In a ruling released just before Christmas the WTO’s Dispute Settlement Body found all 18 regulations restricting beef and horticultural imports challenged by NZ and the US early last year to be illegal.
Despite the comprehensive nature of the ruling Indonesia last week lodged an appeal with the WTO’s Appellate Body.
The appeal was not entirely unexpected after an official in Indonesia’s Trade Ministry earlier said his government disagreed with the ruling and planned to appeal.
“We’ll file an appeal since several regulations being sued by the US and NZ had been amended during the legal process,” Iman Pamagyo told Indonesian media in January.
Pamagyo said the regulations were introduced during former President Susilo Bambang Yudhoyono’s administration, which ran from 2004 to 2014.
Some restrictions were relaxed after former Prime Minister John Key raised the matter with Indonesian president Joko Widido on a visit to Jakarta in July last year.
The changes included deleting a number of primary and secondary beef cuts and offals from a list of banned products as well as simplifying procedures for importers and allowing the distribution of imported beef through local wet markets, which had previously been prohibited.
Reflecting scepticism over a possible appeal by Indonesia from NZ meat industry sources, Chapman Tripp trade lawyer and former Ministry of Foreign Affairs and Trade official Tracey Epps cited precedent in WTO case law that found the body's judges were bound to consider regulatory changes following a case being taken as well as the original rules being challenged.
“This means that the mere fact that measures were amended does not constitute grounds for a successful appeal.”
According to the WTO’s website any appeal must confine itself to arguing points of law and could not challenge factual findings in the original ruling.
The Appellate Body had three months to report back though an extension looked likely because of the heavy workload expected for the Geneva-based body in 2017.
At stake was NZ’s ability to regain a foothold in what was its second largest beef market after the US as recently as 2010.
Meat Industry Association chief executive Tim Ritchie said import restrictions cut NZ’s beef exports to Indonesia by 80% and were estimated to have cost exporters a billion dollars in lost potential earnings between 2011 and last year.
“Since 2011 the trading environment with Indonesia has been uncertain and unpredictable with frequent regulatory changes.
“This challenging environment has meant that NZ companies have become more cautious when it comes to exporting to Indonesia and less inclined to invest in developing the market in the face of significant uncertainty and risk.”
Ritchie said the rule changes following Key’s visit led to a strong bounce in the 10 months to last October on year-before volumes though the trade was still to return to 2010 levels.
“We believe the findings of the WTO Dispute Settlement Body, if complied with, will result in further stabilisation of the market.”
