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Indonesia cuts wheat flour import tariff plan to two years
Indonesia has cut its plan for an indefinite extension of a temporary wheat flour import tariff to two years after talks with suppliers, a trade industry ministry official said.
Asia’s top importer imposed an emergency 20 percent tariff on wheat flour imports for 200 days on Dec. 5, which was due to expire on June 20. Keeping the tariff would boost Indonesia’s demand for wheat grain over flour.
Without an agreement from suppliers, an extension of the tariff risks running foul of World Trade Organisation rules.
Indonesia is talking with sellers including Turkey, Ukraine, Australia and Sri Lanka, Bachrul Chairi, director general of foreign trade at the trade ministry, told Reuters. He said there should be a decision next week.
“The measures altogether would be only two years, beginning from the imposition of the temporary measures,” Chairi said, adding that percentages would also be discussed and may decrease over time.
“If they agree it means that we agree something outside the WTO measures.”
Temporary emergency tariffs are allowed under WTO rules if a country can show a threat of serious damage to its domestic industry from an unexpected flood of imports.
Turkey is the largest exporter of wheat flour to Indonesia, accounting for about 60 percent of the country’s total imports of 402,000 tonnes last year, with Sri Lanka making up around 30 percent.
Industry officials in Turkey have said they could bring a case against Indonesia at the WTO if the import tariff is made permanent.
Indonesia imports all of its wheat, both unprocessed grains and flour, which is largely used to make noodles, bread, cakes, biscuits and convenience snacks.
Southeast Asia’s largest economy imported about 6 million tons last year. The tariff coupled with a 6-7 percent annual rise in demand could see imports rise to 7 million tons in 2013, industry body APTINDO forecasts.
Indonesia buys 65 percent of its wheat from Australia, with Canada and the United States supplying the bulk of the remainder. (Reuters)
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