The Jakarta Post | Jakarta | 14 August 2004
Zakki P. Hakim
The government has proposed 50 products and commodities as the initial focus of a possible future free trade agreement (FTA) between the country and the U.S., according to a senior official at the Ministry of Industry and Trade.
Director of bilateral cooperation at the ministry Sondang Aggraini said that, according to a study carried out by the Pranata Institute of the University of Indonesia (based on Indonesia’s trade performance up to 2002), these products were considered to have high potential to be exported to the U.S.
"But it is still a preliminary study. We need to find out more about the advantages and disadvantages of trading each of the commodities," Sondang told The Jakarta Post on Friday.
She said that the products and commodities included textiles and apparel, furniture, sound recorders, natural rubber latex, telecommunications equipment, crustaceans, mollusks and aquatic invertebrates. Textiles and apparel, for instance, recorded an export value of US$2.5 billion last year, or 33 percent of the country’s total exports in 2002.
Indonesia is aiming to form an FTA with the U.S. as part of efforts to boost trade with the world’s largest economy. The U.S. is the country’s largest export market after Japan. Indonesia’s exports to the U.S. were around $7.6 billion in 2002 (mostly non-oil and gas), with a trade surplus of $4.9 billion. The two countries trade some 256 commodity groups.
Several neighboring countries have moved ahead in forming FTAs with the U.S. and developed nations. Singapore, for example, has established FTAs with the U.S., Japan, New Zealand, Australia and the European Union.
Deputy director for North American Affairs Tulus Budhianto said that an FTA with the U.S. would take more than three years to be realized.
He added that there were several bilateral trade issues that had to be resolved first before further talks could take place. The issues include rampant violation of intellectual property rights in Indonesia, the banning of chicken-leg imports from the U.S. (the government has since 2001 banned the import of chicken leg quarters from the U.S. to protect local poultry farmers and consumers on concern that the commodity was not halal) and the U.S. textile quota system.
"We might need at least three years to realize the FTA. Singapore needed fully three years to establish an FTA with the U.S.," he said.
Meanwhile, Sondang added that the government had not yet received the U.S. proposal about the FTA plan. She said that the U.S. version of the list of products covered should have been completed by July. "But until now, we have not heard any news from them."
Sondang’s office supervises bilateral cooperation with North America, China, Japan, Australia and South Korea.
According to Sondang, the Hawaiian-based East-West Center was working on an in-depth study on the FTA to identify the advantages and disadvantage of a future agreement.
Some of RI’s main export products to the U.S. in 2002 (in US$ million)
Group of commodities | Export | % of total value export to U.S.
Textile and apparel products | 2,500 | 33.07
Furniture | 490 | 6.48
Sound recorders or reproducers | 405 | 5.36
Natural rubber latex | 399 | 5.28
Telecommunication equipment and parts | 356 | 4.71
Crustaceans mollusks & aquatic invertebrates | 215 | 2.84
Source: Ministry of Industry and Trade