Researchers from the Economic Research Institute for Asean and East Asia (Eria) and the Center for Indonesian Policy Studies (Cips) have advised Asean countries to harmonise their non-tariff measures (NTMs) to boost intra-regional trade.
With the adoption of the Asian Trade in Goods Agreement, six members of the association, namely Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand, have eliminated import duties on 99.6 per cent of their tariff line, while four members, Cambodia, Lao PDR, Myanmar and Vietnam, have reduced their import duties to between zero and five per cent on 98.86 per cent of their tariff line.
However, the researchers said that trade in the region remained low due to NTM policies enforced in Asean countries, such as trade quotas, licences, regulations, label requirements, price controls and anticompetitive measures.
Last year, Indonesia’s exports to Asean countries totalled $35 billion, or 23 per cent of the country’s total exports, while its non-oil and gas imports totalled $29 billion, or 19.6 per cent of its total non-oil and gas imports, Statistics Indonesia’s data shows.
“To improve trade performance, regional trade agreements must go beyond trade liberalisation in order to provide tangible benefits. Overcoming NTM and other trade facilitation issues must be the core of a transparent, actionable and realistic work programme,” Eria policy fellow and trade expert Salvador Buban said in a statement.
Cips researcher Felippe Amanta said that, in Asean, NTMs were usually used to control the amount of traded goods through quota enforcement, adding that NTMs also impacted prices, as packaging and labeling requirements increased trade costs.
Eria’s study found 192 NTM regulations in Indonesia and 977 coded NTMs last year, an increase of 14 per cent from 169 NTM regulations in 2015. Overall, 9,502 NTMs were enforced by Asean countries in 2018, an increase of 15 per cent from 8,237 in 2015.
To help harmonise the NTM regulations of its member countries, Asean requires members to establish a database on applied NTMs and provide notification for the adoption and amendment of NTM measures. The regional association also requires information on NTMs to be included in the Asean Trade Repository.
The Trade Ministry’s director for Asean negotiations, Donna Gultom, said that while it would be impossible for developing countries such as Indonesia to completely omit NTMs, she said the country would follow Asean’s NTM guidelines.
Eria has also developed an NTM database with the UN Conference on Trade and Development to increase transparency and developed the Asean Seamless Trade Facilitation Indicators with the Asean Trade Facilitation Joint Consultative Committee to clarify the implementation of trade measures in the region.
Felippe said that while some NTMs were essential to protect consumers, such as sanitary and phytosanitary measures to inspect traded goods for diseases, pests and contaminants, others were unnecessary, such as the requirement to import one brood cow for every five cattle imported, which had not been well enforced.
“It’s really hard to strike a balance, that’s why we need a lot of research and data analysis. The government, private sector actors, and think tanks also need to collaborate,” Felippe told reporters on Friday.
She added that with the harmonisation of NTMs, Indonesia could hopefully play a bigger role in the global value chain through Asean’s market amid the ongoing trade tensions between the US and China.
Regarding the trade roadblock, Salvador expressed optimism that the region could overcome the NTM issue. “I think Asean has been at the forefront of addressing NTMs. I think Asean is on the right track,” he said.
THE JAKARTA POST/ASIA NEWS NETWORK