Indonesia proposes to increase tariffs on EU dairy products

Published 14 August 19

On 2 August, the Indonesian government announced proposals to increase import tariffs on EU dairy products. The move was in retaliation to EU plans to impose anti-subsidy duties on palm biodiesel from Indonesia, which are expected to be applied in early September.

Currently, EU dairy products sent to Indonesia are subject to a 5% import tariff. However, the proposals are to increase the tariff rate to as high as 25%.

Indonesia is the fourth largest export market for EU dairy products. Last year, the EU exported 164,000 tonnes of product, at a value of £221 million. The EU accounts for nearly 40% of all Indonesian imports. Whey and milk powders make up the majority of shipments.

EU dairy exports to Indonesia (2018)

The restrictive measures are also expected to extend to non-tariffs based barriers. Import permits for dairy products from an EU-origin are expected to be delayed or rejected. Meanwhile, permits from alternative origins are expected to be prioritised.

Reports suggest that some EU-exporters have already experienced problems with the Indonesian authorities issuing import permits.  Allegedly, Indonesian dairy imports have been asked to source products from outside of the EU.

How could this impact EU dairy exports?

Additonal Tariff

With the addition of the 25% tariff, nearly all dairy EU products become uncompetitive when compared to alternative sources. For example, EU butter could be more than double the price of butter from Australian. Adding further barriers to EU exports to the region is the recent free-trade agreement with Australia, which will remove all tariffs on dairy products from next year.

Value Of Dairy Exports To Indonesia

Felicity Rusk