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Updated Tuesday, November 13, 2012 at 11:51 AM

State’s apple exporters hit wall of paperwork in Indonesia

By Kyung M. Song
Seattle Times Washington bureau

WASHINGTON — Shipments of Washington apples to its fifth-largest export market have ground to a halt after Indonesia began enforcing new inspection and labeling rules on imported fruits and vegetables — the latest eruption of non-tariff barriers that are frustrating exporters.

After months of delays, Indonesian officials said last week they will bar entry for shipments that departed after Oct. 28 unless they comply with the new regulations. But even cargo that arrived in Jakarta before that date without the required paperwork is being held up at the port.

The resulting uncertainty has all but suspended exports of Washington apples, pears, cherries and other produce and forced some shippers to scramble to reroute ocean vessels en route to Indonesia to other markets.

“Based on conversations I am having with shippers, I think that shipments have completely stopped,” said Mark Powers, vice president of the Northwest Horticulture Council in Yakima, a trade group that handles regulatory and other matters for the fruit-tree industry. “There is a great deal of confusion.”

Such trade disruptions are becoming more frequent even as the United States is knocking down tariffs around the world. In Washington, the effects can show up most acutely with apples, the state’s largest cash crop.

In August, China stopped issuing import permits for U.S. Red and Golden Delicious apples in what American growers suspect is an attempt to protect domestic apple producers. China permits imports of only those two varieties, but Gala, Braeburn and other types reportedly are reaching mainland China via Hong Kong.

In South Korea, where a free-trade agreement with the United States went into effect in March, American apples have yet to arrive because of concerns about pests and diseases.

Potential economic consequences from such non-tariff barriers, however, are much greater when it comes to Indonesia and other countries that already are big customers of Washington apples. Indonesia imports more U.S. apples than any nation except Mexico, Canada, India and China/Hong Kong.

But thanks to a poor apple harvest from frost damage in New York and Michigan, Washington growers this year have had no trouble finding buyers for their record crop of 121.5 million boxes. Otherwise, Powers said, losses from a permanent closure of the Indonesian apple market could total $40 million or more annually.

Washington produces about 60 percent of the nation’s domestic apples and 90 percent of export apples. In 2010-2011, the state produced and packed $3.35 billion worth of apples.

Nearly a third of the state’s crop is sold overseas in more than 60 countries.

Powers said growers and shippers are still trying to figure out Indonesia’s new regulations. Chief among them is a requirement that contents of all shipments must be verified by Indonesian inspectors upon arrival or by a third-party in the country of origin.

In addition, product packaging must be written in Bahasa Indonesia, the country’s official language, and carry such mandatory labels as a recycling code. It’s also possible, Powers said, that Indonesia may impose a cap on total apple imports.

In Congress, a bipartisan group of lawmakers has been pressing for months to rescind Indonesia’s new labeling and licensing rules. Reps. Jim McDermott, D-Seattle, Dave Reichert, R-Auburn, and Doc Hasting, R-Pasco, are among those who have called on the United States Trade Representative and the Indonesian government to keep that market open to U.S. crops.

McDermott, co-chairman of the Congressional Indonesia Caucus, lobbied the Indonesian foreign minister and other officials last week while he was attending the Bali Democracy Forum in that country.

Desmond O’Rourke, retired professor of economics at Washington State University and a fruit-trade consultant in Pullman, sees Indonesia as a crucial test case. Even as world economies move toward more open trade and lower tariffs, other barriers in the form of technical and sanitary standards are threatening to proliferate.

For instance, stringent pest and disease standards — along with commercial missteps — have effectively barred American apple exports to Japan since 1995.

O’Rourke said that tactic hasn’t been lost on the large domestic apple industry in South Korea, where a 45 percent tariff on all U.S. apple varieties except Fuji will be phased out in 10 years.

“If Indonesia gets away with it, other countries might try,” he said.

Kyung Song: 202-383-6108 or ksong@seattletimes.com


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