Capacity building for Indonesia’s Ministry of Trade on Trade in Services and Non-Tariff Measures

The Project at A Glance

Indonesia is currently in the process of negotiating a Comprehensive Economic Partnership Agreement (CEPA) with the European Union. The aim of the agreement is to enhance market access and increase trade and investment between the two parties.

International Economics Consulting Ltd. (IEC), through the ARISE Plus-Indonesia programme, is providing capacity building and technical advice to Indonesia’s Ministry of Trade (MoT) to strengthen the capacity of MoT’s officers in two areas that are key to the ongoing Indonesia-EU CEPA negotiations, namely Trade in Services and Non-Tariff Measures. The programme is a continuation of work provided by our Team in the previous year.

What We Found

The negotiations over a future European Union (EU) – Indonesia Comprehensive Economic Partnership Agreement (CEPA) are advancing. However, despite the progress, there are still significant areas where agreement is pending. Agreement has not been reached over crucial areas and important areas such as trade and sustainable development have not been tackled yet.

The importance of the services economy and services trade for Indonesia cannot be understated. Understanding the composition and evolution of the trade in services is crucial for the Government to be able to implement the necessary policies to adapt to emerging trends and successfully negotiate trade agreements. Furthermore, increasing levels of non-tariff measures (NTMs) have been witnessed, often causing difficulties for SMEs to meet compliance requirements and a framework to pro-actively monitor and address foreign NTBs faced by Indonesian companies when trading with foreign partners could help Indonesian traders alleviate the information burden and ensure the retainment of Indonesia’s trade potential.

Indonesia’s Ministry of Trade has undertaken some preliminary work on this area, in collaboration with ARISE+ Indonesia and our Team. This project is a continuation of the previous work and will further develop this framework and transform it into a useful tool and ensure Indonesia’s negotiators are fully aware of the trends and characteristics governing the different sectors that might be object of negotiations.

Our Strategy and Impact

Given the distinctiveness of the two core matters and the difference in stakeholders involved, the team will implement the trade in services and NTMs tracks in parallel. Specifically for Trade in Services, our Team’s objective is to conceptualise a mechanism to track the performance of Indonesia’s trade in services sector, particularly considering the recent trade in services negotiations that Indonesia is conducting with the EU and the future ones it is expected to engage with. Furthermore, the Team will design a coordination mechanism for trade in services, with the aim to inform relevant stakeholders of the MoT’s decisions with respect to this area, including line ministries and private sector associations.

Intervention on Non-Tariff Measures will involve conceptualising a framework to address foreign Non-Tariff Barriers (NTBs) faced by Indonesian companies abroad. Such framework will be important to ensure that Indonesia’s trade potential is realised. This is a continuation of previous activities in which a NTM reporting mechanism and an institutional framework was conceptualised. The Team will also focus on conceptualising a framework on notifying import licensing requirements at the WTO. This will improve understanding in line ministries and the Ministry of Trade on the importance, process, and conditions for notifying the objectives and reasons behind licensing requirements, processes for obtaining the licences, and agencies involved.

Following the conclusion of all activities, the Team will prepare an assessment report, that will identify strengths and weaknesses, assess the intermediate outcomes, populate lessons learned, and provide strategic recommendations on the next steps for further developing the trade negotiation and NTM capacity of Indonesia.

Our Core Solutions

With the rapid proliferation of trade agreements worldwide, there are new market and investment opportunities for countries to explore. At International Economics Consulting, based on our extensive experience in international trade, we assist our clients by providing a detailed analysis of the key impacts of new trade agreements on their operations and competitiveness through an assessment of tariff, and non-tariff barriers, provisions on rules of origin, customs efficiency, the effectiveness of transport networks, and sustainability provisions, among others.

We can help assess the opportunities in different markets, determine the feasibility and viability of projects, and benchmark the wider ecosystem to support business growth. We also support clients in navigating the policy landscape regarding international trade by establishing robust monitoring and evaluation framework through sophisticated real-time dashboards and reporting systems to ensure the best outcomes.