RI should reap benefits from information era<\/p>\n
By Djauhari Oratmangun<\/p>\n
GENEVA (JP): The recent Asia Pacific Economic Cooperation
\n(APEC) summit in Manila has endorsed the Information Technology
\nAgreement (ITA) by calling for its conclusion in the forthcoming
\nWTO ministerial meeting, which will take place next week in
\nSingapore.<\/p>\n
This endorsement has not come as a surprise to most countries,
\nbecause since the QUAD's (the U.S., European Union, Canada and
\nJapan) ministerial meeting in Seattle in September 1996, these
\ncountries have been actively pursuing this issue through
\nbilateral approaches.<\/p>\n
But is Indonesia benefiting from ITA?<\/p>\n
This question needs an answer. To do so, we need to educate
\nthe industry sector on ITA.<\/p>\n
The proponents of ITA agreed that the reality is there to
\nprove it: We are now living in the era of the information super-
\nhighway. We cannot prevent technology advances in information
\ntechnology (IT) products such as computers, semiconductors and
\nothers which are rapidly influencing the way business is
\nconducted.<\/p>\n
The recent World Bank Report has predicted that the
\ninformation technology sector will be the largest industry in the
\nworld in the next century, and will provide the foundation upon
\nwhich most other industries will be built.<\/p>\n
Realizing that IT products would facilitate the advent of the
\ninformation age, the QUAD, in particular the United States,
\nsuggested that there should be a "multilateral agreement" to
\nreduce tariffs on them.<\/p>\n
This agreement aims to give businessmen better access to IT
\nproducts and to provide greater scope for competition. At the
\nsame time, consumers will also benefit from cheaper IT products,
\nsuch as PCs. The QUAD is aiming to reach an agreement on IT
\nproducts to coincide with the Singapore Ministerial Conference,
\nin order to achieve free trade in IT products by the year 2000.<\/p>\n
The QUAD's objective through ITA is the agreement by the ITA
\nsignatories to eliminate barriers to trade -- especially high
\ntariffs on IT products -- by the year 2000, with the staging of
\ntariff cuts beginning in 1997.<\/p>\n
According to the first proposal presented by the U.S., the
\nproduct coverage of ITA will include computers, hardware
\nproducts, semiconductors and integrated circuits, software,
\ntelecommunications equipment and other IT products such as semi-
\nconductor manufacturing equipment. In general terms, the IT
\nproducts to be covered by ITA include calculators, computers,
\ncomputer parts, telecommunications equipment, magnetic media,
\nresistors, printed circuits and semiconductors, and integrated
\ncircuits.<\/p>\n
Recognizing the importance of the ITA and realizing the
\neagerness of the proponents, as well as being under pressure to
\nhave an ITA before the Singapore conference, many IT producing
\ncountries, particularly in Asia, have prepared a "request list"
\nto be included in the product coverage of the ITA.<\/p>\n
As a member of APEC, which has also endorsed the ITA,
\nIndonesia needs to benefit from the opening of the IT foreign
\nmarkets. The domestic industry, which is heavily dependent on the
\nuse of IT products, will benefit from the "lower import tariff on
\nIT products". At the same time, Indonesia can also protect its IT
\nproducers which are still in the early stages of development.<\/p>\n
Indonesia has been considered both as a "potential" producer
\nand as a big consumer of IT products. Forecasts put the total
\nvalue of trade in information technology products somewhere over
\nUS$400 billion. Whether Indonesia can also benefit from a share
\nof that amount will depend on how it will proceed with the
\nnegotiations and how strongly the private sector will pursue it
\nthrough market intervention.<\/p>\n
The consumer is certain to benefit from the cheaper IT
\nproducts on the domestic market, due to the "lower import
\ntariff". How the industry will benefit from the ITA is again
\nanother question. However, according to the proponents, the ITA
\nwill help industries, businesses and consumers to move decisively
\ninto the information age by lowering costs, improving
\nproductivity, increasing the speed and accuracy of information
\nexchanges as well as the viability of new businesses and consumer
\nservices, and promoting interregional industrial cooperation.
\nThus, it is important to eliminate tariffs which, in essence, are
\na tax on information, competitiveness and productivity.<\/p>\n
For Indonesia, the price of a personal computer will be
\ncheaper as a result of the elimination of the import tariff. For
\nthe industries such as the textile industry, which also depends
\non IT products such as computers, production costs will be lower.
\nTherefore, the product itself will be more competitive in the
\nworld markets. The problems for Indonesia as a potential producer
\nof IT products is how to protect its IT industries in their early
\nstages of development, since they are not ready yet to compete
\nwith the IT producers from big countries such as the U.S. and
\nJapan, as well as the European Union.<\/p>\n
However, if we look at the win-win solution pointed out by
\nexperts, the Asian countries will be able to sell their products
\ncheaper in the U.S. and Europe, while their own consumers at home
\nwill be able to buy cheaper PCs and software.<\/p>\n
As the information age is already around the corner, Indonesia
\nwas right to agree to endorse the ITA at the APEC meeting.
\nHowever, we also need to be very cautious and active in securing
\nthe benefits which parties to the agreement can expect. This kind
\nof expectation has to be achieved through Indonesian negotiations
\nin the field, in particular in Geneva, where the APEC leaders'
\ndecisions have been actively followed up by ITA proponents, and
\nin Singapore during the ministerial conference, where the ITA is
\nexpected to be reached.<\/p>\n
Steps which Indonesia needs to take in approaching ITA
\ninclude:<\/p>\n
a. Along with the ASEAN countries, trying to negotiate for the
\ngreatest amount of flexibility, as provided by the longer
\ntimeframe. Therefore, Indonesia should argue against the
\nsuggested year-2000 deadline, taking into account the fact that
\nAfta will come into effect by 2003.<\/p>\n
b. Along with the private sectors\/industries, studying the
\nlist of the product coverage as proposed by the proponents and
\nanalyzing whether Indonesia could benefit from it in both the
\nshort and long term.<\/p>\n
c. Using the flexibility agreed by APEC leaders to prepare as
\ncomprehensive a "request list" as possible to be included in the
\nproduct coverage of the agreement. In preparing the "request
\nlist", Indonesia should concentrate more on products with dual
\npurposes, namely to benefit the domestic consumer (including the
\nbusiness community) and to gain market access in the U.S. and
\nEurope by protecting the domestic IT industries which are still
\nin their early stages of development.<\/p>\n
d. In preparing this "request list", the government should
\nconsult closely with the IT industries, as well as with state-own
\ncompanies which deal with telecommunications agencies, such as
\nINDOSAT and others, since the proposed coverage of the ITA also
\nincludes telecommunications equipment.<\/p>\n
Indonesia should also make use of its willingness to join ITA
\nas "bargaining power" for other purposes in the international
\ntrade arena. The Singapore Ministerial Conference on the WTO,
\nwhich the APEC leaders have set as a target date on which to
\nagree on the ITA, is only days away. Therefore, we should act
\nquickly if we want to gain as much as possible from ITA, as time
\nis running out.<\/p>\n
The countries which will derive the greatest benefits from the
\nopening of the market that ITA will create are the big powers
\nand, in particular, the original proponents. Otherwise, President
\nClinton would not be lobbying so actively at the APEC meeting to
\nback the IT tariff proposal.<\/p>\n
Djauhari Oratmangun,an observer of international trade
\nnegotiations, currently works in Geneva.<\/p>",
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