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U.S. Updates WTO Challenge of Indonesian Import Restrictions

Monday, May 12, 2014
Sandler, Travis & Rosenberg Trade Report

U.S. Trade Representative Michael Froman announced May 8 that the U.S. is requesting new World Trade Organization dispute settlement consultations to address Indonesia’s import licensing restrictions on horticultural products, animals and animal products.

According to a USTR press release, Indonesia has adopted non-automatic import licensing requirements that impede imports of U.S. goods such as fruits, vegetables, flowers, dried fruits and vegetables, juices, cattle, beef, poultry and other animal products. The U.S. has alleged that these measures are inconsistent with Indonesia’s WTO obligations under the General Agreement on Tariffs and Trade 1994, the Agreement on Import Licensing Procedures, the Agreement on Agriculture and the Agreement on Preshipment Inspection.

Requests for WTO consultations on prior versions of these measures in 2013 prompted Indonesia to replace and amend its import licensing requirements. Specifically, 18 products were removed from regulation, including garlic, garlic powder, chili powder, cabbage, chrysanthemum flowers, heliconia flowers, orchid flowers and several processed products, bringing the total of covered goods down to 39. The amended rules also prescribed a simplified procedure to apply for and receive import permits.

However, the U.S. argues that the revised system did not remove the apparent WTO inconsistencies and introduced new restrictions. Specific allegations include the following.

- horticultural product import recommendation certificates do not permit the importation of fresh products for consumption that were harvested more than six months prior

- any animal products not listed in the appendices to the import licensing regulations may not be imported at all

- importers of horticultural products, animals and animal products may apply for import approvals only during specified time periods that can be months ahead of importation; once issued, an import approval restricts imports during the specified time periods to set products, in set quantities, from set countries and under set conditions

- importers face having their designation as a registered importer or producer importer suspended or revoked if the actual quantity imported is less than a certain percentage of the stated quantity

- the importation of horticultural products, animals and animal products is prohibited when domestic production is deemed sufficient to fulfill domestic demand, and imports of certain goods are prohibited or restricted when their prices fall below certain reference prices

- Indonesia has failed to ensure that preshipment inspection activities do not result in unreasonable delays, are carried out in a non-discriminatory manner and are applied on an equal basis to all exporters

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