RI prepares 50-item FTA with U.S.

RI prepares 50-item FTA with U.S.

Zakki P. Hakim, The Jakarta Post/Jakarta

The government has proposed 50 products and commodities as the
initial focus of a possible future free trade agreement (FTA)
between the country and the U.S., according to a senior official
at the Ministry of Industry and Trade.

Director of bilateral cooperation at the ministry Sondang
Aggraini said that, according to a study carried out by the
Pranata Institute of the University of Indonesia (based on
Indonesia's trade performance up to 2002), these products were
considered to have high potential to be exported to the U.S.

"But it is still a preliminary study. We need to find out more
about the advantages and disadvantages of trading each of the
commodities," Sondang told The Jakarta Post on Friday.

She said that the products and commodities included textiles
and apparel, furniture, sound recorders, natural rubber latex,
telecommunications equipment, crustaceans, mollusks and aquatic
invertebrates. Textiles and apparel, for instance, recorded an
export value of US$2.5 billion last year, or 33 percent of the
country's total exports in 2002.

Indonesia is aiming to form an FTA with the U.S. as part of
efforts to boost trade with the world's largest economy. The
U.S. is the country's largest export market after Japan.
Indonesia's exports to the U.S. were around $7.6 billion in 2002
(mostly non-oil and gas), with a trade surplus of $4.9 billion.
The two countries trade some 256 commodity groups.

Several neighboring countries have moved ahead in forming FTAs
with the U.S. and developed nations. Singapore, for example, has
established FTAs with the U.S., Japan, New Zealand, Australia and
the European Union.

Deputy director for North American Affairs Tulus Budhianto
said that an FTA with the U.S. would take more than three years
to be realized.

He added that there were several bilateral trade issues that
had to be resolved first before further talks could take place.
The issues include rampant violation of intellectual property
rights in Indonesia, the banning of chicken-leg imports from the
U.S. (the government has since 2001 banned the import of chicken
leg quarters from the U.S. to protect local poultry farmers and
consumers on concern that the commodity was not halal) and the
U.S. textile quota system.

"We might need at least three years to realize the FTA.
Singapore needed fully three years to establish an FTA with the
U.S.," he said.

Meanwhile, Sondang added that the government had not yet
received the U.S. proposal about the FTA plan. She said that the
U.S. version of the list of products covered should have been
completed by July. "But until now, we have not heard any news
from them."

Sondang's office supervises bilateral cooperation with North
America, China, Japan, Australia and South Korea.

According to Sondang, the Hawaiian-based East-West Center was
working on an in-depth study on the FTA to identify the
advantages and disadvantage of a future agreement.

Some of RI's main export products to the U.S. in 2002
(in US$ million)

Group of commodities Export % of total

value export to U.S.

Textile and apparel products 2,500 33.07

Furniture 490 6.48

Sound recorders or reproducers 405 5.36

Natural rubber latex 399 5.28

Telecommunication equipment and parts 356 4.71

Crustaceans mollusks & aquatic invertebrates 215 2.84

Source: Ministry of Industry and Trade