U.S. Trade Representative (USTR) Robert Lighthizer this month reaffirmed that Indonesian import licensing regulations for horticultural and animal products violated World Trade Organization (WTO) rules – a clarification that Washington apple industry stakeholders say will bolster apple exports.
According to the USTR release, Indonesia added trade-restrictive rules in 2012 which directly affected U.S. exports including fruits, vegetables and poultry. In 2016, a WTO panel found the country’s requirements to constrain those imports, therefore being inconsistent with WTO guidelines. Indonesia appealed those findings in February 2017, however the panel confirmed their original conclusions this month.
“This is a significant win for U.S. farmers and ranchers,” Lighthizer said in the release. “Given Indonesia’s market size and U.S. competitiveness, we should be selling many more agricultural products to Indonesian consumers. The Trump Administration will continue to use all our tools, including WTO dispute settlement and other mechanisms, to ensure that world-class U.S. agricultural products get fair access to markets around the world.”
Mark Powers, President of the Northwest Horticultural Council (NHC), said he was encouraged by the WTO’s clarification.
“NHC is very appreciative of the hard work and multiple-year effort undertaken by the Office of the US Trade Representative to enforce the trade rules agreed to by all WTO members,” he said in a recent Washington Apple Commission (WAC) release. “This is the perfect example of the positive work USTR does to keep global markets open and allow our growers to sell 30 percent of their crop overseas.”
WAC President Todd Fryhover told Lens he is hopeful that Indonesia will accept WTO’s ruling.
“Prior to this new system put in place that has since been repealed by WTO, we basically had pretty easy access,” said Fryhover. “There wasn’t a permitting process or import permits to bring shipments in from an importer standpoint.”
Indonesia added a quota system in 2012 which put limits on how much fruit could come in, he added. The country also initiated a six-month cycle on those import permits, in which importers must travel to the proper Indonesian authority to request access for the next six months. Part of the issue is that this processing timeframe might take four or five weeks from the date of submission to receiving the import quota before the product could actually be delivered.
“What happened is we’d lose 10 to 11 weeks of shipment every year because of this import permit process,” said Fryhover. “Because the process didn’t overlap, we had to wait for the permit to end, apply and then start importing again.”
The lost weeks came at a bad time for the apple industry, he added, usually falling in December or January, and once more during June and July.
“We tend to harvest fruit in August and finish in late October and early November. December is a really critical time to get into the international marketplace,” he said.
The Indonesian market is a large one for Washington apple growers. According to WAC, Washington apple exports prior to the restrictions brought in roughly $50 million of export business for the industry annually. However, the new rules caused a $22 million drop in those exports.
“Indonesia has already been a significant player, but the real impact is not only the volume but also the type of fruit they are interested in,” said Fryhover. “They are heavy ‘red delicious’ importers which is very important because those are usually the number one entry apple in those new markets in particular, especially for a market that has limited economic resources.”
Indonesia is also interested in the smaller fruits. A typical bushel might have a shipping size of 100, that is, 100 apples per carton. Indonesia is interested in shipping sizes of 125 up to 175.
“That’s important because we try to grow, but sometimes Mother Nature doesn’t always allow us to do that and we end up with smaller fruit, and Indonesia does pay well for the smaller fruit.”