At Eyes on Trade, Todd Tucker responds to my post on the clove cigarette ban. The focus of his post is a quote from an insider involved in the debate over the bill, who had this to say:
Menthol historically in the US has been marketed to African Americans, so there is actually extra good public health reason to ban it.
The failure to ban was not because of so-called protectionist impulse, but political reality: It's too big a market to wipe out and get the bill passed. This is probably a combination of both manufacturer power and worries about protests from African-American smokers.
Todd then follows-up on the point with this comment:
This observer's comment that "political reality is no WTO defense at all" is what's key here. God willing, over the next few years, we're going to see a lot of consumer and environmental protection laws going into effect. A lot of them will be messy, and a lot of them will be criticized by groups like Public Citizen. But I don't think there's an advocate here among us that doesn't realize that the political process is going to yield imperfect results that are still better than nothing. Maybe it's time for a "political reality" carveout from WTO obligations.
I think it may be worth talking about this issue a bit more, because I sense there is some confusion here about what is wrong with the measure. I did not mean to suggest that, on its own, allowing menthol cigarettes was "protectionist." Rather, there is a very specific set of circumstances here that makes one aspect of the measure seem protectionist to me. Let me lay it out in detail.
I am not a smoker, so I don't have any specific experience with this, but my sense of what's going on is the following. There is concern about certain flavored cigarettes appealing to kids. You've got a bunch of sweet or candy-like flavors, such as strawberry, grape, orange, cinnamon, pineapple, vanilla, coconut, licorice, cocoa, chocolate, cherry, and coffee. I see the argument that these sweet flavors might encourage kids to smoke, as the flavor is not as harsh as regular tobacco. In addition to the sweet flavors, you've got flavored cigarettes of the clove and menthol variety. Clove cigarettes are spicy and menthol ones are minty. It's possible that these also make smoking less harsh and thus encourage some people to smoke, but not to the extent of the sweet ones. (Someone who knows more or who has actually smoked these things, feel free to correct me on this).
I don't think there would have been a problem if the sweet flavors had been banned but clove and menthol allowed, or if they had all been banned. The problem is with the treatment of clove and menthol cigarettes, which appear similar in nature. As it happens, clove cigarettes are mainly produced in Indonesia. As a result, when you ban clove cigarettes, there is a huge discriminatory effect on Indonesian products. Legislators were clearly aware of this, as a speech by one Congresswoman demonstrates. Thus, at least in some sense, I think it's fair to say that there was a protectionist intent in banning clove cigarettes but not menthol ones.
The insider quoted above discusses how the political reality required menthols to be exempt from the ban on flavored products, and that's fine. I can understand that, and on its own I don't see a trade problem here. But even accepting that, I don't see how banning clove cigarettes while allowing menthols was anything other than protectionist. (That's not to say there is no possible defense here, just that I'm not aware of what it might be. If someone comes forward with an explanation, I'm happy to consider it. I haven't heard anything so far, though.)
So, how to respond to Todd's final comment: "Will this be the next case of the WTO chilling effect?" I'm not really sure there is much to this. It is true that under WTO rules, as I read them based on what I know about the facts of the case, a ban on menthol but not clove cigarettes could violate the rules. Would a ruling that this aspect of the measure violates the rules have a "chilling effect"? Well, everyone was aware of the issue, and the measure passed anyway, so in that sense the answer is pretty clearly no. Beyond that simple point, if this aspect of the measure is challenged and there is a finding of violation, then trade sanctions could be authorized to bring the aspect into compliance. This would likely mean either allowing cloves or banning menthol, so as to have equal treatment between a predominantly foreign good and a predominantly domestic one. To me, then, the only "chilling effect" that could possibly exist is a very minor one, in that discriminatory treatment is not permitted. This suggests to me that my original instinct was correct: It is a very narrow, arguably protectionist, aspect of the measure that is at issue, and the impact of WTO rules does very little to inhibit the ability of governments to regulate in this area. Yes, it does inhibit their ability to discriminate against foreigners, but that's it.
As a final point, let me note that there are a number of areas where I agree with Todd that WTO rules do go too far in terms of governments' ability to regulate. This isn't one of them, though.
As a final, final point, I also wanted to mention the title of Todd's post: "The WTO Wants You to Light up a Cancer Stick." Now, I'm sure he meant this in a light-hearted kind of way, but I do have concerns that this kind of language gives many people with limited knowledge of trade rules the wrong idea of what the rules actually say.
