Costs of U.S. Trade Restrictions on Indonesian Exports

September 18, 2011

New Research Shows Costs of U.S. Trade Restrictions on Indonesian Exports

World renowned economist finds U.S. trade protections on coated paper products will cost Indonesian companies part of their U.S. market share and raise prices for U.S. consumers

Washington, DC - Today, the pro-development NGO, World Growth, released a new study by Dr. Robert Shapiro, former Undersecretary of Commerce during the Clinton Administration and chairman of the economic advisory firm Sonecon, which concludes that trade restrictions imposed recently by the U.S. on certain coated paper products imported from Indonesia and China would have adverse effects on U.S. consumers. The analysis was released ahead of the one-year anniversary of the U.S. Department of Commerce’s issuance of anti-dumping and countervailing duty orders on coated paper product exports from China and Indonesia into U.S. markets.

In recent years, manufacturers in Indonesia, including pulp and paper producers, have become highly competitive in the U.S. and world markets by combining the effective use of advanced technologies and business methods brought in by foreign direct investors, with certain low costs. Their rapid growth has allowed them to both meet much of Indonesia own fast-growing demand for these products and compete directly in other markets with U.S. and European producers.

The World Growth-commissioned report found that trade restrictions recently imposed on both Indonesian and Chinese coated paper products, through U.S. anti-dumping and countervailing duties, will prove to be counterproductive for U.S. consumers and businesses. The report recommends the U.S. Government and U.S. producers to drop their reliance on trade protectionism.

“The duties imposed on Indonesian coated-paper products by the U.S. will directly raise domestic prices for these products, without producing any long-term benefits for U.S. producers and their workers,” said report author Dr. Robert Shapiro. “If Asian paper producers continue to upgrade their technologies and organizations while American producers depend upon duties to make their products more price-competitive in the United States, the ultimate result will be a growing share of the world market for Asian producers and a shrinking share for U.S. companies.”

“The antidumping and countervailing duty measures imposed on imports of coated paper products from China and Indonesia will not only raise U.S. domestic prices for those products, but will also lower the prices of Chinese and Indonesian exports of those goods to the rest of the world. This will make the same U.S. producers who pressed for the U.S. duties less price-competitive when they try to export their products to those third-country markets.

“American businesses and workers cannot avoid increasing competition from businesses in fast-growing developing countries, such as Indonesia, that can combine lower costs and the use of advanced technologies and business method provided through foreign direct investment,” added Dr. Shapiro.

World Growth Chairman Ambassador Alan Oxley hopes the findings of the report to encourage the U.S. government to lift its trade sanctions against Indonesian products.

“Allowing Indonesian manufacturers a level playing field in the U.S. market would be beneficial to industries in both countries. An increased export to the U.S., facilitated by a more open U.S. market, would stimulate the Indonesian economy, which in turn would create jobs and raise the overall welfare of Indonesians. For U.S. manufacturers, competition with their Indonesian counterparts would drive them to innovate, creating better products for their customers,” said Ambassador Oxley, who had served as Chairman of the General Agreement on Trade and Tariffs (GATT) Contracting Parties, the predecessor to the World Trade Organization.

Click here to read the report, The Economic Impact of U.S. Trade Sanctions on Imports of Paper Products.

World Growth is a non-profit, non-governmental organization established to expand the research, information, advocacy, and other resources to improve the economic conditions and living standards in developing and transitional countries. At World Growth, we embrace the age of globalization and the power of free trade to eradicate poverty and create jobs and opportunities. World Growth supports the production of palm oil and the use of forestry as a means to promote economic growth, reduce poverty and mitigate greenhouse gas emissions. World Growth believes a robust cultivation of palm oil and forestry provides an effective means of environmental stewardship that can serve as the catalyst for increasing social and economic development. For more information on World Growth, visit www.worldgrowth.org.

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