The
Indonesian government’s outright rejection of US President Barack Obama’s
invitation to join trade negotiations for a Trans-Pacific Partnership (TPP), a
new regional free trade arrangement slated to be launched later next year, has
been largely anticipated, given the strong opposition the partnership has faced
from China and Japan.
Trade Minister Gita Wirjawan was quite right
when he asserted early this week that Indonesia’s manufacturing companies were
not yet ready for such global competition.
Both the government and the private sector
indeed still have a lot of homework to do before plunging head-on into global
market competition.
We are by no means opposed to open, free and
fair market competition, but our industries, still grappling with several
disadvantages inherent within our economy, such as the highest lending rate and
logistics costs in the region, need some time to strengthen their
competitiveness before entering the global arena.
While four Asean members — Brunei Darussalam,
Malaysia, Singapore and Vietnam — and Australia, Chile, Peru and New Zealand
have joined the US-initiated TPP negotiations, it is strategically better for
Indonesian interests to focus on the preparations for the fully fledged
implementation of the Asean free trade and economic community in 2015.
We are aware of the frustrations of several
Asean member states at the utterly slow progress on the Asean free trade
arrangements, but Asean and the rest of Asia should remain the focus of our
attention because it is in this region where growth remains robust now and for
the foreseeable future.
As the chair of the Asean regional grouping
this year, Indonesia is called upon to strengthen the grouping’s unity and
resolve to achieve a fully integrated market in 2015, since only with such a
single market can we have a stronger advantage to attract investment and
develop Asean into an efficient production base as part of the global supply
chain.
The blueprint for an Asean Economic Community
(AEC) charts the path to make the region, with a total population of 600
million people and gross domestic product of about US$1.8 trillion, a single
market and production base.
But we often confuse a single market simply
with low or zero tariffs. True, zero tariffs have been achieved for 99.85
percent of traded goods within Asean but the concept of a single market and
integrated economy requires more than just the removal of tariffs. All
non-tariff barriers to trade should also be lifted to facilitate the free trade
of goods and services among member states.
In fact, the removal of such non-tariff
barriers such as technical and safety standards, different customs-clearance
procedures, transit transport systems, rules of origin and conformity
assessment practices are most difficult and complex, requiring
institutional-capacity building in each country.
Three years is not long for the full market
integration given the widely differing levels of technical competence of
officials involved in facilitating the integration process.
Zero import tariffs would be made virtually
meaningless in stimulating intra-Asean trade if the non-tariff barriers are not
resolved, because different standards and assessment practices and different
product registration and labeling rules require duplicate testing for quality
certification, increasing distribution costs.
Asean leaders need to review the progress
already made in the removal of non-tariff barriers to trade and whenever
necessary agree on additional bold measures to ensure that Asean free trade and
the Asean economic community are up and running in 2015, as scheduled.
Editorial Desk
The Jakarta Post
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