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FTA with Australia, NZ to cover textiles, forestry

Jakarta Post, 9 April 2005

FTA with Australia, NZ to cover textiles, forestry

Rendi A. Witular, The Jakarta Post/Wellington

Indonesia will propose special facilities for some of its leading industries in upcoming preliminary negotiations for a free trade agreement (FTA) with Australia and New Zealand, a minister has said.

Minister of Trade Mari Elka Pangestu said on Thursday that Indonesia’s FTA proposal for Australia would most likely cover products in the sectors of textiles and garments, automotive, footwear, and electronics, as well as services — in particular, skilled nurses.

"Currently, Indonesian products face a number of tariff and non-tariff constraints to get into Australia. The FTA is expected to remove them, especially for products and services that Indonesia are good at," said Mari during her visit with President Susilo Bambang Yudhoyono to Australia and New Zealand.

Mari reiterated that at present, Australia imposed high tariffs for some of Indonesia’s most important products, while non-tariff barriers mostly revolved around problems of quality standards and capacity building.

It is due to these problems that the trade relationship between the two countries has remained relatively insignificant, with Indonesia ranked as Australia’s 16th largest trading partner with bilateral trade worth some A$8 billion (US$6.5 billion) last year.

Meanwhile, in the services sector, Indonesia will be expecting Australia to help local nurses by providing training and professional certification in Indonesia to enable them to work in Australia.

"We are hoping that Australia will open its door wider for Indonesian skilled laborers, since we have allowed them to invest in and operate hospitals in Indonesia.

"I believe Australia now lacks nurses and skilled workers in other service sectors," said Mari.

Indonesia and Australia are now assessing the advantages and constraints in setting up the FTA between the two nations, with negotiations over essential facilities for the actual agreement to be conducted later on.

Indonesia, Southeast Asia’s largest economy, has lagged behind Singapore, Malaysia and Thailand in initiating FTA talks with Australia, as well as with New Zealand, due in part to the unclear, uncoordinated trade and industry policies of previous governments.

Elsewhere, regarding a trade agreement with New Zealand, Mari said that it was still at an early stage. Two-way trade between the two countries last year was only US$330 million, with New Zealand’s exports to Indonesia being valued at $180 million, and Indonesia’s at $150 million.

Trade is mostly in forestry-based products such as pulp, paper and furniture.

"The FTA talks with New Zealand are still very preliminary. We formed a trade and investment commission with them in 2001, however, no follow-up has been done since. Now we want to reignite the commission to start talking about the FTA," said Mari, adding that the commission was scheduled to meet in November.

Mari said Indonesia would propose cooperation in furniture and other wood-based products to be included in the trade agreement.

"Forestry based industries in New Zealand are very advanced, and we need to cooperate with them in order to boost our trade activities as well as improving our sustainable forest management," said Mari.

 source: Jakarta Post