Indonesia moves to keep wheat flour import tariff

Indonesia's trade ministry will propose indefinitely extending a temporary 20 percent emergency tariff on wheat flour imports, an official said on Tuesday, as Asia's top importer of the grain looks to protect its expanding wheat mill industry against subsidised imports.
Indonesia imposed an emergency tariff on wheat flour imports for 200 days on December 5 to allow the government to complete an investigation into imports and the impact on domestic mills. "On June 20 the temporary safeguard duty on wheat flour will finish and we will recommend it be determined as a definitive safeguard duty," Bachrul Chairi, director general of foreign trade at the trade ministry told Reuters.
The proposal will be sent to the Indonesian Finance Ministry, who will make the final decision, Chairi added. 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. Temporary emergency tariffs are allowed under World Trade Organisation rules if a country can show a threat of serious damage to its domestic industry from an unexpected flood of imports.
Industry officials in Turkey have said they could bring a case against Indonesia at the WTO if the import tariff is made permanent. The Indonesian Wheat Flour Mills Association (APTINDO) said earlier this year that the import tariff may be extended by up to three years. The Indonesian government notified the WTO about its plan to extend the import tariff on June 5, APTINDO Chairman Franciscus Welirang said on Tuesday, adding that discussions with governments who opposed the move were ongoing.
Indonesia imports all of its wheat, both unprocessed grains and flour, which is largely used to make noodles, bread, cakes, biscuits and convenience snacks. Wheat imports into Southeast Asia's largest economy were about 6 million tonnes last year, and the impact of the wheat flour import tariff coupled with a 6-7 percent annual rise in demand could see imports rise to 7 million tonnes in 2013, APTINDO forecasts. Australia supplies around 65 percent of Indonesia's imports of wheat, with Canada and the United States largely making up the rest. By the year-end, the total number of Indonesian wheat mills will rise by three to 24, with capacity of 8 million tonnes.