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Jakarta Post

Tackling trade barriers in Indonesia

  • Arancha González

    The Jakarta Post

Geneva   /   Thu, December 5, 2013   /  09:59 am

Delays, unusually high fees and excessive documentation are just some of the difficulties that businesses in Indonesia face as they trade with the rest of the world.

Exporters of fresh food, a sector worth more than US$13 billion in exports last year, are particularly affected by barriers to trade, with 60 percent of fresh food companies reporting that they face restrictive measures on a daily basis, according to a survey of close to 1,000 Indonesian businesses by the International Trade Center (ITC), presented recently. Producers of processed food, wood products, electronic components and clothing all say that they come across similar problems.

The survey has found that 37 percent of businesses in Indonesia are affected by non-tariff barriers to trade. This figure is lower than the average of 55 percent in other developing countries but there is room for improvement.

Businesses still face difficulty in gaining access to global markets, difficulties which are costly in both time and money.

Non-tariff measures include a variety of regulations on imports and exports such as technical requirements, rules of origin or quotas. Experts from ITC and the Ministry of Trade met in Jakarta with representatives from the private sector, trade support institutions, government agencies and academics to discuss how to tackle these trade barriers.

Some of the recommendations put forward by ITC include discussing difficulties directly with partner countries, and examining the processes involved in issuing export licenses.

Addressing non-tariff measures was also at the heart of the Trade Facilitation Agreement negotiated ahead of the 9th Ministerial Conference of the World Trade Organization in Bali.

ITC, the multilateral agency dedicated to helping small businesses in developing countries export, supports the conclusion of the negotiations on the Agreement.

The benefits of more '€œfluid borders'€ are extremely critical in today'€™s environment of global production sharing, shortened product lifecycles and intense global competition.

Fluidity does not mean compromising safety or security, but rather it entails ensuring that legitimate measures to protect consumers are as trade enabling as possible.

Competitive exporting requires efficient access to imported raw materials, intermediate goods and capital goods. Trade facilitation is good for reducing the costs of exporting and importing, both of which are essential to operate in value chains.

A deal on trade facilitation will expand business opportunities for the private sector in all countries, specifically for the small- and medium-size enterprises which account for more than two-thirds of global employment.

A Trade Facilitation Agreement would provide a global framework for the nearly 160 WTO member nations to move goods across borders more efficiently. It would also require transparent, accessible and consistent customs procedures.

These requirements, which can be gradually phased in, would enhance existing commitments in a number of areas such as freedom of transit, import/export fees and the publishing and administration of trade regulations.

However, no agreement on its own can bring about change. It is implementation that will unleash the potential which more streamlined customs and border procedures can offer.

ITC is prepared to assist developing countries in implementing trade facilitation measures. Our work in Indonesia on exposing the harmful effects of non-tariff measures is part of this effort.

The findings of the NTM surveys conducted by the ITC are a very important tool in the hands of governments and business, specifically SMEs, to build coherence around how to address these measures.

The writer is executive director of the International Trade Center.

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