The Association of Southeast Asian Nations (ASEAN) will ink a free trade deal with Australia and New Zealand next month
The deal will allow a freer flow of goods between the ASEAN region and both countries, with a combined market of more than 600 million people.
Indonesian Trade Minister Mari Elka Pangestu said recently the free trade agreement (FTA) would be signed on Feb. 27 during the ASEAN summit in Thailand.
“Our negotiations with (Australia and New Zealand) have been completed. There are no longer any stumbling blocks,” she said.
“(We) plan to sign (the FTA) on Feb. 27 during the (ASEAN) summit in Thailand.”
The FTA was supposed to be inked by December last year, as mandated by the 13th consultation between the ASEAN Economic Ministers (AEM) and the Ministers of Australia and New Zealand on Aug. 28 last year in Singapore.
Under the FTA plan, each ASEAN member state will make a bilateral deal with Australia and New Zealand.
ASEAN groups together Indonesia, Thailand, Singapore, Malaysia, the Philippines, Brunei Darussalam, Vietnam, Cambodia, Laos and Myanmar, with a combined population of 575 million as of 2007.
Under the bilateral deal between Indonesia and Australia, Indonesia commits itself to scrap 1,409 tariff lines in the automotive sector in stages, starting this year, opening up strong competition with the established Japanese manufacturers which control 80 percent of the country’s car, van and truck market.
PT Toyota Astra Motor president director Johnny Dharmawan, however, said he was “not too worried” about the FTA since Australian manufacturers focused on big vehicles,
“We only produce small ones, such as MPVs (Multi Purpose Vehicles).” said Johnny.
In the deal with New Zealand, Indonesia will entirely scrap tariffs on four beef products and seven dairy products imported from New Zealand by 2020 and by between 2017 and 2019, respectively.
In exchange, Australia and New Zealand will eliminate tariff lines on textiles and garments, as well as increasing capacity building for Indonesian professionals.
Meanwhile, National Dairy Council (DPN) chairman and Indonesian Cow and Buffalo Farmer Association (PPSKI) secretary general Teguh Boediyana were concerned the FTA might potentially jeopardize the future of four million beef cattle farmers and 100,000 dairy cow farmers.
“We have experience of capacity building programs with other countries in the past, and they have proven to be futile, benefiting only government officials but not our cattle farmers,” he said.
Teguh said any adverse impact of the FTA could be limited if the government immediately provided interest rate subsidies for loans to cattle farmers to help them to compete.
Local production amounted to 1.3 million liters of fresh milk a day. This is only 25 percent of the 5 million to 5.5 million liters a day absorbed by the domestic market, with the rest coming from imports, he said.
ASEAN’s total merchandise trade on goods with Australia and New Zealand jumped by 16.6 percent to US$47.8 billion in 2007 from $41.0 billion in 2006. ASEAN exports grew to $31.0 billion in 2007 from $26.2 billion in 2006, while imports rose to $16.8 billion in 2007 from $14.8 billion in 2006.
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