Trade Liberalization and Indonesian Agricultural Products: The Importance of Special Products and Special Safeguard Mechanism

The discussion of Special Products and Special Safeguard Mechanism in the current WTO Doha Negotiation is seen to be very important for developing countries. The key aspects on these instruments lies on the selection of SP and its treatment, along with the specific modalities for new SSM which includes product coverage, possible trigger mechanisms, and remedies. Indicators that are based on the criteria of food security, livelihood security, and rural development on a self-designation basis are being built by members especially by the G-33 developing countries group. In this context, it is important for each developing country undertake a process of internal reflection and consultations in order to identify its SP products based on the indicators proposed. This paper aims to see which agricultural products in Indonesia to be selected as SP by looking at the indicators of self-sufficiency and import penetration, along with price as livelihood security indicators and export as competitiveness indicator, besides the formal criteria of SP which are food security, livelihood security, and rural development. From the result, there are six main products that should be included as SP. They are: rice, soybeans, sugar, maize, cassava, and groundnut. Adding to this, by using a model of Two Stage Least Square (2SLS), the results suggested that policy regarding import regulation in Indonesia such as import tariff is seen to be beneficial in increasing production in the rice sector, thus restrain the negative effect of declining food self-sufficiency in Indonesia through production. Therefore, SP and SSM can play a role in increasing the performance of agricultural sector in Indonesia.