Free Trade

Indonesian textile producers are hoping that the planned  establishment of a free trade agreement (FTA) with the European Union (EU) will enable them to further expand their markets in the European continent.

The Association of Indonesian Textile Producers’s (API) executive secretary EG Ismy said in Jakarta on Thursday that the proposed FTA, if realized, should give the local textile Textilers broader access to expand their exports in the EU.

Last year, exports to the EU represented 19 percent of Indonesia’s total textile exports of around US$11 billion.

“The EU market has significant potential for our textile export products, such as menswear, and clothes for women and kids,” he said during a public consultancy event held by the industry minister on the proposed establishment of FTAs with several countries, including the EU and Australia and India.

Ismy added that in addition to garment and clothing products, Indonesia could also compete with other textile producing countries such as China and Pakistan to provide textile products for industrial use such as for automobile accessories, and clothes for medical and construction workers.

In order to be able to take full advantage of the free trade agreements, the government should also provide local textile companies with financial support to enhance their technological capability and efficiency programs, he said, adding that gas supply shortages currently hampering many textile companies should be resolved to enable them to be more competitive.

Separately, Indonesian Footwear Association (Aprisindo) official Binsar Marpaung said the footwear industry could see its exports to the EU jump 20 percent if the FTA was implemented.

The EU was the second-largest export destination for Indonesia’s footwear products last year. The exports contributed around 35 percent of Indonesia’s total footwear exports of $2.4 billion.

“However, we’ll still have problems with non-trade barriers and need support from the government,” he said.

The Industry Ministry’s director of international industry cooperation for the US, Europe and multilateral cooperation, Harjanto, said the government would also want non-tariff barrier aspects such as export quotas to be included in the FTA negotiation.

“We don’t want liberalization without being able to overcome the non-trade barriers,” he said.

He added that the government would accommodate suggestions from industrial associations.

The agreement between Indonesia and the EU was realized after President Susilo Bambang Yudhoyono and EU Commission president Jose Manuel Barroso agreed to enhance bilateral trade and investment in December 2009.

From : The Jakarta Post