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Assessing and Addressing the Effects of Trade on Employment Trade Structure and Trade Policy

International Labour Organization. Assessing and Addressing the Effects of Trade on Employment Trade Structure and Trade Policy Indonesia 12 - 16 July 2010 Ralf Peters Chief Technical Advisor ILO Trade and Employment Programme peters@ilo.org.

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Assessing and Addressing the Effects of Trade on Employment Trade Structure and Trade Policy

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  1. International Labour Organization Assessing and Addressing the Effects of Trade on Employment Trade Structure and Trade Policy Indonesia 12 - 16 July 2010 Ralf Peters Chief Technical Advisor ILO Trade and Employment Programme peters@ilo.org

  2. Total merchandise trade value ('000 USD), 1980-2009 Exports and imports increased by 600 per cent during the last 2 decades (nominal) Exports exceed imports: trade balance + US$ 20 bill. (merchandise 12 month, Apr. 2010) Exports peaked at US$ 136 bill. in 2008 and dropped by 15 per cent in 2009 Exports account for 30% of GDP (2007) Impressive but not all supplysidedriven

  3. Export values over time and by region, 1980-2009 ('000 USD) Increase in exports mainly due to increase in exports to East and Southeast Asia (about 60%, of this 22% Japan) Exports to EU and US increased as well Also dynamic: South Asia and Middle East and N. Africa Less dynamic: Latin America Developing countries important markets

  4. Import values over time and by region, 1980-2009 ('000 USD) Also imports increased mostly from East and Southeast Asia

  5. Indonesian average trade value by regional destination, 1980-2009 ('000 USD) Most trade with East and Southeast Asia Trade with China increasing Average exports US$ 32 bill., imports US$ 21 bill. EU and US also large trading partners

  6. Export Structure in Indonesia, 1980 and 2009 Export share of mineral fuels and lubricants decreased • Export share increased for • animal and veg. oil and fats • chemicals • manufactures • machinery and transport equip. • misc. manufactures Successful diversification

  7. Export shares by selected industry, 1980 - 2009 Dominance of mineral fuels and lubricants exports decreased mainly between 1982 to 1998 Why was that? • Price effect • Volume effect • Other goods exports increased

  8. Import Structure in Indonesia, 1980 and 2009 No significant change of import structure Main import item Manufactures

  9. Indonesian trade in services with the world, 2000-2008 Services traded is significantly smaller than merchandise trade (between 10 to 20 % of merchandise trade; in line with world trade structure) Imports are higher than exports Services accounts for 40% of GDP

  10. Service exports by type, 2004-2008 Travel is largest component of services exports Grew to US$ 7 bill. in 2008

  11. Service imports by type, 2004-2008 Transportation is largest component of services imports Transportation, travel and other business & royalties dominate imports clearly

  12. Trade Policy • Tariffs remain Indonesia’s main trade policy instrument • More than 75% of tariffs between 0 and 10% • Peak tariffs apply to motor vehicles, chemicals, fabricated metal products, bicycles, alcohol products • Some degree of tariff escalation: e.g. semi-processed food • Indonesia’s ASEAN average Common Effective Preferential Tariff CEPT: 2.7 per cent (2006)

  13. Bound and applied tariff rate, tariff year 2009 Indonesia Indonesia has a lot of “water in the tariff”, i.e. average bound rate is much higher than applied rate Developing Countries From import substitution to export orientation Developed Countries

  14. Non-tariffmeasures • Bans for chicken-parts, rice and salt (e.g. for sanitary reasons) • Producer import licences (e.g. sugar imports) • Government procurement instrument of industrial policy (not signatory to Agreement on GP) • Active user of anti-dumping measures mainly on base metals and chemicals form the region • Example of import ban in 2004: Domestic rice price 30 per cent above world market price

  15. Trade Negotiations: triple trackapproach • Multilateral track at WTO • Regional track: ASEAN and ASEAN+ • Bilateral (new): e.g. Japan • Government has established a National Trade Negotiation Team

  16. Indonesian export shares of AFTA vs. Non-AFTA members, 1980-2009 20 per cent of Indonesia’s exports to ASEAN countries Intra-ASEAN trade relatively high for south-south RTA

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