WASHINGTON, Dec. 22, 2016 – The U.S. has scored a big win in a trade dispute with Indonesia at the World Trade Organization.
A WTO trade enforcement panel has ruled in favor of a U.S. challenge to wide-ranging restrictions and prohibitions on agricultural products. The Office of the U.S. Trade Representative says the trade barriers are restricting millions of dollars’ worth of imports of American fruits and vegetables, animal products including beef and poultry and other agricultural and horticultural products.
USTR says the panel agreed with the U.S. on 18 out of 18 claims that Indonesia is applying import restrictions and prohibitions that are inconsistent with WTO rules.
“The Obama administration has again prevailed on behalf of U.S. farmers, ranchers, and businesses,” U.S. Trade Rep Michael Froman said in a release. “Today’s panel report will help eliminate unjustified trade restrictions on American agricultural products, allowing U.S. farmers and ranchers to sell their high-quality products to customers in Indonesia – the fourth-most populous country in the world.”
Froman said the victory is the fourth WTO win announced by USTR this year. “It again affirms the Administration’s commitment to enforcing U.S. rights to ensure Americans benefit from all the opportunities the United States has negotiated under our trade agreements.”
According to USTR, Indonesia has maintained the trade-restrictive licensing regimes since 2012. The United States initiated the dispute with Indonesia in January 2013 and, working together with New Zealand, filed additional complaints in August 2013 and in May 2014 to address modifications to Indonesia’s import licensing restrictions. The WTO Dispute Settlement Body established the panel for this dispute in May 2015. The panel found that all of Indonesia's import restricting measures for horticultural products and animal products are inconsistent with international trade regulations. The United States challenged Indonesia’s agricultural import regime as a whole as well specific measure including:
Restriction on the importation of horticultural products during Indonesian harvest periods to avoid competition with domestic products. For example, Indonesia would restrict the importation of oranges during the harvest season of its domestic oranges.
Restrictions on the use, sale, and distribution of imported products. For example, imported beef could only be sold in restaurants and hotel, but not in traditional markets and supermarkets.
Restriction on the importation of certain products when their market prices fall below the government-determined “reference prices.”
Restriction on the importation of horticultural products based on an importer’s ownership of storage facilities. For example, an importer could only import 100 bushels of apples if it owns the storage space for 100 bushels of apples. The importer cannot lease or rent storage spaces to satisfy this requirement.
Prohibition on the importation of horticultural products, animals and animal products when Indonesia determines that its domestic supplies are sufficient to satisfy domestic demand.
The panel found that all of these break WTO rules because they either restrict or prohibit importation of these products, USTR said.
“This is a slam dunk for American agriculture,” Agriculture Secretary Tom Vilsack said. “Since 2012, Indonesia has maintained an untenable import licensing program, harming the ability of U.S. producers to sell a wide range of American-grown products in the Indonesian market – from potatoes to beef to grapes to oranges to poultry. Importantly, the WTO Panel findings will discourage Indonesia from simply substituting new trade-distorting approaches for the measures repealed, restoring American farmers' and ranchers' ability to compete.”
USTR noted that Indonesia is an increasingly important export market for many U.S. agricultural products, with exports of agricultural products affected by the country’s import licensing regimes totaling nearly $115 million in 2015.
Affected U.S. agricultural products include fruits, such as apples, grapes and oranges; vegetables, such as potatoes, onions and shallots; dried fruits and vegetables; flowers; juices; cattle; beef, including a ban on secondary cuts; poultry, including a ban on chicken parts; and other animal products.
The dispute panel’s decision is not the end of the dispute. Under WTO rules, either party may request adoption of the panel report by the WTO within 60 days of the release of the report, and the report would be adopted unless an appeal is filed. If the report is appealed, WTO rules provide that the WTO Appellate Body must issue its report within 90 days of the filing of the appeal.
Click here to view a fact sheet on the Obama administration's trade enforcement record.
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