Govt rejects appeals for AFTA delay<\/p>\n
Adianto P. Simamora, The Jakarta Post, Jakarta<\/p>\n
The government reminded struggling industries here that it
\nremained committed to lowering more import tariffs next year, as
\nit rejected the chemical and textile industries' appeals for
\nexemptions from the ASEAN free trade deal.<\/p>\n
The Ministry of Industry and Trade's director general for
\nregional cooperation, Budi Darmadi, said the government remained
\ncommitted to the 1998 Asean Free Trade Agreement (AFTA) it had
\nsigned.<\/p>\n
\"Like it or not, we have to lower our import tariffs to
\nbetween zero and five percent next January in line with AFTA
\nrequirements,\" Budi told The Jakarta Post on Wednesday.<\/p>\n
He said the government had refused to protect the
\npetrochemical industry for another year from lower trade barriers
\nunder AFTA, which came into effect this year for a number of
\nproducts.<\/p>\n
It also turned down appeals by the textile industry that it be
\ngiven more time to prepare itself against falling trade barriers
\nnext year, Budi added.<\/p>\n
Member countries of the Association of South East Asian
\nNations (ASEAN) agreed in 1998 to gradually cut import tariff
\nrates to between zero and five percent.<\/p>\n
In effect since the start of this year on a wide range of
\nproducts, AFTA aims to expand its product coverage gradually over
\nthe coming years.<\/p>\n
The government's determination to commit itself to AFTA comes
\nagainst the backdrop of landmark deals for creating free trade
\nzones binding the ASEAN markets with China, Japan and India.<\/p>\n
China led the move by clinching a deal with ASEAN leaders on
\nMonday to lay the groundwork for the world's largest free trade
\nzone by 2010. Japan and India jumped on the bandwagon, and signed
\nsimilar deals with ASEAN a day later.<\/p>\n
Analysts said that the free trade deals, although milestones,
\nwould be unrealizable if AFTA failed to live up to its promise.<\/p>\n
Indonesia, like other ASEAN members, has backtracked on
\nseveral items which should have been covered by AFTA tariffs.
\nThese involved a total of 66 items this year, including chemical
\nproducts.<\/p>\n
Budi explained that a flexibility scheme allowed countries to
\ndelay the imposition of AFTA tariffs but added, \"we can't easily
\ndelay such agreements. \"<\/p>\n
He said that backing away from the agreed AFTA terms would
\nerode investor confidence in this country. Indonesia also had to
\npay other countries compensation if it wanted to exempt products
\nfrom the AFTA list, he said, but did not elaborate on the
\ncompensation required.<\/p>\n
But, the opposition to AFTA has been determined. A number of
\nbusiness associations have claimed they would not be ready for
\nimport competition if trade barriers were torn down, and warned
\nthat doing so would impact on the local economy.<\/p>\n
The Indonesian Textile Association (API), whose industry will
\nbe covered by AFTA starting next January, said it needed at least
\nanother three years to bolster its competitiveness.<\/p>\n
The API's head of international relations and foreign trade,
\nSunjoto Tanudjaja, said the 1 January deadline was too soon.<\/p>\n
Textile producers have been plagued by a slump in global
\nmarkets, and rising labor and energy costs.<\/p>\n
For now, their products are shielded from overseas competition
\nby 20 to 30 percent import tariffs.<\/p>\n
A surge of smuggled textile products has also exposed many
\ntextile producers to a supply glut at home, and Minister of Trade
\nand Industry Rini M. Soewandi once sought to raise the import
\ntariff to 40 percent on garments.<\/p>\n
Elsewhere, local chemical players have been urging the
\ngovernment to defer yet again AFTA's application to their
\nindustry, claiming that many firms were mired in financial
\ntroubles and had difficulties upgrading their technologies to
\nmatch those of their competitors.<\/p>",
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"sponsor": "Okusi Associates",
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