The government will install an early warning system at the country’s main customs offices to detect an unusual surge in the flow of goods from China, the Finance Ministry’s senior official says.

Bambang Brodjonegoro, acting chief of the fiscal policy office, said in Jakarta on Thursday the implementation of the early warning system would be an important program to handle the influx of Chinese goods, which had seriously hurt local industries.

With the warning system, the customs officials can detect the surge in certain types of goods imported from China and then report the findings to related government agencies, which would later verify if the goods flow did not violate trade agreements.

He said the government could impose additional import duties namely anti-dumping duties, safeguard duties and counterveiling duties on Chinese products involving dumping practices. In addition, the government could also implement the Indonesian National Standard (SNI) and Indonesian-language use for imported product labels.

Anti-dumping duties will be imposed for products sold lower than the prices at the home market, but needs to be proven before being imposed. Safeguard duties will be for import products that create domestic industry injury. Counterveiling duties are for unfair trade such as subsidizing exports products.

“Through our policies, we will always be responsive in ensuring that the local products’ competitiveness will not be disrupted by Chinese imported products,” Bambang said.

Meanwhile, deputy finance minister Anny Ratnawati said with the early warning system, customs officials would know right away if there was an unusually high increase in the flows of Chinese goods.

“Customs officials will review the rule of origin. We will check the certificate of origin. They will tightly verify and supervise the goods’ origin,” she said.

Senior ministers have noted that the surge of Chinese products was mainly due to smuggling and dumping practices.

According to a survey by the Industry Ministry released last month, Indonesian products were losing ground in the domestic market to Chinese products following the implementation of the China-ASEAN agreement on Jan. 1, 2010 with sales of local products in the textiles, furniture, metal, machinery and electronics declining.

Under the trade agreement, more than 7,000 products traded between China and six ASEAN countries—Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand—are duty-free.

The Indonesian Central Statistics Agency (BPS) reported that the nation ran its largest international trade deficit with China last year. Although Indonesia booked an overall US$22 billion surplus in international trade in 2010, the country had a $5.6 billion trade deficit with China.

Policy tools to mitigate Chinese imports pressures

1. Anti-dumping duties

Additional import duties for products that are sold lower than the prices at the home market or than the operational costs (dumping); Needs to be proven before being imposed.

2. Counterveilling duties

Additional import duties for products that are perceived as implementing unfair trade practices.Needs to be proven.

3. Safeguard duties

Additional import duties imposed for products that create domestic industry injury; There has been no rigid international pact on “domestic industry injury”; Not permanent and the period of the duties implementation needs to be determined.

4. Non-tariff barriers

Implementation of the Indonesian National Standard (SNI); Labelling import products with Indonesian words.

Jakarta | Fri, 04/15/2011 9:56 AM

By Esther Samboh

Source: The Jakarta Post