Indonesia-China trade spat

The Jakarta Post ,  Jakarta   |  Fri, 08/10/2007 1:00 PM  |  Opinion

Cool heads should reign in China and Indonesia in resolving their trade dispute, which seems to have been triggered by differences of views regarding procedures for the scrutiny of the safety of imported consumer goods.

Indonesia decided late last month to ban candies and some cosmetics from China after laboratory tests by the Food and Drug Monitoring Body found those products contained formaldehyde and other dangerous substances.

We could not help but smell retaliation when China suddenly announced on the Web site of its General Administration of Quality Supervision, Inspection and Quarantine last Friday that it had temporarily prohibited the distribution of fish and shellfish imported from Indonesia, claiming that its quarantine inspectors had found mercury and cadmium in them.

As if not disturbed by the seeming retaliation, Indonesia announced early this week an additional list of 26 cosmetic products from China, Taiwan, South Korea, Thailand and the Philippines that were banned from entering the local market.

The exchanges between the two countries resembled disputes between Beijing and Washington. China has faced a string of product safety problems in the American market, ranging from contaminated pet food to toothpaste laced with industrial chemicals. U.S toy-makers have recalled more than one million toys made in China this year, after discovering they were coated in lead paint.

But Trade Minister Mari Pangestu was right in playing down the dispute in view of the steadily expanding trade relations between the two countries, which last year exceeded US$15 billion, of which $8.34 billion consisted of Indonesian exports. Indonesian exports of aquatic commodities to China last year amounted only to $70.3 million.

Both countries should resolve the dispute according to the World Trade Organization rules and based on WTO agreements our government has the right to ask for further clarification from China on its measure because its circular on the Web site is quite brief and too general, short of details on specific products and their exporters.

China's ban on Indonesian seafood should be assessed based on the provisions of the WTO Agreement the Application of Sanitary and Phytosanitary Measures on food safety and animal and plant health regulations.

The agreement sets out the basic rules for food safety and animal and plant health standards but allows countries to set their own standards. But it also stipulates that sanitary measures must be based on scientific evidence and must be applied only to the extent necessary to protect humans. Most important is that the application of the regulations cannot be discriminatory and cannot be used as a non-trade barrier to restrict imports from particular countries.

Disputes may however arise because the agreement still allows countries to use different standards and different methods of inspecting products even though it also sees to it that measures to ensure food safety should be based as far as possible on the analysis and assessment of objective and accurate scientific data.

China has the right to take immediate measures such as ban on imports in an emergency situation but WTO regulations require it to immediately notify Indonesia on its sanitary measures and provide more information and to Indonesia to support its action.

There are numerous examples of bans on the production, sale and import of products based on scientific evidence that they pose an unacceptable risk to human, animal or plant health.

There have been several cases in the past whereby Indonesian shipments of shrimps were banned by the U.S Food and Drug Administration from entering the American market due to contamination but the measures did not cause major trade disputes. The cases were closed after the necessary corrective measures were taken.

Indonesia and China should seek a mutually acceptable bilateral solution to their trade issues through formal consultations. But if they cannot resolve their dispute, they can choose to follow any one of several means of dispute settlement, including good offices, conciliation, mediation and arbitration allowed under the WTO agreements.

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.