Jakarta: Indonesia has complained to the World Trade Organisation over a protectionist tariff imposed by Australia on paper imports, in a move that could overshadow the last months of sensitive free-trade negotiations.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The latest salvo comes as the Indonesian government also expressed its "deep concern" after Australia launched an investigation into the alleged dumping of steel rods exported from Indonesia.
The leaders of Indonesia and Australia have committed to reaching a free-trade deal by the end of the year.
However, Australia announced in April that it would impose dumping duties on A4 paper exported from Indonesia and three other countries in a crackdown on "unfair dumping into the Australian market".
A dumping duty is a protectionist tariff imposed on foreign imports priced below their normal value in the country of export.
The decision was celebrated at the Maryvale mill of Australian Paper - Australia's sole copy paper manufacturer - where jobs had been at risk from cheap imports.
But on September 1, Indonesia filed a complaint claiming that Australia's actions appeared to be inconsistent with provisions under the World Trade Organisation's Anti-Dumping Agreement regarding the determination of dumping.
Director of Trade Defence Pradnyawati said the anti-dumping measures were based on allegations by the Australian Anti-Dumping Commission that Indonesia's ban on the export of timber logs had distorted the price of A4 copy paper.
The commission found exports of paper from Indonesia were dumped with margins of up to 38.6 per cent.
"The Indonesian government has pursued diplomatic approaches by explaining to the Australian government that the policy does not cause price distortion, however, it did not affect the course of investigation and decision on imposition of anti-dumping duties," Ms Pradnyawati told Fairfax Media.
"Therefore, the government of Indonesia decided to raise this issue as a dispute case in the World Trade Organisation."
Indonesia's "request for consultations", the first step in a trade dispute, gives Australia 60 days to settle the issue. After that period, Indonesia could ask the WTO to adjudicate.
Indonesia's chief trade negotiator, Deddy Saleh, said the A4 paper case would not affect the negotiation of the free-trade deal, known as the Indonesia Australia Comprehensive Economic Partnership Agreement (IA-CEPA).
But he said if Indonesia's complaint were successful, "Australia should no longer make accusations without strong foundation".
"Because if it is continuously done it will obviously disturb the trust of the Indonesian business sector and government so that IA-CEPA won't be easily implemented."
A spokesman for Trade Minister Steve Ciobo said the government had made clear to Indonesia the independence of Australia's anti-dumping system and processes.
He said the Anti-Dumping Review Panel was undertaking a domestic review of the paper dumping duties.
"The government understands the panel has just instructed the Anti-Dumping Commission to re-investigate," the spokesman said.
Indonesia and three other tobacco-producing countries have also appealed against Australia's world-first cigarette plain packaging laws to the World Trade Organisation, arguing they created an illegal trade barrier.
The final ruling is yet to be made but Bloomberg reported in May that a leaked draft report found Australia's laws were a legitimate public health measure.
With Karuni Rompies
