WTO acknowledges Indonesia for trade liberalization moves

Adianto P. Simamora, The Jakarta Post, Jakarta

The World Trade Organization (WTO) has praised Indonesian efforts to liberalize its trade policies over the past four years, saying the move had stabilized its economy.

The WTO, however, urged Indonesia to press on with trade reforms to help boost economic growth, reduce poverty and attract foreign investment.

The WTO secretariat, on its website, says that trade liberalization and other structural reforms undertaken by Indonesia since the severe financial crisis of 1997 have successfully stabilized the economy and fostered growth.

"But the economy remains fragile and the recent global downturn has heavily reduced foreign investment, on which the economy critically depends," it said in a report released on Tuesday.

The report said further trade and other structural reforms, including strengthened governance and institutions, were needed "to alleviate poverty, to provide the basis for the sustained growth of the economy and to help boost investor confidence, something which the country urgently needs."

The WTO assessed Indonesia's economic and trade policies over the past four years in Geneva on Monday to ensure whether or not the policies violated the WTO ruling.

During the two-day meeting, the WTO praised Indonesia's move to bring import tariffs down to an average of 7.2 percent in 2002.

At home, however, criticism on the government's move to drastically reduce import tariffs, mainly on the four key agriculture products of rice, sugar, soybean and corn, have been on the rise.

The government currently imposes import tariffs of Rp 430 per kilogram on rice, Rp 570 and Rp 700 on sugar and zero percent on both soybean and corn.

Experts have said the government should impose higher import tariffs on these commodities to protect local farmers against cheaper imported products.

The report also discloses that WTO members raised questions over Indonesia's move to impose non-tariff barriers on several commodities, such as textiles and steel.

Some WTO members have also sought clarification on, among other things, the 'check' prices for customs valuation purposes, the use of import restrictive licensing, anti-dumping measures, export restriction, labeling requirements and participation in regional and bilateral trade liberalization agreements.

The WTO also urges greater transparency and public scrutiny of Indonesia's trade policies especially in sensitive sectors, "where trade policy seems to be set on an ad hoc basis."