5 October 1990

1. On 22 December 1989, the United States requested consultations with Thailand under Article XXIII:1, concerning restrictions on imports of and internal taxes on cigarettes maintained by the Royal Thai Government (DS10/1). As these consultations which were held on 5 February 1990 did not lead to a solution, the United States requested the CONTRACTING PARTIES to establish a panel under Article XXIII:2, to examine the matter (DS10/2). The Council agreed to establish the Panel on 3 April 1990 and authorized its Chairman to designate the Chairman and members of the Panel in consultation with the parties concerned (C/M/240).

2. On 16 May 1990, the Council was informed that the Panel would have the following terms of reference and composition:

A. Terms of reference

"To examine, in the light of the relevant GATT provisions, the matter referred to the CONTRACTING PARTIES by the United States in document DS1O/2 and to make such findings as will assist the CONTRACTING PARTIES in making the recommendations or in giving the rulings provided for in Article XXIII:2" (C/M/241).

B. Composition

3. Additionally, the Council took note of the following understanding between the Parties (C/M/241):

4. At the meeting of the Council held on 3 April 1990, the European Communities reserved the right to intervene in the Panel proceedings (C/M/240).

5. The Panel held meetings with the parties to the dispute on 2 and 27 July 1990. It consulted with officials of the World Health Organization on 19 July 1990. The delegation of the European Communities made an oral submission to the Panel at the meeting held on 27 July 1990. The Panel submitted its report to the parties on 21 September 1990.

A. Restrictions on imports

6. Under Section 27 of the Tobacco Act, 1966, the importation or exportation of tobacco seeds, tobacco plants, tobacco leaves, plug tobacco, shredded tobacco and tobacco is prohibited except by licence of the Director-General of the Excise Department or a competent officer authorized by him. Section 4 of the said Act defines tobacco as "cigarettes, cigars, other tobacco rolled for smoking, prepared shredded tobacco including chewing tobacco". Licences have only been granted to the Thai Tobacco Monopoly, which has imported cigarettes on only three occasions since 1966, namely in 1968-70, 1976 and 1980.

B. Internal taxes

7. Cigarettes are subject to the payment of an excise tax, a business tax and a municipal tax.

(i) Excise tax:

8. The schedule of fees and tobacco stamp rates appended to the Tobacco Act, 1966, provides that the ceiling rate of excise tax for domestic cigarettes is 60 per cent of the retail selling price given in notifications of the Director-General of the Excise Department, while the ceiling rate for imported cigarettes is 80 per cent of the retail selling price given in notifications of the Director-General of the Excise Department or 0.60 baht/gram. The Act permits the Ministry of Finance to set the rate of tax at levels which do not exceed those laid down in the schedule. Until 11 July 1990, the rates of excise tax on domestic cigarettes were based on the amount of Thai tobacco leaf contained in the cigarette, with the maximum rate set at a level slightly below the ceiling laid down in the Tobacco Act.

9. The sales weighted average rate of excise tax on domestically produced cigarettes in 1989 was 54.69 per cent of the retail selling price. The excise tax which would be applied to imported cigarettes was set at 0.50 baht per gram. In the absence of cigarette imports, the ad valorem equivalent of this tax in 1989, as computed by the Thai authorities, would have been 35.83 per cent, assuming a c.i.f. price of 11.50 baht per packet.

10. On 11 July 1990, the Ministry of Finance issued a regulation which set the rate of excise tax at 55 per cent ad valorem, for both domestic and imported cigarettes, with immediate effect.

(ii) Business and municipal taxes

11. Business tax is currently assessed on both domestically produced and imported cigarettes at a rate of 1.5 per cent of the retail selling price and the municipal tax is set at 10 per cent of the business tax. Section 5 bis of the Tobacco Act, 1966, exempts from business tax "tobacco manufacturers on the sale of shredded tobacco or smoking tobacco, and sellers of shredded tobacco or smoking tobacco made from native tobacco leaves". As indicated in paragraph 6, the Act defines the term tobacco to include cigarettes. The Thai Tobacco Monopoly is the only licensed manufacturer of cigarettes. Under the Municipal Revenue Act of 1954, the municipal tax is collected as a percentage of the business tax, and products exempted from the business tax are also exempted from the municipal tax. On 18 August 1990, the King approved a Royal Decree which explicitly exempts as of 22 August 1990 all imported cigarettes from payment of business and therefore municipal taxes.

A. Findings and recommendations requested by the Parties

12. The United States requested the Panel to find that:

(i) Restrictions on imports

(ii) Internal Taxes

13. The United States requested the Panel to recommend that:

14. Thailand requested the Panel to find that:

(i) Restrictions on imports

(ii) Internal taxes

15. Thailand therefore requested the Panel to reject the complaint of the United States.

B. Article XI:1

16. The United States argued that since 1966 Thailand had implemented an import licensing régime for cigarettes which was inconsistent with Article XI. The Thai Tobacco Monopoly had imported cigarettes on only three occasions and the Government refused to consider import licence applications from any other entity. The United States had repeatedly requested that Thailand eliminate its licensing restrictions and permit imports of cigarettes from other contracting parties. These requests had been turned down. Recalling that a number of recent panel reports ¹ which had been adopted by the CONTRACTING PARTIES, had confirmed that the activities of state-controlled import monopolies must conform to a number of rules contained in the General Agreement, including those of Article XI:1, the United States asked the Panel not to accept an artificial distinction between the activities of state-trading monopolies and other government acts and policies to restrict trade. Such a finding would essentially vitiate one of the most effective provisions for achieving the objectives of the General Agreement, i.e. the substantial reduction of tariffs and other barriers to trade and the elimination of discriminatory treatment in international trade.

C. Exceptions to Article XI:1

(i) Article XI:2

17. Thailand recognized the existence of a virtual prohibition on imports of cigarettes. However, it contended that this restriction was justified under Article XI:2(c). There was a long-standing practice in GATT which had been accepted in past rounds of trade negotiations and followed by panels in other cases, to treat products falling under Chapters 1 to 24 of the CCCN or the HS nomenclatures as agricultural products within the meaning of Article XI. Therefore, cigarettes which were classified under the CCCN as 24.02.B and the HS nomenclature as 2402.20 were agricultural products. Thailand contended that import restrictions on cigarettes were "necessary to the enforcement of governmental measures which operated to restrict the quantities of the like domestic product". Allowing cigarette imports would undermine government policy to reduce the tobacco planting area and cigarette production.

18. The United States held the view that because of the fundamental nature of the ban on quantitative restrictions, contained in Article XI:1, any exceptions to it must be narrowly construed. With respect to each exception asserted, each and every condition must be met before a measure may be considered as covered by the exception.

19. The United States argued that the import restrictions maintained by Thailand on cigarettes could not be justified by Article XI:2(c) for the following reasons:

20. Thailand recognized that since the first Tobacco Act had been passed in 1938, no imports of cigarettes had been allowed, except on a few critical occasions when insignificant quantities had been imported during short periods of time. Thus, it could not be argued, as the United States did, that the restriction had the effect of reducing the proportion of imports which might be expected to rule in the absence of restrictions.

(ii) Article XX(b)

21. Thailand contended that the prohibition on imports of cigarettes was justified by the objective of public health policy which it was pursuing, namely to reduce the consumption of tobacco which was harmful to health. It was therefore covered by Article XX (b). The production and consumption of tobacco undermined the objectives set out in the Preamble of the General Agreement which were: to raise the standard of living, ensure full employment and a large and steadily growing volume of real income and effective demand, develop the full use of the resources of the world and expand the production and exchange of goods. Instead, smoking lowered the standard of living, increased sickness and thereby led to billions of dollars being spent every year on medical costs, which reduced real income and prevented an efficient use being made of resources, human and natural. The production of tobacco had not altogether been prohibited in Thailand because this might have led to production and consumption of narcotic drugs having effects even more harmful than tobacco, such as opium, marijuana and kratom (a plant with fragrant yellow flowers and intoxicating leaves). Historically, the manufacturing of cigarettes in Thailand had been aimed at providing a legal substitute for narcotic products which were themselves outlawed. Cigarette production in Thailand was a state-monopoly under the Tobacco Act, because the government felt the need to have total control over such a product which, even though legal, could be extremely harmful to health. A main objective of the Act was to ensure that cigarettes were produced in a quantity just sufficient to satisfy domestic demand, without increasing such demand. While a certain quantity of foreign cigarettes was smuggled into Thailand, this was unlikely to be done without the manufacturers' consent, since prior to the total ban on cigarette advertising which had been implemented on 10 February 1989, foreign cigarette manufacturers had advertised on Thai television, in mass circulation newspapers and on billboards. Indirect advertising had also taken place and the logos of cigarette manufacturers had appeared on clothing and many other non-tobacco products.

22. The United States noted the intent of the drafters of the General Agreement that measures which a contracting party seeks to justify under the provisions of Article XX(b) should reflect similar domestic safeguards. The drafting history of Article XX(b) indicated that the language in the preamble to Article XX stating that measures not be disguised restrictions on international trade had this meaning in the context of Article XX(b). The United States further noted that safeguards comparable to an import prohibition did not exist with respect to domestic cigarettes.

23. The United States noted that a recent panel ⁴ had found that a contracting party could not justify a measure inconsistent with another GATT provision as "necessary" in terms of Article XX(d) if an alternative measure which it could reasonably be expected to employ and which is not inconsistent with other GATT provisions is also available to it. It had also found that in cases where a measure consistent with other GATT provisions is not reasonably available, a contracting party is bound to use, among the measures reasonably available to it, that which entails the least degree of inconsistency with other GATT provisions. The United States considered that Thailand, like other contracting parties, could pursue the objective of seeking to prevent the increase in the number of smokers without imposing a ban on imports. The experience of other countries had shown that decreases in the level of smoking resulted from diminished demand achieved through education and the recognition of the effects of smoking rather than restraints on the availability of cigarettes. Moreover, the United States considered that Thailand could not argue that the ban on imports was necessary to protect human life or health since domestic production, sales and exports of cigarettes and tobacco remained at high levels. Between 1979 and 1988, total domestic sales of Thai cigarettes had risen by 2.6 per cent annually. They had risen by 5.76 per cent in 1987, after the active anti-smoking campaign had started, and by 7.4 per cent in 1988. Most recent data suggested that sales rose by about 8 per cent in 1989. They were forecast to rise again in 1990. These figures indicated that there was an ongoing substantial increase in the number of smokers or a substantial increase in the number of cigarettes consumed by current smokers. The anti-smoking campaign had been unsuccessful in actually diminishing the absolute level of cigarette production and sales in Thailand, while all legitimate imports had been banned. There existed in Thailand a well-established demand for foreign cigarettes, met by illegal imports unauthorized by legitimate producers, which accounted for 4 to 5 per cent of the market.

24. Thailand replied that the exception contained in Article XX(b) reflected the recognition that public health protection is a basic responsibility of governments. With the support of non-governmental organizations, the Thai government had taken action to control smoking by, inter alia:

25. Most recently, on 6 March 1990, the Thai Cabinet had decided to attack the problem of smoking on both the supply and demand sides by instructing the relevant authorities to:

26. According to Thailand, the smoking rate among the Thai population over 10 years of age declined from 30.1 per cent in 1976 to 27.8 per cent in 1981, 26.4 per cent in 1986 and 25 per cent in 1988. In addition per capita consumption of tobacco declined at a rate of 2.2 per cent a year between 1974-76 and 1984-86. Aggregate consumption had increased at an average annual rate of 1.1 per cent in 1984-86 but this was largely accountable to increase in population and a higher standard of living which had encouraged smokers, particularly in rural areas, to switch from self-rolled cigarettes and traditional tobacco products to manufactured cigarettes. At the same time, while total cigarette production in Thailand was still growing, the annual growth rate had fallen from 2.8 per cent to 2.72 per cent in recent years.

27. Thailand argued that while competition had desirable effects in international trade in goods, this did not apply to cigarettes. Governments in many countries, including the United States and Thailand, tried to discourage or control tobacco and cigarette consumption. Competition would lead to the use of better marketing techniques (including advertising), a wider availability of cigarettes, a possible reduction of their prices, and perhaps improvements in their quality. This might have the undesirable effect of leading to an increase in total consumption, especially among women and the young, which would run contrary to public health objectives. Some American cigarettes were specifically targeted at women of whom only 3.5 per cent smoked in Thailand compared to 30 per cent in Western countries. A recent report of the Council on Scientific Affairs of the American Medical Association stated that at a time when cigarette smoking is falling in developed nations, it is increasing in Africa, Latin America and Asia as tobacco companies seek new markets. According to this report, the United States leads the world in tobacco exports, and its cigarette exports to Asia had increased by 75 per cent in 1988 alone. Since the health consequences of the opening of cigarette markets constituted one of the major justifications for Thailand's cigarette import régime, Thailand deemed it necessary that the panel consult with experts from the World Health Organization (WHO) on recent experience in countries which had been made to open their markets for cigarettes. This showed that once a market was opened, the United States cigarette industry would exert great efforts to force governments to accept terms and conditions which undermined public health and governments were left with no effective tool to carry out public health policies. Advertising bans were circumvented and modern marketing techniques were used to boost sales. Hence, Thailand was of the view that an import ban was the only measure which could protect public health. Any other measure which allowed imports in any amounts would not be effective.

28. Thailand also argued that cigarettes manufactured in the United States may be more harmful than Thai cigarettes because of unknown chemicals placed by the United States cigarette companies in their cigarettes, partly to compensate for lower tar and nicotine levels. United States cigarette companies also used other additives which increased the health risks of smoking. One such additive was cocoa, which according to one study increased the risk of cancer. Others included deer tongue, ethyl butyrate, linayle acetate, isoamyl acetate, 2,3,5 trimethyl and pyrazine. According to the United States Surgeon-General's 1984 report, "a characterization of the chemical composition and adverse biological potential of these additives is urgently required, but is currently impossible because cigarette companies are not required to reveal what additives they employ in the manufacture of tobacco" (USDHHS, 1984). According to Thailand, some United States cigarettes contained nicotine which was extracted from tobacco leaf, resprayed back into the leaf as part of a process called "reconstituting" the tobacco. Re-adding nicotine in chemical form to tobacco leaf may make United States cigarettes different from Thai cigarettes in the strict sense of the word and make them more addictive, since it could make inhalation easier and absorption of nicotine by the bloodstream and the brain more efficient.

29. The United States replied that the health hazards of smoking had been the subject of extensive documentation in a number of countries. The existence of such hazards was not the real issue in this dispute. The United States did not believe that Thailand had established that its import ban served the purpose of protecting public health or that such a measure was necessary to accomplish that purpose. The Thai Tobacco Monopoly produced at least 15 brands of cigarettes appealing to all types of consumers. It had consciously attempted to imitate "American blend" cigarettes, clearly in response to perceived consumer demand. These "American-style" brands were among the Monopoly's best sellers. Its distribution system was both extensive and well-established at the wholesale and retail levels. Few barriers were imposed to entry into the retail cigarette business. Currently, Thailand had over 40,000 licensed cigarette retailers. The marketing techniques of the Thai Tobacco Monopoly were as effective as those of American manufacturers. N° decision had been adopted by the Thai Cabinet to reduce cigarette production until 6 March 1990, i.e. after the United States had requested the establishment of the panel. In the past, the Thai Tobacco Monopoly had ignored earlier Cabinet decisions. For example, it had not implemented the six labelling requirements mentioned by Thailand and was negotiating with the government to weaken two of them. Moreover, three major expansion plans had been initiated by the Thai Tobacco Monopoly between July 1987 and January 1990, despite government policy, and new orders had been placed for machinery which would enable the Monopoly to increase its production by 10 billion cigarettes in 1991. While the Ministry of Agriculture had been instructed in January 1988 to formulate a plan for reducing tobacco acreage, this was not relevant to the object of the dispute which was cigarettes. Furthermore, Thailand had not presented any information on a concrete plan to decrease acreage and Thai statistics showed, if anything, that tobacco acreage increased, rather than decreased, in the 1988/1989 season.

30. According to the United States, the reasons identified by Thailand for the increasing consumption of cigarettes, namely a switch from traditional tobacco products to manufactured cigarettes were of declining importance as the economic situation of Thailand changed. Increased availability would lead to increased consumption if there was demand that was not currently satisfied. Thus, as had happened in other Asian markets which had recently liberalized import policies, opening the Thai market would lead to a shift in consumption from the Thai Tobacco Monopoly cigarettes to imported products, rather than to an increase in total demand.If the real issue was over advertising and concern over the creation of new customers and new demand, that problem should be addressed directly and not through a GATT-inconsistent import prohibition. The United States could not accept the view that the import ban on cigarettes was justified because of the lack of an alternative tool to carry out public health policy effectively. Any measures that could be taken in pursuance of such objectives should be taken on a national treatment basis.

31. The United States denied that its cigarettes raised special health concerns. Indeed, the Thai government had recognized that United States and other foreign cigarettes were less harmful than Thai cigarettes because of their significantly lower tar and nicotine content. Cigarettes exported from the United States were the same product as the ones sold in the United States. Their ingredients had been disclosed to the Department of Health and Human Services since 1985, in pursuance of the Federal Cigarette Labelling Act. That Department had raised no issue with any of the items on the list of ingredients that had been reported each year. None of the other countries, such as the United Kingdom, France and the Federal Republic of Germany, which also required disclosure of ingredients, had raised problems with ingredients in United States cigarettes. Thailand, however, had no regulations or restrictions on ingredients or flavourings used in cigarettes. The United States noted that the Thai Government admitted that the Thai Tobacco Monopoly used additives in its cigarettes. With respect to the ingredients that the Thai Government cited as raising health concerns, the United States noted that the US cigarette industry, unlike the Thai Tobacco Monopoly, did not use deer tongue, also known as coumarin. The Thai Tobacco Monopoly also purchased cocoa which it used as flavouring and which was on the list of approved ingredients of every country that maintained one. It was also a substance frequently consumed as food or beverage. 2,3,5 trimethyl was a flavoured aroma ingredient commonly used in food products and approved by the US Food and Drug Administration. Reconstituted tobacco had less nicotine than full leaf tobacco and the Thai Tobacco Monopoly intended to use this technique in the future. According to independent studies, tar and nicotine levels in Thai cigarettes were higher than in foreign cigarettes illegally imported into Thailand. While it was true that United States cigarette exports to Asia had increased in recent years, this increase, which was due to the dismantling of monopolies in several countries, had been from a zero base which explained the high percentage increase in exports.

32. Thailand replied that it had never recognized that foreign cigarettes were less harmful than Thai cigarettes. Even though their tar and nicotine contents might be lower, they were more addictive than Thai cigarettes because smokers tended to consume a higher number of low tar and nicotine cigarettes, in order to obtain the amount of nicotine to which they were used. Artificial flavourings and other ingredients were added to low tar/nicotine cigarettes to compensate for the milder taste of such cigarettes. Thailand, like the United States, had regulations on ingredients and flavourings. The Thai Tobacco Monopoly was required by a Cabinet resolution of February 1990 to disclose the ingredients of its cigarettes to the Ministry of Public Health. This Ministry had requested the Ministry of Finance, which supervised the Thai Tobacco Monopoly to instruct it to reduce or eliminate three of the ingredients which were considered particularly dangerous to health. Some of these, such as cocoa could be harmless when eaten or drunk, but could be carcinogenic when burned. While it was true that the list of additives to American cigarettes had been submitted to the Department of Health and Human Services since 1985, only a consolidated list of additives which was used by six manufacturers was submitted by these manufacturers, without identifying the brand (or brands) of cigarettes containing particular additives and without indicating the amount of each additive used. Thus, the nature of the information given to the Department of Health and Human Services limited the ability to conduct a thorough analysis of the potential health risks of additives. Canada had passed legislation requiring all cigarette manufacturers to disclose the additives they used, and as a result one leading United States manufacturer had withdrawn several of its brands from the Canadian market. Moreover, Thailand did not agree that cigarettes exported from the United States were the same product as those sold on the domestic market. Recent studies had shown that some foreign cigarettes sold in Asia contained a higher tar level than the same brands sold in Australia, Europe or the United States.

33. Thailand recognized that consumption of cigarettes had continued to rise in Thailand, in spite of the efforts by the government with the support of non-governmental organizations, because such campaigns took a long time to produce effects, as had been seen in the United States where consumption had continued to rise until 1981, even though the first anti-smoking campaign had been initiated in 1965. Thailand denied that the objective of its policy was to protect domestic production of cigarettes. N° new factory had been built in the last 12 years and a number of plans to expand existing capacity had been rejected by the government. Any machinery installed in existing factories was only replacing equipment whose life-span had expired. While it was true that the Thai Tobacco Monopoly had delayed implementing the health warnings required by the Cabinet, and had tried to weaken two of them, it could not ignore cabinet resolutions and would have to enforce the warnings. Health considerations overrode any other policy objectives of the government. Thus, the Ministry of Finance had estimated that the importation of cigarettes would yield an extra revenue of baht 800 million (about US$30 million) per year which was a substantial sum for a developing country. However, the government had decided to forego this sum in deference to public health considerations.

34. Since May 1989 Thailand had resisted bilateral pressures, under Section 301 of the US Trade Act, to open its market for cigarettes, and faced the imminent threat of retaliation against Thai exports to the United States, valued at US$166 million. Even though exports were the linchpin of Thailand's economic success, such considerations had given way to health concerns. In the course of these bilateral pressures, the United States had made it clear that its objectives were not limited to market opening and national treatment on internal taxation but covered other areas, such as a unilateral reduction of Thailand's import duty on cigarettes to zero, a low specific rate of excise tax on cigarettes (which when converted to an ad valorem basis, would work to the advantage of higher-value American cigarettes) and the right for manufacturers of foreign cigarettes to advertise and conduct point-of-sale promotion even though such a right was denied to manufacturers of domestically-produced cigarettes. Thailand therefore sought from the Panel a recommendation as to whether Thailand was required by GATT provisions to grant such concessions to the United States. Such a recommendation was necessary to protect the credibility of the multilateral dispute settlement mechanism. Thailand also sought from the Panel confirmation of its understanding that, in the event of its market for cigarettes being opened, its obligations with regard to the pricing, distribution, advertising, promotion and labelling of cigarettes were limited to providing national treatment for foreign cigarettes.

35. In the view of the United States, there was a marginal benefit to be gained from smoking low tar and nicotine cigarettes, rather than high tar and nicotine cigarettes. With respect to tobacco additives, it considered that there was no evidence that these additives had any adverse effects and referred the panel to the findings of the American Health Foundation which were annexed to the WHO submission. Moreover, Thailand's import prohibition had always affected all cigarettes and not simply those containing additives, many of which such as menthol were also used by the Thai Tobacco Monopoly. United States cigarette manufacturers complied with the labelling and disclosure requirements of United States law. Apart from cigarettes sold in countries where local content requirements resulted in United States companies manufacturing locally for domestic consumption through licensees, and in consequent variations in tar and nicotine levels, all other cigarettes exported from the United States were identical to the product sold on the domestic market. Unless Thailand amended the Tobacco Act of 1966 to eliminate the monopoly on the manufacture of cigarettes, foreign firms would have to supply the Thai market through imports. In the case of Canada, only 1 per cent of the market had been held by United States cigarette manufacturers prior to the introduction of a reporting requirement for additives. That did not change after the implementation of the requirement as much of US manufacturing and sales were effected through Canadian licensees. Some firms had expressed concern about the protection of their trade secrets and had considered that the size of the market did not justify continuing their export effort, especially as each Canadian province had enacted individual requirements thus atomizing the market. The United States denied that it was seeking anything other than the application of national treatment in measures taken by Thailand to control the consumption of cigarettes and objected to the Panel making recommendations on issues not raised by it, as these issues were outside the terms of reference of the Panel.

(iii) Protocol of Accession

36. Thailand argued that the Thai import régime for cigarettes was in full conformity with Thailand's rights and obligations under the General Agreement as the Tobacco Act of 1966 on which the import restrictions were based, was covered by paragraph 1(b) of the Protocol for the Accession of Thailand by the General Agreement according to which:

37. Recalling that the recent panel report ⁵, adopted by the CONTRACTING PARTIES, on "Norway's Restrictions on Imports of Apples and Pears" had concluded that in order to be eligible under the Protocol, existing legislation must (a) be legislation in a formal sense, (b) predate the Protocol and (c) be mandatory in character by its terms or expressed intent, the United States argued that Thailand's restrictions on cigarette imports were not covered by its Protocol of Accession, because although they predated its accession to the GATT, they were not mandatory. Section 27 of the Tobacco Act, 1966, did not impose a mandatory prohibition on importation of cigarettes, but only empowered the Director-General of the Excise Department to issue import licences. Moreover, imports had occurred under the Act.

38. According to Thailand, the Tobacco Act of 1966, which was the legal basis for restrictions on the importation of cigarettes, constituted existing legislation within the meaning of the Protocol. The Act could satisfy each and every condition specified in the recent Panel report on Norway - "Restrictions on Imports of Apples and Pears" (L/6474, paragraph 5.7). The Act, which was adopted in 1966, predated the Protocol, which had itself been adopted in 1982. Even though the Act did not state explicitly the intent of minimizing harm to public health, it was self-evident that its intent was identical to that of its predecessor, namely the Opium Act of 1929, which was to control consumption in order to minimize the harm to health. The Tobacco Act shared the same features as the Opium Act in requiring strict control over the production, distribution, consumption etc. of the product from beginning to end. As in the case of the legislation which it had replaced, namely the Tobacco Acts of 1938 and 1943, the 1966 Act required the Thai government to control production, consumption, internal and international trade of cigarettes. The purpose of the Act was to ensure that the quality and quantity of tobacco products were such that they did not jeopardize public health. With this objective, the law regulated the supply of tobacco products from both domestic and foreign sources. The importation of tobacco, including cigarettes, was explicitly prohibited under Section 27 of the Tobacco Act of 1966. Although such prohibition could be relaxed by the Director-General of the Excise Department, the mandatory intent of the law had to be respected.

TO CONTINUE WITH RESTRICTIONS ON IMPORTATION OF AND INTERNAL TAXES ON CIGARETTES

¹ Report of the Panel - "Republic of Korea's Restrictions on Imports of Beef, paragraph 115 (L/6503). Report of the Panel - "Japan's Restrictions on Imports of Certain Agricultural Products", paragraph 5.2.2.2. (BISD, 35S/163).