and Opportunities for Indonesia Jakarta, 5 September 2017 By Ni - - PowerPoint PPT Presentation

Perdagangan Sebagai Sektor Penggerak Pertumbuhan dan Daya Saing Ekonomi, serta Penciptaan Kemakmuran Rakyat

Negotiating FTAs: Challenges and Opportunities for Indonesia

Jakarta, 5 September 2017 By Ni Made Ayu Marthini, Director of Bilateral Negotiations Directorate General of International Trade Negotiations Ministry of Trade, Republic of Indonesia

The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

OUTLINE

• 1. INDONESIA’S INITIATION TO ENTER NEW BILATERAL NEGOTIATIONS
• a. THE URGE TO REFORM
• b. THE NECESSARY TO STRENGTHEN/IMPROVE COMPETITIVENESS
• c. THE COMMITMENT TO BE A WORLD CLASS NATION
• 2. INDONESIA’S PREVIOUS EXPERIENCE IN BILATERAL TRADE
• 3. INDONESIA’S CURRENT FTA NEGOTIATIONS: STATUS AND DEVELOPMENT
• 4. KEY FTA NEGOTIATING ISSUES AND CHALLENGES FACED BY INDONESIA
• 5. DO’S AND DON’TS IN NEGOTIATIONS
• 6. OPPORTUNITIES FOR INDONESIA FROM THE FTA NEGOTIATIONS
• 7. FUTURE PROSPECT FOR INDONESIA’S FTA NEGOTIATIONS

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The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• 1. INDONESIA’S INITIATION TO ENTER NEW NEGOTIATIONS

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The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• a. THE URGE TO REFORM: TRIGGERED BY THE GLOBAL AND REGIONAL TREND

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BREXIT: anxiety among EU countries Trump’s New Protectionism Around the Globe:

• The Protectionism

sentiment is on the rise

• The increase of

competetiveness among countries

• The uncertainty of future

trade mechanism under WTO regulation Domestic Challenges:

• 1. Developing the

required infrastructure to have strong competitive advantage for national economy

• 2. The

unpromising Economic Outlook 2017 Internet of Things (the fourth industry revolution) Regional and Global Value Chains

The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• b. THE NECESSARY TO STRENGTHEN/IMPROVE COMPETITIVENESS

FTA AGREEMENT AS ONE OF FACTORS TO STRENGTHEN NATION COMPETITIVENESS (EXAMPLE: VIETNAM)

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• Migration of furniture industry and handicraft to Vietnam

– Indonesian Furniture and Consumers Association (AMKRI) stated that there were several foreign companies migrating to Vietnam to seek efficiency on cost of production. – Vietnam has competitive advantage: 1) ease of doing business; 2) very efficient – bring a profit up to 30% for exporters , and 3) FTA agreement with EU.

• 30% of factories in Batam were planning to move to Vietnam

(source : http://bisnis.liputan6.com/, 2016 )

• SAMSUNG has top up the investment in VIetnam as much as USD 3,38 billions.

(source: www.thanhniennewd.com, 2014 )

• Taiwanese furniture investor in Sidoarjo migrated to Vietnam

(source: http://www.antaranews.com/, 2015)

• LG ELECTRONICS has top up the investment as much as USD 1,5 M

(Sumber: www.vietnam.briefing.com, 2016)

The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• c. THE COMMITMENT TO BE A WORLD CLASS NATION

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 By having trade agreements with trade partners, Indonesia will be forced to: – build infrastructure to improve connectivity – roads, airports, ports – improve the quality of human resources – increase competitiveness – increase its ease of doing business – deregulation, transparency  Indonesia has the basic ingredients: demography, natural resources, but it is the reformation and development that will make Indonesia to be a world class nation

The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• 2. INDONESIA’S PREVIOUS EXPERIENCE IN BILATERAL

TRADE

• Indonesia-Japan Economic Partnership Agreement (EPA) – concluded in 2017,

implemented in 2008

• Indonesia-Pakistan Preferential Trade Agreement (PTA) – concluded in 2012,

implemented in 2013

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The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• 3. INDONESIA’S CURRENT FTA NEGOTIATIONS:

STATUS AND DEVELOPMENT

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PERUNDINGAN PERDAGANGAN

INDONESIA

2 0 1 7 / 2 0 1 8

Indonesia-Pakistan PTA

Implemented: 2013 Current status: Review concluded (2017) First meeting of the Expansion/Deepening of PTA to be held February 2018

Indonesia-Japan EPA

Implemented: 2008 Current status: Proposed Early Harvest (2017) Target: General Review to be concluded in 2018

CEPA = Comprehensive Economic Partnerhip Agreement; EPA = Economic Partnership Agreement, PTA = Preferential Trade Agreement; CECA = Comprehensive Economic Cooperation Agreement; FTA = Free Trade Agreement; TIGA = Trade in Goods Agreement

ONGOING NEGOTIATIONS UPCOMING NEGOTIATIONS

Indonesia-Turkey CEPA

Current status: Launched (July 2017) First Meeting: October 2017

Indonesia-Mozambique PTA

Current status: Proposed (2017)

Indonesia-Egypt FTA

Current status: Proposed (2017)

Indonesia-Nigeria (ECOWAS) PTA

Current status: Proposed (2017

Indonesia-Peru PTA

Current status: Joint Study finished First Meeting: November 2017

Indonesia-Sri Lanka PTA

Current status: Joint Feasibility Study (2017)

Indonesia-Bangladesh PTA

Current status: Proposed (2017)

Indonesia-Taiwan ECA

Current status: Review Feasibility Study

Indonesia-EAEU TIGA

Current status: Proposed JSG (2017)

Indonesia-Kenya (EAC) PTA

Current status: Proposed (2017)

Indonesia-SACU PTA

Current status: Proposed Feasibility Study

Indonesia-GCC PTA

Current status: Proposed Feasibility Study

COMPLETED/ON REVIEW AGREEMENTS

ASEAN-Hong Kong FT A

Completed: 2017 Current Status: Planned to be signed in September/November 2017

Indonesia-European Union CEPA

Current status: Intersession Meeting follow up of 2nd Round of Negotiation (June 2017) 3rd Round of Negotiation (September 2017)

Indonesia-Australia CEPA

Current status: 8th Round of Negotiation (July 2017) 9th Round of Negotiation (October 2017) To be concluded in 2017

Indonesia-Chile CEPA

Current status: 3rd Trade in Goods (TIG) Negotiation (June 2017) 4th Trade in Goods (TIG) Negotiation (November 2017) To be concluded in 2017

Indonesia-Iran PTA

Current status: 3rd Round of Negotiation (July 2017) To be concluded in 2017/2018

Indonesia-EFTA CEPA

Current status: 12th Round of Negotiation (March 2017) To be concluded in 2017/2018

Regional Comprehensive Economic Partnership (RCEP)

Current status: 19th Round of Negotiation (July 2017)

1 2 3 5 4 6 1 2 3

RCEP

ASEAN-Canada FTA

Current status: Proposed Joint Feasibility Study

8 9 10 11 12 13 1 2 3 4 5 6 7

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 Preferential Trade Arrangement/PTA: The scope of the agreement is to reduce/take out few of export tariff which becomes the interest of partner country. In this agreement, ROO is also applied to ensure the originating status of product which is exported to partner countries. Other arrangement such as SPS, TBT, facilitation are also applied based on WTO and existing regulation (based on MFN regulation).  Trade in Goods Agreement/TIGA: The scope of the agreement is to reduce/take out all of export

• tariff. The agreement also covers other rules such as ROO, SPS, customs procedures & facilitation,

TBT, IPR, trade remedies which are based on Wto-plus. In certain cases, some countries are proposing additional arrangement such as geographical indications (GIs) arrangement.  Free Trade Agreement/FTA: The scope of this agreement is to liberalize sector of product, services and investment. The agreement covers other rules such as ROO, SPS, customs procedures & facilitation, TBT, IPR, trade remedies which are based on Wto-plus. In certain cases, some countries are proposing the agreement to include other aspect such as ecotech.  Comprehensive Economic Partnership Agreement/CEPA: The scope of this agreement covers in liberalization, facilitation, ecotech, rules, and other specific issues such as SMEs, GIs, competition, sustainable development, SOEs, government procurement.

FORMS OF AGREEMENT: PTA, TIGA, FTA, CEPA

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• Stakeholder

Engagement: It is difficult to engage with inter- ministries/agencies (different sense of level of urgency, different interest and vision, communication issues, bureaucracy, culture)

• Complicated Regulations: Some regulations need to be revised to meet

standards of trade partners (especially if the trade partners are developed countries)

• Human

Resources: quantity, lack

• f

experiences and capacity, thus recruitment and capacity building are very essential

• Getting Support from Public (including Private Sectors): Some people are

reluctant in opening domestic market for foreign producers; Indonesian producers are sometimes too comfortable with domestic and traditional markets

• Implementation/Utilization of Trade Agreements
• 4. KEY FTA NEGOTIATING ISSUES AND CHALLENGES FACED BY

INDONESIA

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• Negotiation is “being hard on issues, soft on people”.
• 5. DO’S AND DON’TS IN NEGOTIATIONS
• Other tips: control yourself, calm and measured; know your substances; focus;

get enough sleep; do your role professionally as a chief negotiator, deputy/alternate, member of delegation (supporting/technical).

Don’t see it as a contest Don’t bargain over positions Don’t attack people Don’t focus on differences Don’t search for the right solution See it as a joint effort, think Win-Win Solve a problem jointly Attack the problem Focus on common interests Be creative, brainstorm multiple options to choose from

The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• 6. OPPORTUNITIES FOR INDONESIA FROM THE FTA

NEGOTIATIONS

• Indonesia will have the privileges in having full preference scheme which is agreed

upon the FTA agreement

• Indonesia will be able to retain the access of existing markets and penetrate to new

markets (with new country patners)

• Indonesian products will be competitive in its FTA partners’ markets
• Indonesia will get access to cheaper raw materials or capital goods for domestic

industries

• Indonesian consumers will get more preferences and affordable consumers goods

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The Ministry of Trade of the Republic of Indonesia The Ministry of Trade of the Republic of Indonesia

• 7. FUTURE PROSPECT FOR INDONESIA’S FTA NEGOTIATIONS
• By end of this year, Indonesia will have template for almost all bilateral agreements

(PTA, TIGA, CEPA)

• Using a template will make it easier for Indonesia to accelerate or open new

bilateral trade negotiations with its trade partners

• FTA Center to disseminate the FTA information to stakeholders

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THANK YOU

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