U.S. wants Indonesian exporters to apply corporate social responsibility

U.S. wants Indonesian exporters to apply corporate social responsibility

Urip Hudiono, The Jakarta Post, Jakarta

With the World Trade Organization (WTO) set to abolish the global
quota on textile and garments this month, Indonesian
manufacturers are worried about how to stay in the game and grab
a share of the U.S. market.

Meanwhile, growing concerns that the U.S. might impose non-
tariff trade barriers to protect its domestic industry from a
flood of cheap Chinese textile products have raised further fears
in the industry.

Such worries could well come true, as indicated by
Washington's recent request that Indonesian textile and garment
makers pay more attention to issues of corporate social
responsibility (CSR) -- such as workers' welfare and conservation
-- if they wanted access to the U.S. market.

Minister of Trade Mari E. Pangestu disclosed the request on
Friday after a meeting with the U.S. Department of Trade's
assistant secretary for market access and compliance, William H.
Lash.

"The U.S. has asked Indonesian textile producers to implement
a more `socially responsible' manufacturing process," Mari said.
"The requirement includes that the U.S. be able to conduct its
own `social audit' of our textile factories."

To ensure a level playing field, however, Mari said the
government had asked for the U.S.' assistance in helping
Indonesian manufacturers understand and comply with the CSR
requirement, as well as other possible non-tariff barriers.

Mari said Lash had also inquired as to Indonesian textile
makers' preparedness for the quota abolition.

The U.S., however, refused to abolish import duties on
Indonesian textile products, arguing that such a move would not
benefit Indonesia much.

"They said similar lifting of bans on other textile-exporting
countries, like Bangladesh and Pakistan, had not helped improve
their competitiveness," she said.

Commenting on the U.S.' CSR requirement, Indonesian Textile
Association (API) chairman Benny Sutrisno said it was not a
problem, as textile producers here had long been dealing with
similar customer requests.

"(The customers') main concern is whether we have complied
with Indonesian laws and regulations," he said. "...(Then) they
usually require that we comply with certain international
standards concerning the environment and human rights."

According to Benny, among the requirements are the prevention
of child labor and better awareness of working conditions,
including providing health care facilities for workers.

Benny agreed with the minister that the U.S. should explain
its requirements clearly, and that the same criteria should be
applicable to all textile-exporting countries to the U.S.

"Although countries can apply certain trade regulations to
protect their domestic industries, the WTO agreement clearly
states that it cannot be unilateral," he said.

The government projects an increase in textile and garment
exports this year to US$7.5 billion, from $7.03 billion last
year.

The U.S. market accounts for more than 28 percent of
Indonesian textile exports.

With the industry plagued by labor disputes and aging
machinery, and now facing the quota abolition, the API estimates
a fall in Indonesia's U.S. market share from the current 4
percent to 2 percent next year, when the quota system is
eliminated.