Impact of Non Tariff Measures (NTM) ASEAN on Indonesian Electronics Trade

Abstract

As tariffs have fallen in the years since the General Agreement on Tariffs and Trade (GATT) was established in 1948, attention has progressively shifted towards non-tariff measures (NTMs). Pervasiveness non-tariff measures in ASEAN region will impact on regional trade and difficult for the establishment of ASEAN Economic Community by 2015. Electronics sector, which is a potential sector in Indonesia will be one of the sectors affected by the implementation of non-tariff measures. This research provides a brief of Indonesian electronics trade and implementation of NTM in ASEAN. The main purpose of this study is to analyze the impact of ASEAN’s NTM on Indonesian electronics trade flows. Two approaches are used; the inventory approach and the econometric approach which makes use of the cross sectional gravity model. This research use secondary data which is collected from BPS, WITS, WDI, Doing Bussiness, UNCTAD, dan international publication. The bigest electronics trade in Indonesia comes from component product with Singapura as a dominant trade partner. Indonesia and Singapure can join integration in production electronics because of their location. Indonesia-Singapura agreement on Free Trade Zone Bintan Batam Karimun haven’t optimal yet so need review in negotiation, infrastructure and institution development. Indonesia is the most protective country in electronics trade. Indonesia use more NTM for pretecting local producer while other ASEAN country use more NTM for protecting local consumers such as labelling, packaging, standardize, and sertification requirement. Non automatic licensing dan technical regulation is used by almost all country in ASEAN to protect component dan consumer product. The empirical results show that the overall ASEAN’s NTM does not affect Indonesian electronics trade flows. However, if NTM is disagregated into core and non core measure, the results showed that increase in core measure would reduce trade flows and increase in non core measure would increase Indonesian electronics trade flows. Government should develop electronics industry by focusing in quality, design and, inovation product. Government should provide testing laboratorium with cheaper administration cost to increase Indonesian export competitiveness.