RESTRICTED
WORLD TRADE G/STR/W/16
26March 1996
ORGANIZATION(96-1071)
Original: English Working Party onState Trading Enterprises
REPLY TOQUESTION FROM THE UNITED STATES1ON
THE ARTICLE XVII NOTIFICATION OFINDONESIA2
Thefollowing communication, dated 13March 1996, hasbeenreceived fromthePermanent
Mission ofIndonesia.
_______________
Indonesia shares theviewthattransparency isessential forthepurpose ofthereview process
inthework oftheWorking Party onStateTrading Enterprises. However, Indonesia alsoshares the
reluctance ofsome Members oftheWorking Party toengage inadiscussion oftheconsistency ofany
statetrading enterprises notified, including BULOG, withanyprovisions ofGATT 1994 other than
Article XVII. Therefore, based onthatunderstanding, Indonesia would liketogivesome clarifications
ontheUSquestion asfollows:
1. Article XVII anditsinterpretation states thatgovernment institutions and/or private enterprises
whichweregrantedexclusiverightsand/orprivilegesbythegovernmentrenderingthemcapable
ofinfluencing imports orexports, could beconsidered asState Trading Enterprises (STE).
2. BULOG isthegovernment institution which wasgranted special rights assoleimporter and/or
exporter ofcertain foodcommodities withtheaimofstabilizing thesupply andtheprice of
thesaidcommodities onthedomestic market, thushelping toensure theobjectives ofsustained
development andeconomic growth. Therefore BULOG appears toenjoy aspecial privilege
within themeaning ofArticle XVII ofGATT 1994.
3. BULOG 'soperations asanSTEareconsistent withArticle II:4ofGATT 1994 (negotiated
tariff concessions) since thedomestic price oftheproducts under themonopoly ofBULOG
doesnotexceed theamount ofprotection provided inIndonesia 'sschedule ofcommitments
asstipulated initsSchedule XXI.
1G/STR/W/10
2G/STR/N/1/IDN
./.G/STR/W/16
Page2
4. (a) Schedule XXI-Indonesia
Commodities Baserateofduty Bound rateofduty
Rice 180% 160%
Sugar 110% 95%
Wheat andwheat flour 30% 27%
Soybean 30% 27%
4. (b) Comparison between theratioofinternal/external price totherateofduty
External price,
c.i.f. (US$/ton)Internal price;
wholesale
(US$/ton)Internal/external
priceBound rateof
duty
Rice 372.11 370.85 -0.34% 160%
Sugar 384.65 567.19 47.46% 95%
Wheat flour 321.96 306.4 -4.84% 30%
Soybean 328.45 490.84 12.91 30%
Note: Price forOctober 1995.
5. Uptonow,thedomestic priceforthefoodcommodities under BULOG hasalways beenbelow
thebound rateofduty. TheTables above alsoclearly show thattheratiooftheinternal to
theexternal priceisbelow thebound rateofduty. Therefore, BULOG asanSTEisconsistent
withbothArticles XVII andII:4ofGATT 1994.
6. TheSchedule ofCommitments ofIndonesia forMarket Access, inparticular minimum access
forrice,is70,000 tons. Infact,fortheyear1994/95, Indonesia imported 1,800,979 tons
ofrice.
7. Inimporting those foodcommodities, BULOG follows theprinciple ofnon-discrimination.
Inaddition thedatashow thatthecountry oforigin ofimportation ofthose foodcommodities
isthemajor supplier.