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.