New Zealand has made its second complaint in as many years to the World Trade Organisation about import restrictions and red tape in Indonesia that led to an 80 percent slump in exports of beef and horticultural products.
New Zealand and the US originally teamed up to initiate legal proceedings against Indonesia via the WTO in August last year. That complaint didn't proceed beyond the consultation stage because Indonesia subsequently changed some of its measures, which under WTO rules meant a new application had to be made.
In the new complaint, lodged on May 8, New Zealand and the US cite Indonesia's "unjustified and trade-restrictive" licensing requirements on imports, "unreasonable and discriminatory" pre-shipment rules and insufficient published details of how the restrictions work.
"Indonesia does not appear to administer these quotas and restrictions in a uniform, impartial or reasonable manner as they are applied inconsistently and unpredictably," New Zealand says in its 'request for consultations' with Indonesia, the first step in a complaint to the WTO.
Indonesia is New Zealand's ninth-largest market and overall merchandise exports to Indonesia rose 17 percent to $961 million in the 12 months ended March 31. But for beef in particular, trade slumped after the Southeast Asian nation imposed volume-based quotas in 2011 with the intention of becoming self-sufficient. Instead, as New Zealand and Australian supplies dried up, beef prices soared.
New Zealand exports of beef and beef offal tumbled to 10,355 tonnes in 2011, from 48,405 tonnes in 2010 as a result of the restrictions. Volumes began to pick up again last year after Indonesia eased the restrictions but are still well below levels before the initial quotas were imposed.
"The meat industry fully supported the original NZ/US request for consultations with Indonesia through the WTO, given the material damage done to our industry by the quotas," said Philip Houlding, trade and economic manager at the Meat Industry Association.
"The new Indonesian regulations have allowed trade to pick up again, but there are still some major concerns," he said. Those concerns include a 'reference price' in the market below which no imports are allowed, and "stringent restrictions" on importers that make it difficult to expand the market.
Under WTO rules, the parties have 60 days to agree on a solution, after which New Zealand and the US can request a WTO panel be established to hear the dispute.
New Zealand "remains concerned about a number of issues in the Indonesian laws and regulations which remain opaque and overly burdensome," a spokeswoman for the Ministry of Foreign Affairs and Trade said in an emailed statement. "Our exporters require certainty in regards to the trading environment, so that they can plan their business and investment decisions confident of how Indonesia's laws and policies will be implemented."