Exploring Non-Tariff Measures Facing the Indonesian Agricultural Products in FTA/CEPA Trading Partners

Agriculture is an important sector for Indonesian economy with 21.8% contribution to non-oil and gas export, but it is observed that Indonesian agricultural products face challenges in complying with stringent non-tariff measures (NTMs) imposed by importing countries, mainly on SPS and TBT. This article tries to address some NTMs issues on Indonesian agricultural export products particularly the prevalence of NTMs using frequency ratio (FR), coverage ratio (CR) and regulatory distances (RD) analysis. This study utilizes data from World Intergrated Trade Solution (WITS). The study shows that Indonesia’s ability to get better market access to its major trading partners depend on its ability to comply with SPS and TBT measures, and this is reflected in their high prevalent index. However, the average coverage ratio on Indonesian agricultural exports is only 13%, implying that NTMs policy on agriculture products imposed by Indonesian FTA/CEPA trading partners impacted only 13% of Indonesian agriculture export products. The RD of agricultural products between Indonesia and some of its main FTA/CEPA partners is 0.011with Pakistan and Singapore, and 0.09 with the Philippines and Australia. The finding reveals that there is a “core” of countries with similar NTM patterns at the product level on animal and food regulations.,. Indonesia is encouraged to address NTMs issues with its FTA/CEPA trading partners, in particular on any stringent NTMs and procedural obstacles related to SPS and TBT implementation as they often burden exporters. Keywords— Frequency Index, Coverage ratio, Regulatory Distance, SPS, TBT