KPPI close to completing 1st safeguard case

Zakki P. Hakim, The Jakarta Post, Jakarta

The Indonesian Trade Safeguard Committee (KPPI), is to announce soon its first-ever decision, which concerns the question as to whether it is necessary for the government to protect the local ceramic tableware industry from cheap imports, a senior official at the Ministry of Trade says.

The Ministry's director of trade protection, Slamet Effendi, said on Monday that the committee was set to finish its report on May 5, and would then pass on its recommendations to the Minister of Trade.

"The report will decide whether or not the cheap imports have damaged local industry," Slamet said after a public hearing with stakeholders in the ceramic tableware industry.

Among the participants at the hearing were the Indonesian Ceramic Industry Association (Asaki) as the petitioner, lawyers representing importers, representatives from the embassies of the countries concerned, including China, Thailand, the European Union and Australia.

Indonesia's tableware industry has been losing out to cheap imports -- mostly from China -- and was now seeking state protection, said Slamet, who is also the KPPI's executive secretary.

According to Asaki, surging imports have cost the local industry dearly through decreased market share, factory closures and layoffs.

Asaki's foreign affairs director, Indra Kangean, earlier said that imports of tableware had increased rapidly over the past few years to 45,000 tons in 2003 from 20,000 tons in 2001, of which over 95 percent originated from China.

As a result, the market share of imported products had increased to 65 percent from 50 percent in 2001. This situation had forced five tableware factories to close down and lay off their workers.

The industry used to employ 20,000 workers directly, but now only employed 10,000, Indra said.

"The rest of them have either lost their jobs or are working less hours," Indra said, adding that a total of 2,500 workers had been laid off over the past two years.

Responding to the industry's complaints, the Indonesian Trade Safeguard Committee (KPPI) agreed in October to investigate as to whether damage had been caused by the cheap imports.

Under World Trade Organization rules, the government can impose a provisional measure on an imported product for a maximum of 200 days after the committee launches an official investigation.

In January, the government formally increased its import duties on tableware products to 30 percent from 5 percent in January in the expectation that this would temporarily stem the surging imports.

Should the investigation confirm that damage has been caused, formal safeguard measures will be applied, which could be in the form of increased tariffs, the setting of a quota, or a combination of both.

Such measures, however, can only remain in force initially for a maximum of four years, and the industry will be required to embark on a gradual liberalization.

However, Slamet pointed out that the WTO allows developing countries like Indonesia to extend such measures up to a maximum of 10 years.

Tableware Imports in RI 1999-2003

Year Imports Market share Local demand

(tons) (percent) (tons)

1999 12,000 45 25,000
2000 24,000 51 35,000
2001 20,000 50 40,000
2002 37,000 60 52,000
2003 45,000 65 58,000

Source: Central Statistic Agency (BPS) and Asaki