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Great wall of trade barriers
planned

Following concerns of a surging influx of overseas products that may further hurt local businesses amid the escalating global economic slump, the government plans to expand trade barriers to limit unnecessary imports.

Trade Minister Gita Wirjawan said on Tuesday the measures would include mostly non-tarriff barriers such as an expanded quarantine policy and mandatory use of the Indonesian National Standards (SNI) system.

“We are preparing for the policy and hopefully we can issue them sooner rather than later,” Gita said on the sidelines of the CEO Forum hosted by the Indonesian Publicly Listed Companies Association.

Among the measures, Gita said, was requiring all agricultural imports be loaded at designated ports equipped with stricter quarantine centers.

“There’ll be two or three ports available for such imports. The ports must be backed by strong infrastructure and risk analysis,” he said.

Gita said another measure was expanding the use of the SNI, as many imported products failed to comply with the existing rules, the labeling system and the expiration period requirements.

“The SNI has been applied for 83 products, but we [import] thousands of products. We’ll seek to expand the application of the standard soon.”

According to the Industry Ministry, there are 86 obligatory SNI and 6,000 non-obligatory SNI standards.

“We’ll look to intensify the use of obligatory SNI, but it may take time because it must pass the WTO’s [World Trade Organization] ruling,” said Industry Minister M.S. Hidayat.

As demand slows in the US and Europe, exporting countries such as China and India have made Indonesia their main export market, as the Southeast Asia’s largest economy will likely weather the impact of the deepening global economic slowdown.

With a population of more than 230 million and economic growth expected at 6.7 percent next year — among the highest in Asia — Indonesia saw a 40 percent surge in non-oil-and-gas imports in 2010 as against 2009.

Businesses have voiced concerns that the imports include basic goods that are produced at home, including fruits, vegetables, salts, footwear and textiles.

According to Gita, these trade-barrier measures would not be contrary to Indonesia’s commitment to free trade and reflect protectionism.

“It will not be contrary to our commitment because these measures have even been applied in many developed and advanced countries, and we need to learn about and implement them as part of our spirit of togetherness,” he said.

During the 23rd Asia-Pacific Economic Cooperation (APEC) summit in Honolulu in the US last month, Gita reiterated Indonesia’s commitment to supporting an open multilateral trade system and averting all kinds of protectionism.

Unlike his predecessor, Mari Elka Pangestu, Gita is regarded as more supportive of local businesses and is in line with Hidayat, who is deemed as a champion of protectionism.

Gita recently approved a request from Hidayat to ban raw rattan exports to help local producers, a decision previously opposed by Mari.

Indonesian Chamber of Commerce and Industry (Kadin) vice chairman for trade, distribution and logistics Natsir Mansyur said the trade barriers might be counterproductive in protecting the local market as they might violate WTO rules and incite retaliation from trading partners.

“The government should seek measures that have not been regulated by the WTO,” he said.

As trade policy seems to take a new course toward defending the local market, the country is likely be scrutinized by trading partners.

According to the Indonesian Trade Security Committee (KPPI), Indonesia was ranked third after India and Turkey on a list of countries that applied protectionist trade barriers, based on WTO data in 2010.

Possibly out of retaliation, Indonesian products face antidumping and safeguarding measures implemented by more than 12 countries, according to the Trade Ministry.

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