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NZ, US win WTO case against Indonesia on trade restrictions

Friday 23rd December 2016

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New Zealand and the US have won their World Trade Organisation dispute over Indonesian trade barriers that led to the collapse in New Zealand beef exports to the southeast Asian country.

The WTO has upheld all the complaints regarding 18 agricultural non-tariff barriers imposed by Indonesia since 2011, which New Zealand and the US brought to the trade body in 2013. The barriers covered horticultural products and animals and animal products and included import prohibitions, use and sale restrictions, restrictive licence terms and a domestic purchase requirement.

Indonesia, the world's fourth-most populous country, introduced import quota restrictions on beef in 2011 as part of a programme to become self-sufficient in a range of agricultural products. That caused a slump in New Zealand exports of beef and beef offal to Indonesia to a decade-low of 10,206 tonnes worth $48.8 million in 2012, from 48,823 tonnes valued at $185 million in 2010, when it was the nation's second-largest beef market. The barriers are estimated to have cost the New Zealand beef sector as much as $1 billion in lost trade and also hurt exporters of apples, potatoes and onions.

"This is an important result for New Zealand’s agricultural exporters – and for trade fairness,” said New Zealand Trade Minister Todd McClay. "It is an example of the government's proactive exercising of its rights under trade agreements to resolve non-tariff barriers on behalf of New Zealand industry.

"As a result of this process, we have already seen some improvements to Indonesia’s regulations and gains for New Zealand exporters to Indonesia. These will only improve following implementation of the WTO decision."

McClay said New Zealand has a "very strong" relationship with Indonesia, with close cooperation in a range of areas of mutual interest, and he sees no reason why the WTO decision would diminish the strength of those ties.

"Even close friends have occasional disagreements and the WTO helps insulate trade policy differences from wider bilateral relations,” he said.

Indonesia has until early 2017 to appeal the decision to the WTO's Appellate Body. If there is no appeal, the panel's report is expected to be formally adopted by WTO members by February 2017, making them legally binding and requiring Indonesia to comply within a reasonable period of time.

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