Indonesian Yarn Manufacturers Seek Safeguards to Prevent Foreign Yarn Dumping

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Led by the Indonesian Synthetic Fiber Association (ISFA), yarn manufacturers in Indonesia are petitioning their government to impose a temporary safeguard duty on imported yarn products.

Indonesia’s local yarn manufacturers are keen to protect the country’s domestic industry whose products, particularly polyester, have struggled to compete with cheaper imported yarns due to higher production costs. Secretary-general, Redma Wirawasta, of the ISFA has claimed that many foreign yarn producers have essentially dumped their products onto the Indonesian market, selling them at lower prices in an effort to compensate for weak global demand.

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According to the secretary-general “We have seen a rising demand for textile and garment products in recent years as our middle-class population has grown. But most of the garments use large amounts of imported yarns. We hope that the government helps the yarn producers until there is a stable supply and demand in the global market.”

It is hoped that the measures called for will induce downstream textile companies to use local yarn products. In 2014, Indonesia’s local textile industry exported US$12.7 billion worth of products, a slight increase over the previous year’s level of US$12.5 billion. Additionally, the industry imported US$8.39 billion worth of products.

As stated above, competition in the polyester sector has been particularly fierce and Indonesia’s local manufacturers have found themselves on the losing end of the recent battles. According to the ISFA, Indonesia’s 2014 total consumption of polyester was 620,000 tons, 135,000 of which was imported. Imports have greatly increased over previous years – in 2010 the country only imported 72,000 tons of polyester. The ISFA predicts that in 2015 the local textile industry will consume 650,000 tons of polyester.

Indonesia is not the only country in Southeast Asia to find itself in a conundrum vis-à-vis yarn and the products made out of it. As part of the ongoing Trans-Pacific Partnership negotiations, American trade negotiators are currently pushing Vietnam to drastically reduce its imports of textiles from China (which is not a part of the TPP). It is the intention of the United States to push Vietnam to begin importing more fabric from the US, thus growing that country’s fabric industry and creating more jobs.

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A key part of this strategy is the move by the US to have a rule known as “yarn forward” included in the TPP agreement. In essence, “yarn forward” would require that only fabric produced from yarn made by a TPP country would qualify for the trade agreement’s duty-free status. The rule is intended to ensure that the trade benefits of the TPP only apply to signatory countries rather than outside players such as China. However, the rule also has significant effects on signatory countries, such as Vietnam.


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