The Government has given Indonesia until the middle of next year to implement a World Trade Organisation ruling and amend legislation used to introduce import rules previously used to block NZ beef exports.
NZ and the United States first won a ruling from the WTO against the trade barriers in 2016 but it was appealed against by the Indonesians.
The WTO again ruled in favour of NZ and the US in November last year but the Indonesians are still to fully comply with the decision.
Now the Americans have come out all guns blazing with a request to impose US$350m of retaliatory tariffs against Indonesian exports to the US.
In a filing with the WTO in Geneva last week the US said it is seeking sanctions equal to the damage done to its own export industries from the failure to remove all the trade barriers.
A spokesman for Trade Minister David Parker said the Government is still considering its options.
“Indonesia has amended a number of its regulations and brought several of the WTO-inconsistent trade barriers into compliance but it has not yet fully complied with all rulings of the Appellate Body.
“NZ is consulting affected export industries on those barriers still in place and discussing full compliance on these remaining barriers with Indonesia.
“We are doing this in close consultation with the US.”
The Meat Industry Association’s trade and economic manager Sirma Karapeeva confirmed many of the regulations estimated to have led to a billion dollars in lost sales for NZ beef exporters between 2010 and 2015 – including an outright ban on secondary cuts and offal – have been rescinded by the Indonesians.
However, the legislation that spawned the illegal import rules remains in place.
“Unless that legislation is amended the risk is that new trade-distorting measures could be introduced in the future.”
Despite that the industry us comfortable with the Government’s decision to give Indonesia till the middle of next year to make the legislative changes needed to bring it fully into compliance with the WTO ruling, Karapeeva said.
The deadline is after the country’s presidential elections early next year.
Self-sufficiency in beef has been a feature of the past two elections and is likely to be so again.
“Legislative change is always a lengthy and complex procedure, even in NZ, and I suspect taking it out past the elections would be more palatable, especially given the fundamental change that is necessary.”
Parker’s spokesman said Indonesia will be flouting WTO rules if it reintroduces illegal trade barriers under the legislation it had been given extra time to repeal.
Under WTO rules NZ would be within its rights to follow the US and impose tariffs equal to the damage done to its exporters if Indonesia fails to carry out the court’s rulings.
However, that is rare with well over 80% of rulings from the WTO to date having been complied with voluntarily without resorting to retaliatory tariffs.
Since Indonesia imposed import restrictions in 2010 it has sunk from being NZ’s third largest beef market to its eighth.
