IMPACTS OF MANDATORY STANDARDS POLICY AND SIGNING OF INTERNATIONAL MUTUAL RECOGNITION AGREEMENTS ON INDONESIAN IMPORTS

Abstract

The abatement of tariff obstacles led to an increase in the implementation of non-tariff barriers inglobal trade. Standardization policy plays a dual role in international trade as non-tariff barriers which can drive or inhibit trade. On the other hand, international organizations, such as ILAC and IAF, encourage their members to sign mutual recognition agreements to reduce technical barriers to trade. This study aims to investigate the extent to which mandatory standards policy and signing the international mutual recognition agreements influence Indonesian imports.This is a quantitative study by using secondary data, including: Indonesian import’s value, Indonesian tariff, Indonesian GDP, partner countries’ GDP, geographic distance, a dummy variable of mandatory SNI, and a dummy variable of MLA/MRA. This study observes the import value of 300 commodities that are required to comply with SNI from 103 trading-partner countries between 2007 and 2019. The gravity model is employed as an analytical tool, which is then regressed by utilizing linear regression with a product's fixed effect. A key finding of this empirical research is that mandatory standards policy has a negative link to Indonesian imports. Another crucial outcome is that though the mutual recognition agreement of the conformity assessment results has a positive correlation to Indonesian imports, it is not statistically significant. It can be recommended that the enforcement of compulsory SNI needs to be upward in the future in order to carry out the mandate of the law for consumers protection from an abundance of low-quality imported goods. Another recommendation is that the government could make optimal use of the MRA to be able to promote exports of Indonesia's main commodities to the global market.