China, ASEAN to begin FTA despite business anxieties<\/p>\n
Zakki P. Hakim, The Jakarta Post, Jakarta<\/p>\n
Starting on July 20, Indonesia and five other members of
\nAssociation of Southeast Asian Nations (ASEAN) begin the journey
\nof entering a free trade agreement (FTA) with China -- creating a
\nmassive single market of approximately 1.8 billion people.<\/p>\n
Despite anxieties from domestic businesses here, the top six
\neconomies of ASEAN and China are to start slashing their import
\ntariffs by up to 85 percent on all their goods and gradually
\nreach a zero-tariff level by 2010.<\/p>\n
The other five countries are Singapore, Malaysia, Thailand,
\nthe Philippines and Brunei Darussalam.<\/p>\n
There are 5,255 groups of commodities traded between ASEAN
\ncountries and China.<\/p>\n
Under the \"Normal Track I and II\" scheme, Indonesia has 4,192
\n(track I) and 263 (track II) groups of goods concurrently in the
\ntrade liberalization drive that would have their tariffs
\ngradually cut to zero by 2010 and 2012 respectively, Ministry of
\nTrade said.<\/p>\n
Ready or not, the free trade implementation has already
\nignited skepticism and protests from observers and particularly,
\nindustry players.<\/p>\n
Learning from the implementation of the \"Early Harvest
\nProgram\" -- a prelude of sorts to the liberalization scheme that
\nASEAN and China had agreed to enjoy before going into the main
\ncourse of the Normal Track -- some, if not many, local
\nstakeholders reportedly have a lack of understanding about the
\ntrade liberalization concept.<\/p>\n
Some local industry players, in an apparent move to prevent
\nChinese products from penetrating the Indonesian market,
\nrecommended to the government not to include some of their
\nproducts in the liberalization drive.<\/p>\n
A move the industry players eventually regretted, after they
\nrealized that neighboring countries enjoyed wider market access
\nto China for the very products they tried to protect.<\/p>\n
At least two associations have requested that the government
\nlobby China to include their left-out commodities, namely a crude
\npalm oil derivative product of stearic acid and several cacao
\nproducts, since the EHP started in Jan. 1, 2004.<\/p>\n
Under the EHP, Indonesia agreed to start slashing tariffs on
\n449 groups of farm products to eventually reach zero by Jan. 1,
\n2006.<\/p>\n
The government should be prepared for more \"stearic acid
\ncases\", as the normal track program is 10 times bigger in the
\nnumber of commodities involved.<\/p>\n
The problems could occur from the differences between each
\ncountries' lists of sensitive and highly sensitive sectors.<\/p>\n
Indonesia's list of sensitive sectors consists of 304 tariff
\ncategories covering among other things, the automotive and
\nelectronics industries, as well as their component industries, a
\nfew branches of the textile industry and the chemical industry.<\/p>\n
Meanwhile, the highly sensitive list consists of 47 tariff
\ncategories that include rice, sugar, soybeans, corn and several
\nother food staples.<\/p>\n
The sensitive groups of products would have their tariffs
\nslashed starting in 2012 to reach a level between zero and 5
\npercent by 2020, while highly sensitive goods may maintain their
\nimport duties but only to a maximum 50 percent in 2020.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/china-asean-to-begin-fta-despite-business-anxieties-1447893297",
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"sponsor": "Okusi Associates",
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