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WTO Declines Indonesia Appeal on NZ Beef Trade

13 November 2017

NEW ZEALAND - The World Trade Organization has turned down Indonesia's appeal against a ruling that trade barriers imposed since 2011, which hurt New Zealand's beef exports, were inconsistent with global trade rules.

New Zealand had invoked WTO dispute settlement consultations with Indonesia in 2013 and 2014 over 18 trade barriers it said had resulted in an 80 per cent drop in the nation's exports to Indonesia of beef and horticultural products such as apples and onions.

Prior to the restrictions, Indonesia was New Zealand's second-largest market for beef, worth $180 million a year, and the accumulated trade impact was an estimated $500 million to $1 billion, according to the complaint.

Consultations between the two countries failed to resolve the dispute and in 2015 New Zealand escalated its complaint by requesting the WTO Dispute Settlement Body establish a panel for a hearing. The US made a panel request at the same time and became a co-complainant. Former Prime Minister John Key raised the issue with his Indonesian counterpart during a visit in 2016.

Last December the WTO panel ruled in New Zealand's favour, concluding that the 18 measures were inconsistent with rules under GATT 1994 that prohibit import restrictions. Indonesia appealed that decision in February this year and the appeal was declined in a ruling dated 12 October in Geneva, couched in the WTO's cautious legalese.

New Zealand's response overnight in welcoming the ruling was equally cautious and conciliatory. Trade Minister David Parker praised Indonesia's "exemplary" approach to the WTO hearings, which had been conducted with a "collegial and constructive" tone.

"This decision from the WTO's highest dispute settlement body is an important result for our agricultural exporters and should pave the way to grow New Zealand exports to the Indonesian market," Mr Parker said.

New Zealand's original 2013 complaint cited Indonesia's quotas, import restrictions, and discretionary or non-automatic import licensing schemes, which it said didn't appear to be administered "in a uniform, impartial or reasonable manner as they are applied inconsistently and unpredictably."

"Indonesia has also failed to publish or provide relevant information, including overall quota details, sufficient for governments and traders to become acquainted with them," the original request for consultations said.

Indonesian licensing procedures, under which importers were forced to complete multiple steps prior to any imports, were "trade-restrictive and -distortive effects and are broader in scope, and more administratively burdensome, than necessary" and were "applied inconsistently and unpredictably."

Indonesia had argued that the measures were aimed at restricting imports of certain agricultural products where domestic production was deemed sufficient to satisfy domestic demand.

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