Industry balks at ASEAN-China FTA

Zakki P. Hakim, The Jakarta Post, Jakarta

Industry players are generally the most affected stakeholders in any free trade agreement (FTA), but they continually feel they are being left out of the FTA negotiation process.

The implementation of the FTA between China and ASEAN nations -- which would see almost all import duties slashed starting on Wednesday and gradually dropping to zero by 2010 -- is the latest example.

Indonesian Electronics Producers Association (Gabel) chairman Rachmat Gobel said the involvement of industry players in the negotiations had been minimal.

"If the government says it involved industry players in the process, most of them would ask, which ones?" he told The Jakarta Post on Tuesday.

He acknowledged that the current government was more proactive in involving the private sector, although they could still do better.

Rachmat said most industry players here were still clueless on the government's plan for the private sector in facing the trade liberalization drive.

"We expect to see a concrete plan. Until there is one, we will still use our own plans and assumptions as to which markets and products we will be developing," he said.

Indonesian Textile Association (API) chairman Benny Sutrisno said the Ministry of Trade should communicate the results of the FTA, and suggest ways of anticipating the impacts of ASEAN-China FTA to the private sector as soon as possible.

"Most industry players have no idea about the ASEAN-China FTA. Without proper knowledge, how can they make the right business decisions?" he told the Post.

He said that industry had no choice but to be ready to face the ASEAN-China FTA. However, it would be helpful if the government provided clear guidelines of what each sector had to do each year before the actual liberalization in 2010.

Benny further implied that the textile industry players were mostly still in the dark about the negotiations that led to the signing of a "Framework Agreement on Comprehensive Economic Cooperation between ASEAN and China" on Nov. 4, 2002 in Phnom Penh.

His claims, however, were contradicted by the trade ministry who said that every commitment in the FTA was only made based upon input from the private sector.

Benny suggested that the ministry needed to find more creative and effective ways to communicate with the private sector.

Also, he said the government should have protected the textile industry as it provides a massive number of jobs.

The ministry said that it had always accommodated input from the private sector, including those sectors targeted for liberalization.

On Wednesday, the government will start slashing tariffs by 85 percent on 5,255 groups of goods (HS 6 digits) traded between ASEAN and China, but secured 304 tariff categories of goods on a "sensitive" list, and 47 categories on the "highly-sensitive" list.

The "sensitive" group of goods, includes, but is not limited to, certain sub-sectors of the textile industry and the electronics industry. Tariff cuts for this group would only start in 2012, reaching zero in 2020.

The ministry said that several industry players had to learn the hard way that they had lost markets in China to other ASEAN countries as a consequence of not opening up the domestic market.