KPPI close to completing 1st safeguard case

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