RI not serious about FTA with U.S., says USAID

RI not serious about FTA with U.S., says USAID

Zakki P. Hakim, The Jakarta Post/Jakarta

The United States perceived Indonesia as half-hearted in its
commitment to establishing a free-trade agreement (FTA) between
the two countries, thus leaving the talks in limbo, an official
of the U.S. Agency for International Development (USAID) said on
Friday.

USAID economic consultant Stephen Wendel suggested that
Indonesia should take immediate action to accelerate the talks or
face the risk of losing market share in the U.S.

"Indonesia is not serious. If both are serious, it is possible
for an agreement," Wendel told The Jakarta Post.

According to Wendel, the U.S. was very concerned about the
violation of intellectual property rights in Indonesia, and if
the government remained passive in tackling the issue, the U.S.
would most likely be reluctant about further FTA talks.

Wendel went on that it was important for Indonesia to pursue
an FTA deal with the U.S.; otherwise, Indonesia's market share
could shrink, as other countries were making aggressive moves to
forming an FTA with the U.S.

For example, he pointed out that Thailand was now closer to
establishing an FTA with the U.S., which might threaten half of
Indonesia's exports to the U.S.

Under the FTA with Thailand, the U.S. is to cut significantly
import tariffs for several of Thailand's export commodities,
which would make them more competitive than similar products from
Indonesia.

Wendel said the tariff cut, for instance, would make Thai
footwear products about 20 percent cheaper than Indonesian
products in the U.S. market, while Thai-made women's and girls'
clothing would be 12 percent lower.

Indonesia exported about US$1.1 billion worth in women's and
girls' clothing to the U.S. last year, and $602 million in
footwear exports. According to latest data at the Ministry of
Industry and Trade, the country's total exports to the U.S.
reached $6.4 billion from January to November in 2003.

USAID senior economist, William E. James, said Indonesia had a
lot to gain and less to lose in establishing an FTA with the U.S.

As the majority of Indonesia's top exports to the U.S. were
subject to pay high duties, significant cuts under an FTA
mechanism would surely boost export volume, he said.

On other hand, U.S. exports would not experience much of a
boost, as most key American products have entered Indonesia with
low tariffs. Only cars and other motor vehicles, which only
accounted for 0.3 percent of U.S. exports to Indonesia, reached
$2.4 billion in the first 11 months of last year.

Wendel added that since the U.S. might not gain much from the
trade deal in terms of export of commodities, it would propose
wider market access for its services including transportation,
travel and commercial services.

According to a study by the University of Indonesia, some 50
products had the potential to be included in the planned FTA with
the U.S, including textile, apparel, furniture sound recorders or
reproducers, natural rubber latex, telecommunication equipment
and mollusks and fish.