In this issue, the Journal of the World Studies presents five selected articles focusing on the dispute settlement mechanism under the global trading system and salient issues relating to trade relations at the regional level. Topics related to the global trading system analysed in this edition, include the dispute between the US and China and the implementation of cross-agreement retaliation. Articles covering the regional level of trade discuss: the cumulative rules of origin for closer economic integration by focusing on the Association of South East Asian Nations (ASEAN) single market perspective; the formation of bilateral Free Trade Agreements (FTA) and ASEAN agreements; and also the Indonesian government policy on creative economy in order to cope with the ASEAN Economic Community.
The first article, examing the formation of bilateral FTAs, uses a political-economic perspective to compare the US and the Japanese model of FTAs; it is written by Siti Daulah a lecturer at Department of International Relations, Universitas Gadjah Mada. This article examines the motives, interests, and preferences of states in forming FTAs using a political-economic approach, to clarify the determinants of FTA formation. Presenting the case of the United States (US) and Japan—two influential advanced economies in international trade— this article took the US FTA model and the Japanese FTA model into considerations, provided analytical explanations on the political-economic reasons behind the developed countries’ initiative to form FTA, and its implications for developing countries.
Ika Riswanti Putranti, a PhD Candidate in European Union Law, Dipartimento di Scienze Giuridiche, Università degli Studi di Ferrar, writes the second article on the cumulative rules of origin for closer economic integration by focusing on the ASEAN single market perspective. The article argues that globalisation causes complexity in the determination of the origin of goods. The basic concept of the rule of origin is to identify the “nationality” of goods. In this regard, the “nationality” of goods imposes the legal consequence of trade policy instruments that are applied to the goods. In order to determine such “nationality”, there are legal or administrative requirements that must be fulfilled by the traders, known as origin criteria. The article argues that since there is no binding agreement or international standard governing preferential rules of origin, the rules of origin can be different from country to country, triggering the establishment of free trade agreements or preferential trade agreements between potential trading partners.
The third article is written by I Gede Ketut Catur Bimantara Suberata, a research assistant at the Center of World Trade Studies, Universitas Gadjah Mada. The article focuses on the authorization of cross-agreement retaliation for Ecuador in the Banana Dispute. Using the most well-known WTO dispute, the Banana War, this article examines the crucial role of cross retaliation. In that case, Ecuador, one of the plaintiffs, was granted the right to cross-retaliate under the TRIPS agreement, yet despite the authorization, it did not enforce its right and subsequently the case dragged on for years. This begs the question of why Ecuador refrained from implementing its right? This article analyzes the reason for Ecuador’s decision by examining the complexity of cross-retaliation implementation, the true nature of cross-retaliation, and other significant contributing factors to the dispute.
The fourth article written by Angga Aditama Putra, a research assistant at the Center of World Trade Study, Universitas Gadjah Mada, focuses on the US and China dispute regarding increasing import tariffs on China’s tires This article argues that the China-United States tire dispute was the first case concerning the China-specific Safeguard, particularly China’s Accession Protocol and Section 421 of the Trade Act 1974. The China-specific Safeguard was implemented by the United States to block products solely from China to enter the US market. This article questions China’s decision to countermeasure the US tire tariff policy in the WTO and the nature of special safeguards as a means of protectionism. This article argues that the US victory in this tire tariff dispute shows that the China-specific Safeguard can be used to exceed the rationality of the WTO’s traditional safeguard measures. It also illustrates that the WTO has not been able to overcome the protectionist measures implemented by its members.
The last article is written by Atika Marzaman, a research assistant at the Center for World Trade Studies, Universitas Gadjah Mada. This article intends to map the position of Indonesia’s creative industry not only in the ASEAN market but also in the wider global trade context. The findings show that in some ASEAN countries, the creative industries sector has been able to assume an important role in economic development and contribute greatly to GDP. This has challenged Indonesia’s creative industry to compete in an increasingly competitive regional market. A further finding demonstrates that the Indonesian government has been implementing several policies to endorse creative economy. These include supporting the Small and Medium Enterprises (SMEs) as the significant actor in this industry and also implementing policies to increase product value through innovation, as well as endorsing the establishment of creative communities at regional level. The article also argues that enhancing the relations among government, private sector, and academia is crucial in strengthening Indonesia’s creative industry sector.