Despite talk of free trade, new U.S. policy to hit RI exports

The Jakarta Post Jakarta

A new U.S. policy requiring all agricultural products from Indonesia to undergo security inspection in Singapore before entering the U.S. market could hurt Indonesia's agricultural exports, the government admitted on Friday.

Ferry Yahya, director for agricultural and mining exports at the Ministry of Industry and Trade, said that the policy could result in additional costs for the country's exporters as it would lengthen export procedures.

"Importers (in the U.S.) could have to pay additional expenses, which they will naturally seek to recover from exporters," Ferry told The Jakarta Post.

"As such, it will hurt our exports," he remarked.

Currently, the U.S. is still Indonesia's biggest export market. Around 16 percent of Indonesian exports go to the U.S., followed by Japan with 13 percent and Singapore with 10 percent.

Indonesia's exports to the U.S. were valued at US$ 7.75 billion last year, lower than equivalent 2000 figure, which stood at $8.47 billion.

Agricultural exports to the U.S. include black pepper, tobacco, tea, rubber, coffee and shellfish.

The new policy comes amid news that Indonesia's exports to the U.S. rebounded in September following an improved economic performance in the U.S.

Exports were up 4.21 percent in September to $5.10 billion from less than $5 billion in previous months. The increase was spurred by growth in U.S. gross domestic product (GDP), which rose by 3.1 percent year on year in the third quarter, as against 1.3 percent in the previous quarter.

Mahendra, a spokesman for the Coordinating Minister for the Economy, confirmed the new policy, saying that it would take effect globally on Jan. 1, 2003.

"The policy requires the inspection of all containers entering the U.S. market for possible dangerous goods," Mahendra told the Post.

According to Mahendra, the policy is part of the U.S.'s efforts to step up security at home to counter the threat of terrorism.

However, Mahendra said that although the policy was slated to take effect in January next year, there would be a more than two- month transition period to see how the system worked.

"During this time, we will see how it operates and who's going to bear the costs resulting from the inspections," he said.

Both government officials also claimed that so far there had been no official notification from the U.S. government about the policy.

"The U.S. government should have issued an official notice on the policy," Ferry said, adding that the Ministry of Industry and Trade would seek clarification from the U.S. Embassy as soon as possible.

For Eyebox:

RI agricultural exports to U.S. market in 2001:

Tea $6.5 million Tobacco $4.7 million Coffee $42.2 million Rubber $281.7 million Shellfish $149 million Black Pepper $19.7 million

Source: Central Statistic Agency