US Seeks $350M Annual Trade Sanctions on Indonesia

August 7, 2018 Updated: October 5, 2018

After years of arguments at the World Trade Organization (WTO), the United States wants to retaliate against Indonesia for choking American imports. But under the WTO rules, it could take years before the United States will be allowed to do so.

The Indonesian trade barriers on certain agricultural products made the United States lose up to $350 million on trade in 2017, according to an Aug. 2 WTO filing.

Indonesia has maintained restrictions on imports such as fruits, vegetables, flowers, cattle, beef, and poultry since 2012, according to the Office of the U.S. Trade Representative (OTR).

The office oversees trade negotiations with other countries and has been complaining about Indonesia’s behavior. New Zealand joined in the complaint.

In 2017, the United States and New Zealand secured a WTO ruling in their favor after Indonesia’s unsuccessful appeal.

But the latest U.S. filing said Indonesia had not complied with the ruling, so Washington is seeking annual sanctions to compensate for the damage to U.S. interests.

The process of seeking compensation often takes years, and Indonesia is likely to contest the size of any potential sanctions.

Indonesia is still studying the U.S. move to seek sanctions, said Oke Nurwan, trade ministry’s director general of foreign trade, adding that authorities believe Jakarta had complied with the WTO decision. He said rules on Indonesian food imports had already been revised.

There was no immediate sign of a similar sanctions request from New Zealand.

Indonesia has been lobbying U.S. officials to keep the Southeast Asian nation on a list of countries that receive special trade terms under the Generalized System of Preferences (GSP), which gives reduced tariffs to about $2 billion of Indonesian exports.

The OTR stated in April it was reviewing Indonesia’s eligibility for GSP in light of Jakarta’s trade and investment barriers.

Indonesia’s trade minister Enggartiasto Lukita said in July that Indonesia will remove trade barriers for U.S. apples as part of lobbying for GSP. Indonesia scrapped a quota system for beef imports in 2016.

Reuters contributed to this report.

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