Indonesia Embroiled in Antidumping Offensive as Crisis Chokes World Trade
As struggling firms scramble for markets and try to wind down inventories, allegations of dumping have become the order of the day on the international trade front, with Indonesia finding itself on the receiving end of eight new dumping charges and measures over the last five months.
However, this country has responded by leveling dozens of dumping accusations against trade competitors, and soon may file more against China, India and Taiwan.
Antidumping rules are designed to punish firms that sell their products at “unfair” prices in foreign markets, usually lower than those that would be charged in domestically. However, critics say they are often employed as a disguised form of protectionism.
“It’s probably due to the global economic crisis, since every country is trying to protect its own industries and products,” said Ernawati, the Trade Ministry’s director of international trade security, on Thursday.
Four of the new allegations against Indonesia concern viscose staple fiber, food additives, polyethylene shopping bags and phthalic anhydride, with a total of 18 companies involved.
India has accused two Indonesian companies of dumping viscose staple fiber - a synthetic, cotton-like fiber that is widely used in apparel and textiles. “The initiation process has been underway since March,” Ernawati said, referring to the first step in an antidumping investigation.
In April, China accused two Indonesian companies of dumping food additives, and another 13 of dumping polyethylene bags.
The latest charge was filled by Pakistan against PT Petro Widada in East Java, which has been accused of dumping phthalic anhydride, which is used in the production of the plastic PVC.
“India and Pakistan have been aggressively laying accusations against Indonesia,” Ernawati said. “They have also been pretty cavalier about it by going straight to the initiation stage even though they still don’t have all the data.”
In addition to the new charges, a number of outstanding antidumping actions against Indonesia have advanced to the next level - the imposition of safeguard measures, which means that the aggrieved country temporarily imposes duties on or restricts imports of products because a domestic industry is threatened.
A process to impose safeguard measures has been underway in Egypt since January with respect to cotton yarn and blended and woven cotton fabrics.
India, meanwhile, is also in the process of preparing safeguard measures in respect of a number of paper products.
Major safeguard measures have already been imposed by South Africa on L-Lysine HCI, an animal feed supplement exported by PT Cheil Jedang Indonesia.
“Because of this, a safeguard duty of more than 3 percent has been imposed on all South Africa’s imports of this product since March 27,” Ernawati said. “Indonesia is also waiting for the findings of investigations in Turkey and the European Union.”
Turkey accused Indonesia last year of dumping motorcycle tires and synthetic yarn. The EU leveled charges of dumping sodium cyclamate, which was used as a low-calorie sweetener but is now banned in many countries due to its possible carcinogenic effects.
Trade Minister Mari Elka Pangestu said that defining dumping was problematic since each country had its own rules.
“There are two ways to handle these cases, the offensive and defensive ways,” Mari said on Wednesday “The offensive way is that we try to resolve the problem internally by seeing if local industry players are engaging in unfair practices,” while the defensive way sees the government taking the company’s side.
Ernawati said the government would support any company that was accused of dumping, provided it was willing to cooperate with the investigation process.
Ade Sudrajat, the executive director of the Indonesian Textile Association (API), said that most dumping cases were handled by companies without the government being directly involved.
He also agreed with Mari on the problem of differing national regulations, saying: “We have our own rules, and so do they.”
However, this country has responded by leveling dozens of dumping accusations against trade competitors, and soon may file more against China, India and Taiwan.
Antidumping rules are designed to punish firms that sell their products at “unfair” prices in foreign markets, usually lower than those that would be charged in domestically. However, critics say they are often employed as a disguised form of protectionism.
“It’s probably due to the global economic crisis, since every country is trying to protect its own industries and products,” said Ernawati, the Trade Ministry’s director of international trade security, on Thursday.
Four of the new allegations against Indonesia concern viscose staple fiber, food additives, polyethylene shopping bags and phthalic anhydride, with a total of 18 companies involved.
India has accused two Indonesian companies of dumping viscose staple fiber - a synthetic, cotton-like fiber that is widely used in apparel and textiles. “The initiation process has been underway since March,” Ernawati said, referring to the first step in an antidumping investigation.
In April, China accused two Indonesian companies of dumping food additives, and another 13 of dumping polyethylene bags.
The latest charge was filled by Pakistan against PT Petro Widada in East Java, which has been accused of dumping phthalic anhydride, which is used in the production of the plastic PVC.
“India and Pakistan have been aggressively laying accusations against Indonesia,” Ernawati said. “They have also been pretty cavalier about it by going straight to the initiation stage even though they still don’t have all the data.”
In addition to the new charges, a number of outstanding antidumping actions against Indonesia have advanced to the next level - the imposition of safeguard measures, which means that the aggrieved country temporarily imposes duties on or restricts imports of products because a domestic industry is threatened.
A process to impose safeguard measures has been underway in Egypt since January with respect to cotton yarn and blended and woven cotton fabrics.
India, meanwhile, is also in the process of preparing safeguard measures in respect of a number of paper products.
Major safeguard measures have already been imposed by South Africa on L-Lysine HCI, an animal feed supplement exported by PT Cheil Jedang Indonesia.
“Because of this, a safeguard duty of more than 3 percent has been imposed on all South Africa’s imports of this product since March 27,” Ernawati said. “Indonesia is also waiting for the findings of investigations in Turkey and the European Union.”
Turkey accused Indonesia last year of dumping motorcycle tires and synthetic yarn. The EU leveled charges of dumping sodium cyclamate, which was used as a low-calorie sweetener but is now banned in many countries due to its possible carcinogenic effects.
Trade Minister Mari Elka Pangestu said that defining dumping was problematic since each country had its own rules.
“There are two ways to handle these cases, the offensive and defensive ways,” Mari said on Wednesday “The offensive way is that we try to resolve the problem internally by seeing if local industry players are engaging in unfair practices,” while the defensive way sees the government taking the company’s side.
Ernawati said the government would support any company that was accused of dumping, provided it was willing to cooperate with the investigation process.
Ade Sudrajat, the executive director of the Indonesian Textile Association (API), said that most dumping cases were handled by companies without the government being directly involved.
He also agreed with Mari on the problem of differing national regulations, saying: “We have our own rules, and so do they.”