20 Feb 2019
Non-Tariff Barriers Have Potential to Frustrate Intra-ASEAN Exporters, but Complaints Mechanism is Available

Non-Tariff Barriers in ASEAN

The inauguration of the ASEAN Economic Community (AEC) on 31 December 2015 marked the start of a new chapter in ASEAN’s ambitious drive towards closer integration and cooperation. The overarching objectives of the AEC are to promote the seamless movement of goods, services, investment, capital and skilled labor within ASEAN, with the ultimate goal being the creation of an ASEAN single market.

Despite the myriad obstacles that ASEAN has faced since its establishment in 1967, such as socio-cultural diversity and markedly divergent stages of economic development, the grouping has eliminated many formal tariffs on intra-ASEAN trade, while restrictions in the services sector are being removed, albeit at a slower pace.

However, a key constraining issue for intra-ASEAN trade is the continuing prevalence of non-tariff measures (NTMs). While NTMs are sometimes justified on the grounds of protecting the public interest (such as in the areas of health, product safety, etc.), the problem is that at times they simultaneously take the form of protectionist barriers to trade, or what are known as non-tariff barriers (NTBs).

The extent of the problem can be seen from the fact that non-tariff impediments to trade in ASEAN increased from 1,634 to 5,975 during the 2000-2015 period, according to the Asian Development Bank.

With a population of some 379 million people (excluding Indonesia), ASEAN should be a lucrative market for Indonesian exporters. However, despite the laudable goals of the AEC and the various ASEAN regulatory framework agreements that have been adopted, many Indonesian exporters find themselves at a significant disadvantage compared with local producers in other ASEAN member states as a result of the continuing existence of NTBs.

Complaints Mechanism for Exporters

The good news is that an easy-to-use, internet-based complaints mechanism is available to ASEAN-based businesses that encounter NTBs in intra-ASEAN trade, namely, the ASEAN Solutions for Services, Investments and Trade (ASSIST) platform, which allows exporting businesses to file complaints or requests for clarification on NTBs, or NTMs that they think are actually NTBs. The platform, which was launched in 2016, thus far only covers movements of goods from one ASEAN member state to another. However, it is expected to be expanded to cover services around May 2019.

ASSIST has been significantly underused to date, which may be partly due to the fact that it has never been well publicized. Perhaps more importantly, however, many companies may have been reluctant to use it for fear of retribution at the hands of governmental authorities.

To overcome this, ASSIST is now being relaunched so as to allow businesses to lodge complaints anonymously through ASEAN-based trade associations, or other representative entities such as chambers of commerce, business councils, business federations, or registered ASEAN-based lawyers or law firms, when anonymity is desired by the complainant.

It is hoped that this will encourage more companies that encounter NTBs to file complaints through the system.ASEAN member states have around 60 days to respond to a complaint/request for clarification and either accept it (and therefore propose changes) or explain their position.

Should the complainant not be satisfied with the outcome, it may refer the case, through the government of the ASEAN member state in which it is registered, to the ASEAN Compliance Body (ACB) or to the ASEAN Enhanced Dispute Settlement Mechanism (EDSM).

How ABNR Can Help

ABNR has extensive experience, extending over 50 years, of advising clients on international trade issues. If you feel that your business has been unfairly prejudiced by NTBs when exporting into another ASEAN member state, we can help you identify the legal issues involved, formulate your complaint or query, and file it anonymously using the ASSIST platform. Should you be dissatisfied with the outcome of the ASSIST process, we can further help by advising on other forms of redress that may be available, such as pursuing litigation or availing of alternative dispute resolution mechanisms. We have close contacts with both EUROCHAM Indonesia and the EU-ASEAN Business Council, and share resources on ASSIST issues.

If you would like to talk to us about ASSIST, or trade issues in general, please do not hesitate to contact our Senior Foreign Counsel, Mr. Theodoor Bakker (tbakker@abnrlaw.com) or our Partner, Ms. Ulyarta Naibaho (unaibaho@abnrlaw.com).

This ABNR Legal Update and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this Legal Update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.