Thus, in the process of negotiations, Indonesia played a role as a part of a big grouping to obtain its issues of interest. According to Indonesian Industry and Trade Minister at that time, if the Cancun meeting were a success, Indonesia would have to agree on certain consensus, which could be beyond the capability of developing countries like Indonesia to implement.
At the final day of Cancun Meeting, Indonesia was joined the larger green room meeting on the Singapore issues attended by more than 30 countries, but it resulted no outcome. Indonesia’s ministerial statement in the Cancun meeting was addressed to several important issues for its national interests. Among them are on the agriculture issues, the issue of market access for non-agricultural products (Non-Agricultural Market Access - NAMA), and the issues under TRIPS and public health.
In general, Indonesia’s basic policy in the negotiations was to discuss its national great interest in a number of the topics and to fully achieve an – at least – satisfactory agreement for the national development. Indonesia was also committed to the principle that an open, fair and predictable system of international trade is required to become the engine and propeller of economic growth to benefit all and to propel the world economy forward.
On Agriculture Issues
About this issue in DDA:
“The declaration reconfirms the long-term objective already agreed in the present WTO Agreement which is to establish a fair and market-oriented trading system through a programme of fundamental reform. The programme encompasses strengthened rules, and specific commitments on government support and protection for agriculture. The purpose is to correct and prevent restrictions and distortions in world agricultural markets”.
Before Cancun, developing country delegates were left groping in the darks, guessing each step along the way how the preparatory process would unfold. In the Cancun meeting, as always, developed countries tried to dominate the negotiations by forcing on the issues that were favorable for them. Indonesia – alongside other developing countries – was pressured in reducing import tariffs on agriculture, while developed countries intended to remain protective over their domestic agricultural products. Developing countries were thus being asked to agree on ambitious tariff reduction formula, without knowing the extent of developed country subsidy cuts. Such intention would be a threat for Indonesia’s agricultural products as well as other developing countries’. In essence, what the developed countries wanted was a more flexible and advantageous environment for its agriculture market access whereas it was actually the opposite for developing countries such as Indonesia.
Nevertheless, Indonesia successfully managed to approach other developing countries to unite and decline the desire of the developed countries to have their export tariffs to the developing countries reduced significantly. At first, only 19 countries joined Indonesia movement to share the similar vision and develop agreement to oppose the developed countries' pressure. Yet, the number of developing countries joining forces with Indonesia finally enlarged up to a final total of 33 which then became the G33.
Together with fellow developing countries, Indonesia fought to have basic food commodities exempted from liberalization and from further tariff reduction and expansion of tariff quota as well as automatic access to special guard mechanisms, since they play a vital role in alleviating poverty and economic development in many developing countries.
On Special Products, Indonesia has requested the meeting to adopt certain exit rule on special product in case the developing countries are demanded to reduce their import tariffs; while the developed countries are still subsidizing their agricultural products. In the context of WTO Agreement, developing countries including Indonesia may determine some of their import products, which would be subject to as high import duties as possible in case their domestic market is over supplied with import products, she said. In this circumstance, Indonesia and other developing countries had attempted to ensure that the WTO Agreement gives protection of domestic agricultural products since it remains importantly necessary for developing countries like Indonesia.
In agriculture, which has high potential for developing country exporters, only limited progress has been made to reduce developed countries’ trade distorting subsidies; since access for agricultural products from developing countries to developed markets and to other developing countries remains limited. From Indonesia’s view on this issue, the aims are to obtain a substantial improvement of market access opportunities for the recent and potential export of developing countries products, while simultaneously provide due consideration to sensitive products in developing countries; and to ensure that the interest of the developing countries such as rural development, poverty alleviation and food security are fully reflected in the ongoing negotiation. The declaration of DDA on agriculture makes special and differential treatment for developing countries integral throughout the negotiations, both in countries' new commitments and in any relevant new or revised rules and disciplines.
Linked to the problem of poverty faced particularly by Indonesia, agriculture is of fundamental importance to all developing countries. Indonesia's long-standing policy objective has been to foster food production in order to meet the demand of a growing population, and achieve self-sufficiency in the main staple foods (especially rice). Food security has remained a sensitive issue as political stability has traditionally been linked to the Government's ability to ensure an adequate supply of rice and other basic commodities at affordable prices. Some sensitive items, such as rice, cloves, corn, soya beans, and sugar, have been subject to special import licensing; rice, cloves, and sugar have also been subject to exclusive import rights granted to domestic producers of these products.
Considering Indonesia's position as a major producer of several commodities, a few programmes have been implemented to ensure food security through, inter alia, self-sufficiency in certain staples. Although, average of applied MFN tariff protection for the agriculture sector is only 4%, compared with 7.5% for manufacturing, yet it remains the important national interest. Although, in 2000, non-oil and gas exports accounted for US$47.8 billion, an increase of 22.8% from the previous year, excluding agricultural sector exports which dropped 6.6% so that its export only reached US$2.7 billion. For Indonesia, there are certain agricultural products that can not be measured as commercial commodities. Thus, as stated in its Ministerial Statement, Indonesia strongly request that special product and special safeguard mechanism concepts to be further discussed intensely and adopted in the negotiations.
At the end, the failure of Cancun meeting signifies that the old agreement on agriculture issues in DDA remains of use. Agriculture is the litmus test for the WTO’s future where the power struggles between the developing countries and the USA and the EC will be played out, and the WTO’s impact on the lives of the world’s poor will be determined. Indonesia and its alliance countries had successfully prevented the harm to their agricultural products from the action of developed countries in determining the export and import duties; although it is still questioned how long they can be able to defense their interests against the selfishness of the major powers within the WTO. The G20 positions on agriculture is still very dangerous for struggling small farmers in developing countries, endorsing yet another round of market opening, while maintaining special treatment for developed countries’ subsidies.
On NAMA issues
Prior to the Cancun meeting, Indonesia alongside its negotiating group on market access had communicated that issues of tariff peaks, tariff escalation and high tariffs was an integral part of the mandate., thus the core modality needed to be considered that it should be effective in addressing those issues. On NAMA, Indonesia was concerned about the non-linear formula and implied mandatory nature of sectoral initiative and proposed the deletion of references to “non-linear” in the formula and to “participation by all participants” from the sectoral approach.
Relating to the issue of market access for non-agricultural products (NAMA), the ministers agreed to launch tariff-cutting negotiations on all non-agricultural products. The important issues are reducing average tariffs, reducing the number of tariffs that are significantly higher than the average (tariff peaks), and reducing higher tariffs for processed items (called “cascading tariffs), since they are such a burden for developing countries exports including Indonesia because they are mostly focused in agricultural and food products.
Indonesia’s current industrial and trade policies concentrate on several issues including the industrial revitalization and development. The industrial revitalization program is focused on textile and textile product, electronics, footwear, wood processing, and pulp & paper industries; while, industrial development program consists of seven groups of industry having high potential in absorbing labor forces and foreign exchange earnings, covering leather and leather product, fish processing, crude palm oil, fertilizer and agricultural machinery and equipment, food product, software, jewelry and handicraft industries. The main objectives of revitalization and development program are as follows:
a. Returning and increasing the performance of export oriented industries and high local content industries,
b. Maintaining and increasing investment,
c. Maintaining and creating job opportunities for employment,
d. Increasing foreign exchange revenues, and
e. Empowering SMEs as supporting industries.
External trade on non-agricultural trade products has an important role in Indonesia’s economy. Manufactures and fuels and mining products are of the significant sector in economy’s total export and import. The manufacturing sector contributed more than 80% and the rests were agricultural and mining exports as, in 2002, total exports increased slightly to US$57 billions where manufacturing products remained the dominant component of the total non-oil/gas products.
As stated in the Ministerial Statement, the problems were that members still kept long lists of products exposed to those issues. Thus, Indonesia believes that improved and secured access to markets is a pre-requisite for development strategies, whereby Indonesia relies to a large degree on external trade. Moreover, Indonesia also fully supported the process towards securing a framework for more negotiations and robustly emphasized that it should reveal the requirement of developing countries since the success of the Doha Development Round in improving market access can benefit competitive exports of developing countries and enable them to export higher-value items.
In relation to Indonesia’s interests, it was emphasized the importance of reduction or elimination tariff peaks and escalation on product of export interest to developing countries which still exists in the major trading partners. It is extremely important that negotiation take into account the different level of economic among members. The principle of less than full reciprocity should be implemented in the course of negotiation. Developing members should also be provided with full flexibility in extending their commitment.
On TRIPS and public health issues
Issues under TRIPS and public health are also very much important to developing countries to sustain their national developments. In the area of intellectual property rights, the introduction of patent rights in pharmaceutical products could undermine the access for medicines in developing countries, including drugs to fight diseases such as HIV/AIDS and Avian flu. In the declaration, ministers stress that it is important to implement and interpret the TRIPS Agreement in a way that supports public health — by promoting both access to existing medicines and the creation of new medicines. Another important issue under TRIPS which is important for Indonesia and other developing countries is geographical indications for wines and spirits and multilateral system of notification and registration of geographical indications of other products addressed under review of implementation o the TRIPS agreement.
On issues under TRIPS, Indonesia welcomed the very recent agreement in Geneva that would allow developing countries to provide low-cost medicines to their people to treat such diseases such as Malaria, HIV/AIDS, tuberculoses and other extensive problems. The Avian Influenza (HPAI) is an area of rising concern as Indonesia reported is fifth confirmed case from the virus, with increasing reports of infection in other regions. After a slow initial response and over-dependence on poultry vaccination, the government announced a stronger focus of culling chickens, following increased human infections. Indonesia has made significant progress in health outcomes over the last decades; however, new challenges have emerged as a result of social and economic changes. Related to this issue, the importance of patent rights over generic medicines is crucial for developing countries. In this case, Indonesia suggested it not to be adopted based in a purely commercial perspective, but in a humanitarian reason.
Since geographical indications are place names – also covering words associated with a place in for some countries – used to identify products with particular characteristics because they come from specific places. Linked to geographical indications, Indonesia stressed the significance of a higher level of protection should also be given to other products other than only wine and spirits. Such protection is needed traditional knowledge such as batik Solo, jamu, and Toraja coffee since Indonesia has a lot of original commodities. A case example is of Toraja coffee of which is originally a traditional product of Indonesia. Yet, it has been patented by Key Coffee of Japan, thus Indonesian exporters can not directly export Toraja coffee to Japan unless it is done under permission and through the Key coffee. Such circumstance is a disadvantage for Indonesia.
However, the agreement on a permanent solution on the issue of TRIPS and public health has finally achieved. As for Indonesia, this agreement is not only of crucial importance to ensuring greater access to affordable medicine for the many poor people in the developing world but also pertinent to help dealing with the recent outbreaks of various communicable diseases. The agreed procedures are expected to not hampering the effectiveness of it in delivering the medicines to so many poor people in need.
After Cancun
Shortly after the Cancun meeting, the government of Indonesia vowed to continue protecting certain agricultural commodities against liberalization and will align with tens of other poor countries to block any efforts at the WTO talks to liberalize trade on the commodities and the government would continue to block any efforts to liberalize trade on strategic farm products together with the countries grouped in the so-called Group 33. Each member of the group has their own strategic products, but Indonesia has named rice, corn, soybean and sugar as strategic products. The group wants that each country is allowed to set their own import duties on the commodities.
For Indonesia, things went fairly well in Hong Kong since the meetings accommodated its interests in terms of protecting special products that domestic consumers depend on for food security and farmers depend on for financial security. With the addition of this special product clause, this nation can be sure that it will be able to allow subsistence rice farmers to keep their prices relatively high despite tight competition -- lower priced imports from neighboring countries -- by maintaining high import tariffs. For developing countries, the meeting also granted the right to protect their products when there is an unanticipated flow in imports through the special safeguard mechanism.
The area that must be watched closer is the NAMA and the service sector. On the progress on NAMA issues, the issue of formula in relation to flexibility has been discussed at length but there had been no agreement. Seven proposals have been on the table, but most of them do not seem to satisfy the interests of all members. Indonesia proposed differentiated coefficients as part of the principle of "less than full reciprocity." In this issue, Indonesia more focused on protecting its subsistence farmers rather than protecting its businesses. In order to fully achieve its goals, Indonesia will continue to maintain the solidarity within the grouping groups under intense bilateral pressure thus they must hang together and be strengthened to keep their bargaining positions within the process of negotiations on Doha Development Round.
Conclusion
With its commitment to multilateral trade, trade liberalization and other structural reforms undertaken by Indonesia have successfully stabilized the economy and fostered growth. But the economy remains fragile and the recent global downturn has heavily reduced foreign investment on which the economy critically depends. Indonesia has been focusing its concentration in improving its trade policy and performance. Among Indonesia’s important area of interest are agricultural issues, NAMA issues, and TRIPS and public health issues including geographical indications. Although significant achievement was only in agriculture, yet a more flexible market access for agriculture and non-agricultural commodities is needed for Indonesia’s future.
In the Doha Development Rounds, the policy position of each country remains based on each national main area of interests that is considered an advantage to benefit its social economic performance, and Indonesia’s position is not an exception. Considering its weak bargaining position as a developing country, Indonesia attempted to strengthen its position by approaching other fellow developing countries to join and or create larger alliances. Although it was not possible to get a concrete result, the grouping countries in which Indonesia was also included achieved some important things such as gaining respect the respect for the group, being able to keep their unity, and noting their role as permanent actors in the negotiations. Their voice of the developing world was finally taken into consideration in the negotiation that Cancun will be remembered as the conference that signaled the emergence of a less autocratic multilateral trading system. It is important for Indonesia to maintain its relationship within the grouping countries to facilitate its bargaining position in the negotiations. The position has a significance role in achieving its main issues of interests.
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