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Indonesia wary of rise in protectionism

Publication Date : 10-03-2014

 

The Indonesian government is becoming increasingly concerned over the continuing trend of implementing trade-restrictive measures this year amid the persistent global economic slowdown, which may affect Indonesia’s capacity to reach its annual export target of US$180 billion.

Deputy Trade Minister Bayu Krisnamurthi said struggling with decelerating international trade flows had resulted in many economies taking protective measures.

“The trend is alarming because we are aiming to boost exports to many destinations,” he said over the weekend.

Describing trade defence as “more important” and “more determining”, the government had strengthened related trade authorities to anticipate surging trade-restrictive measures, he added.

In its recent global-trade monitoring report, the World Trade Organization (WTO) revealed its findings on 407 new restrictive measures worldwide during the review period between mid-October 2012 and mid-November 2013, while 308 measures were reported in the same period a year before.

These new measures affected 1.3 per cent of world merchandise imports totalling $240 billion.

The trade measures materialised by way of trade remedy actions and others, notably sanitary and phytosanitary measures and technical barriers to trade, according to the report.

There were 217 initiations of new trade remedy probes in the period, covering around 0.2 per cent of world imports, while only 138 terminations of either investigations or existing duties impacting 0.1 per cent of world imports.

Indonesia did not commence any new anti-dumping enquiries last year, compared to seven investigations that started in 2012. However, it launched four safeguard probes last year, with a similar number in 2012.

Partner economies — China, the European Union (EU), New Zealand and the United States (US) — have raised concerns over the closure of Indonesia’s main import gate in Tanjung Priok in North Jakarta, which fell into the technical barrier to trade category.

In terms of sanitary and phytosanitary measures, Indonesia received complaints from South Africa, the US and the EU due to its import permit regulations requiring labelling and consumer information.

Indonesian Institute of Sciences (LIPI) economist Latif Adam said it was critical for trade defense as well as related-trade authorities — the Indonesian Anti-Dumping Committee (KADI) and the Indonesian Trade Safeguard Committee — to lay out priorities in tackling trade cases amid the current situation. The priorities should be given to products from industries considered vital to the country’s economy, such as palm oil.

“With clear priorities, the government will in a better position to respond to foreign trade remedy measures and provide assistance to businesses that need it most,” he said.

Apart from that, Latif added, the government should also enhance the institutional capacity of related authorities as Indonesia still applied less trade remedy measures on its trading partners compared to those they applied on Indonesia.

From 1995 to 2013, Indonesia put 119 trade remedy measures comprising anti-dumping, countervailing and safeguard duties on its trading partners, while its counterparts imposed 225 measures on the country.

 

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