Vision Group Report: Invigorating the Indonesia-EU Partnership

Nowadays, in trade relations – even between developed
and developing countries – tariffs are not the important
challenge. Effective market access means meeting all
the technical and sanitary related regulations, to ensure
access goes beyond so called ‘naked access’ at borders but
amounts to effective market access including provisions
covering TBTs, SPS and NTMs.
5.1 tarIffs
The scope for tariff reductions in an EU-Indonesian bilateral
context is limited by the existing level of tariff liberalization
especially within the frameworks of WTO and ASEAN.
A simple comparative analysis of tariff lines shows that
those are already relatively low. The simple average of
MFN tariff applied, is 5.3% for the EU (2009) and 6.9% for
Indonesia (2007) The Vision Group therefore recommends
a move to zero tariffs for 95% of tariff lines (covering
at least 95% of trade value) in a period of maximum
9 years. A best-endeavour clause on the remaining 5%
should permit further progress.
Moreover, the Vision Group recognises that in an
asymmetrical relationship the speed of implementation of
tariff reductions takes into account the different levels of
development. Still, as 60% of the tariff lines of the two
parties are between 0 and 5% and 20% are already at zero,
gains from tariff measures would be expected to be small.
However, the positive impacts from simply dismantling
tariffs cannot take into account the dynamic gains to be
generated from, for example, increased investment, the
liberalisation of services and the dismantling of non-tariff
barriers.
Below, an example is given of how an asymmetric tariff
liberalisation could be implemented. Legend: T=time in
years; Commitments: % of tariff removed
Commitments
100%
75%
50%
25%
EU INA
T o T 3 T6
T 9
Different speeds should apply to different products of
different “sensitivities”. The least sensitive ones should
be liberalised faster with the greater parts of commitment
implemented at the time of entry into force of the
agreement. The most sensitive ones could be liberalised
more slowly. This approach should be adopted to give
enough time to Indonesia to improve its preparedness for
market opening, allowing for a higher likelihood that the
benefits from the EU-Indonesia CEPA will be shared more
evenly.
Finally, safeguards and provisions on sensitive sectors may
be incorporated. At the same time, credibility and ambition
would be negatively affected if such provisions and their
application would not remain truly exceptional and subject
to objective criteria.
5.2. tbts and ntMs
Market access for goods depends critically on overcoming
or avoiding sanitary (SPS) and technical standards
(TBT) issues and sometimes other non tariff measures
(NTMs) such as onerous administrative requirements
and excessive licensing. TBTs are technical regulations,
standards, conformity assessment procedures and
similar regulatory requirements (e.g. inspections,
approvals) that might restrict trade. NTMs are a broader
concept encompassing all barriers to trade other than
tariffs and arise in many different forms (quotas, custom
procedures, etc). The costs created by TBTs and SPS are
a high burden, particularly for SMEs. Overcoming their
negative side effects therefore becomes necessary.
Key instruments in the TBT field supported by the
Vision Group are:
» Promotion and enhanced effectiveness of technical
assistance in the TBT area.
» Greater harmonisation of technical regulations,
standards and conformity assessment procedures,
notably through greater use of international
standards.
» Pursuit of good regulatory practices to promote less
onerous and burdensome technical requirements,
including in the field of conformity assessment.
» Enhanced implementation of TBT transparency
provisions with a view to ensuring that WTO
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