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December 30, 2008

Indonesia postpones trade pacts with Australia, New Zealand
Indonesia, Southeast Asia’s largest economy, has delayed signing a trade deal with Australia and New Zealand, due to be inked this month, until March next year, the Jakarta Post quoted a senior official as saying Monday.

The deal is under the framework of the Asean free trade agreement (FTA) with Australia and New Zealand (AANZ-FTA), which was successfully negotiated on August 28 in Singapore.

Gusmardi Bustami, the Trade Ministry’s director general for international trade cooperation, said the delay was because the framework of the deal, under Asean’s legal scope, would only be officially signed in February.

Other factors include the political instability in Thailand and the unfinished verification by other Asean (Association of Southeast Asian Nation) member states, Gusmardi added.

“Indonesia has secured commitments from Australia and New Zealand, and will discuss the details in January and February. We hope we can complete both deals in March,” he said.

The AANZ-FTA is supposed to be inked by this December, as mandated by the 13th consultation between the Asean Economic Ministers (AEM) and the Ministers of Australia and New Zealand on August 28.

The negotiations by each Asean member state are part of an auxiliary deal under the AANZ-FTA. ASEAN groups together Indonesia, Thailand, Singapore, Malaysia, the Philippines, Brunei Darussalam, Vietnam, Cambodia, Laos and Myanmar.

Under the bilateral negotiation with Australia, Indonesia has committed to scrap 1,409 tariff lines in the automotive sector, while offering New Zealand an elimination of tariff lines for four beef products and seven dairy products.

In exchange, Australia and New Zealand will eliminate tariff lines on textile and garment products, as well as increasing capacity building for Indonesian professionals.

Under the AANZ-FTA, Indonesia will scrap 10,397 tariff lines and lower 645 lines by 2020. This makes up 98.9 percent of Indonesia’s total 11,159 tariff lines currently in place.

Gusmardi dismissed allegations the AANZ-FTA would devastate local industries and lead to a foreign economic invasion of the country, with critics saying the offers made by Australia and New Zealand are too little and put Indonesia at a disadvantage.

“We are not talking about how much money Australia and New Zealand will spend on their offered programs; we have to see it as a way of leveraging our capacity in the industries that the two countries master,” Gusmardi said.

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