The Maryvale Paper Mill in Victoria, Australia. Credit:Bloomberg Dumping duties are a protectionist tariff imposed on foreign imports which a domestic government believes are priced below fair market value. Australia and Indonesia are in the middle of negotiating a free-trade deal, which the leaders of both countries want wrapped up by the end of the year. Asked if he was optimistic about the trade talks, Mr Lukita said: "I can't say I'm optimistic however we have conveyed our position". The head of Indonesia's free trade negotiation team, Deddy Saleh, said Australia's decision to enforce anti-dumping duties would "obviously" affect free-trade deal discussions.

"We explained to Australia that it [the dumping accusation] is not true, but they insisted, just to protect their industry," Mr Deddy said. "So it means there is unfairness. How can we conduct negotiations when we know that our counterpart is not fair? Negotiation takes mutual trust from both sides." The Australian government decided to impose the duties after the Anti-Dumping Commissioner found the Australian paper industry experienced loss of sales, price suppression, reduced profits and reduced revenue as a result of the dumped paper. The decision will benefit Australia's only paper manufacturer - Australian Paper - whose Maryvale mill is the biggest private employer in the struggling Gippsland region. Mr Ciobo said he was aware of Mr Lukita's concerns and had discussed the independence of Australia's Anti-Dumping Commission with him.

"Australia's robust anti-dumping system is transparent, consultative and complies with our international obligations," Mr Ciobo told Fairfax Media. "I have encouraged the Indonesian Government to raise any concerns with the Anti-Dumping Commission directly." Mr Ciobo said he had written to Mr Lukita again outlining options for appealing the decision. The two ministers "remain in regular contact" as they worked on the landmark free-trade deal, known as the Indonesia Australia Comprehensive Economic Partnership Agreement. The Anti-Dumping Commission said the Indonesian government's support for the development of timber plantations and its ban on the export of timber logs had directly resulted in the distortion of the price for A4 copy paper. But in a submission to the commission, anti-dumping specialist Roger Simpson said the Indonesian government had explained that the log export ban did not apply to the acacia and eucalyptus timber used by Indonesian pulp and paper industries.

Mr Simpson, who represents Indonesian pulp and paper company Sinar Mas, told Fairfax Media earlier this month he would appeal the decision to the anti-dumping review panel. Mr Deddy, Indonesia's chief negotiator in the free-trade talks, said if a decision was issued which the Indonesian government regarded as not fair it would take the case to the World Trade Organisation. He said using the log export ban as a reason for the alleged distortion of paper prices was one example that was "illogical and irrational". "If we challenge it to the World Trade Organisation I believe we can win." However Mr Lukita said he hoped the issue could be solved bilaterally. "We have sent the letter some time ago."

Australia Indonesia Business Council President Debnath Guharoy said he was disappointed by the decision to impose dumping duties at this point in the trade negotiations. "This is undoubtedly a setback as this is very important from the Indonesian perspective," Mr Guharoy said. "We have got to find a way out of this impasse." Mr Guharoy said a fairer approach would be to provide anti-dumping guidelines for paper manufacturers rather than a "blanket assault on Indonesia". "Those manufacturers who have evidence of meeting those guidelines should be welcomed," he said.

"We need to try to engage in intelligent conversation not to threaten each other." In August Australia was also warned that an Anti-Dumping Commission finding that exporters of tinned tomatos had dumped their products here could put a free-trade deal with the European Union at risk. Follow Jewel Topsfield on Facebook