Key Topic – WTO Ruling on Indonesia Beef Access

The United States requested that the WTO establish a dispute settlement panel to examine Indonesia’s import restrictions on a range of U.S. agricultural products, including U.S. beef. Trade officials from New Zealand filed a similar request with the WTO. The U.S. first requested consultations on these matters in January 2013, and working together with New Zealand consulted again in August 2013 and May 2014. During this time Indonesia announced various changes to its import policies, but its uneven regulatory environment continued to impede trade.

UPDATE: On Dec. 22, 2016, the WTO Dispute Settlement Panel issued a report regarding Indonesia’s import restrictions on a variety of agricultural products, including beef. The panel’s findings were overwhelmingly in favor of the U.S. and New Zealand. More details are available online. Indonesia appealed the ruling, but see further update below.

At its 2011 peak, Indonesia was a top 10 destination for U.S. beef/beef variety meat, with exports totaling 17,847 mt valued at $28.2 million. But with the Indonesian government putting very tight restrictions on beef imports in an effort to build up its domestic industry, followed by BSE-related restrictions on U.S. beef in April 2012, exports to Indonesia declined by 91 percent in volume and 70 percent in value in 2012, before rebounding somewhat in 2013. In 2014, exports to Indonesia totaled 6,559 mt (+30 percent from 2013) valued at $26.8 million (+60 percent). But the business climate in Indonesia continued to be uncertain, due in part to its volatile import policies. In 2015, U.S. exports to Indonesia totaled just 1,495 mt (-77 percent) valued at $11.8 million.

In 2016, first-half exports of U.S. beef to Indonesia increased significantly but product restrictions, Indonesia’s complex import permit system and a limited number of approved U.S. plants still made the market difficult to serve. In late July 2016, the Indonesian Ministry of Agriculture issued a new import regulation expanding market access for meat products, allowing imports of all beef cuts and a range of variety meat items including livers, hearts, lungs, tails, tongues and feet. Importers are also no longer required to meet domestic beef purchasing thresholds before being issued import permits, and the reference price system is no longer part of the import process. These are encouraging developments which, along with the WTO ruling outlined above, could provide a boost for U.S. exports to Indonesia, especially beef variety meat.

UPDATE: On Nov. 9, 2017, the WTO Appellate Body ruled in favor of the U.S. in this dispute. The WTO report found that all 18 of Indonesia’s import measures challenged by the United States were inconsistent with WTO rules and obligations. The ruling marked the end of the WTO dispute settlement process and is expected to open up significant new export opportunities for the U.S. beef industry in the Indonesian market. In 2017, exports to Indonesia totaled 13,748 metric tons, up 27 percent year-over-year, valued at $53.7 million, up 36 percent and setting a new single-year record. Indonesia is currently the third-largest export market for U.S. beef hearts, following Mexico and Hong Kong.

UPDATE: In August 2018, USTR requested that the WTO allow the United States to impose sanctions on Indonesia for failing to meet its obligations under the ruling within a reasonable period of time (the parties had agreed that the reasonable period would expire July 22, 2018). USMEF provided more details to members in this Exporter Update.