RI, Japan FTA to boost ASEAN-Japan trade liberalization

Zakki P. Hakim, The Jakarta Post, Jakarta

A free trade agreement (FTA) between Indonesia and Japan, which has been initiated by the two governments, will not pose a threat to a similar trade deal currently being developed between Japan and Southeast Asian countries, an official said on Monday.

"The bilateral trade agreement (between Indonesia and Japan) would instead accelerate the process in establishing ASEAN-Japan FTA," Ministry of Trade's director general for international cooperation Pos M. Hutabarat said on the sidelines of a two-day meeting to discuss a possible FTA between the two nations.

The meeting is an initial move toward starting formal rounds of bilateral FTA talks, whereas the Association of Southeast Asian Nations (ASEAN) is scheduled in April to start trade liberalization talks with Japan.

Monday's meeting discussed, among other things, the cost and benefits of establishing an Indonesia-Japan FTA, Pos said, adding that he had yet to make a formal calculation on how the FTA would boost trade between the two countries.

Indonesia's non-oil and gas exports to Japan in the first seven months of last year totaled US$4.53 billion, up 17.86 percent from the $3.85 billion in the same period in 2003.

The meeting is the first of three scheduled sets of talks ahead of formal negotiations for a preferential trade agreement. The preliminary talks will produce a full-scale assessment on FTA in mid-April to be submitted to relevant ministers of the two countries, Pos said.

Afterward, "the ministers will determine whether or not an Indonesia-Japan FTA is needed, and if it is deemed necessary, to decide when negotiations will start," he explained.

The meeting is expected to explore import duties, labor regulations, immigration, taxation, trade facilitation and investment issues in both countries.

A bilateral trade agreement is considered a faster measure in liberalizing trade between nations compared to deals involving more than two countries.

According to Pos, neighboring countries were ahead of Indonesia in establishing FTAs with Japan. Singapore and the Philippines have already signed such agreements, but only the city-state has implemented the deal as the Philippines is still straightening out several technical details.

Negotiations with Thailand and Malaysia are also under way, and are unlikely to be completed anytime soon, Pos said, citing agricultural and investment issues as among the obstacles.

ASEAN and Japanese leaders agreed at last year's ASEAN summit in Laos to commence negotiations in April 2005, and to conclude the talks within two years.

The six founding ASEAN members and Japan made a schedule to establish a free trade area by 2012, and the newer members by 2017.

Founding ASEAN members are Brunei, Malaysia, Indonesia, the Philippines, Singapore and Thailand, while Cambodia, Myanmar, Laos and Vietnam joined later.