stakeholder (paper)

7/31/2019 Stakeholder (Paper)

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ENHANCING ASEAN FTA NEGOTIATING CAPACITY PROGRAMME

WORKSHOP 1: EU AND ASEAN TRADE POLICY, NEW TRADE ISSUES,STAKEHOLDER CONSULTATIONS AND FTA NEGOTIATIONS

SIMULATIONS

Stakeholders Participations in Trade NegotiationYose Rizal Damuri

Trade negotiation agenda in many layers of trade agreements is undergoing changes. It is no

longer just about tariff cuts and the elimination of quotas. The widening coverage of trade

policy results in involvement of many agencies within the government itself and with other

non-public institutions. Good coordination of trade policy making is extremely important

since it will affect trade performance and competitiveness. The involvement of non-

government institutions in trade policy making is still limited in many developing nations,

thus resulting in weak consensus building among trade-policy stakeholders which will in

turn, adversely affect trade policy implementation once final decision have been agreed at

multilateral level.

The weak consensus building leads to wider criticisms, and in many cases, rejections against

the implementation of trade agreements. In many cases, little involvement of multi-

stakeholders in trade negotiations makes the liberalization efforts to take blame for losing

competitiveness. When ASEAN-China FTA came into full implementation in 2010,

Indonesian parliament and non-public institutions criticized the trade agreement for problems

related to the flooding of imported products and lack of competitiveness, while the real

problems lay on other aspects of the economy. This gives example that greater participation,

in addition to effective trade policy formulation and coordination, to be the key for successful

trade agreement negotiation and implementation.

Trade Policy Formulation and Negotiation: Stakeholders Importance

While preparing for trade negotiation is a big task with various different important aspects,starting it with stakeholders identification and greater participation could bring a lot of

benefits to the process. From political perspective, careful stakeholders identification ensure

better management of interests since those most affected have a strong motivation to use the

political process to ensure that the countrys negotiating position reflects their concerns.

Greater participation also means that information needed during negotiation and policy

formulation can be collected more easily. Finally, stakeholders participated in the process

would get full understanding of the outcome and are able to prepare their actions for the

unfavourable impacts of trade agreements.

Trade negotiation, like other decision making in trade policy, involves a range of publicinstitutions and agencies. Figure 1 shows trade policy formulation process and groups of


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stakeholders that likely to be involved. Continuous consultation and consensus building

among ministries and agencies is essential to ensure commitment to trade and economic

reform. Constant dialogue with legislative agencies and parliament also makes the ratification

procedure and implementation more manageable. Constructive dialogue on trade policy

between government agencies and private sector is also critical since trade agreement, in theend, is about commerce and business.

While traditionally trade issues are alien to many civil organizations, recently some private

interest groups began to organize and engage actively. Transparency and greater access to

information on trade policy formulation and negotiation process lead to better acceptance of

such policies. Academics and research institutions can provide information and analytical

skills that may be required to shape trade negotiations but not available in the government

agencies.

It should be noted that stakeholders participation is an ongoing, two ways process. The

participation should not be limited in terms of the launch of negotiation or socialization of theresults. Trade authorities should collect initial input before starting the negotiation, inform the

stakeholders on the progress and taking feedbacks from them. Active participation requires

active contribution from a broad range of stakeholders, although not all are engaged at the

same level and or during the same phase of trade policy formulation and trade negotiations.

Therefore initial assessment on the importance of stakeholders and their likely influence and

contribution at each part of the process become crucial. Finding the right balance between

stakeholders contribution and the cost of managing different interests is the key to reap

benefits from greater participation.

Intra-government Coordination

Coordination with trade-related government agencies proves to be very delicate and

sometimes involves particular political propositions. This often results in policy controversies

and inconsistencies1. Common ways to deal with coordination problems include taking ad-

hoc approach by setting up various inter-departmental teams to deal with a specific policy

formulation under the supervision and coordination of an appointed agency. Import duties

formulation, for instance, is a regular task that needs to be done with intensive consultation

with related ministries and agencies responsible for relevant products. Having an inter-

agencies team under the direction of finance ministry is a common approach to tackle

coordination problem in tariff setting.

For broader issues such as FTA negotiation, many countries set-up a national team at several

levels of responsibilities and tasks2. The focal point of such team is normally ministry of

trade or commerce who responsible to facilitate and to coordinate the negotiation process.

1 For example, while government is committed to further trade liberalization and to improve performance of

manufacturing industries, industrial policies that gives protection to upstream industries are likely to hold back

the development downstream manufacture. Agriculture protection which aimed at enhancing food security may

also likely worsen poverty.2

Indonesia set up a National Team for International Trade Negotiation with two coordination levels to handle itsmultilateral, regional and bilateral trade negotiation. Thailand formed steering committee, supporting committee

and negotiating committee for its FTA talks.


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Despite all the efforts, coordination seems to be a significant problem in improving trade

policy formulation and implementation. The ex-officio positions in the interdepartmental

agency create additional workloads for government officials, resulting in a rather ad hoc

approach in formulating trade policy. Frequent changes of official positions in government

departments add to the already complicated interdepartmental coordination and often disruptconsensus building among trade-related agencies. To tackle this problem, each agency should

be asked to designate individuals at permanent position to participate in inter-agency group

responsible for the negotiations. Providing them with certain decision making power can also

make the consultation process more efficient.

Limited exchange of information due to the lack of communication infrastructure and system

exacerbates the coordination problem. Information that should be used by many related

agencies often can only be accessed by one agency only, or even by a small part of the

agency. Conducting interdepartmental meeting on systematic and regular basis can improve

the exchange of information, although more permanent solution lay on the development ofbetter information system.

In federal-like countries, coordination with local governments raises another concern. Local

governments often implement measures that could have major implications for trade and

investment that frequently out of central governments policy radar. Trade negotiating team

may also have to establish a separate forum for consulting officials from sub-central

governments although it may be less intensive.

Parliament and other legislative bodies is another crucial branch of government for a

successful implementation of a trade agreement. In many developing countries, authorities in

conducting trade agreements are accorded to or assumed by the executive, while the role oflegislature is limited to ratification of the final agreement. But as many countries have

witnessed difficulties in convincing legislature to ratify trade agreements, greater

involvement of parliament in the negotiation process is necessary to ensure smooth

ratification and implementation process of the result3.

Government-Private Dialogue

Normal practice for government-private sector dialogue includes awareness raising and

information dissemination in form of workshops and public meeting. Those are carried out

informally as many developing countries do not specify formal mechanism of private sector

participation in trade policy formulation. But the practice currently has been expanded by

including private sector in request and offer formulation or even as part of the negotiation

group.

Greater involvement of private sectors does not only allow trade negotiating authority to

obtain support for the ongoing process but also make it easier to collect information needed.

This task, however, is challenging because private sector often involve very diverse and

conflicting interests. Some business currently gain from more protective regime might oppose

3

The implementation of US-South Korea FTA, for example, was delayed for more than three years due toobjections of the agreement from legislatives of the two nations. ASEAN-India agreement has not been ratified

by all members of the Association after three years of the signing.


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The second role is to provide capacity building. While private research institutes can be hired

to provide useful analysis for preparing trade negotiation, they may not be available timely as

the negotiation normally need fast analysis. Moreover, access into many trade negotiations is

sometime limited only to government officials. An in-house research agency is pretty handy

for providing faster analysis and information. Capacity building in conducting trade relatedresearch and analysis can be provided by the academic society. Cooperation between

academics and government agencies can be designed to increase capacity of both parties;

government agencies supply data and resources while the academics strengthen their official

capacities.

The last role is in the dissemination of information and socialization of the negotiation

outcome to wider public audience. This is also related to the role of civil society organization.

There are some advantages of using academic and civil society to disburse information

regarding trade agreement. Those parties are regarded to be relatively interest-free on the

matter of sensitive issues such as trade liberalization. Excellent communication skill andpublic network possessed by the academics and civil society also contribute to better public

outreach. For some specific civil society groups, such as environmentalists or labour union,

greater participation also means better understanding of wider issue of trade liberalization in

balance with their particular interest. Support from this type of group ensure better

implementation of trade agreement.

Concluding Remark

Consultative activities need to be conducted simultaneously during trade negotiation process.

While it is tempting to conduct the activities at sectoral level and allowing inputs fromsectoral-related government agencies as mediator, performing such task directly by the

negotiating team and trade authorities ensure faster information exchange and feedback,

while also increase the debate and support for trade agreement. Trade authority and

negotiating team also need to change their perspective on the activity. Stakeholders

consultation should not be seen as a burden but rather an opportunity to take necessary and

useful information for successful negotiation and implementation.

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