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Indonesia delays free trade deals with Oz, NZ

The Jakarta Post | Wednesday, December 31, 2008

Indonesia delays free trade deals with Oz, NZ

Indonesia, Southeast Asia’s largest economy, has delayed signing a trade deal with Australia and New Zealand, due to be inked this month, until March next year, a senior official said Monday.

The deal is under the framework of the ASEAN free trade agreement (FTA) with Australia and New Zealand (AANZ-FTA), which was successfully negotiated on Aug. 28 in Singapore.

Gusmardi Bustami, the Trade Ministry’s director general for international trade cooperation, said the delay was because the framework of the deal, under ASEAN’s legal scope, would only be officially signed in February.

Other factors include the political instability in Thailand and the unfinished verification by other ASEAN (Association of Southeast Asian Nation) member states, Gusmardi added.

“Indonesia has secured commitments from Australia and New Zealand, and will discuss the details in January and February. We hope we can complete both deals in March,” he said.

The AANZ-FTA is supposed to be inked by this December, as mandated by the 13th consultation between the ASEAN Economic Ministers (AEM) and the Ministers of Australia and New Zealand on Aug. 28.

The negotiations by each ASEAN member state are part of an auxiliary deal under the AANZ-FTA. ASEAN groups together Indonesia, Thailand, Singapore, Malaysia, the Philippines, Brunei Darussalam, Vietnam, Cambodia, Laos and Myanmar.

Under the bilateral negotiation with Australia, Indonesia has committed to scrap 1,409 tariff lines in the automotive sector, while offering New Zealand an elimination of tariff lines for four beef products and seven dairy products.

In exchange, Australia and New Zealand will eliminate tariff lines on textile and garment products, as well as increasing capacity building for Indonesian professionals.

Under the AANZ-FTA, Indonesia will scrap 10,397 tariff lines and lower 645 lines by 2020. This makes up 98.9 percent of Indonesia’s total 11,159 tariff lines currently in place.

Gusmardi dismissed allegations the AANZ-FTA would devastate local industries and lead to a foreign economic invasion of the country, with critics saying the offers made by Australia and New Zealand are too little and put Indonesia at a disadvantage.

“We are not talking about how much money Australia and New Zealand will spend on their offered programs; we have to see it as a way of leveraging our capacity in the industries that the two countries master,” Gusmardi said. (hwa)

Trade deals with Australia, New Zealand

New Zealand offering:
1. Elimination of textile and garment tariff lines, effective 2017-2018. The tariff now stands at 7.75-19 percent
2. Working holiday scheme for 100 Indonesian workers
3. Employment for 100 chefs, 20 halal butchers, 20 Indonesian language teachers
4. Capacity building program in beef and dairy industry
5. Scholarships
6. Project funding in beef and dairy sectors
7. Cooperation in food and quality assurance
8. Support for small and medium enterprises (SMEs) empowerment

Australian offering:
1. Elimination of textile and garment tariff lines, effective 2009-2015. The tariff now stands at 5-17.5 percent
2. Elimination of 25 tariff lines in automotive sector
3. Capacity building in agribusiness, beef and dairy industries
4. Capacity building for local automotive industry
5. Commitment in providing working visas for certain jobs
6. Support for food certification program
7. Training and certification for oil and gas pipeline welders
8. Providing English teachers for industrial vocational schools

Indonesian offering to Australia (all in automotive sector)
1. Elimination of 240 tariff lines, effective 2009-2103
2. Elimination of 482 tariff lines, effective 2012-2013
3. Elimination of 345 tariff lines, effective from 2015
4. Elimination of 342 tariff lines, effective 2011-2023

Indonesian offering to New Zealand
1. Elimination of tariff lines for four beef products, effective in 2020
2. Elimination of tariff lines for seven dairy products, effective in 2017 and 2019

Source: Trade Ministry

 source: Jakarta Post