Govt to review ways of determining tariffs: Minister

Zakki P. Hakim, The Jakarta Post, Jakarta

The government is reviewing which ministry should have the authority to determine trade-related fiscal policies such as import duties in an effort to maximize the use of the "injury clause" to curtail the excesses of trade liberalization, a senior official said.

Minister of Trade Mari Elka Pangestu said that the government realized that there should be a better coordination between ministries, to enable the country to continue to embrace free trade and at the same time protect some of its industries and jobs against imports by using the injury clause permitted under the World Trade Organization rulings.

"We want to fix this. But the question remains, who should hold the authority, is it the Minister of Finance or the Coordinating Minister for Economy," Mari told the press last week.

Conceptually, the Coordinating Minister for Economy should have the final say, but the ministry which has the capacity to analyze a certain issue should be taken into consideration, said Mari.

"For trade-related issues, the Ministry of Trade should have the right to analyze them and come up with a conclusion," she said.

However, she suggested that the country might want to adopt the practices of other countries, such as Australia, where it had a Productivity Commission which conducted an objective analysis and came up with suggestions.

The commission then consulted with legislators on the advantages and the disadvantages of a trade measure before passing a final decision.

"We might be moving toward that kind of procedure. But it requires further discussion with fellow Cabinet members, so in the future we could deliver a consistent policy for the sake of national interests," she said.

Indonesia can continue to embrace free trade and at the same time protect some of its industries -- and jobs too -- against imports by using the injury clause permitted under the WTO rulings. It is something that Indonesia had not applied optimally in the past while other countries, including the U.S. and Europe, invoked them freely in the name of protecting national interests.

Industry players as well as government trade officials have long complained that the injury clauses could not be applied effectively due to problems at the Ministry of Finance.

The government has set up the Indonesian Anti-Dumping Committee (KADI) and Indonesian Trade Safeguard Committee (KPPI) that would determine which sectors should be protected using temporary tariff barriers upon inputs from injured domestic industries, which have suffered from the massive inflow of cheaper imported products.

The two committees then proposed the tariff measure to an inter-ministerial Tariff Team, which would have the final say whether or not to impose a higher entry duty.

The team, now chaired by the Minister of Finance, however, most of the time found it necessary to re-analyze recommendations from the two committees, which creates further delay, while the industry cries foul over unfair competition from cheap imports.

In several cases, the team took more than a year to finally give the decision, which sometimes meant it was too late, said a trade official who spoke on the condition of anonymity.

He said that Minister of Trade should hold the chairmanship, as the role of the Tariff Team was crucial for the country in countering the excesses of trade liberalization.

According to him, during the early days of WTO in the mid 1990s it was minister of industry and trade Tungky Ariwibowo who chaired the team.

Separately, the Ministry's director general for international cooperation Pos M. Hutabarat said that the two independent committees were not effective considering their weak legal basis.

The KADI was based on the Customs Law while KPPI was based only on a presidential decree on trade safeguard measures, he said.

The ministry was currently working on a trade bill, which would give a stronger legal basis for the two committees, said Pos.

Between 1996 to 2004, out of 31 antidumping petitions submitted to KADI, only nine cases got Ministry of Finance's approval for imposing antidumping duties. While the other five cases are still under investigation, the remaining cases were closed, reports said.