Monday, July 27, 2009

ASEAN and China FTA to ignite `tug of war in trade'

A free trade agreement between the Association of Southeast Asian Nations and China (ASEAN-China FTA) will likely ignite a trade war between Indonesia and China with local producers likely to ask the government to impose a number of tariff and non-tariff barriers - Indonesian National Standards (SNI), anti-dumping measures, or safeguards - as Chinese products would further injure the domestic market once the FTA became effective.

China might consequently retaliate by imposing similar measures.

Indonesia was currently in a similar trade war against Turkey. Turkey has now imposed anti-dumping duties on Indonesian tires and textiles after Indonesia imposed additional import duties on Turkey's flour.

The FTA, which will come into effect on Jan. 1, 2010, will scrap all import duties on textiles, footwear and leather products, ceramics, food and beverages, iron and steel products, petrochemicals and electronics shipped out of China to Indonesia.

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