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GTAP Resource #1696

"Indonesian Interests in the Agricultural Negotiations under the Doha Development Agenda"
by van Tongeren, Frank, Nizwar Syafa At, Budiman Hutabarat and Thom Achterbosch

This paper takes the ‘July 2004 package’ as a starting point to assess Indonesian interests in the agricultural negotiations under the WTO Doha Development Agenda. Since the start of the Doha round in 2001 the scope for liberalization in agricultural trade has gradually declined, and Members agree on far reaching exemptions from reforms in individual products (special products for developing countries and sensitive products for developed countries). The ambitions on reforming domestic support in OECD countries seem to be moderate, at best, and a number of developing countries are less inclined to open their markets through improved access. This paper uses a large-scale economic model of trade and production (GTAP) to identify the possible impact of a realistic global liberalisation scenario in the spirit of the ‘July 2004 package’ on the Indonesian economy. Given the prevailing quite liberal trade regime in Indonesia the expected overall impacts on national income, trade and production are positive, but rather limited. For Indonesian agriculture global liberalisation offers positive prospects for vegetable oils and for animal products, while small adverse impacts on the protected rice and sugar sectors can be expected. Further analysis of a Safeguard Mechanism for rice reveals that temporary (seasonal) tariffs may be able to cushion the domestic rice sector against world price drops against moderate economy-wide costs. Even without a Safeguard Mechanism, the current binding overhang, i.e. the spread between the bond tariffs and actually applied tariffs, is large enough to allow Indonesia enough flexibility to shield domestic markets against an influx of cheap imports. The paper also analyzes policies aimed self-sufficiency in sugar. We conclude that such a policy would entail very high macro-economic costs, as huge subsidies would be needed to move resources from other activities into sugar production.

Resource Details (Export Citation) GTAP Keywords
Category: 2005 Conference Paper
Status: Published
By/In: Presented at the 8th Annual Conference on Global Economic Analysis, Lübeck, Germany
Date: 2005
Created: van Tongeren, F. (4/26/2005)
Updated: van Tongeren, F. (4/26/2005)
Visits: 2,115
No keywords have been specified.

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