Oct 17, 2012

Indonesia – WTO - Developing Countries Should Open Trade

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The World Trade Organization has called on developing nations, including Indonesia, to remove trade barriers that would enable them to benefit from the free flow of goods in the global market.

WTO deputy director-general Valentine Rugwabiza said on Tuesday that developing nations can unlock trade potential with emerging peers if they remove barriers.

Such nations also need to improve the competitiveness of local industries to experience the most benefits from free trade, she said in an interview in Jakarta.

She added that any form of trade restriction would “send the wrong signal to investors.”

In Indonesia, many non-tariff measures have been imposed on goods from China, following the gradual implementation of the Asean-China free trade deal in 2010 that resulted in a flood of imports from the world’s second-biggest economy.

Other restrictive measures include developing standards for imported products through the Indonesian National Standard (SNI) and a labeling system.

“[Non-tariff barriers] are not a good way to protect [local] industry,” Rugwabiza said. Many developing nations have kept their doors closed to other developing nations, she said, adding that removing barriers among themselves would be an effective way to counter weaker demand from the developed nations.

Non-tariff restrictions include import duties, quotas, trade-related subsidies and trade defense measures.

She encouraged Indonesia’s policymakers to improve the business climate by helping local businesses cut costs and identify problems that hamper productivity. This could involve efforts to improve infrastructure, providing incentives and boosting the quality of human resources.

The WTO’s main mission is to ensure trade flows in a smooth, predictable and free manner.

Muhamad Al Azhari

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