RI demands "flexibility" with agriculture tariffs
Adianto P. Simamora, The Jakarta Post, Jakarta
The government has called for greater "flexibility" on the import tariff policy on key agriculture products during the recent informal ministerial World Trade Organization (WTO) meeting in Japan, a senior official at the Ministry of Trade and Industry said on Friday.
"We want the flexibility in tariff cuts for four products. This is our position at the WTO talks," Pos M. Hutabarat, directorate general of multilateral cooperation at the ministry told The Jakarta Post.
The four products are rice, sugar, soybean and corn.
Under the proposed flexibility position, Indonesia can still impose a higher import tariff on the four products, aiming to help protect domestic agribusiness against more competitively priced imported agriculture commodities.
"Ibu Rini Soewandi (Minister of Trade and Industry) has stated this position during the last two informal meetings in Japan and Australia. We hope other member countries can accept our proposal," he said.
The informal meeting, held last week, was participated in by 25 trade ministers both from developing and developed countries.
Pos said that the main reason for proposing the flexibility position was because the four commodities were strategic to the country both in terms of protecting farmers and ensuring food security here.
"We still need these four products (to be kept at a higher price for our consumers) as they are still the main pillars in rural areas which absorb many workers," he said.
He said that the flexibility proposal had been agreed upon by the national team at WTO.
The team - formed under a presidential decree - was chaired by Rini with other ministers and experts, included Mary Pangestu, Marzuki Usman and Djisman Simanjuntak.
According to the current WTO agreement, Indonesia is allowed to impose higher import tariffs on the four products.
However, Indonesia has been under pressure from the International Monetary Fund (IMF) to keep a relatively low import tariff on the four commodities. The IMF has provided the country with a multi-billion dollar economic bailout package.
The government currently has an import tariff of only 30 percent on rice, far lower than WTO's bound tariff of 160 percent.
Japan, the sponsor of the recent informal meeting, has import tariffs of 490 percent.
Indonesia applies import tariffs of only Rp 550 to Rp 700 per kilogram on sugar, and zero percent on soybeans and corn.
European countries and the U.S., respectively, impose import tariffs of 240 percent and 150 percent on sugar.
The Indonesia Farmers' Association (HKTI) has repeatedly called on the government to raise import tariffs on the four key products to protect the ailing agriculture corporations against cheaper imported commodities.
According to Pos, agricultural issues were the main topic in the meeting as each WTO member countries were still divided in both tariff reduction and slashing of agricultural subsidies.
"Japan refuses to reduce import tariffs on rice while the European countries want to maintain agricultural subsidies," he said.
He said that the discussion on agriculture was so far based on the proposal issued by Stuart Harbinson, known as the Uruguay and Switzerland formulas.
Under the Uruguay formula, the reduction in import tariffs on agricultural products would be carried out in stages, while the Swiss formula applies a sharp tariff reduction.
"Both (the Uruguay and Swiss formulas) were opposed by Japan, European countries and developing countries including Indonesia," Pos said.
To resolve the sharp differences, the delegation of each WTO member country will start formal talks in Geneva starting on Monday.
"We will continue fighting for the flexibility proposal," Pos said.
He said that Indonesia's delegation would be chaired by Gusmardi Bustami, the Indonesian ambassador for WTO in Geneva.
"Gusmardi will be accompanied by Tagor Napitupulu from the ministry of agriculture," he said.