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Last Updated:[28-07-2009 06:55:43 EDT] Zoom in Zoom out Back to Tradenews

ASEAN-China FTA May Hit the Indonesian Roadblock

tradenews Indonesian Textile Association (API) warned that the China-ASEAN FTA in the present form would not be accepted, and appealed not to overlook industry needs. Deputy Chairman of API, Ade Sudrajat said domestic manufacturers would compel government to impose a number of tariff and non-tariff barriers including Indonesian National Standards (SNI), anti-dumping measures, or any other safeguards to protect the local textile industry against likely Chinese low priced items.

The Chinese goods will start flowing to the ASEAN markets since the FTA takes effect from January next year. It is feared that with zero percent import duty under the FTA, the demand and the price of local products would diminish, and eventually believed to bring down particularly, the textile industry of Indonesia along with other industries those China could overpower.

However, API observed that it would not be easy to impose safe guard measures or anti-dumping import duties against China as it is known for reprisals such as, banning products imported to China from any hostile country on some pretext or the other. Sudrajat averred Indonesian fish and shrimp products would be the primary target if country imposed any anti-dumping duties on the Chinese goods.

He pointed out that already a trade-war with Turkey was on the boil as Indonesian tyres and textiles were imposed with anti-dumping duties as against similar duties charged on Turkish flour in Indonesia. The FTA will remove all import duties on textiles, footwear and leather products, ceramics, food and beverages, iron and steel products, petrochemicals and electronics shipped out of China to Indonesia.

The textile imports from China to Indonesia are valued at about $900mn or 15 percent of the $7bn domestic textile market, and these figures are excluding illegal imports from China. Indonesia exported mostly natural resources to China such as, coal worth $17.2bn during last year whereas the same period witnessed imports from China at around $14.3bn which largely comprised of finished products.

Sudrajat admitted that a trade war with China would be unavoidable taking into account the woes of the textile industry that had been already affected by the downturn. Nevertheless, the industry ministry director for the textile industry of Indonesia, Arryanto Sagala is understood to have called for a postponement of the FTA by sending a letter to the Trade Ministry’s international co-operation administration center and secretariat general.

By Jose Roy

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