`Move to limit agriculture exports not against WTO'

Adianto P. Simamora, The Jakarta Post, Jakarta

Experts said steps taken by a number of countries to limit exports of agricultural commodities to prop up prices are not against the World Trade Organization (WTO) ruling as member countries have not reached an agreement on a trade and competition policy.

"As long as the WTO member countries have not yet agreed on the WTO's Singapore issues, which include a trade and competition policy, producing countries are able to regulate their own exports and output of agricultural commodities," Soy Pardede, the director for trade affairs at the Indonesian Chamber of Commerce and Industry (Kadin), told The Jakarta Post on Monday.

Besides the trade and competition policy, the new Singapore issues also include trade and investment, government procurement and trade facilitations.

Soy made the comment following a plan by Indonesia and Vietnam, two of the world's largest coffee producers, to limit overseas sales of robusta beans.

Last month, the Vietnam Coffee and Cocoa Association (Vicofa) and the Association of Indonesian Coffee Exporters (AICE) signed a memorandum of understanding (MOU) in Hanoi to coordinate their coffee exports.

The two countries produce about 65 percent of the world's supply of robusta beans. The two rivals Brazil and Colombia grow mostly more expensive arabica.

Indonesia's coffee production averages at about 500,000 tons each year, of which more than 85 percent is exported. Vietnamese coffee production leapt from about 413,600 tons in 1997 to 900,000 tons in 2001.

Separately, the world's top rubber producers -- Indonesia, Malaysia and Thailand -- also signed an MOU in Bali in August 2002 to set up a consortium called the International Tripartite Rubber Companies Consortium (ITRCo). Its main duty is to help boost the price of the commodity.

The three countries jointly contribute about 95 percent to the world's natural rubber production.

The consortium will purchase the commodity from their respective domestic market in case of oversupply so that the price will gradually increase. But in case of high demand and short supply, the consortium will release its stock.

The ITRCo was established following the forming of the International Tripartite Rubber Council (ITRC) by the three countries, which pledged to cut rubber output by 4 percent and exports by 10 percent every year.

Sri Adiningsih, an economist from the Gadjah Mada University shared Soy's opinion, saying that the move was still relevant as the rich member countries of the WTO continued to protect their local farmers.

"It (the policy to limit exports) is an understandable policy and it is not against the WTO ruling," Sri told the Post.

Both experts, however, urged producing countries to explain the move to the international community before implementing their joint policy.

"This is a cartel like OPEC," Soy added. "A cartel's producing countries has to announce their policy to the international community on their total of exports and production."

He was referring to the Organization of Petroleum Exporting Countries, which currently regulates the oil production of its members.