Kretek Industry Faces Big Losses as US Moves to Ban Clove Cigarettes

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Kretek Industry Faces Big Losses as US Moves to Ban Clove Cigarettes - The Jakarta Globe

June 13, 2009

A man smokes a cigarette near a traditional schooner at Sunda Kelapa port in Jakarta. (Photo: Beawiharta, Reuters)

Kretek Industry Faces Big Losses as US Moves to Ban Clove Cigarettes

Indonesia’s kretek cigarettes are almost certain to be banned in the United States after the US Senate passed a strict antismoking bill aimed at cutting the attraction of cigarettes to children.

The Family Smoking Prevention and Tobacco Control Act, voted through by a Senate committee late on Thursday, has a raft of new measures but includes the kretek prohibition because a US study found they helped to hook children on smoking.

If the bill is signed into law by President Barack Obama — as the White House says it will be — US authorities will have the power to impose strict new controls on the making and marketing of tobacco, including banning cloves as a cigarette flavoring along with such flavors as cherry and chocolate.

For Indonesian clove cigarette makers, who export about 20 percent of the $500 million worth of kretek sold overseas every year to the United States, this means $100 million a year is likely to go up in smoke. It is especially likely to affect Indonesia’s biggest kretek exporter, Gudang Garam, which has a factory in South America for the continental market.

Menthol cigarettes will not be included in the ban, however, which has angered Indonesian trade officials who point out that a ban on kretek but not menthol is discriminatory and are threatening to complain to the World Trade Organization. Government officials’ comments on the ban make it likely that WTO action will now proceed.

Earlier this month, Trade Minister Mari Pangestu hit out at the bill for not including a ban on menthols and threatened to invoke WTO action if the bill was passed. Mari and Indonesian Ambassador to the United States Sudjadnan Parnohadiningrat have argued that the US Congress would be favoring a domestic product over an imported one if it banned cloves and not menthols.

“I think it is unfair because menthol cigarettes have not been included,” Mari said last month.

Thursday’s 79-17 Senate vote sends the measure back to Congress, which in April passed a similar but not identical version. House acceptance of the Senate bill would send it directly to Obama, who supports the action and has said he would sign in into law as soon as it reached his desk.

JG, Agencies