ASEAN-China free trade a likely disaster, say trade unions
Ridwan Max Sijabat, The Jakarta Post/Jakarta
Labor unions here called the historic trade pact between China and the 10 Southeast Asian countries a disaster on Tuesday, claiming that Indonesia would not be able to compete with Chinese products.
Dita Indah Sari, chairperson of the Indonesian Workers National Struggle Front (FNBI), said that if Chinese products were allowed to flood the Indonesian market, almost all small and medium enterprises (SMEs) here would be faced with collapse, thus resulting in hundreds of thousands of people losing their jobs.
She said Indonesia could not compete with China because it produced the same goods as Indonesia, but with better quality but at lower prices.
"We will lose out in free market competition because we're still using outdated technology that is not environmentally friendly, and that fact that we cannot overhaul our high-cost economy and our human resources are less productive," she said.
Open unemployment in the country has reached 9.6 million, while disguised unemployment stands at more than 40 million.
The historic agreement, which was signed during the Association of Southeast Asian Nations (ASEAN) summit in Vientiane on Monday, aims at paving the way for the world's biggest free-trade zone by 2010, containing nearly two billion people. It requires the liberalization of tariff and non-tariff barriers on tradable goods, and the establishment of a mechanism to resolve trade disputes.
ASEAN plans to start free trade negotiations with Japan and South Korea next year, while Australia and New Zealand, attending an ASEAN summit for the first time, hope to soon announce the start of their own talks on a free trade deal.
The 10 leaders of ASEAN also agreed on a six-year program to fast-track trade liberalization and regional integration to create a powerful ASEAN community by 2020, or earlier.
ASEAN members also signed a separate agreement to liberalize tariffs in 11 key sectors, including the automotive, textile and electronics sectors, by 2007 for the six more developed members of ASEAN and 2012 for the other four.
Idin Rosyidin, secretary-general of the Indonesian Welfare Labor Union Confederation (KSBSI), shared Dita's view and said Indonesia would be flooded by Chinese products. He said Indonesia could not compete with China and the more developed ASEAN nations as almost 70 percent of the around 100 million members of the workforce here were elementary and high school graduates, or school dropouts.
"Many timber and garment companies have collapsed over the last three years because of the elimination of quotas in these two sectors, and our garment and textile products are no longer able to compete with products from China and India," Idin said.
Meanwhile, the All-Indonesian Workers Union Confederation (KSPSI) greeted the ASEAN single market and the ASEAN-China trade agreement cautiously, saying that trade liberalization could be a good opportunity for Indonesia to increase its products' share of the regional market. However, he said that trade liberalization needed to be implemented gradually and selectively.
"Indonesia should not bow to pressure from other countries in the region, including giants China and India. Rather, it should be quite selective in determining which products will be allowed to enter the local market," he said.
He said free trade was unavoidable in the global economy and it would be a major challenge for Indonesia to improve the quality of its human resources. However, he also said that it would provide a good opportunity for Indonesia to make use of its competitive advantages.