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United States Requests WTO Panel to Examine Indonesia’s Import Restrictions on U.S. Agriculture

Obama Administration Stands Up for U.S. Farmers’ and Ranchers’ Trade Rights in Face of Restrictive Indonesian Barriers Impacting American Exports of Fruits, Vegetables, Beef, Poultry, and other Agricultural Products

Washington, D.C. – United States Trade Representative Michael Froman announced today that the United States has requested the World Trade Organization (WTO) to establish a dispute settlement panel to examine Indonesia’s wide-ranging import restrictions on fruits and vegetables (such as apples, grapes, and potatoes), animal products (such as beef and poultry), and other agricultural products.  These measures include a ban on poultry and certain meat products and Indonesia’s trade-restrictive import licensing regimes for horticultural products and animals and animal products.  Indonesia’s prohibitions and restrictions have unfairly limited opportunities for U.S. farmers and ranchers to export their world-class products to Indonesia’s large and growing market.  The United States has been working closely with New Zealand in this dispute, and New Zealand is also requesting the establishment of a WTO panel to examine Indonesia’s import restrictions.

In 2014, the United States exported a record-high $155.1 billion of agricultural exports to the world, supporting over a million American jobs. Increasing those exports and protecting the trade rights of American farmers and ranchers is a high economic priority for President Obama.

“American-grown agriculture exports are tremendously beneficial to the economy of America’s heartland,” said U.S. Trade Representative Michael Froman. “That’s one of the chief reasons that President Obama’s historic trade agenda is a major component of his Middle Class Economics strategy. I’m proud to take this action today standing up on behalf of farmers and ranchers across the United States who have been shouldering unfair export barriers to the fourth largest country in the world, Indonesia. This announcement comes at a time when the Obama Administration is fighting to unlock other economic opportunities for American agricultural exporters across the Asia-Pacific region through the Trans-Pacific Partnership.”

“USDA welcomes this next step in the WTO dispute settlement process,” said Secretary of Agriculture Tom Vilsack.  “USTR and USDA have worked over the past two years to hold Indonesia to its trade commitments. America’s farmers and ranchers are among the most productive in the world, but they need a level playing field.  When our trading partners don’t play by the rules it costs American jobs, so it is critical we hold them accountable.”

“The implications of Indonesia’s trade regulations are particularly relevant for Washington State, because my state is one of the top exporters of horticultural products, including apples, to Indonesia,” said Rep. Rick Larsen (WA-2). “This barrier to a critical market has created a guessing game about what Indonesia’s future needs will be, leading to major uncertainty for our farmers. I am pleased USTR has taken action to hold our trading partners accountable.”

“By limiting access to an important market for Washington’s apples and pears, Indonesia’s trade restricting actions have harmed Washington’s thriving agricultural sector which supports communities across the state,” said Rep. Dave Reichert (WA-8). “I applaud Ambassador Froman for his commitment to challenging these barriers, so that our specialty crop producers can reliably access a top market.”

“It is imperative to my constituents and I that we see strong enforcement of U.S. trade agreements to give us confidence that these provisions will protect American workers and businesses,” said Rep. Kurt Schrader (OR-05).  “The unfair trade restrictions being imposed by Indonesia are hurting America’s producers and it’s critical that the USTR continue to take the enforcement actions necessary to maintain a level playing field for U.S. small businesses, especially our farmers and ranchers. Our small business owners need the ability to export their high-quality products, free of prohibitive limitations and I hope this measure will prevent further economic growth from being stifled.”

“Nebraska is one of the top exporters of agricultural products – especially beef – and access to foreign markets is a critical component of the economy,” said Rep. Brad Ashford (NE-2).  “Increasing open access to these foreign markets for U.S. goods means more jobs at home, and allows our producers to be more competitive in the global marketplace.  I support Ambassador Froman and Secretary Vilsack in taking this action, and working to provide a more level playing field for U.S. goods abroad.” 

Indonesia is the fourth most populous country in the world and an increasingly important export market for many U.S. agricultural products, with exports of agricultural products affected by Indonesia’s import licensing regimes totaling nearly $200 million in 2014. 

In 2014, U.S. exports of affected horticultural products to Indonesia exceeded $122 million – including $50 million of apples and over $37 million of grapes.  In the absence of Indonesia’s trade-restrictive import licensing regime, however, we would expect U.S. farmers to be able to compete more effectively for sales to Indonesian consumers.  In 2014, exports of affected horticultural products to Malaysia, a similar market, totaled $128.5 million, $6 million more than exports to Indonesia, despite the fact that Indonesia’s population is over eight times larger than Malaysia’s.

U.S. exports of affected animals and animal products totaled $63.2 million in 2014.  As with exports of horticultural products, however, we would expect U.S. producers to compete more effectively in the Indonesian market in the absence of Indonesia’s trade restrictions.  For example, U.S. exports of affected animals and animal products to the Philippines, another similar market, totaled $248.3 million in 2014, notwithstanding the fact that the population of the Indonesia is 2.5 times larger than that of the Philippines. 

Today’s action confirms the President’s commitment to leveling the playing field for U.S. exports, and to holding our trading partners to their WTO commitments. 

Background

Since 2012, Indonesia has maintained unjustified and trade-restrictive licensing regimes for the importation of horticultural products and animals and animal products.  Indonesia has amended its regimes several times, adding additional trade-restrictive requirements.  The United States consulted with Indonesia in January 2013 and, working together with New Zealand, consulted again in August 2013 and in May 2014 to address the modifications to Indonesia’s import licensing restrictions. 

In conjunction with its import licensing regimes, Indonesia prohibits the importation of certain products at certain times and restricts the sale of imported products within Indonesia. 

U.S. agricultural products affected by Indonesia’s import licensing regimes and related prohibitions and restrictions include fruits, such as apples, grapes and oranges; vegetables, such as potatoes, onions and shallots; dried fruits and vegetables; flowers; juices; cattle; beef, including a ban on secondary cuts; poultry, including a ban on chicken parts; and other animal products. 

Through its import licensing regimes and related measures, Indonesia appears to have acted inconsistently with its WTO obligations.  In particular, the measures appear to breach Article XI:1 of the General Agreement on Tariffs and Trade 1994 (GATT 1994) and Article 4.2 of the Agreement on Agriculture, which prohibit restrictions on the importation of goods, including those made effective through import licenses.   

See a copy of the panel request here.