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POLITICAL ECONOMY
Indonesian leader seeks 'protection' from China trade pact

by Staff Writers
Jakarta (AFP) April 7, 2010
Indonesian President Susilo Bambang Yudhoyono said Wednesday he would seek "protection" for certain local industries that feel threatened by a regional free trade pact with China.

Yudhoyono made the comments as he headed to Vietnam for a summit of Southeast Asian leaders and ahead of a visit to Jakarta later this month by Chinese Prime Minister Wen Jiabao for talks on trade and investment.

"I have learnt that the public has paid special attention to the ASEAN and China free trade agreement. The government also has big concerns about this issue," he said, referring to the accord between the Association of Southeast Asian Nations (ASEAN) and China that took effect on January 1.

"We will find a solution to any problems that may occur in certain sectors so that we will be able to give protection to our industries and their workers."

He did not spell out what measures he would take to reverse parts of the accord, which Indonesia helped frame as a founding member of ASEAN over years of negotiations.

China and six founding ASEAN states -- Brunei, Indonesia, Malaysia, the Philippines, Singapore and Thailand -- eliminated barriers to investment and trade on 90 percent of products on January 1.

The ASEAN-China Free Trade Area is the world's biggest by population with a market of 1.7 billion consumers, and is the cornerstone of ASEAN's efforts to position itself as a major trade bloc.

But some Indonesian industry groups have complained that they will not be able to compete with cheap Chinese imports and have called for a delay in the elimination of protective tariffs on 228 product lines until 2012.

Yudhoyono said only that "cooperation must be beneficial for both Indonesia and China".

"This will be our agenda... so that it can improve the economy of both countries as well as bringing real benefits," he said, without elaborating.

Plans for the establishment of an ASEAN Economic Community by 2015 are likely to be a key topic when leaders of the group hold their annual summit this week in Vietnam's capital Hanoi.

But ASEAN's failure to find a common position on closer economic integration, both between member states and with the outside world, has dogged its efforts to be taken seriously as a global player.

The European Union and the United States have launched separate talks with individual ASEAN states rather than try to clinch a free-trade deal with the group as a whole.

The bloc, based in Jakarta, has however reached free trade agreements with Australia and New Zealand, India, Japan and South Korea.



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