The Beef Industry Is a Major Part of This Countrys Economy

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Indonesia^[62]

1 Introduction

Indonesia is the fifth most populated country in the world and is a major producer of agricultural products. The islands of Java and Bali account for only 7 per centum of Republic of indonesia'due south total state area just 60 per centum of the population. Agriculture is very intensive on these islands, with upwards to three crop rotations per year. Off Java, soils are less fertile, and agriculture is less intensive. The major food crops, ranked by expanse harvested, are rice, corn, cassava, soybeans and peanuts. Indonesia is also one of the world's largest producers and exporters of tree crops such as rubber, copra, palm kernels, palm oil, coffee, cocoa and spices (Ministry building of Agriculture, 2001).

The Government of Indonesia has made a cracking effort to integrate the Indonesian economy into the world economic system. The process began in the mid-1980s and accelerated in the 1990s when the Government reduced international trade barriers essentially and opened up the economy to strange investment. The impetus for Indonesia's market opening measures was the sharp drop in oil prices. The objective was to restructure the economy by diversifying the trade sector abroad from its heavy dependence on oil.

Regime policies were highly successful at attracting foreign investment into light, labour-intensive export industries and led to the rapid growth of Indonesia'southward manufacturing sector. Ane result is a declining share of agriculture in the total economy. In 1985, the share of agronomics in the Gdp stood at 23.ii percent.^[63] By 2000, that share had fallen to 16.nine percent.

Although agriculture'south importance has declined, information technology remains critical to the overall health of the Indonesian economic system. In 2000, for example, agronomics still absorbed 45.1 percent of the Indonesian labour force. Fifty-fifty more importantly, agronomics provided a absorber confronting the effects of the Asian economic crisis. Agronomics depends less on the formal financial system than other sectors and was therefore less afflicted by the collapse of Indonesian banks. Furthermore, the massive devaluation of the Indonesian rupiah acquired a large aligning in relative prices in favour of traded goods, such as agriculture. One consequence is that fifty-fifty though real Gross domestic product declined by viii.3 pct between 1997 and 2000, agriculture expanded by 3.0 pct.

Republic of indonesia'due south policy objectives for agriculture have evolved in response to the irresolute economy. These objectives are now far more than circuitous than they were 25 years agone. Some examples of Republic of indonesia's more important objectives are:

• Diversification, which has long been a goal of agricultural policy, has taken on a broader meaning to include expanding the types of employment opportunities bachelor in rural areas.

• A priority for merchandise policy is to enhance Indonesia's industrial competitiveness and to movement up the value-added processing concatenation. This is particularly the case for natural resource-based sectors such equally agriculture where exports are still highly concentrated in chief products.

• As in other countries that have experienced rapid economic growth, Indonesia now attaches far more than importance to protecting farm incomes. Twenty-five years ago, low food prices for consumers were a major objective of the Government. Now, some argue that high prices for producers are of equal importance.

As a result of the economical crisis, poverty in Indonesia nearly doubled from 15.7 pct of the population in 1996 to 27.1 percent of the population in 1999 (Globe Banking company, 2001). Although poverty has since returned to pre-crunch levels, a significant proportion of the Indonesian population remains at risk. Co-ordinate to the World Bank, "poverty is the development challenge facing Indonesia today".

Indonesia'southward policy objectives can lead to inherent contradictions, specially when price policy is the only policy musical instrument that is used for several objectives. Achievement of one objective through toll policy can have negative consequences for others. This poses a dilemma for the Government and can make it more difficult to develop a clear strategy for the agronomical negotiations in the WTO.

two Experience in implementing the agreement on agronomics

2.one Market place admission ^[64]

As noted in the Introduction, Indonesia began to open up its economic system in the tardily 1980s. Merchandise policy reforms were implemented through a series of deregulation packages that were issued at least once each year and which aimed at converting non-tariff barriers into tariffs, rationalizing and reducing tariffs and removing restrictions on foreign investment.

An important feature of Republic of indonesia'due south reforms is that they were for the about role undertaken unilaterally. With few exceptions, Indonesia's international merchandise policy commitments, such as those with the WTO, Association of Due south East Asian Nations (ASEAN) and Asia-Pacific Economic Cooperation (APEC), serve just to complement reforms that Republic of indonesia had in whatever case decided to undertake unilaterally. Exceptions are Indonesia's commitments to the Imf. Under the structural adjustment component of its 1998 Letter of Intent (LOI) with the Imf, Indonesia committed to a large number of trade policy reforms. Some of these reforms go further than what Indonesia had decided to undertake unilaterally, and to what it had agreed to internationally.^[65] This is particularly the case for agriculture.

Non-tariff import barriers

Initially, Indonesia'south merchandise reforms focused on import licensing restrictions. In 1990, such restrictions affected more than than thou items in Indonesia's tariff lawmaking. By 1996, the number of products requiring import licences had fallen to 200. The number has since declined even more than as Indonesia implemented its WTO commitment to eliminate all NTBs for bolt bound in the WTO.

For agriculture, Indonesia bound 100 percent of its tariff lines as required during the UR and must eliminate all agronomical NTBs. Past the time the UR agreements were implemented, however, many of the licensing restrictions affecting agriculture had already been removed. Those remaining consisted of:

• Local content rules for soybean meal and dairy products. Republic of indonesia agreed to eliminate these in three and ten years, respectively. Local content rules were actually eliminated shortly after implementation of the UR agreements.

• Licensing restrictions on alcoholic beverages. These restrictions remain today. Since alcoholic beverages are classified as agronomical bolt, they may eventually have to exist eliminated unless Indonesia is granted special exemptions.^[66]

• Sole importer licences granted to public agencies. Indonesia had granted sole import rights for rice, soybeans, saccharide, wheat, wheat flour and garlic to BULOG, the National Food Logistics Agency.^[67] Sole import rights for cloves were granted to the BPPC, a cloves marketing agency.

Indonesia notified the WTO that both BULOG and BPPC operate every bit country tradingenterprises (STEs) within the pregnant of Article XVII of GATT. As a outcome, Indonesia's WTO commitments for these commodities are to ensure that import purchases are non-discriminatory and that the margin betwixt the domestic toll and world price falls within the tariff binding for each commodity. There may accept been a few occasions (e.grand. carbohydrate) where the margin between the domestic price and world price has been close to Indonesia's bound charge per unit.

With the exception of soybean meal and dairy products, the UR has not caused whatsoever changes to Republic of indonesia's import licensing regime for agricultural commodities. Of far more significance was Indonesia's 1998 LOI with the IMF. Under the LOI, the Government agreed to phase out all import licensing restrictions that could not exist justified for health, safety, environmental or security reasons. This included NTBs for industrial commodities that were not bound in the WTO, BPPC's import monopoly for cloves and all BULOG import monopolies. The just exception was rice.

Although Indonesia was not required to eliminate BULOG's monopoly over rice imports, Indonesia later opened up rice trade to the individual sector equally well. BULOG can nonetheless trade in rice and other commodities, but it no longer has the sole import right for whatsoever commodity. As discussed afterwards, BULOG continues to take a role in domestic price stabilization and the distribution of rice to the poor.

Although Republic of indonesia eliminated BULOG's import monopoly for sugar every bit required past the IMF, it later introduced new licences that restrict imports to sugar processors. Under WTO rules for STEs, BULOG'due south sole import licence for carbohydrate may have been permitted. Under WTO rules for tariffication, the newest licences might exist classified as NTBs and have to be eliminated.

Tariffs

During the UR, Indonesia bound 92 percent of all industrial tariff lines and 100 percent of all agronomical lines. For agriculture, the number of bound tariff lines increased to 1 500 compared with just 65 before the Round.

For industrial commodities, most tariff bindings are an across-the-board 40 percent. For agriculture, the bindings are far more than variable and are much higher, averaging more than 70 per centum.^[68] The average bound rate for agronomics is to be reduced by 24 percent earlier 2005, with a minimum reduction of 10 per centum per tariff line. Some of the highest bound rates are for items that were subject field to nontariff import barriers or were one time under the control of BULOG (Tabular array 1).

As was the example for non-tariff import barriers, the UR has had very little impact on Indonesia's applied tariffs. In 1995, the simple average tariff for agronomics was 16 per centum and was well beneath the average bound charge per unit. There were only a few bolt where applied and bound rates were approximately equal. Most of these commodities had been spring at fairly low rates during earlier rounds of GATT negotiations.

Alcoholic beverages are exceptions. Leap rates for alcoholic beverages must be reduced from 170 percentage to 150 percent by 2005. Since applied rates are currently equal to 170 per centum, they volition eventually have to exist reduced every bit well in social club to keep them at or below bound rates.

Table ane. WTO leap tariff rates for agronomical commodities with NTBs or formerly under BULOG

	Bound tariff in 1994	Bound tariff in 2004
	(%)	(%)
Cloves	75	60
Dairy products	50-238	40-210
Soybean meal	45	40
Garlic	threescore	40-l
Wheat	30	27
Wheat flour	30	27
Rice	180	160
Sugar	110	95
Soybeans	30	27
Alcoholic beverages	170	150

Source: Indonesia'due south WTO Schedule XXI.

In May 1995, Republic of indonesia announced a long-run tariff reduction package (Pakmei '95), which was of far greater significance to tariffs than the UR. This package lays out a schedule of annual tariff reductions, where the reductions each yr are based on the level of tariffs before May 1995 (Table 2). The final year of the parcel is 2003, when there would exist a iii-tiered tariff construction of 0, 5 and 10 percent.

The Pakmei schedule is meant simply to exist a guide to future tariffs.^[69] Furthermore, some tariff lines are exempt from the schedule and have higher long-run targets. This is particularly the case for agriculture. Some 300 tariff lines, or approximately 20 percentage of all agricultural lines, are exempt from the schedule. Many of these lines pertain to fruits and vegetables. Every bit a effect, the boilerplate tariff for agriculture would be 13.ii percentage in the concluding year of the schedule. This compares with an average of vii.2 percent for all tariff lines.

Tabular array two. Republic of indonesia's tariff reduction schedule (1995-2003)

Tariff before May 1995	1995	1996	1997	1998	1999	2000	2001	2002	2003
	(%)	(%)	(%)	(%)	(%)	(%)	(%)	(%)	(%)
0	0								0
5	5								Max 5
ten	five								Max 5
fifteen	x		5						Max v
20	fifteen		10		five				Max 5
25	20	15		10					Max 10
30	25	20		15		ten			Max 10
35	thirty	25		20		fifteen		10	Max 10
twoscore	30	25		20		15		10	Max 10
>45	30	25		xx		15		10	Max 10

Indonesia'southward LOI with the IMF has resulted in a much faster step of tariff reductions for agronomics and to tariffs that are lower than those envisioned nether Republic of indonesia'due south Pakmei schedule. To reduce the inflationary impact of the rupiah depreciation on nutrient prices, the Government agreed to reduce all food tariffs to 5 percent in February 1998. Tariffs on all not-food agronomical items are also to be reduced, but in stages of v percentage points each year. The long-term target for not-food agricultural tariffs is a maximum of ten pct past 2003. Every bit a outcome of the LOI, Republic of indonesia'southward boilerplate tariff for agriculture is now close to 5 per centum. This is much lower than the Pakmei target of thirteen.2 percentage in 2003.

Rice and sugar are exempt from Republic of indonesia's IMF commitment of nada tariffs for food items. Initially set at zero, the tariffs on rice and saccharide were raised when BULOG's monopoly over imports was eliminated. Currently, there are xx to 25 percent tariffs on the various types of sugars. These tariffs were to be reduced over 3 years in conjunction with a plan to restructure the sugar processing industry, including the closure of inefficient country-owned carbohydrate mills. In the example of rice, the tariff was set in specific terms at Rp430/kg through August 2000. At that fourth dimension, the ad valorem equivalent of the specific tariff was estimated to be 30 percent. Although meant to be temporary, the tariffs on sugar and rice are still in effect.

Regional trade agreements

Indonesia is a founding fellow member of the Asean and participates in the ASEAN Gratuitous Trade Surface area (AFTA). With few exceptions, AFTA tariffs on intraregional trade are to be reduced to between 0 and 5 percent by 2002. Initially, twenty percentage of Indonesia's tariff lines were excluded from AFTA reductions. Now, only 1 percent are excluded. The excluded lines pertain mostly to dangerous items and alcoholic beverages. Tariff reductions for certain sensitive items, such as rice and sugar, are delayed until some time after 2002.

Reductions in Indonesia's AFTA tariff rates have closely followed reductions in MFN rates. Equally a result, the margin of preference for Indonesia'southward ASEAN trading partners has remained fairly small at about 2.5 percent. The margin is probably even smaller for agricultural commodities because of the precipitous reduction in tariffs required by Republic of indonesia's LOI with the Imf. Since almost ASEAN trade is with non-Association of southeast asian nations countries, the impact of AFTA on Indonesia and other Association of southeast asian nations countries has probably been small (Feridhanusetyawan and Pangestu, 2001).

Special access commitments (tariff rate quotas)

During the UR, Republic of indonesia agreed to special access commitments for rice, 70 000 tonnes at tariffs of no more than xc percent, and dairy products, 414 700 tonnes in milk equivalent at tariffs of no more than xl percent. Indonesia did not set upwards special procedures to administrate its tariff quotas. In the case of rice, BULOG had an import monopoly and thus had the responsibility for all imports, including those inside the quota. For dairy, Indonesia already operated a local content system under which domestic and imported milk were mixed in a fixed ratio. Quotas were allocated using milk absorption certificates that were based on the corporeality of domestically produced milk used in processed products.

Indonesia'southward markets for rice and dairy are at present fairly open up. BULOG no longer controls rice imports, and the local content scheme for dairy has been eliminated. As a result, rice and dairy products may be brought into the land past general importers at tariffs, or tariff equivalents, which are less than the in-quota tariff rates. Equally a issue, no special quota arrangements are necessary. Since implementation of the AoA, Indonesia's imports of these products have been well in excess of the quota amounts.

The special safeguard and other trade remedies

The AoA'due south special safeguard is available but for those bolt where nontariff import barriers were eliminated and replaced past tariffs. Since Indonesia had very few NTBs to eliminate, information technology could avail itself of the special safeguard in simply a few cases. Co-ordinate to Republic of indonesia'south WTO Schedule of Commitments, the special safeguard is only available for dairy products and cloves. Since implementation of the Uruguay Round Agreements, Indonesia has not used the special safeguard.

Indonesia's Custom Police force of 1995 authorizes the Government to take antidumping and countervailing duty actions provided that those actions are consistent with WTO rules. In the following year, the Authorities introduced new anti-dumping and countervailing duty procedures and established a trade remedies unit under the Minister of Finance and the Minister of Industry and Merchandise. Safeguard procedures have too been drafted simply have not yet been canonical by the President. To date, most fourteen anti-dumping petitions have been filed. Only i of these involved an agronomical commodity - wheat flour. Although at that place was a positive finding of dumping and injury in the instance of flour, the Government has delayed the imposition of duties pending further investigation of Indonesia'south national interest.

ii.2 Domestic supports

Indonesia maintains a number of domestic programmes that are classified equally domestic supports under the AoA. These include full general services, programmes to promote agronomical development (research, extension, etc.), stockholding and administered toll systems for some commodities, and domestic nutrient help.^[seventy] With the exception of administered prices, most of these programmes announced to fall either under the Greenish Box or under Special and Differential Treatment, and need not be reduced as a result of the AoA. Indonesia'southward Green Box programmes, as notified to the WTO, are listed in Table 3.

Table 3. Republic of indonesia'due south Greenish Box measures

Type of measure	Monetary value of measure (billion rupiah)
	1995	1996	1997	1998	1999	2000
General services	366	407	557	622	826	1 057
Payments for natural disaster relief	3	4	5	12	15	127
Domestic nutrient aid	-	-	-	411	426	iii 055
Public stock holding of food security	32	38	56	265	347	33
Total in rupiah	401	450	618	1 310	i 613	four 272
Exchange rate (Rp/US$)	2 249	2 342	ii 909	10 014	7 855	viii 421
Light-green Box (United states of america$ million)	178	192	212	131	205	507

Source: Republic of indonesia'due south Notification to the WTO on Domestic Supports.

At that place are many loopholes in the Domestic Support section of the Agreement; every bit a result, most countries are non required to undertake policy changes that reduce domestic supports. Indonesia, however, did not offering a commitment on the "total" value of back up to agriculture (AMS) and consequently cannot provide support in excess of the de minimis standard to any single product. Since Republic of indonesia has "developing land" status nether the Agreement, that standard is 10 percentage. As noted below, there may be a few cases where domestic back up has exceeded the standard. By declining to commit on the total value of back up, Republic of indonesia might therefore be subject to greater disciplines than countries that did make such a commitment, fifty-fifty though those countries provide far greater levels of back up.

Some of Indonesia's more important domestic support programmes are as follows.

Domestic nutrient subsidies

In response to the economic crisis, the Government introduced a special distribution plan for rice in 1998. Under the programme, up to 20 kg of rice is distributed monthly to needy households at a price that is considerably below the market price. The number of target families was originally gear up at 7.4 million, just this has since been raised to 16.eight meg. At that place are now proposals to double the programme budget to compensate the poor for reductions in fuel subsidies and to brand diverse authoritative improvements and then as to eliminate leakage and ensure better targeting of the poor.

Administered prices

Nether the Domestic Support section of the AoA, whatsoever policy organisation that provides toll support to farmers could be discipline to reduction commitments. Republic of indonesia maintains administered prices for sugar and rice. If the administered toll for either of these commodities exceeds the world reference price by more than 10 percentage (later on taking transport and taxes into business relationship), the de minimis standard for a unmarried product would be exceeded. It is probably the case that Indonesia'south administered price for rice exceeds the de minimis standard. However, the Government lacks the resources to support domestic prices at the administered level. In other words, the system has been ineffective at providing farmers the full support implied by the administered price.

Authorities stockholding

BULOG operates a stockholding plan for rice that is linked to the administered price system and involves seasonal rice purchases. Although the AoA permits government stockholding for the purpose of food security, the rules are unclear. On the ane manus, government stockholding for food security is "permitted" and is a Light-green Box measure. On the other mitt, stockholding is "bister" if information technology provides price back up to farmers. Indeed, most programmes accumulate stocks when prices are at their lowest in tiptop harvest months, and thereby provide price support to farmers. Finally, stockholding could exist "red" if it involves exports from stocks at less than the purchase price.

ii.3 Export policies

Export subsidies

Indonesia has very few programmes that might authorize equally export subsidies. In the 1980s, Indonesia operated a generally available consign credit program that has since been eliminated. In the late 1980s and early 1990s, there were occasions when BULOG needed to reduce stocks and exported surplus rice at less than the domestic price. At that time, Indonesia was more or less cocky-sufficient in rice, exporting in some years and importing in others.

In lodge to allow policy-makers as much flexibility as possible in regard to the futurity disposal of stocks, Indonesia decided to brand a commitment on export subsidies. Export subsidies for rice were bound at ceiling amounts of US$28.3 million and 299 750 tonnes in 1995, failing to US$21.5 million and 257 785 tonnes by 2004. Since implementation of the AoA, Indonesia has not subsidized exports of rice.

Restrictions on exports

Under its LOI with the International monetary fund, Indonesia agreed to eliminate nearly all restrictions on exports. In the case of agriculture, this includes export taxes on leather and a ban on exports of palm oil. The latter was replaced with an export revenue enhancement of 40 percentage, which is to turn down eventually to 10 percent.^[71]

two.four Sanitary and phytosanitary standards

In 1996, Republic of indonesia introduced a new law on nutrient condom, which covers labelling and packaging requirements, food additives, pesticide residues and other contaminants (USDA, 2000). In 1999, Indonesia besides introduced a Consumer Protection Act, which includes provisions on the retail auction of foods. Although comprehensive, both of these laws are general in nature, and regulations need to be implemented earlier they can be enforced. For example, a producer of genetically engineered foods must ensure that the production is safe for man consumption and must label the food as "GENETICALLY ENGINEERED", simply farther regulations and guidelines on genetic engineering science have however to be issued.

In addition, nigh processed food imports must be registered with the Department of Health and may crave certificates referring to the degree of radiation, standards on Islamic purity ("Halal"), food additives, food safety and alcoholic content. With the exception of a recent example on chicken legs, there announced to be few instances where Indonesian standards have been used to discriminate against imports. Rather, importers have complained nearly the overall efficiency of the registration process. There are also complaints that an otherwise routine import "blessing process" has been used to block imports of meat in times of local surpluses.

In the case of chicken legs, Indonesia's Ministry of Agronomics had banned imports of U.s.a. chicken legs on the grounds that they were not produced in accordance with Islamic practices. Although still under review, the Regime may decide to rescind the import ban and instead will protect the domestic market by raising tariffs on chicken legs.

2.v Merchandise-related intellectual property rights

During the past couple of years, Indonesia has enacted and amended its laws on copyrights, patents and trademarks. In 2000, new laws were likewise enacted on trade secrets, industrial design, integrated circuits and constitute varieties. Although questions remain apropos the compliance of Indonesian laws with the TRIPS Agreement, Republic of indonesia'due south trading partners appear mostly concerned with the implementation and enforcement of those laws. In that location have been no major problems with respect to the protection of plant varieties.

iii Experience with food and agricultural trade

Indonesia is traditionally a net exporter of agronomical products (Table 4). During the latter half of the 1980s, the agricultural surplus ranged from United states$ane 200 to United states$ane 500 million per annum. By the latter one-half of the 1990s, even so, the surplus had fallen to U.s.$900 1000000 per annum. The turn down was due generally to a precipitous turnaround in the food balance. Cyberspace exports of foods fell from a surplus of US$500 million in the tardily 1980s to a deficit of US$900 million in the second half of the 1990s.

Table four. Agriculture and nutrient trade (almanac averages)

Period	Imports		Exports		Net exports
	Agronomics	Nutrient	Agriculture	Food	Agriculture	Food
	The states$ one thousand thousand per annum
1984-1986 (A)	985	589	2 488	one 243	i 503	654
1989-1991 (B)	i 775	911	two 962	1 329	1 208	418
1994-1996 (C)	4 545	ii 963	5 414	i 987	869	-976
1998-2000 (D)	four 145	2 901	v 045	2 038	900	-863
	Per annum growth rates
Menstruum A to C	16.5	17.v	8.1	iv.8	-	-
Menstruum C to D	-2.3	-0.5	-1.eight	0.6	-	-

Source: FAOSTAT.

3.1 Agricultural exports

Indonesia'due south major agricultural exports consist of products of tree crops, including palm and coconut products (33.viii percent), rubber (18.6 percent), coffee, tea and spices (25.9 percent).^[72] Indonesia has also had some success at diversifying into higher valued fruits and vegetables (5.8 per centum). Together, these four product categories accounted for 84.0 percentage of all agricultural exports in 1998-2000.

Indonesia's food and agricultural exports grew at 4.8 and eight.1 percentage per annum, respectively, between 1984-1986 and 1994-1996 (Table 5). Since then, nutrient exports take increased only slightly, whereas full agronomical exports have declined. This has been a major concern of the Regime, which had hoped that the huge devaluation of the rupiah would pb to an export-led recovery from the economic crisis.

Tabular array five. Indonesian agricultural exports

	Period averages			Annual percent change
	1984-86	1994-96	1998-2000	B over A	C over B
	(A)	(B)	(C)
Animal/vegetable oils
Value (Us$ million)	249	1 413	ane 705	19.0	4.viii
Quantity (chiliad tonnes)	696	2 693	4 461	14.five	13.4
Unit value (United states of america$/tonne)	357	525	382	three.9	-7.vi
Safe
Value (The states$ million)	753	1 676	936	8.iii	-13.vi
Quantity (thousand tonnes)	951	1 306	1 490	three.2	3.4
Unit of measurement value (The states$/tonne)	792	1 283	628	4.ix	-16.iv
Coffee, tea, spices
Value (US$ million)	1 017	one 274	ane 305	2.three	0.six
Quantity (thousand tonnes)	469	763	957	5.0	5.8
Unit value (The states$/tonne)	2 170	ane 670	1 364	-2.6	-4.9
Fruits/vegetables
Value (US$ million)	seventy	327	294	sixteen.vi	-ii.six
Quantity (thousand tonnes)	540	one 054	728	6.9	-8.8
Unit of measurement value (The states$/tonne)	130	310	403	9.1	6.8
Food exports (Us$ meg)	one 244	ane 987	ii 038	4.viii	0.half-dozen
Agricultural exports (U.s.$ million)	2 488	5 414	5 045	eight.1	-1.7

Source: FAOSTAT.

As indicated in Table 5, declining commodity prices are one of the principal reasons for Indonesia'south poor export performance in recent years. Unit of measurement values for Republic of indonesia's major export products fell precipitously, whereas most volumes actually increased betwixt 1994-1996 and 1998-2000. The price declines were particularly severe for rubber. Another factor that may accept contributed to Indonesia's weak consign performance is the structural collapse of Indonesia'southward trade finance system. Massive bank failures and increased Indonesian "country" risk caused the complete collapse of local and international trade finance mechanisms during the early years of the crunch (Brown and Magiera, 2000). Increased commercial gamble might likewise have led to risk discounts and lower dollar prices for Indonesian exports.

3.2 Agricultural imports

Indonesia's near important not-food agricultural imports are fabric fibres (17.5 percent) and brute feeds (7.5 pct).^[73] Indonesia's virtually important food imports are rice (twenty.2 percent), other cereals (16.6 percent), oilseeds (6.4 percent) and sugar (ten.ane per centum). Together, these products accounted for 78.ii percent of all agricultural imports in 1998-2000.

Republic of indonesia'due south nutrient and agricultural imports grew apace at 17.5 and 16.5 pct per annum, respectively, between 1984-1986 and 1994-1996 (Table 6). It is this rapid expansion of imports that accounts for the turn down in Indonesia's agricultural trade surplus. Although imports have fallen slightly in the last couple of years, so likewise accept exports. Meanwhile, rice and sugar imports continue to ascent, causing the deficit in food trade.

Tabular array 6. Indonesian agricultural imports

	Flow averages			Almanac percent modify
	1984-86	1994-96	1998-2000	B over A	C over B
	(A)	(B)	(C)
Rice
Value (US$ 1000000)	49	603	836	28.5	8.five
Quantity (thousand tonnes)	159	1 976	2 999	28.7	ten.9
Unit value (US$/tonne)	309	305	279	-0.1	-2.2
Other cereals
Value (US$ 1000000)	297	1014	688	xiii.i	-9.two
Quantity (m tonnes)	1 581	4 871	four 327	11.nine	-2.nine
Unit value (The states$/tonne)	188	208	159	1.0	-half-dozen.5
Cloth fibres
Value (US$ 1000000)	200	875	726	15.ix	-four.6
Quantity (thousand tonnes)	174	475	497	10.6	1.one
Unit value (United states of america$/tonne)	i 149	1 840	i 459	4.viii	-5.6
Sugar/sweeteners
Value (Usa$ million)	x	285	417	39.iii	10.0
Quantity (thousand tonnes)	25	694	1 735	39.vii	25.viii
Unit value (US$/tonne)	422	411	240	-0.iii	-12.5
Animal feeds
Value (U.s.$ million)	85	402	309	16.viii	-6.4
Quantity (chiliad tonnes)	376	1 405	1 348	xiv.ane	-1.0
Unit value (US$/tonne)	226	286	229	2.4	-five.iv
Oilseeds
Value (US$ million)	118	337	265	11.0	-five.8
Quantity (g tonnes)	402	882	1 084	8.2	v.3
Unit of measurement value (US$/tonne)	295	382	245	two.half dozen	-ten.5
Food imports (US$ million)	589	ii 963	2 901	17.5	-0.5
Agronomical imports (Usa$ one thousand thousand)	985	4 545	iv 145	16.5	2.3

Source: FAOSTAT.

Inside the non-food category, imports of textile fibres reverberate conditions in the textile and garment industries. Most of the rapid expansion in these industries occurred during the late 1980s and the early 1990s. The growth in feed imports reflects higher incomes and the resulting ascension need for poultry. Imports are full-bodied in the protein feeds where Republic of indonesia is traditionally in deficit.

Within the food category, increased sugar imports reflect long-term structural problems in the Indonesian saccharide industry. Sucrose yields take been declining ever since the 1970s; farmers often find information technology more profitable to grow crops other than sugar; and Indonesia'southward expanding nutrient and beverage industries require a college-quality carbohydrate than can be produced domestically. The Regime has attempted to restructure the industry by moving pikestaff production to extensive areas off-Coffee and by either selling or endmost state-owned mills. However, these efforts at present engagement back more than than xx years and take been unsuccessful at reducing imports.

Of about concern to the Government has been the increase in rice imports. During the past decade, there have been ii weather-related increases in rice imports. The beginning occurred in 1995 and was caused by the extremely low level of stocks and poor harvest of the previous year. Every bit a upshot, rice imports rose from an average of 300 000 tonnes annually in the early 1990s to virtually two 1000000 tonnes annually in 1994-1996. The second occurred because of El Niño of 1997 and 1998. This caused rice imports to rise even more to an boilerplate of 3 1000000 tonnes annually during 1998-2000.

Although Republic of indonesia has experienced shut to normal atmospheric condition during the by few years, production has not returned to trend levels. Between 1985 and 1996, rice production increased by 2.1 percentage per annum. This enabled continued increases in the per capita availability of domestically produced rice, fifty-fifty though the population grew at 1.vii percent per annum. Betwixt 1996 and 2002, even so, rice production was stagnant. Neither the acreage harvested nor the yields have shown much modify. With continued population growth, the per capita availability of domestic rice has declined, and imports have continued at loftier levels. In 2001, rice imports were about 1 million tonnes. In 2002, they climbed above 3 million tonnes. This has led to concerns that Republic of indonesia now has a structural deficit in rice (Tabor et al., 2002).

Indonesia's other major cereal import is wheat. Wheat flour products are a substitute for rice and are consumed primarily by middle- and high-income households. Imports rose rapidly between 1984-1986 and 1994-1996 but have declined during the economic crunch.

3.3 Tariff reductions and trade

The Indonesian Government's conclusion to reduce import barriers has led to concerns well-nigh increased imports. Some believe that Indonesian industries lack competitiveness and cannot compete in a low-tariff environment. To evaluate this concern, Table vii compares changes in tariffs with changes in trade for major commodity groups. The table shows Indonesia's average tariffs for the years 1994 and 1998, and the change in Republic of indonesia's trade surplus (or arrears) between 1994 and 1999, where the modify is defined as:

Change in trade surplus = (exports minus imports in 1999) minus (Exports minus imports in 1994).^[74]

A positive number indicates that Indonesia's trade situation has improved between 1994 and 1999. A negative number indicates that the trade state of affairs has deteriorated. As indicated in Tabular array 7, in that location has been a substantial reduction in tariffs for all economical sectors. For the entire non-oil/gas sector, Indonesia's average tariff declined by fifty per centum - from 19.6 percentage in 1994 to nine.5 percentage in 1998. Yet, there are no signs that this has had a detrimental effect on import competing sectors. On the reverse, Indonesia's trade surplus improved by U.s.a.$17.7 billion between 1994 and 1999. This reflects the fact that a country's trade balance is determined non so much by tariffs, but by macroeconomic factors - particularly the relationship between savings and investment. The improvement in Republic of indonesia'due south trade surplus is mostly due to the economic crisis and the decline in imports that resulted from the movement of foreign savings out of the Indonesian economy. The results for the agricultural sector are more than mixed than those for the overall economy. The trade balance for the entire agricultural sector (including fish products) declined by U.s.a.$900 million. Agricultural sectors with declining merchandise balances were safe, cereals and sugar. In the instance of rubber, the reject was due to a drop in exports - not to an increment in imports.^[75] Only in the case of cereals and sugar was the deterioration due to an increase in imports.

It is difficult to decide whether protection has increased or decreased for cereals and sugar since both were discipline to not-tariff import barriers for many years. A rough approximate is that protection has increased for rice just declined for saccharide. In the instance of rice, BULOG attempted to go along rice prices at parity with globe prices during the early 1990s. At present, the advertizement valorem equivalent of the specific tariff on rice is approximately xxx percent. For sugar, the tariff equivalent of NTBs in the early 1990s may have reached 100 percent. Now, the advertizing valorem tariff on sugar is 20-25 percent. It would appear, therefore, that sugar is the just commodity for which decreased protection is correlated with increased imports.

Tabular array 7. Indonesia's tariffs and non-oil/gas trade (1994-1999)

Product description (SITC Code)	Boilerplate tariffs			Imports			Exports			Change in trade surplus 1994-99
	1994	1998	Cyberspace change	1994	1999	Annual growth	1994	1999	Annual growth	(U.s.$ million)
	(%)	(%)	(%)	(US$ million)	(US$ million)	(%)	(United states of america$ million)	(US$ million)	(%)
Agronomics	22.8	8.four	-14.four	two 678	iii 920	vii.9	6 442	6 789	1.1	-895
Safety (23)	6.1	5.3	-0.8	138	93	-seven.v	i 275	865	-7.v	-365
Fish/shrimp (03)	26.0	5.2	-20.8	16	25	10.ii	one 582	ane 556	-0.3	-35
Java, tea, cocoa, spices (07)	24.8	iv.9	-twenty.0	18	76	33.ii	one 297	1 310	0.two	-45
Vegetable oils (40, 42, 43)	xiii.ii	five.0	-8.ii	101	29	-21.nine	i 373	ane 828	5.9	527
Fruits/vegetables (05)	26.one	five.0	-21.1	197	147	-five.7	304	384	iv.eight	131
Beverages/tobacco (eleven, 12)	105.2	88.iv	-xvi.8	142	154	i.seven	138	232	10.9	82
Animal feed (08)	8.2	3.nine	-4.4	417	274	-8.0	157	90	-10.5	76
Cereals and preparations (04)	NTB	NTB	...	922	ane 899	xv.5	58	61	1.0	-974
Saccharide and preparations (06)	NTB	NTB	...	63	559	54.9	73	68	-i.4	-501
Other (00, 01, 02, 09, 21, 22, 41, 29)	xvi.2	five.2	-11.0	666	664	-0.ane	186	395	xvi.ii	211
Forestry	17.v	4.7	-12.nine	934	963	0.vi	five 953	6 172	0.7	189
Mining/minerals	8.9	6.four	-2.5	one 005	665	-7.ix	2 383	3 510	8.1	i 467
Other industry	19.half dozen	x.3	-ix.three	24 960	14 741	-ten.0	15 582	22 286	7.four	16 922
Full non-oil/gas	19.6	ix.5	-10.1	29 577	twenty 290	-7.3	30 360	38 756	5.0	17 683

Source: Magiera (2000a).

Table 8. Tariff escalation for products of export involvement to Indonesia

	Tariff wedge between outputs and inputs in percent
	EU			Nihon			United states of america
	Base	Spring	Change	Base of operations	Spring	Change	Base	Leap	Modify
	Products of interest to Indonesia
Palm/kokosnoot oil	14.0	9.0	-v.0	13.0	3.5	-9.5	Negative escalation
Java/cocoa	6.4	4.half-dozen	-ane.8	13.6	9.0	-four.half-dozen	one.three	one.3	0.0
Tobacco	37.3	14.ane	-23.ii	6.1	half-dozen.i	0.0	Negative escalation
Fruits	xx.1	14.nine	-five.two	14.0	8.9	-5.1	9.3	7.3	-ii.0
Vegetables	ix.ix	vii.5	-2.4	ten.8	6.7	-4.i	Negative escalation
	All products
Average	23	xvi	-seven	35	27	-viii	12	nine	-3

Source: Lindland (1997). The base of operations tariff wedge is the divergence between the boilerplate output and input tariff for each commodity grouping in 1986-88. The jump tariff wedge is the difference between the boilerplate WTO leap output tariff and the bound input tariff. Only positive wedges are used to calculate the averages for each commodity grouping and for each country. In other words, negative tariff escalation is excluded from the averages.

3.4 Tariff escalation in foreign markets

As indicated earlier, a major policy goal of the Indonesian Regime is to reduce the dependence on exports of main products and to motion upwardly the valueadded chain into processed foods. The achievement of this goal has been frustrated by both internal and external factors. Internally, processors face loftier costs for capital, inefficiencies in the domestic marketing organisation and difficulties in securing reliable, high-quality supplies of raw materials.^[76] Externally, Republic of indonesia faces issues meeting the quality standards of foreign markets (run into next section) and traditional merchandise barriers such every bit tariff escalation.

In a 1997 study, the FAO found that the UR will result in reduced tariff escalation for about all agricultural products in the EU, Japanese and US markets (Lindland, 1997). This is illustrated in Table 8, which shows the gap between output and input tariffs for products of export involvement to Indonesia. With the exception of tobacco in Japan and coffee/cocoa in the United states of america, at that place is a decline in tariff escalation for all products of interest to Indonesia.^[77] For most products, this decline is lower than the average decline for all products. This may reflect the fact that the products of interest to Republic of indonesia are mostly tropical products, which tend to have lower base tariffs than the temperate zone products produced in developed countries.

3.five Trade remedies and sanitary/phytosanitary standards in foreign markets

Republic of indonesia has faced a big number of anti-dumping and other merchandise remedy actions away. Although developed countries have initiated most of the cases, there take been a growing number in the developing countries of Asia also. Defending against such actions has required big amounts of resources, both on the part of the Authorities and on the part of the private sector. Some cases are clearly motivated by political pressures in the state initiating the action.

Anti-dumping actions involving Indonesia'southward agricultural exports are fairly few in number - tomato plant paste in Australia, sorbitol in the EU, canned mushrooms in the United states. There have also been a number of cases involving downstream products processed from leather and natural fibres. The Indonesian press reports that several billion dollars of merchandise may be afflicted past anti-dumping and countervailing duty actions. Even though the number of agricultural cases is small, Indonesian officials are under force per unit area to solve the problem and could link results in the negotiations on agriculture to improved rules on anti-dumping and safeguards.

Figure 1. Number of property orders affecting Indonesian exports of processed foods to Australia.

Source: Compiled by Indonesia's Ministry of Industry and Trade.

Indonesia is besides concerned nigh the increasing number of measures taken to limit agricultural and fish exports for reasons of germ-free or phytosanitary standards, technical barriers to trade, and the environment (Effigy ane). Indonesian exporters have slap-up difficulty meeting the different standards of various developed state markets and in tracking changes to the regulations in those markets. In cases where the regulations appear to represent an unfair bulwark to trade, Indonesia has yet to be involved in a formal WTO dispute.^[78] At the aforementioned time, Authorities officials argue that bilateral consultations are of little use in resolving disputes. Republic of indonesia would thus benefit from any changes that lead to improved transparency and greater harmonization of standards based on internationally agreed norms.^[79]

iv Food security concerns

Indonesia has been very successful at reducing the number of poor during the past ii decades (Figure ii). As a result of the economic crunch, however, the poverty level rose substantially from xv.7 percent of the population in 1996 to 27.1 percent of the population in 1999. The problem was temporary, and poverty has since fallen back to its pre-crunch level. The Earth Banking company estimates that declining food prices (mostly for rice) explicate 41 percent of the recovery. The remainder was due to ascension incomes. Although the situation has improved, fifty percent of the Indonesian population accept incomes of less than U.s.$2 per day and remain at risk (World Banking concern, 2001).

Effigy 2. Percentage of Indonesian population beneath the poverty line.

Source: Indonesian Central Bureau of Statistics. In 1996, the series was revised. For comparisons, therefore, poverty estimates under the old and new serial in 1996 are provided.

FAO provides a favourable picture of the nutrient security situation in Indonesia (FAO, 2001). In 1997-1999, the proportion of undernourished people in Indonesia was significantly beneath that elsewhere in Asia. For Republic of indonesia, the proportion was vi per centum. In Southeast Asia and South asia, the proportions were thirteen and 24 percent, respectively. Of the 99 developing countries in the FAO study, Republic of indonesia was the tertiary all-time performer in terms of reducing the number of undernourished people between 1990-1992 and 1997-1999. The number of undernourished in Indonesia declined by 5 million over this menses.

Indonesia's strange substitution earnings also announced ample for covering Indonesia'due south food import needs. Before 1994, the proportion of food imports in total exports, net of amortization and interest payments on the public foreign debt, amounted to only 4-vi pct (Figure iii). Although that percentage has risen since 1995 because of greater food imports, it is still below 10 percent.^[80]

Figure 3. Indonesian nutrient imports as a percentage of total exports net of payments on the public strange debt.

Source: Food imports are from FAO. Total exports are from Republic of indonesia's Bureau of Statistics. Amortization and interest payments on the public foreign debt are from the Banking company of Republic of indonesia.

4.one Food security and rice

Rice continues to exist Indonesia's most important article. Information technology is the single nigh important source of free energy and protein in Indonesian diets and the nearly important employer in rural areas. For the past couple of years, at that place has been a heated debate within Indonesia apropos rice policy. Nutrient security appears to exist at the center of this argue, where food security ways the adequate domestic production of rice, or rice cocky-sufficiency.

Those in favour of rice cocky-sufficiency debate that it should be achieved fifty-fifty if it requires domestic prices that are above globe prices (Tabor et al., 2002). High prices tin generate positive externalities past transferring incomes to rural areas, where near of the poor are located, and promoting rural development. The counter-argument is that rice is a major consumption detail of the poor and that near rice farmers are themselves internet consumers of rice. High rice prices revenue enhancement the poor and may not be of much net benefit to rice farmers. Furthermore, high prices may generate piddling increased production, since rice farmers are at present producing at the technological frontier. If a price-induced increment in rice production does occur, it will likely be at the expense of other food crops.

The nutrient policy fence likewise concerns the types of policy instruments that should be used to reach Republic of indonesia's rice policy objectives. Central to the debate are the use of merchandise policies to support farm incomes and a number instruments classified as domestic supports. The instruments being debated include administered prices, the level of the rice tariff, the blazon of tariff, whether to reintroduce sole importer status for BULOG, some combination of tariff and land trading, and how the various policy levers will link to stabilize prices. In recent months, the rice policy debate has intensified considering of inconsistencies in the awarding of current policy instruments.^[81] How it is resolved could greatly affect Indonesia'southward position towards the agricultural negotiations in the WTO.

5 Issues of concern in further negotiations on agronomics

Indonesia has taken a stiff position in favour of SDT for developing countries during the current round of agricultural negotiations.^[82] Equally is typical of other developing countries, Indonesia'due south proposals refer to policy objectives, non to specific measures or types of policies. Indonesia has proposed a list of objectives that would fall under the SDT provisions of the Agreement. These include agriculture and rural evolution, poverty alleviation and food security, where Republic of indonesia's definition of food security encompasses not but accessibility to foodstuffs merely likewise the power to produce Indonesia's own nutrient needs. Indonesia also supports the objectives proposed by other developing countries, including support for depression-income and resource-poor farmers, rural employment and diversification of agriculture. Finally, Indonesia has proposed that the concept of SDT be broadened to address the central issues of evolution and growth in developing countries.

Indonesia proposes that all measures used by developing countries to encounter SDT objectives be excluded from WTO disciplines. If not excluded, Indonesia would fence that developing countries should have considerable flexibility in the applications of the rules. Flexibility in this case refers not simply to a longer time frame for reform but also to the nature and depth of the commitments.

With respect to specific negotiating areas, bug of concern to Republic of indonesia might be as follows.

five.ane Import access

1 of Indonesia's principal goals during the electric current round of negotiations might be to maintain and open up up markets for its export bolt. For example, Republic of indonesia strongly advocates the emptying of tariff peaks, NTBs and tariff escalation on products of interest to developing countries. This includes tropical products. The elimination of tariff escalation is especially important to Indonesia now that it has removed consign taxes. Export taxes are one means to counter tariff escalation in other countries.

Indonesia might as well favour linking concessions in agronomics to concessions in other negotiating areas, such as anti-dumping and countervailing duties. Indonesia has been subject to a large number of anti-dumping actions and views these every bit disguised protectionist policies that are practised mostly by developed countries. In addition to lost trade, Indonesia often complains nearly the huge legal costs associated with the implementation of WTO rules, particularly those pertaining to anti-dumping and other trade remedies. Improved rules which, for case, limit the use of anti-dumping measures to clear cases of predatory pricing is an surface area where Indonesian negotiators see clear benefits for the Indonesian economy. Indonesia is also concerned most the possible use of sanitary/phytosanitary measures equally disguised forms of protectionism, and favours improved transparency and harmonization.

With regards to Indonesia's own merchandise policies, applied tariffs have been reduced past ii-thirds during the past half-dozen years, and most NTBs take been eliminated. As a result, the agricultural sector is fairly open to foreign trade. Even if Indonesia wishes to preserve the flexibility to increase tariffs in the future, it could even so offering to reduce its own tariff bindings in return for meaningful market opening measures by other countries. Tariff bindings would take to fall by a considerable extent before budgeted applied rates. Indonesia has as well adopted the position that reciprocity for tariff reductions made by adult countries should not be required of developing countries, when this is inconsistent with their "development, financial, and merchandise needs", when the objective is to protect subsistence farmers, or when the goal is food security.

5.2 Domestic supports

Indonesia supports diverse proposals to allow developing countries greater flexibility to exclude from reduction commitments those measures that are used for food security, rural development, etc. Indonesia proposes that the Greenish Box be expanded to include such measures.

Every bit noted earlier, Republic of indonesia is at present in the process of debating its policies on rice. Included in the debate are policy measures which would exist classified every bit domestic supports and which might exist included in the AMS. Since Indonesia did not submit a commitment on the AMS, it could be constrained in its ability to apply such measures in the future. Similar other developing countries, Indonesia feels that the Agreement is biased in this regard. Past non making a commitment on the AMS, Republic of indonesia may come nether more than disciplines than those countries where domestic subsidies are far more than prevalent. The policies of interest to Republic of indonesia include stockholding for food security, and the administered toll systems needed to brand such programmes operational.

v.3 Export subsidies

Republic of indonesia has proposed that all export subsidies used by developed countries be eliminated. Even though Indonesia states that it does not intend to use export subsidies in the future, it does propose that developing countries retain the existing flexibility to utilize such subsidies.

5.four Export taxes and other restraints

Republic of indonesia holds the view that no changes in Article 12 are necessary. If there are modifications, these should not undermine the SDT provisions of the Article. Indonesia reports that it has occasionally used export taxes considering of critical food shortages and to conserve natural resources.

5.5 Special safeguards

Indonesia proposes that the special safeguard exist eliminated for developed countries. For developing countries, Republic of indonesia proposes that the special safeguard be made more than widely bachelor, irrespective of whether NTBs were converted into tariffs. The safeguard could be used to protect "domestic production" from import surges or a decline in prices and would qualify as a measure out for food security. Indonesia apparently favours the special safeguard since information technology operates mechanistically without proof of injury. As noted before, Republic of indonesia does not yet have a general safeguard mechanism.

6 Conclusions

The AoA appears to have placed very few practical constraints on Indonesian policy-makers. Nevertheless, Indonesia is now reconsidering its agronomical policies, and the results of this debate could significantly touch on Indonesia's position in the agronomical negotiations. The debate within Indonesia centres on nutrient security and the policy instruments that might exist used to stabilize and perchance support domestic agricultural prices.

The political economic system of agriculture is such that developed countries tend to support subcontract incomes, while developing countries are as concerned with price stabilization. The domestic support role of the AoA is oriented towards the types of policies traditionally used by developed countries. These policies typically have an on-budget financial exposure that developing countries tin sick afford. Price-stabilization policies, however, ofttimes operate in conjunction with merchandise policies and have less on-budget fiscal exposure.^[83] WTO rules governing the use of such policies appear unclear.

Major problems during the current round of agricultural negotiations are likely to be very similar to those of the UR and include marketplace access, export subsidies and domestic supports. Where developing countries desire special and differential treatment with respect to market place access in developed countries, information technology might be best to frame SDT in terms of specific commitments. Where developing countries want greater flexibility in their own commitments, it might be best to frame this flexibility in terms of policy measures and criteria, rather than policy objectives. The evolution of specific criteria for permitted agronomical programmes was one of the hallmarks of the AoA. It is therefore difficult to envision how developing countries could receive blanket approving to omit policies from disciplines based solely on the objective of the policy.

One of Indonesia's major goals during the negotiations might be to open upwards markets for its consign commodities. Indonesia's own agricultural markets are now fairly open to foreign merchandise, and Indonesia's tariff bindings are quite high. As a upshot, Indonesia could easily offering to reduce its bindings in return for meaningful market opening measures by other countries. Indonesia might also favour linking concessions in agriculture to concessions in other negotiating areas, such equally improved rules on the utilise of antidumping and countervailing duties.

References

Arifin, B., Munir, A., Hartati, East.S. & Rachbini, D.J. 2001. Food security and markets in Indonesia. Report for the Management and Organization Development for Empowerment, Inc. and the Southeast Asia Council for Nutrient Security and Off-white Trade.

Brown, 1000. & Magiera, S. 2000. Trade finance in Indonesia; structural issues and impact of the fiscal crisis. Jakarta, March (mimeo).

FAO. 2001. The land of nutrient security 2001. Rome.

Feridhanusetyawan, T. & Pangestu, M. 2001. Republic of indonesia's participation in the WTO, APEC, and AFTA: How much is the gain? Center for Strategic International Studies, Jakarta, April (mimeo).

Lindland, J. 1997. The impact of the Uruguay Round on tariff escalation in agricultural products. ESCP/No. 3, FAO, September.

Magiera, S.Fifty. 2000a. Indonesia's trade performance during the economical crisis. Dki jakarta, May (mimeo).

Magiera, S.L. 2000b. Indonesia'southward international trade policy commitments. Jakarta, November (mimeo).

Magiera, S.L. 2001. An overview of Indonesia's trade policy during the 1990s. Jakarta, May (mimeo).

Ministry of Agriculture, Indonesia. 2001. Agricultural development in Republic of indonesia 1996-2000. Jakarta.

Tabor, Due south.R., Husein Sawit, M. & Dillon, H.S. 2002. Republic of indonesia rice policy and the choice of a merchandise authorities for rice in Indonesia. Paper presented at INDEF Workshop on Indonesian Rice Policy, Jakarta, March.

Us Department of Agronomics. 2000. Indonesia food & agronomical import regulations and standards. Jakarta, Agricultural Trade Function, October.

Globe Bank. 2001. Indonesia: The imperative for reform. Brief for the Consultative Group on Republic of indonesia, November.

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^[62] Report prepared for FAO by Stephen L. Magiera, Trade and Telecommunications Advisor for Nathan Associates in Indonesia's Ministry building of Industry and Trade. The views expressed in this paper are those of the author and are not necessarily those of Nathan Assembly or the Indonesian Government.
^[63] Agronomical Gdp includes forestry and fisheries. Macroeconomic data are from various World Depository financial institution reports on Indonesia.
^[64] The discussion on market admission is based on Magiera (2000b, 2001).
^[65] Republic of indonesia's commitments with the IMF are tied to specific loans with an implementation flow catastrophe in December 2002. In those cases where the reforms become beyond Indonesia'southward international commitments, Republic of indonesia would be free to revoke the reforms after information technology "graduates" from the Imf programme.
^[66] Although Indonesia is complimentary to restrict consumption of alcoholic beverages for religious or other reasons, some contend that such restrictions should apply every bit to domestic and foreign-produced alcohol.
^[67] At the conclusion of the UR, Indonesia eliminated import licences for garlic and transferred the right to import to BULOG, which could then reassign that right dorsum to the previous licence holders.
^[68] Author's calculations. Information on Republic of indonesia's applied and spring tariffs is likewise contained in the tariff analysis tables submitted by Indonesia equally part of its APEC action plan.
^[69] Although the Pakmei schedule is non the outcome of an international commitment, Indonesia did incorporate the schedule into its APEC action programme. At the Bogor and Osaka Leaders' Meetings of 1994 and 1995, APEC countries agreed to a long-term goal of free trade, and to submit annual action plans, which outline their liberalization initiatives. Indonesia is 1 of the few countries to lay out a tariff reduction formula for meeting APEC's long-term goal of free merchandise. The Government has been fairly faithful at reducing tariffs in accord with the Pakmei schedule. Nevertheless, there has been slippage, which has worsened over time.
^[lxx] In addition, the Government provides subsidized credits to farmers and, until recently, subsidized the use of fertilizers and pesticides. Direct subsidies on the apply of fertilizers and pesticides have been eliminated, but urea fertilizer may even so benefit from subsidies on the use of natural gas in urea production.
^[71] In 1998, consign taxes and other types of export restrictions affected a fairly large number of items in the forestry and textiles sectors. Indonesia'due south commitment to the IMF does not include the elimination of those consign restrictions that are used to enforce MFA quotas in the markets of developed countries.
^[72] The numbers in parentheses signal the product share in Republic of indonesia'due south total agricultural exports in 1998-2000.
^[73] The numbers in parentheses indicate the product share in Indonesia's full agricultural imports in 1998-2000.
^[74] We use a later stop date for imports/exports (1999) than for tariffs (1998) because of the lag between a change in tariffs and the expected impact on trade.
^[75] Within manufacturing, just a few sectors experienced a declining trade balance between 1994 and 1999 (plywood, footwear and jewellery). In all such cases, the decline was due to decreased exports, not to increased imports (Magiera, 2000a).
^[76] Equally a result, Indonesia has fallen behind other Asian countries, particularly Thailand, in the development of its agribusiness sector.
^[77] Considerable amounts of information tin can be lost during the tariff averaging process. Thus, there could be cases of extremely high tariff escalation within product categories that have a depression average escalation.
^[78] Indonesia was not a party to the WTO console decision on turtle excluders. In 2001, the United states of america prohibited imports of Indonesian shrimps considering of the improper use of excluders.
^[79] While requirements for advance find of changes to standards and the establishment of points of inquiry are positive steps towards greater transparency, Indonesian officials still have difficulty in accessing timely information. In the Authorities agency treatment sanitary/phytosanitary regulations, there is one Internet access bespeak for 75 staff members.
^[eighty] Many of Indonesia'south manufacturing exports have a very high import content. Since imported inputs are required to produce these exports, Figure three overestimates the amount of foreign substitution bachelor to import nutrient. Besides, Republic of indonesia has a huge domestic debt of Usa$73 billion. Interest payments on this debt are three times that on foreign debt and have necessitated donor support to help finance the land upkeep.
^[81] Following the sharp depreciation of the rupiah, the Regime raised the floor price for rice on several occasions. On the last such occasion, it may take overshot the level that could be supported. BULOG's monopoly over imports had been eliminated and replaced with a specific tariff of Rp430/kg, or 30 pct advertising valorem. This tariff turned out to be too depression to continue imported rice from flooding the market at less than the intervention price. At the aforementioned time, BULOG maintained its part in stabilizing prices, merely no longer had the budgetary resources needed to intervene in the marketplace, either on a seasonal ground or to prevent prices from falling towards the world cost plus tariff. Rampant smuggling may take aggravated the trouble by causing prices to fall to less than the world cost plus tariff. In the end, BULOG could no longer defend the flooring price and might even have purchased imported rice from the domestic market equally part of its market place intervention activities.
^[82] See the argument by Republic of indonesia at the Quaternary Special Session of the Committee on Agriculture, 15 November 2000, WTO Certificate G/AG/NG/W/71. Indonesia also generally supports proposals of other developing countries for special and differential treatment, including the proposal by ASEAN in November 2000 (G/AG/NG/Westward/fourscore) and Bharat in January 2001 (G/AG/NG/Due west/102).
^[83] The fact that a policy has little or no financial cost to the Government does non imply that the policy'due south cost to the economy is less than one with significant financial price. Trade policies can generate revenues for the budget but are typically far more than costly to the economy than direct government payments.

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