China to lift tariffs on Indonesian cocoa

By Dominique Patton

- Last updated on GMT

Related tags: International trade, China

China will remove the import duty on Indonesian cocoa from 1
January next year, a move likely to increase demand for the beans
from the world's third biggest producer.

The removal of the import duty was agreed during a meeting of the Joint Commission on Economic, Trade and Technical Cooperation between Indonesia and China in Bali on October 6. In turn, Indonesia will lift the duty levied on chili powder from China. The news will be welcomed by China's growing chocolate industry. While China's chocolate consumption is still much lower than western markets, it is growing significantly. Euromonitor estimates that sales of chocolate confectionery reached $636.9 million in 2005, up 9 per cent on the prior year. Laurent Pipitone, senior statistician at the International Cocoa Organisation, said demand for Indonesian beans is already high owing to lower transport costs compared with those shipped from West Africa, as well as a lower price. "Indonesian cocoa is already less expensive than African beans because it is of lower quality,"​ he told A tonne of Indonesian cocoa beans costs about US$200 less than the same amount from the Cote d'Ivoire, the world's biggest producer. "And because China is not yet a big market for high quality beans, I expect the removal of tariffs to create strong demand for Indonesian beans,"​ said Pipitone. China was previously accused of discriminating against Indonesian cocoa products. It has already lifted its import duties on Malaysian cocoa products but Indonesia products continued to be subject to a 15 per cent import tariff. Under the new agreement, the tariff will be removed. The value of Indonesian cocoa exports to China has nevertheless increased from US$10.9 million in 2004 to US$16 million in 2005, accounting for around a third of its total imports. China's total imports of cocoa beans and shells during 2004-05 amounted to 48,000 tonnes, up from only 30,000 tonnes four years earlier.

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