015


Regarding laws on plain packaging of tobacco imposed by Australia, Indonesia sued Australia to the world trade Organization sued Australia to the World Trade Organization (WTO). This is the biggest trade dispute handled by WTO until today, where there are three other WTO members who also sued Australia, namely Honduras, the Dominican Republic, and Cuba, and 36 WTO members become third parties who have participating interest in the lawsuit. Director General of International Trade Cooperation of the Ministry of Trade, Bachrul Chairi, confirmed that the obligation to use plain packaging for tobacco products has harmed the right of WTO members under the terms of Trade-Related aspects of Intellectual Property Rights (TRIPS).

“Consumers have a right to know the products that will be consumed, and on the other hand, manufacturers have the right to use the trade mark freely without any baseless barriers. The lawsuit is filed to safeguard national interests. Because the laws on plain packaging for tobacco products imposed by Australia’s have a wide implication on world trade, especially that it could potentially hamper Indonesia’s cigarette exports that will affect the lives of tobacco farmers and tobacco industry nationwide, “said Bachrul in the first meeting between the plaintiff, defendant, and panelists at WTO office in Geneva, Switzerland, Thursday (June 4).

Bachrul said that the tobacco industry accounted for 1.66% of total Gross Domestic Product (GDP) of Indonesia and foreign exchange revenue through exports to the world whose value in 2013 reached USD$ 700 million. besides, the tobacco industry is also a source of livelihood for 6.1 million people working in the tobacco and clove farmers. Intellectual Property Rights Protection Policy for the laws on plain packaging of tobacco products is aimed at reducing tobacco consumption and restrictions on smoking access for young and novice smokers. The purpose of this law is also consistent with the policy applied by many countries, including Indonesia.

However, Australia’s policy to achieve these goals through the implementation of plain packaging of tobacco products is considered not protecting intellectual property rights (IPR) on tobacco product trademarks owned by cigarette manufacturers. This can be detrimental of the manufacturers and will affect competition in trade of tobacco products sold in Australia, because of the loss of distinguishing characteristics between one and other tobacco products. He explained that if the laws on plain packaging were allowed, it is feared that it will have a more extensive implications, because other WTO member can issue a policy that negatively impacted the IPR protection of trademarks of other imported products, such as automobiles, electronics, clothing, shoes, and other products.

Furthermore, he also confirmed that the dispute is not a debate on the negative impact of tobacco products on health or the justification of freedom of sale of products that can have a negative impact on health, but it is a struggle for the protection of IPRs on the trademarks owned by the businesses. “This dispute should give legitimacy for the protection of health of consumers without eliminating the protection of intellectual property rights of a marketed product,” he concluded.

On a national scale, the government puts the tobacco industry in a strategic position and includes in Presidential Decree No.28/2008 on the National Industrial Policy. “Tobacco product industries are developed by taking into account balance between health, employment, and state revenues. The industry is also a local wisdom that has been able to compete and survive, “said Minister of Industry, Saleh Husin.

Throughout 2014, tax revenues reached IDR 111.4 trillion, or increase from 2013 which reached IDR 100.7 trillion. The current market share for machine-rolled clove cigarettes (SKM) is 66.26 percent, hand-rolled clove cigarettes (SKT) 26 per cent, machine-rolled white cigarettes Machine (SPM) 6 per cent and others, namely Klobot, Cigars, Klembak Menyan, and hand-rolled cigarette filters 1.74 percent. In 2012, export value of cigarettes and cigars reached USD$ 617.8 million, increased in 2014 to USD$ 804.7 million, or an average annual increase of 14.1 percent.

According to Saleh Husin, smoking regulations are increasingly tight, both domestically and internationally, due to consideration of consumer protection and health. “It is a challenge for the tobacco industry. Additionally, tax increase is also a factor affecting the development of the tobacco industry,” he added. (E) 

Business News - June 10, 2015

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