ECONOMIC DETERMINANTS OF THETIMINGOF PREFERENTIAL TRADE AGREEMENT FORMATIONS AND ENLARGEMENTS

Abstract The stalling of WTO multilateralism and the proliferation of preferential trade agreements in recent decades have drawn substantial attention to the impacts of preferential liberalization. A critical question is how they affect the trade barriers imposed against outsiders. I examine the relationship between preferential trade liberalization and protection against non-member countries by testing the predictions of a political–economy model based on the previous literature. Focusing on a specific model allows me to uncover the mechanisms via which preferential liberalization affects external import protection, whereas most of the existing literature has focused on establishing the sign of the effect only. Furthermore, I focus on not only tariffs, as most studies do, but also on the temporary trade barriers of antidumping and safeguards. I test the predictions for Latin America and obtain results that provide solid evidence supporting two mechanisms from the theory, which lead to lower protection against non-members of a preferential trade agreement. First, a lower preferential import protection level means that the increase in preferential imports from increasing the external tariff creates a smaller increase in tariff revenue. Second, as preferential import protection is cut, there is a decrease in the markup and sales of domestic firms, and thus raising the external import protection generates less profit. Moreover, this second effect is present when the political motivation of the government is sufficiently strong.

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PEMANFAATAN KERJA SAMA INDONESIA-JEPANG ECONOMIC PARTNERSHIP AGREEMENT (IJEPA) DAN INDONESIA – PAKISTAN PREFERENTIAL TRADE AGREEMENT (IPPTA)

Buletin Ilmiah Litbang Perdagangan ◽

10.30908/bilp.v12i2.313 ◽

2018 ◽

Vol 12 (2) ◽

pp. 181-204

Author(s):

Endah Ayu Ningsih ◽

Telisa Aulia Falianty ◽

Fitri Tri Budiarti

Keyword(s):

Trade Balance ◽

Positive Impact ◽

Trade Agreement ◽

Preferential Trade Agreement ◽

Preferential Trade ◽

Economic Partnership Agreement ◽

Economic Partnership ◽

Partnership Agreement

AbstrakPenelitian ini mengevaluasi tingkat pemanfaatan Indonesia-Japan Economic Partnership Agreement (IJEPA) dan Indonesia-Pakistan Preferential Trade Agreement (IPPTA) dalam ekspor dan impor Indonesia ke Jepang dan Pakistan. Tingkat pemanfaatan FTA untuk ekspor menggunakan rasio nilai perdagangan yang termuat dalam Surat Keterangan Asal (SKA) terhadap nilai ekspor ke negara mitra. Sedangkan tingkat pemanfaatan impor menggunakan rasio nilai impor produk yang memenuhi syarat terhadap total impor Indonesia dari negara mitra. Studi ini menemukan bahwa pemanfaatan IJEPA (2012-2016) cenderung menurun. Pada tahun 2016 tingkat pemanfaatan ekspor sebesar 47,2%. Sementara pemanfaatan IPPTA untuk ekspor ke Pakistan mengalami peningkatan yang signifikan sejak diimplementasi tahun 2013 dengan tingkat pemanfaatan ekspor sebesar 72,0% pada tahun 2016. Di sisi impor pemanfaatan IJEPA mencapai 67,7% sementara IPPTA hanya 18,8% (2016). Pemanfaatan impor IJEPA dan IPPTA relatif stagnan, jumlah perusahaan yang menggunakan SKA IJEPA sudah pada level jenuh, sementara pengguna SKA IPPTA masih tumbuh 18,2% per tahun. Bentuk PTA lebih memberikan dampak positif bagi peningkatan ekspor Indonesia ke negara mitra dibandingkan FTA yang komprehensif. Kebijakan melakukan FTA dalam bentuk Economic Partnership perlu disertai dengan kerja sama yang menjamin peningkatan perdagangan yang seimbang antar negara anggota. AbstractThis study aims to address the utilization level of The Indonesia-Japan Economic Partnership Agreement (IJEPA) and Indonesia-Pakistan Preferential Trade Agreement (IPPTA). The level of FTA utilization for exports was measured by the ratio of trade value recorded in the Certificate of Origin (CoO) to Indonesia’s export value to the related country. While the level of utilization of imports was defined by the ratio of the import value of eligible products to Indonesia's total imports from the related country. The study found IJEPA’s utilization during 2012-2016 tended to decrease. In 2016, the level of utilization was about 47.2%. While IPPTA utilization for exports to Pakistan experienced a significant increase since it was implemented in 2013 with a rate of export utilization was 72.0% in 2016. On the import side, the level of utilization under IJEPA reached 67.7% while IPPTA was only 18.8% at the same period. In terms of the imports utilization level of both IJEPA and IPPTA, it was relatively stagnant, while the number of companies utilize IJEPA’s CoO was saturated. In contrast, IPPTA’s CoO users still grew at 18.2% per year. This study concluded PTA provides more positive impact on increasing Indonesia's exports to related countries than comprehensive FTAs. Thus, establishing an FTA in the form of an Economic Partnership needs to be followed with the cooperation that guarantees trade balance within the parties.

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