Apr 30, 1991
GATT COUNCIL REVIEWS INDONESIA’S TRADE POLICY.
GENEVA, APRIL 26 (TWN) – Indonesia was commended Friday in the GATT Council for the trade policy reforms it has already undertaken and was "encouraged" to vigorously pursue efforts to liberalize and deregulate its trade and economic policies and increase transparency of its trade regime, and extend the reforms to other areas. The Council ended its review of Indonesia’s Trade Policy, under its TPRM exercise, with a summing up by the Chairman of the GATT Council, Amb. Lars Anell of Sweden. A GATT spokesman who relayed the summing-up to the press also quoted the EC as having told the Council that "Indonesia has brilliantly passed its examination by the GATT". Noting that Indonesia’s efforts to diversify and expand exports encountered some substantial tariff and non-tariff barriers in foreign markets the Council emphasized (in the summing-up) that a supportive world trading and financial environment, including improvements in market access, would make a significant contribution to encouraging Indonesia’s development efforts and the process of reform on which it had embarked in recent years. The trade policy reforms, it was noted, had been made in response to the adverse impact on the Indonesian economy of severe external shocks - falling commodity prices, especially for petroleum, and an-increasing debt burden. Indonesia, it was further noted, had tackled these challenges resolutely through comprehensive economic reforms: important reversal in direction of trade policies, complete overhaul of customs procedures, removal or tariffication of many non-tariff barriers and tariff reductions, curtailment of direct export subsidies as a result of Indonesia joining the subsidies code and the predominantly non-discriminatory nature of Indonesian tariffs generally applied on an MFN basis and using ad valorem rates. At the same time, Council members expressed concern on a number of details of Indonesian trade policy: * High and disparate tariffs, with peaks and substantial escalation often exacerbated by temporary surcharges, * Low level of tariff bindings (at under 10 percent of tariff lines) and frequent use of surcharges to compensate domestic producers for removal of import licensing or provide temporary relief, * Substantial share of domestic output still covered by formal and informal non-tariff measures: a complex system of import licensing, including approval of sole distributors and a substantial role for State and private monopolies, resulting in lack of transparency and inhibiting growth of small and medium enterprises, * Very low share of consumer goods in import structure, differential rates of excise duty on tobacco products which effectively prohibited cigarette imports for a number of years and protected domestic imports, * The trading effects of the self-sufficiency programme in key agricultural commodities and the adverse effects on trade of the extensive marketing and price controls administered by the National Logistic Affairs Bureau (BULOG). Questions were also raised about the consistency of Indonesia’s aims within the Uruguay Round of pursuing market openings in agriculture and textiles with its own protective policies in these areas; the rationale behind prohibition of investments in a number of sectors through a "negative list"; continued sheltering of "strategic" industries such as food processing, shipbuilding, heavy equipment, motor vehicles and steel from international competition; and use of formal and informal export restrictions to promote the development of natural resource-based processing industries such as logs, sawn timber, rattan, raw hides and cement. The summing up said that some members had however expressed understanding for Indonesia’s developmental aims in areas of strategic agricultural and processed natural resource-based products and for priority given to imports of capital and intermediate goods rather than consumer products.