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Indonesia plans import duties on clothing, ceramics, minister says

  • July 1, 2024
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Indonesia plans import duties on clothing, ceramics, minister says

Sub: Economy

Sec: External Sector

Context: Indonesia will impose safeguard duties of 100% to 200% on imports ranging from footwear to ceramics, reviving a plan to protect domestic industries, the trade minister said.

The planned import duties average more than 100%.

Trade Minister Zulkifli Hasan told reporters on Friday. “If we are flooded with (imported goods), our micro, small and medium enterprises could collapse.”

Southeast Asia’s biggest economy issued a regulation late last year to tighten monitoring for more than 3,000 imported goods, from food ingredients to electronics to chemicals.

However, the regulation was reversed after domestic industry said it hindered the flow of imported materials needed by domestic industry.

Duties will be imposed soon and could affect imports of footwear, clothing, textiles, cosmetics and ceramics, Mr. Zulkifli said.

Indonesia mainly imports apparel and clothing accessories from China, Vietnam and Bangladesh.

Concept:

  • Safeguard measures include tariff increases to check increased imports of particular products that have caused ‘serious injury’ to domestic producers.
  • Safeguard Duty is a tariff barrier imposed by the government on commodities to ensure that imports in excessive quantities do not harm the domestic industry.
    • It is mainly a temporary measure undertaken by the government in defence of the domestic industry which is harmed or has potential threat getting hard due to sudden cheap surge in imports.
  • Retaliatory custom duty-a tax that a government charges on imports to punish another country for charging tax on its own exports to that country/removing the existing concession of duty.
  • Tariff-rate quota (TRQ) (also called a tariff quota) is a two-tiered tariff system that combines import quotas and tariffs to regulate import products.
    • A TRQ allows a lower tariff rate on imports of a given product within a specified quantity and requires a higher tariff rate on imports exceeding that quantity.
    • For example, a country might allow the importation of 5,000 tractors at a tariff rate of 10%. However, any tractor imported above this quantity would be subject to a tariff rate of 30%.
    • Unlike a simple quota system, a TRQ regime does not restrict the quantity of imported products.
    • The “in-quota commitment” is complemented by an “out-of-quota commitment”.
    • The out of quota commitment does not set any limit on the quantity or value of an imported product, but instead applies a different, normally higher, tariff rate to that product. Imports face this higher duty rate once the in-quota quantity or value has been reached, or if any requirement associated with the “in-quota commitment” is not fulfilled
    • A TRQ is generally used to protect domestic production by restricting imports. Under that regime, the quota component combines with a specified tariff level to provide the desired level of protection. In many cases, imports above the threshold may face a prohibitive “out-of-quota” tariff rate.

Other types of Safeguard duty:

  • Countervailing duty (CVD) is a specific form of duty that the government imposes in order to protect domestic producers by countering the negative impact of import subsidies. CVD is thus an import tax by the importing country on imported products.
    • To make their products cheaper and boost their demand in other countries, foreign governments sometimes provide subsidies to their producers. To avoid flooding of the market in the importing country with these goods, the government of the importing country imposes a countervailing duty, charging a specific amount on import of such goods.
  • Anti-dumping duties are imposed when it is conclusively proved that a particular item is being exported at a price lower than what is prevailing in the domestic market of the exporter and is leading to disruption in the domestic market, injuring the local producers
    • An anti-dumping duty is a protectionist tariff that a domestic government imposes on foreign imports that it believes are priced below fair market value.
    • Dumping is a process where a company exports a product at a price lower than the price it normally charges in its own home market.
    • The duty is aimed at ensuring fair trading practices and creating a level-playing field for domestic producer’s vis-a-vis foreign producers and exporters.
economy Indonesia plans import duties on clothing

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