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Indonesia Notifies Asean of Plan To Renegotiate China FTA
Yessar Rosendar & Dian Ariffahmi | January 05, 2010

Many fear the domestic textiles sector will be hurt by the Asean-China Free Trade Agreement, which came into force last week. (Antara Photo) Many fear the domestic textiles sector will be hurt by the Asean-China Free Trade Agreement, which came into force last week. (Antara Photo)
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kriste5
3:32pm Jun 15, 2010

Hi. maybe someone has experience with imports from China to Indonesia?I heard that it is almost not possible, because Indonesia puts 100% taxes?thanks in advance.

Kriste

Simon
3:12pm Jan 15, 2010

Rules, indeed. That is very much to the nub of the issue.

If Indonesia walks away from this, or tries to re-negotiate, it may well shut up shop and walk away. It's credibility as a trading nation is shot.

Rules
2:24pm Jan 15, 2010

Salimharko et al.

In my view, the crux of the problem is not how China's economy compares to ours at the moment, or how bad this would be to local industry.

The crux of the problem is that the government signed this in good faith with the PRC in 2002 - that's eight years ago. We have had eight years to prepare for this and now, eight years later, we wish to renege our end of the bargain at the last moment.

What have we been doing for eight years? Why haven't we taken enough steps from 2002-2010 to ensure that when the time comes we can step up to the plate and say, "Ok, we're ready to do what we promised to do eight years ago."

Our credibility will be destroyed because of this, and this is not China's fault. China does not make our economic policies. Why do we back out of a deal we signed at the last moment? We could've said no, we're not gonna sign this, eight years ago.

Simon
1:09pm Jan 15, 2010

"All one has to do is read the current news and events about trade and commerce in various media like BusinessWeek, Time, Bloomberg and so on to know what is going on."

Ahh, the very same publications that were touting the collapse of China in late 2008. If I was relying on those rags, I'd not be (very successfully) in business across the region for many years.

Salimharko, in the politest possible way can I suggest that a career as an Asian economic commentator for Fox might be an option.

Indonesia will live or die on the quality of what it produces. Right now, it will die on that. The items you list below are all done better by China. Much, much better.

Two years aback I placed a large order for some machined goods in Indonesia. They were delivered late, faulty, and the price changed despite a contract, which had no force of law at the end of the day. When I paid the Indonesian owner took the money and bought a new Mercedes. His factory is desperately in need of new equipment, but it was not to be.

Compare with China where goods are almost always on time, to a specified quality standard and the money is reinvested. That's the huge difference. I've learned my lesson and I will buy Chinese now.

But, hell, I wish they'd explain to me how to turn the massive losses implied by the various right wing dumping conspiracies into such vast profits, because I am a businessman and am very anxious to know exactly how they did it.


Salimharko
10:35am Jan 15, 2010

Interesting articles to read: How China Cooks Its Books. - It's an open secret that China has doctored its economic and financial statistics since the time of Mao. But could it all go south now?: Foreign Policy.

China's Economy: Behind All the Hype - Despite an impressive rebound, an innovation shortfall may hobble sustainable growth: Business Week/Bloomberg.

( Google search the titles ).

Indonesia has notified the Asean council of its plan to modify the implementation of the Asean-China Free Trade Agreement by renegotiating 228 tariff categories in eight industrial sectors, a senior cabinet minister said on Monday.

“We have sent notification for a renegotiation with Asean and China regarding the agreement because it has a potential to weaken local industries,” Coordinating Minister for the Economy Hatta Rajasa said.

The government is seeking to delay the implementation of tariff cuts on 228 categories of products to give local industries a chance to become more competitive to withstand the onslaught of cheap Chinese imports.

In return, it is offering to accelerate the implementation of tariff cuts on 153 tariff categories.

The trade deal took effect on Friday.

Hatta said the government was also planning to form a team made up of representatives from relevant ministries and the private sector to monitor and accelerate the competitiveness of local industries.

The team’s role would be to protect the domestic market from illegal goods, promote local products, and prevent unfair trade practices, he said.

Industry Minister MS Hidayat said it was important to compensate the other parties to the agreement, which was why the government was offering to accelerate tariff reductions in some categories. He said he was optimistic that the renegotiation efforts would result in a win-win solution for all parties.

The 228 tariff categories include steel, iron, textiles, electronics, basic inorganic chemicals, petrochemicals, furniture, footwear, machinery, cosmetics and herbal medicines.

Under the free-trade agreement, tariff reductions on categories included in track I were to be implemented from Friday. Track II categories were to see tariffs reduced from 2012, while categories on the sensitive list would not face tariff cuts until 2018. Categories on the highly sensitive list would not see cuts until 2020.

Hatta said the government was proposing to shift 146 tariff categories from track I to track II, and to shift 60 tariff categories from track I to the sensitive list. The government is also proposing that another 22 tariff categories, on which tariffs were already cut in 2009, should be transferred to the sensitive list.

In return, it is proposing that 153 tariff categories, in sectors such as textiles, steel, toys and footwear, face tariff cuts sooner than planned.

Most of the categories that the government is proposing enter the FTA sooner than planned are in the iron, steel and textiles sectors, Hatta said.

The government is proposing that 56 tariff categories be transferred from track II to track I, 16 tariff categories from the sensitive list be transferred to track I, a further 50 tariff categories from the sensitive list be shifted to track II, and 31 tariff categories from the highly sensitive list be transferred to the sensitive list.

The Asean-China Free Trade Agreement expands a limited agreement that came into force in 2005.

Since 2000, Asean’s trade deficit with China has increased by more than five times, to $21.6 billion, stoking fears that many local industries will be badly hurt by the agreement.