Thu, 13 Oct 1994

World Trade Organization ratified

JAKARTA (JP): The House of Representatives (DPR) yesterday approved a law ratifying the establishment of the World Trade Organization (WTO), which will administer the new General Agreement on Tariffs and Trade (GATT) early next year.

In a plenary session led by Soetedjo of the Armed Forces (ABRI) faction, the House unanimously passed the WTO law, along with another law on an extradition agreement between Indonesia and Australia.

None of the House's four factions -- ABRI, the ruling Golkar, the United Development Party (PPP) and the Indonesian Democratic Party (PDI) -- voiced reservations to ratifying the WTO.

The bill on the WTO was submitted by the government to the House on Sept. 3 by Minister of Trade Satrio Budiardjo Joedono. On Sept. 30, the House's Commission I, which deals with laws and foreign affairs, formed a special team to deliberate the bill.

The special team effectively deliberated the bill from Oct. 1 to 8, and submitted the results to the commission on Oct. 10. The final draft of the WTO bill was then brought to yesterday's plenary session for ratification.

In yesterday's session, Minister Joedono explained to the House the benefits that Indonesia would reap from ratifying the WTO. The average tariffs on Indonesia's products exported to Japan, for instance, will fall to 4.4 percent, to the United States and the European Union to around six percent.

These three economies are the major destinations of Indonesia's exports.


"Many Indonesian products have great chances of entering these three major markets duty free," he said. "Three quarters of Indonesia's exports to Japan and nearly half its exports to the European Union and the United States, for example, will no longer be subject to duties."

However, those three major markets, as well as other potential markets, will be open not only for Indonesian products but also for the products of other GATT signatories, thereby increasing competition.

Dwie Riawenny Nasution of the Golkar faction, therefore, suggested that the government take necessary actions to make Indonesian products more competitive on the world market.

The new GATT was signed by some 125 countries in Marrakesh, Morocco, last April 15 after more than seven years of tough negotiations on freer trade of goods and services.

When asked about a study by the World Bank and the Organization of Economic Cooperation and Development (OECD) that projects Indonesia to be a big loser in the agricultural sector after the implementation of the new GATT, Joedono called the study out of date and unrealistic.

"The study assumes that Indonesia will be a great rice exporter when trade of this commodity is totally liberated in year 2005. Now you see, the projection of losses from rice exports is simply unrealistic as Indonesia is not a net rice exporter at all," Joedono told The Jakarta Post.

The minister said Indonesia, as a developing country, is safe enough in the agriculture sector because import tariffs for 300 commodities of agricultural products are set at above its average ceiling of 40 percent.

A duty of 90 percent will be imposed on the first 70,000 tons of imported rice and 180 percent on imports above that, he said.(rid)

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