Local firms given protection against cheap imports

Local firms given protection against cheap imports

Adianto P. Simamora, The Jakarta Post, Jakarta

Local manufacturers reeling under a massive influx of cheaper,
imported products can now appeal to the government to raise the
import duties on the products in question as part of a new
government safeguard mechanism.

The new policy is stipulated in a presidential decree signed
by President Megawati Soekarnoputri on Dec. 16, under which the
government can temporarily or permanently raise import duties to
help protect local industries.

The government can also impose a quota system as a way to curb
an influx of imports.

According to the decree, high import tariffs should be first
applied for 200 days.

However, if the government finds that imports are causing
serious injury to local companies, or are threatening their
survival, the high import duties could be kept on for four years.

The decree says that before imposing a safeguard tariff on a
certain product, the government must first consult with and
listen to the views of exporting countries.

Such a safeguard mechanism is permitted under the World Trade
Organization (WTO) agreement.

According to WTO rules, member countries are allowed to impose
high import tariffs to protect local firms from an influx of
cheaper imported products.

But the higher tariffs must immediately be abandoned if an
investigation shows that the imported products are not causing
damage to local companies.

Almost all WTO members have such a safeguard regulation.

Minister of Trade and Industry Rini M. Soewandi earlier said
that she would soon set up a special committee to investigate the
influx of imported products.

"We hope the team can start working next year," Rini said.

Many local manufacturers have long complained that cheaper
imported products were threatening their products on the domestic
market.

They have repeatedly called on the government to impose higher
import tariffs to help them compete against the cheaper imports.

Minister of Agriculture Bungaran Saragih had also asked the
Ministry of Trade and Industry to impose higher import duties on
several agricultural commodities, such as sugar, rice, corn and
soybeans.

Rini, however, rejected the calls at the time, saying that
imposing higher import tariffs would be against WTO rules as the
country had yet to put a safeguard policy in place.

The Philippine government in May applied a safeguard tariff to
Indonesian ceramic imports as Philippine ceramic producers
claimed that the influx of Indonesian products was harming their
businesses.

The Philippines imposed an additional import tariff of 5.4
pesos per kilogram on Indonesian ceramic products on top of the
existing 15 percent tariff to protect the local industry.