Indonesia 'not ready' to join TPP

business October 28, 2015 12:53

By Grace D. Amianti and Ina Parli

5,043 Viewed

Indonesia President Joko "Jokowi" Widodo's intention to push for membership of the US-led Trans-Pacific Partnership (TPP) trade deal signals a reversal in Indonesia's protectionist traditions, and some experts have warned that the country had yet to caref



Hikmahanto Juwana, an international law professor with the University of Indonesia (UI), said he was surprised by the president’s statement, which contradicted traditional views held by state officials.
 
“The view is that Indonesia is not ready yet to join the TPP, so it’s surprising to hear a different statement from the president,” Hikmahanto told The Jakarta Post over the phone on Tuesday.
 
“We were not given any direction or voice in the TPP drafting process so that if we join the group, we will have acquiesced to set conditions and points that have already been decided and declared final,” Hikmahanto added.
 
Hikmahanto went on to say that involvement in the TPP would force Indonesia to revise many laws and regulations and the concept of state control stipulated in Article 33 of the Constitution would likely become meaningless.
 
On Monday, Jokowi expressed Indonesia’s intention to join the TPP while delivering a speech before representatives from a number of American companies, representatives Jokowi addressed as “old friends”.
 
Among US companies attending the US Chamber of Commerce meeting were Nike, GE, ConocoPhillips, Chevron, and Pfizer. These companies were accompanied by the United States-Indonesia Society (USINDO) and the US-Asean Business Council (USABC).
 
“We announce today that Indonesia intends to join the TPP,” Jokowi said after a meeting with US President Barack Obama, emphasising that Indonesia “is an open economy” and that “with its 250 million people, Indonesia is the largest economy in Southeast Asia”.
 
During the event, Indonesian Trade Minister Thomas Lembong also said that the country could join the TPP within two years after it finished all the preparations necessary to join the free trade pact, such as providing incentives to local businesspeople.
 
The TPP agreement involves 12 countries — reflecting a total population of 808.7 million people or 11 per cent of the world’s population. The gross domestic product (GDP) of those countries reaches US$27.8 trillion or 37 per cent of global GDP.
 
Meanwhile, Mahmud Syaltout, international trade law and policy expert with UI, and Revrisond Baswir, economist at the University of Gadjah Mada, voiced concerns that Indonesia would be “too hasty” in joining the TPP now because the agreement had more disadvantages than advantages for the archipelagic nation.
 
“I’d say that the president’s statement was just a form of politeness as a guest, because the Obama administration is rather persistent in pushing the TPP agenda. I don’t think it will be easy for Indonesia to join the deal, because we weren’t in the original negotiations,” Revrisond told the Post.
 
UI economist Lana Soelistianingsih suggested that the government should negotiate a better bargaining position with the US before joining the TPP, such as requesting a cut in import duties for Indonesian goods to the US.
 
Lana said Indonesia often met with disadvantages when dealing with free trade agreements (FTAs), even as the country had yet to enter the Asean Economic Community (AEC) next year.
 
“We have seen a trade deficit between 2010 and 2014 after we joined the ACFTA [Asean-China Free Trade Agreement] because imports of Chinese goods were cheaper,” Lana said.
 
Hikmahanto, Mahmud and Revrisond also agreed that the AEC, along with other FTAs, could test whether Indonesia would secure a more prosperous economic position from engaging in free trade agreements before undertaking a more significant step into free trade by signing on with the TPP.