Aristo Pangaribuan

In the Rush to Free Trade, Don’t Put Consumers at Risk

The Asean-China Free Trade Agreement came into force on Jan. 1, in an area with a staggering 1.7 billion consumers, an annual trade volume of approximately $1.23 trillion and a combined gross domestic product of close to $6 trillion. The new FTA is the world’s largest trading bloc in terms of population and the third largest in terms of trading volume.

The agreement has led to wide debate. Many suggest that it will negatively impact Indonesia’s manufacturing and trade, hindering small and medium businesses and putting millions of jobs at risk. Proponents argue that free trade is inevitable and they note that the deal has been in the works for almost a decade since negotiations began in 2002.

However, given changes in our economy since 2002, a possible recalculation of the FTA’s impact and rising public pressure, Indonesia is seeking to renegotiate at least 455 tariff rates included in the deal. Much of the worry is driven by businesses, but what is often overlooked is the impact of this massive trade deal on consumers.

Under the FTA, consumers will face a tidal wave of Chinese products. While this could benefit consumer choice, it may also introduce inferior or untested goods into the market.

Even though the FTA calls for the Asean Coordinating Committee on Standards and Quality to regulate and standardize goods, it is no secret that China has difficulty with the idea that consumers deserve special protection. Consumer activists and other public advocates have been frequent targets of harassment and legal action in China.

We still recall the scare from September 2008, when the Indonesian Food and Drug Monitoring Agency (BPOM) found melamine in 28 dairy products from China. That same year, the BPOM also banned some cosmetic products from China after they were found to contain hazardous substances such as mercury, retinoic acid, hydroquinone and diethyl glycol.

There have also been other cases, such as the Chinese tainted-milk scandal and other product-safety incidents.

In the case of this free trade agreement, the flood of products is inevitable. The next question is: Will our current Consumer Protection Law be able to protect consumer rights?

Consumers are often powerless when dealing with big corporations. It is our government’s responsibility to ensure that there exists a comprehensive body of laws to protect consumers, laws that can reconcile the vast disparity in bargaining power between consumers and merchants.

Take the case of Prita Mulysari — a clear example of power disparity. Prita was sued for criminal libel by Omni International Hospital in Tangerang and even jailed for complaining in an e-mail about the treatment she received at the hospital. This outrage was only addressed when massive public action helped her receive justice.

Our 1999 Consumer Protection Law is not much help. It was enthusiastically passed but not well crafted during the reformasi hysteria following the fall of Suharto. As a result, the law is full of contradictions, such as the fact that costs for individuals to litigate fraud and warranty disputes are prohibitive.

The flaws in the law, including its lack of socialization and real bite, pose significant risks for consumers in an era of free trade. The Consumers Dispute Resolution Agency (BPSK) established under the law is arguably toothless, and as a result, consumers need to go through the complicated, costly and cumbersome district courts to seek redress. Indeed, the cost of legal enforcement generally exceeds the amount in question, leaving disputes unresolved and consumers frustrated.

By way of comparison, in countries such as the United States, Hong Kong, Canada, Britain and South Africa the judicial system enables consumers to access small claims courts. Here, consumers can easily exercise their legal rights without the burdens of an ordinary court, which require lawyers and other mechanisms beyond the reach of most common people. Small claims courts recognize the disparity in bargaining power between consumers and merchants.

In addition, the lack of private consumer advocacy organizations is also detrimental to our consumers. We need more of these groups to serve as watchdogs for the interests of consumers so that they will know their rights and how to seek redress from businesses.

And we cannot leave these matters to the government. Consumers need to educate themselves in order to avoid potential losses or damages. They need to know their rights and responsibilities and how to access them.

Free trade is here to stay, but in the inevitable process of globalization, let us not forget our consumers.



Aristo Pangaribuan is a Jakarta-based lawyer and a ctivist. He can be reached at aristo@aristopangaribuan.com.

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