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.