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Jakarta Post

Government prepares team for TPP negotiations

  • Khoirul Amin

    The Jakarta Post

Jakarta   /   Mon, November 23, 2015   /  06:14 pm

Despite strong opposition to its sudden expression of intent to join the US-led Trans-Pacific Partnership (TPP), the government says it is proceeding with preparations by establishing a special team to thoroughly review the trade-pact agreement.

Sofjan Wanandi, the chairman of the Vice President'€™s advisory team said the team, whose members would comprise staff from relevant ministries and other experts, would delve into the terms of various free-trade agreements (FTAs), including the TPP.  

'€œThe TPP team will be a cross-ministerial team and we expect that it will start working early next year to thoroughly study the advantages and disadvantages of joining the TPP,'€ Sofjan said recently after the closing of the Asia-Pacific Economic Cooperation (APEC) summit in Manila.

President Joko '€œJokowi'€ Widodo reiterated Indonesia'€™s intention to join the TPP during his visit to the US last month.

According to Sofjan, many FTAs had already been implemented without the full comprehension of the public, including businesspeople. '€œWe don'€™t want that to happen for the next FTAs,'€ he said.  

Sofjan explained that as a non-signatory country of the TPP, Indonesia would have between two and three years to boost its readiness before the trade pact would be fully implemented.

Analysts have warned that participating in the TPP would be damaging for Indonesia as most of the country'€™s industries are unprepared for stiffer competition and that joining the trade deal would demand a far greater degree of economic liberalization in contrast with most of the country'€™s current protectionist policy framework.

Djisman Simandjuntak, a senior economist with the Centre for Strategic and International Studies (CSIS), said the government would have to revise a lot of regulations and policies if it were to sign the trade deal. Among the regulations that would need revising are those on investment, labor, trade and intellectual property rights.

Meanwhile, Mahmud Syaltout, an international trade law and policy expert with the University of Indonesia, said that local agricultural and financial industries could become Indonesia'€™s most vulnerable sectors competing against similar products from overseas.

The TPP, which covers some 40 percent of the global economy, has sparked criticism from members of the public and analysts for the secret nature of its negotiations and a number of points in the deal that are deemed threatening to state sovereignty and underserved groups.

One of the most controversial articles within the TPP deal is the investor-state dispute settlement (ISDS) in which investors could directly sue governments in international arbitration courts if the latter'€™s policies harmed their businesses.  

Meanwhile, according to analysts affiliated with the East-West Center and Peterson Institute for International Economics, Indonesia would see additional income gains of around 4 percent of gross domestic product (GDP) by 2025 from joining the TPP under a scenario where South Korea, the Philippines and Thailand also became signatories.

Sofjan said that joining the TPP was essential for Indonesia to boost the competitive advantage of its textile products against those of Vietnam, which has already signed up for the TPP.

The US, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam, which concluded the TPP negotiations early last month, are now in the process of ratifying the trade agreement in their respective countries. The ratification process is expected to take around two to three years.

Trade Minister Thomas Lembong said that neighbor Australia had offered to help Indonesia in conducting further studies on the TPP as well as sharing its experience in the TPP negotiations.

On a separate occasion, US Ambassador to Indonesia Robert O. Blake also said the TPP would benefit Indonesia in terms of job opportunities and lower product prices for end consumers.

Blake explained that the first task that the 12 signatory parties of the TPP had to undertake was to finish the process of ratification in their respective countries before looking at other members joining.

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