Exploring Non-Tariff Measures Facing the Indonesian Agricultural Products in FTA/CEPA Trading Partners
Ernawati Munadi, Ayu Sinta Saputri
University of Wijaya Kusuma Surabaya, Ministry of Trade
Abstract
Agricultural is important sector for Indonesian economy with 21.8% contribution to total non-oil and gas export in last 5 years, and grow at 1.9% annually. Agricultural products export is dominated by oil palm and its derivative contributed about 55% of total non-oil and gas export. It is observed that Indonesia agricultural products faces challenges in complying with stringent non-tariff measures (NTMs) imposed by importing countries, such as SPS and TBT. This article tries to address some NTMs issues on Indonesian agricultural export such as coverage ratio, regulatory distances, and the most prevalent NTMs on Indonesian agricultural export. The study utilizes coverage ratio indicator and regulatory distance analysis. The study shows that the ability of Indonesia for better market access on major trading partner depends on the ability to comply with SPS and TBT measures, shown by their high prevalent. However, coverage ratio average on Indonesian agricultural export is only 13% implies that NTMs policy on agriculture products imposed by Indonesian FTA/CEPA trading partners impacted only 13% of Indonesian agriculture products export to its FTA/CEPA trading partners. The regulatory distances between Indonesia and her agricultural export partners is 0.43 indicates that 43% of Indonesian NTMs on agriculture products are different with its main FTA/CEPA trading partners. Indonesia is encouraged to address NTMs issues with its FTA/CEPA trading partners, particularly on any stringent NTMs and procedural obstacles as they often burden exporter related to SPS and TBT implementation.
Keywords: Non-Tariff Measures; Regulatory Distance Analysis; coverage ratio
Topic: Trade policies strategic Responses