A successful joint New Zealand-US complaint to the World Trade Organisation (WTO) disputes panel has been welcomed by meat exporters. It should, in theory, see quantities of NZ beef exports to Indonesia lifting in the near future.
News filtered through in late December of the WTO’s decision to uphold the complaint brought in 2013 against Indonesia’s imposition of a range of barriers imposed on agricultural products since early 2011. These included import prohibitions, use and sale restrictions, restrictive licence terms and a domestic purchase requirement.
The barriers are estimated to have cumulatively cost the New Zealand beef sector alone between half a billion and a billion dollars. As recently as 2010, Indonesia was New Zealand’s second largest beef export market by volume, taking beef and edible offal exports of 48,823 tonnes worth $180 million that year.
According to Meat Industry Association (MIA) figures, the effect of the restricted regime saw the market tumble from second to eighth largest market for New Zealand beef within two years. By 2012, beef and offal exports to Indonesia had declined to 9,407 tonnes worth $49 million.
Minister for Trade Todd McClay welcomed the disputes panel decision saying it was an important result for New Zealand’s agricultural exports and for trade fairness.
“We are committed to pursuing a range of options for addressing trade barriers that affect New Zealand exporters, including WTO dispute settlement as a last resort,” he said when announcing the result.
“As a result of this process, we have already seen some improvements to Indonesia’s regulations and gains for New Zealand exporters to Indonesia. These will only improve following implementation of the WTO decision.”
New Zealand continues to have a very strong relationship with Indonesia, he added.
MIA chief executive Tim Ritchie explains Indonesia removed the restrictions on secondary cuts and edible offals last year and introduced some simplification of import licencing requirements.
“This was welcomed by New Zealand exporters,” he says. “We believe that the findings of the WTO Dispute Settlement Panel, if complied with, will result in further stabilisation of the market and we expect exports to Indonesia to recover, particularly given the potential of the market.”
While export data for December 2016 is not available yet, for the 11 months through until the end of November 2016, beef and offal exports were 15,309 tonnes worth $71 million, a 74 percent increase in volume and 23 percent increase in value compared to the same period in 2015.
“Indonesia has a large and increasingly wealthy population with a strong affinity for beef. Rebuilding the beef trade could lead to other opportunities for New Zealand companies when it comes to Indonesia’s domestic agriculture and farming systems,” says Ritchie.
While the panel found firmly in New Zealand’s favour, Indonesia can still appeal the decision to the WTO’s appellate body.
Measures that were imposed by Indonesia on imported meats included prohibiting certain types of cuts and restricting sales through key retail channels, limiting the quantity of beef that could be imported, and opening unreasonably short windows for importers to apply for import licences – which made preparing and shipping products difficult.
In addition to disrupting trade, these restrictions had the perverse effect of pushing beef prices out of reach for ordinary Indonesians particularly during periods of peak demand as Indonesian domestic supply was not able to keep up with demand, says Ritchie.