* Indonesia imports 60 pct of flour needs from Turkey
* Case could deal blow to growing trade ties
* Temporary tax due to expire in June
By Can Sezer
ISTANBUL, March 27 (Reuters) - Turkey could ultimately bring a case against Indonesia at the World Trade Organisation over a tax which Jakarta imposed on flour imports if the duty is made permanent, Turkish industry officials said.
The tax halted new Turkish flour exports to Southeast Asia's largest economy and the dispute could deal a blow to trade between the two countries which amounted to more than $2 billion last year.
Indonesia imposed the emergency tariff on wheat flour imports for 200 days on Dec. 5 while it investigates the impact of imports on domestic mills.
Jakarta may then opt to impose the tax for a four year period which could later be extended for a further four years.
Turkey supplies 60 percent of Indonesia's flour imports but with very thin margins and the tariff has made its products uncompetitive in the Indonesian market.
"This is of course a matter for the Economy Ministry, but I expect a case will be opened against Indonesia," said Turgay Unlu, head of the Central Anatolian grain exporters union, which has regular contact with the government on trade issues.
"These relations are always based on reciprocity. I believe Turkey will exercise its rights within the WTO to the full extent," he said.
An economy official familiar with the subject said Turkey's response would take into account its friendly relationship with Indonesia and the priority was a diplomatic initiative to resolve the issue.
"Both countries are WTO members and it is clear how such trade disagreements are resolved. We are taking all measures to close the matter without any action. An initiative through WTO would be a last resort," the official in Ankara said.
Turkey, a major global flour exporter, exported 210,000 tonnes of flour to Indonesia in 2012, down from 376,000 tonnes a year earlier.
Indonesia, with a growing population of 240 million, is increasing its consumption of flour products as it moves beyond its traditional focus on rice consumption.
Indonesia imports all of its wheat needs, both unprocessed grains and flour, which is largely used to make noodles, bread, cakes, biscuits and convenience snacks.
Unlu said Indonesia's actions did not have a reasonable basis, saying its flour producers had been increasing their sales and were profitable before the tax was imposed.
Fast-growing Turkey, whose exports traditionally focused on European Union countries, has sought to diversify its markets in recent years through increased trade with Africa, the Middle East and Asia.
According to Turkish Statistics Institute data, Turkey's total exports to Indonesia last year amounted to 243.7 million lira ($134 mln), with imports from Indonesia totalling $1.8 billion.
($1 = 1.8143 Turkish liras)
(Additional reporting by Ozge Ozbilgin; Writing by Daren Butler; Editing by Nick Tattersall and Toby Chopra)
((daren.butler@thomsonreuters.com)(+90-212-350 7122)(Reuters Messaging: daren.butler.thomsonreuters.com@reuters.net))
Keywords: TURKEY INDONESIA/FLOUR
