Jakarta, Jan 6 (ANTARA) - While the rates of additional tariff lines are being reduced to zero under the Common Effective Preferential Tariffs for the ASEAN Free Trade Area (CEPT-AFTA) as of January 2010, Indonesia is seeking to re-negotiate the rates of at least 455 tariff lines which, it thinks, have the potential to weaken its domestic industries.
Of the 455 tariff lines that need to be re-negotiated, 227 are under the CEPT-AFTA scheme involving Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand, and 228 other tariff lines are under the Asean-China Free Trade Agreement (ACFTA).
Members of the Association of Southeast Asian Nations (Asean) agreed to implement a CEPT scheme through the AFTA in 1992 and in 2002 Asean and China made a comprehensive cooperation agreement which became the basis for the negotiations in 2004 for the establishment of the Asean-China Free Trade Agreement (ACFTA).
"Based on inputs from businesses a total of 227 tariff lines for the CEPT-AFTA need to be reviewed because they have potentials to weaken domestic industries," Chief Economic Minister Hatta Rajasa said on Monday.
With regard the Asean China FTA a total of 228 tariff lines need to be reviewed. "It is the inputs from businesses that have made the government send a notification for renegotiations in the framework of both of CEPT AFTA and Asean-China FTA," he said
For this purpose, Indonesia has set up a special team with members from various ministries and businesses to anticipate the impact of the implementation of the Asean-China Free Trade Agreement and CEPT AFTA.
"We are responding quickly by asking businesses to work together with the government to anticipate possible disadvantages for our industries," the chief economic minister said.
According to the ASEAN Secretariat on Monday, as of 1 January, 2010, for ASEAN-6, an additional 7,881 tariff will be reduced to zero, bringing the total tariff lines under the CEPT-AFTA to 54,457.
The tariff rates include final consumer products such as air conditioners; chili, fish and soya sauces; as well as intermediate materials such as motorcycle components and car cylinders. Other products include iron and steel, plastics, machinery and mechanical appliances, chemicals, prepared foodstuffs, paper, cement,
ceramics and glass products.
The tariff elimination by ASEAN-6 (Brunei Darussalam, Indonesia, Malaysia, Philippines, Singapore and Thailand) underscores ASEAN's commitment to dismantle the tariffs and keep intra-ASEAN trade open. It will also serve as a catalyst for the development of the single market and production base projected in the ASEAN Economic Community (AEC) Blueprint.
Hatta Rajasa said the Indonesian government set up the team to settle obstacles in the industry and trade with members coming from various ministries and institutions concerned and businesses.
The team is expected to be able to improve the effectiveness of domestic market protection efforts from smuggling and also play a role in protecting and monitoring domestic flows of goods.
"The team will also assure that all goods and services meet the Indonesian National Standards of health, security and environment," he said.
In general the team's focus will be on strengthening export markets, improving land use and spatial order, infrastructure and energy development, extension of incentives, development of special economic areas, expansion of financing access and interest cost reduction as well as logistics system development.
As to the tariff lines with ACFTA, the government is collecting materials for renegotiation with China.
According to Industry Minister MS Hidayat, the materials had been presented to the coordinating minister for economic affairs as the coordinator of a joint government team to prepare for the ASEAN-China FTA.
The industry ministry identified a number of findings including an indication that the ASEAN-China FTA would lead to unfair trade practices as China would give a tax discount of 14 percent to major exporters.
The tax discount could be categorized as s subsidy to Chinese major exporters, while Indonesia did not give any subsidy to its exporters, the minister said.
The ministry had also presented the details of eight industrial sectors with 228 tariff posts to be affected by the ASEAN-China FTA.
The industry ministry had also proposed tariff modification for several industrial sectors previously expected to be implemented in 2010 but could be postponed until 2012-2018.
Starting in early 2010 under the ACFTA, Indonesia will set its foot in the free trade arena in the five ASEAN founding countries and China. The five ASEAN founding countries are Indonesia, Malaysia, Singapore, the Philippines, and Thailand.
In this case, Indonesia needs to increase its product competitiveness in facing the ACFTA. According to economic analyst of the Yogyakarta Muhammadiyah University (UMY) Lilies Setiartiti, raising the competitiveness needs to be done by improving internal aspects like the existing inefficient bureaucracy.
An inefficient bureaucracy will also lead to an equally inefficient business. ACFTA is not only aimed at increasing cooperation in trade and economic liberalization, but seeking new areas or markets in the countries involved as well.
"Indonesia has no need to hurriedly seek other countries for the marketing of its products, but first needs to improve its internal capacities to be enable it to compete with Chinese goods flooding Indonesia," she said.
(T.A014/A/HAJM/14:00/f001)
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