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Pursuing FTA finalization target, Indonesian Government are trading away people’s live and rights

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Press Release - 05 March 2019

Pursuing FTA finalization target, Indonesian Government are trading away people’s live and rights

Jakarta, 04 March 2019. Indonesian Civil Society Coalition for Economic Justice urge the government not to enacted Indonesia – Australian CEPA agreement without meaningful public consultation. The negotiation process always conducted in closed and non-transparent manner on the contents of text. Moreover, the Coalition also doubts there is any consultation by the Government to Parliament.

Indonesia – Australia CEPA negotiations was finalized on August 2018, and the agreement was signed Monday, 4 March 2019. On the agreement, Indonesia – Australia significantly eliminate tariff and trade barriers, liberalise investment and services, including e commerce.

Pursuing the Pre-election Target

Executive Director of Indonesia for Global Justice (IGJ), Rachmi Hertanti stated that Government of Indonesia eager to finalize various FTA, including IA CEPA, merely pursuing the target of quantity performance without assess its impact to the communities.

“Government of Indonesia don’t need to be ambitiously finalize some of FTA negotiations on this year and ahead. There are many things that must be considered, particularly the extensive impact for Indonesia. The FTA, including IA CEPA, are not only about exports and imports”, Rachmi said.

Before ratification, it is necessary for the Indonesian Parliament and the Government to analyze the impact of the FTA that has been negotiated. This is important to calculate precisely the impacts that Indonesia would experience on the future. The horrible thing is if the IA CEPA ratified during pre election will seriously endanger the fate of the Indonesian people in the future days without critical consideration.

“The most important thing to do by the Government and Parliament is to ensure that the constitutional rights of Indonesian people protected and not ignored or even violated by the international trade agreements. So election is not an excuse to pursue the finalization of FTA, including IA CEPA agreement”, stressed Rachmi.

Indonesia floods import of food and agricultural products from Australia

Eventhough the Government of Indonesia hopes to increase of exports to Australia by this agreement, but the data on trade balance between Indonesia and Australia always shows the deficit. Without free trade agreement between Indonesia and Australia, the number of food import from Australia since 2012 until 2018 shows a significant increase. In fact, from June to August 2018 it reached US$ 3.8 million, especially imports of beef, refined sugar, milk and cheese. Of course, this agreement will have a serious impact on food situation in Indonesia. Particularly, with the increasing number of signed trade agreements that in fact opening the higher food imports.

The import value of agricultural product from Australia shows the significant number because Indonesia is the largest market for Australia to export agricultural products in the Southeast Asia region. No wonder if the import value of agricultural product increase every year. The data shows that until 2018, Indonesia imports up to US$ 5.16 million, or approximately 33% of Australia’s agricultural exports to Indonesia, specifically milk, wheat, live cattle, butter, fruit and cotton.

Kartini Samon, researcher from the Coalition highlight that IA CEPA will worsening the situation and make Indonesia flooded with import of agricultural product from Australia. Therefore, IA CEPA will be impact to small farmers and livestock keeper, local sugar producers and other agricultural producers, if it left unchecked.

“While the export of Indonesian products to Australia, mostly already got 0% tariff elimination under ASEAN-Australia-New Zealand FTA, which means that this agreement may not increase the previous market. But on the contrary, Indonesia is even more flooded with food imports from Australia”, Kartini explained.

In addition, Henri Pratama from Advocacy and Research Division of Kesatuan Nelayan Tradisional Indonesia (Indonesian Traditional Fishers Union) said that Indonesia always struggling with salt industry management. Coupled with bad government policies that loosen salt import will impact to the problem of national salt management. The policy by opening salt import quotas should not be carried out for 4 reasons. First, the salt import policy in the last 10 years has been excessive, which then paralyzed the national salt production. As a result, salt farmers have been harmed by this policy, which has led to the conversion of professions to the forced labor because of their salt production unprofitable. The downstream issue is the ability and capacity of salt production declined and then concluded as unability to meet with the national salt needs. Secondly, not only impact to the salt farmers exodus, but the salt production fields were narrowing because land owners did not produce salt due to the situation of many salt farmers left their professions. Third, lack of management from Garam Indonesia, Co. in absorbing salt farmers’ production. The government should clearly appoint Garam Indonesia, Co. so that the salt production in each region can be absorbed, along with the other efforts to provides incentives to the salt farmers. Fourth, the government must again to expand the areas of salt production. National salt self-sufficiency must be top priority to exit from the trap of dependence on the imported salt. Therefore, the expansion of salt production fields must to do, by utilizing the unproductive land, including landn that has become the target of mining conflict and reclamation projects.

“Salt import policy, which will extend the impoverishment of Indonesian salt farmers and lose their identity. Therefore, to realize salt self-sufficiency the government must to guarantee the business certainty of salt as the mandate from Law No. 7/2016 on the Protection and Empowerent of Fishers, Fish and Salt Farmers, and asked the President to issue the Presidential Instruction on salt self-sufficiency to improve national salt governance”, said Henri Pratama.


Other thing concerned by the Coalition is the liberalisation of investment regarding the service agreement. On the document of IA CEPA key outcomes issued by the Australian Departmenet of Foreign Afairs and Trade (DFAT) [1] , stated that the liberalisation of investment in the services sector is considered to provide more guarantees for Australian investment in Indonesia. In fact, Australia claims that Indonesia gives stronger commitment than any other agreement has ever made.

According to Puspa Dewy, Solidaritas Perempuan chairperson, the liberalisation investment in the service sector rules the prohibition for Indonesia to limitate the level of Australian investment ownership. Even Indonesia is prohibitied from requiring divestment of Australian investment ownership in Indonesia under the agreed percentage (with limited exceptions [2]). The provisions of domestic regulation disciplines even included in the liberalization of service sector where state is prohibited from making stricter liberalisation policies in the future.

“The rules of trade and investment agreements will encourage a lot of deregulation. Of course this has an impact on the narrowing of the state policy space in carrying out its obligations to respect, fulfill and portect basic rights of the citizens. On the other hand, the domestic regulation continues to be encouraged to facilitate investment more that people’s protection”, said Dewy.

Rachmi added that IA CEPA also regulates the investment protection rules by including the Investor State Dispute Settlement (ISDS) clauses. This clauses was made to give the right of foreign investors (from Australia) to sue the host government in international arbitration tribunal for regulations that are considered detrimental to investors.

"Regarding investment issues in IA CEPA, there is an insistence from Australian mining corporations who want the ISDS mechanism to be included in the IA - CEPA [3]. They claim that Australian mining corporations often get great pressure from the policies of the Indonesian Government, particularly related to the Mining Law which requires divestment of foreign shares, "Rachmi explained.

Rachmi reminds about Indonesia experiences being sued by foreign investments including mining companies from Australia like Churcill Mining and Planet Mining (both company shares are owns by Australia) due to expropriation restriction especially about the revoke of mining permit. Even another Australia-based mining company, New Crest once threaten to sue Indonesia to ICSID for amending environmental law.****

*Further contacts*
Rachmi Hertanti, Director Executive IGJ: +62817-4985180
Kartini Samon, Researcher Koalisi Masyarakat Sipil untuk Keadilan Ekonomi : +62813-14761305
Puspa Dewi, Solidaritas Perempuan: +62852-60241597
Henri Pratama, Kesatuan Nelayan Tradisional Indonesia: +62813-1569-3394

CSOs Coalition for Economic Justice is a Coalition that struggling for the economic justice for Indonesian people which threatened by the mechanism of FTA and Investment. Some of organization that part of the Coalition are: Aliansi Petani Indonesia, Indonesia AIDS Coalition, Indonesia for Global Justice, Indonesia Human Rights Committee for Social Justice, Kesatuan Perjuangan Rakyat, Kesatuan Nelayan Tradisional Indonesia, Koalisi Rakyat untuk Hak atas Air, Koalisi Rakyat untuk Keadilan Perikanan (KIARA), Serikat Petani Indonesia, Solidaritas Perempuan, Eknas Wahana Lingkungan Hidup Indonesia, Walhi Bali, Yayasan Bina Desa, Yayasan Manikaya Kauci.


[2the phrase “with limited exception” is vague because the text is not open to public so not clear what are the exception