Tuesday, 23 September 2014


The ministry if Trade [kemendag] would foster coordination with businessplayers, especially exporters to anticipate technical regulation as import barrier by buyer countries. The coordination outcome would determine the form of facilities prepared by Kemendag. One thing known was restriction on calorie content of food for Mexican and Latin American markets. This was important because non traditional markets were the target markets.

The products targeted were F&B products.”The technical regulations applied in Mexico included among others calorie content coffee. Indonesia coffee producers kept probing on the Mexican market. We would facilitate trade remedies, because there is a special directorate for it. The Dir. Gen of PEN Nuz Nuzulia told Business News [21/8].

Before requirement for calorie content in F&B products, the Ministry had to face labeling problem. Some buyer countries tend to protect their domestic industry with various regulations. The Ministry of trade smelled out various restrictions, including labeling. “Rules for labeling is getting more strict. We keep on studying the barrier rules in buyer countries.”

The Ministry called out market players in managing trade remedies. Kemendag had set up working groups to aim at export market in Brazil. Indonesia could use Brazil. Indonesia could Brazil as intermediary to expand to markets in Latin America, but again Technical Regulation was the barrier.

Even to send sampling of products Indonesia had to pay the tariff. The Ministry of Trade brought the case to WTO starting with the committee to handle technical barriers to trade. The case was further brought to panel dispute settlement body of WTO. The Kemendag Team retaliated to restriction of import of ex-Indonesia cigarettes. America rated the clove flavor of Indonesia’s Kretek cigarettes disadvantage young smokers in America. “we argued that clove was not flavior but part of the cigarette. We brought the case to WTO and Alhamdulillah [praise God the almighty] we won.

Meanwhile Indonesia for Global justice [IG] urged the Indonesia Government to fight for agricultural subsidy system for farmers. This urge was made following India’s step to refuse to sign Trade Facilitation Agreement when proposal for agricultural subsidy set forth by developing countries never arrived at any point agreement.

On December3-6 2013 WTO Ministrial Meeting IX in Bali had come up with an agreement called Bali Package consisting of Trade Facilitation Package for less developed countries and agro-proposal related to subsidy for food reserve. “Unfortunately the proposal had not arrived at permanent solution by requesty of developing countries who proposed elimination on restriction of subsidy for developing countries” Riza Damanik of IGJ disclosed to Business News sometime ago.

Meanwhile Trade Facilitation Agreement adopted by WTO on July 31 2014 and automatically to be implemented on July 31 2015 if 2/3 of WTO members agreed to it. The Proposal for food Subsidy was proposed by G 33 Group for public stockholding for food security. The objective was to eliminate restriction on subsidy giving for public stockholding in helping poor farmers and increasing food aid for the poor.

Without any permanent solution program from stockholding, developing countries like India and Indonesia would have to face restricted domestic support set at 10% on national production value. The subsidy was given on the basis of price of 1986 – 1988 which was no longer relevant.

In responding to the matter, the Government of RI who was also Chairman of G33 in WTO, choosed not to support India’s proposition and even insisted that Trade Facilitation proposition be agreed upon; and yet Indonesia was facing food problem. For example the case of increasing food price, dependency on imported food and the problem of farmer’s poverty which hel back growth of the agricultural sector in Indonesia. “The policy is most disadvantageous to Indonesia and would push Indonesia deeper into food crisis.”

Since 2010, trading in the agro sector especially the plantation and horticulture sub-sector was still posting deficit, i.e. USD 4.13 billion in 2010 increasing to USD 6.8 billion in 2013. The condition of farmers was also still far from prosperous. This was visible in the Farmer’s Exchange Value [NTP] for the plantation sub-sector which was posting downturn. BPS data showed that NTP of the Food Plantation Sector of June-July period was downturning from 98.22 to 98.04.

The agricultural Subsidy Proposal should be an opportunity to increase quality of development of agriculture sector in Indonesia. However, the Government had not put agricultural sector as prioritized issue. This was reflected in Government’s seriousness to solve some problems in food issue.

In the survey run by IGJ in 2013 on the Effectiveness of Proposal G 33 in Realizing Indonesia’s Food Souverignity it was disclosed that so far the Government had not responded to several issues in Indonesia’s Public Reserves System like [1] public food reserves which was only limited to rice [related to BULOG’s restriction]; [2] Price of Government’s Buying [HPP] for rice commodity which was no longer in accordance with farmer’s economical standard; [3] Absorption mechanism by BULOG and [4] the amount of Rice-for-the-Poor [Raskin] which was way below demand; all were on account of food subsidy value which was still low.

Decision of the Government of RI at the WTO IX Ministrial Meeting in Bali on December 2013 last had stripped off Government‘s responsibility in food affairs. The government even replaced the Agricultural Subsidy Proposal with Trade Facilitation Concept which would almost certainly open Indonesia’s import valve which would increase overseas debt. The Indonesia Government must be responsible for the decision they made which disadvantaged farmers.

The above condition must be the underlying consideration for the next Government to re evaluate their international economy diplomacy particularly in meeting with WTO. For that matter the Indonesia Global Justice urge the Indonesian Government:
[1] To fight for the Proposal for Agricultural Subsidy
[2] To refuse to approve the Trade Facilitation Agreement
[3] To revise the public food reserve system into a system which stand on the side of food souverignity. (SS)

Business News - August 27, 2014

No comments: