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.