RI, U.S. plan bilateral free trade pact

RI, U.S. plan bilateral free trade pact

Rendi A. Witular, The Jakarta Post, Nusa Dua, Bali

Indonesia and the United States took the first step towards
tearing down each others' trade barriers, as senior officials
from both countries decided on Thursday to study the possibility
against the backdrop of a surge of free trade initiatives across
the region.

Minister of Industry and Trade Rini M.S. Soewandi met with
visiting U.S. Trade Representative Robert B. Zoellick in Bali to
discuss trade issues, including the likelihood of bilateral a
free trade agreement (FTA).

"During our talks we raised the possibility of funding a study
on a FTA between Indonesia and America," Rini told reporters
during a press briefing here.

The U.S. is Indonesia's biggest export market, accounting for
around 16 percent of total export sales.

Indonesia's main exports to the U.S. are garments, textiles,
footwear and shellfish. Imports from the U.S. consist mainly of
agricultural products like cotton, wheat and maize.

Zoellick arrived from Singapore where the U.S. is already
close to signing its first bilateral free trade pact in the
region.

Singapore is using Indonesia's nearby Batam island as a base
to manufacture a number of products sold in the U.S.. The planned
U.S.-Singapore FTA also covers Singaporean products made in
Indonesia.

Rini said that among the obstacles blocking a FTA with the
U.S. were concerns over Indonesia's poor enforcement of
intellectual property rights.

Pundits here, however, are likely to object to heavily
subsidized U.S. agricultural products, which already dominate U.S
exports to this country.

But pressure is mounting for countries in the region to jump
on the bandwagon of free trade initiatives with developed
countries.

Earlier this month, the Association of Southeast Asian Nations
(ASEAN) agreed to create free trade pacts with China, Japan and
India under three separate deals.

Coming against this background is the U.S. move to bypass
ASEAN as a region and seek bilateral deals with its members
instead.

"We agreed to work on some studies to see whether the U.S. and
Indonesia can move forward to a FTA," said Zoellick during the
press meeting after he paid a visit to last month's bomb scene
where more than 180 people, mostly foreign tourists, died.

He said his meeting with Rini also covered issues on customs
reforms and Indonesia's investment climate, the latter having
worsened since the terrorist strike in Bali.

The recent trend of bilateral trade pacts signal frustration
over the slow progress of talks at the multilateral level,
notably in the World Trade Organization (WTO).

Equally slow are the negotiations at the Asia Pacific Economic
Cooperation (APEC), whose recent summit in Mexico was dominated
by terrorism issues.

At present, Indonesia is involved in a free trade pact within
ASEAN under the ASEAN Free Trade Agreement (AFTA), which is seen
as a trial run for the country as regards similar deals on a
wider scale.