MARKET DEVELOPMENT
Vicious Cycle of Mistrust Remains Post-Bali: RI Trade Minister
Vicious Cycle of Mistrust Remains Post-Bali: RI Trade Minister
05/08/2014 (Jakarta Post) - High mistrust among countries remains a major barrier to free trade realization, according to Indonesia’s Trade Minister Muhammad Lutfi, even after a historic deal was made during the 9th World Trade Organization (WTO) meeting in Bali last December.
The WTO on Thursday failed to reach a deal to standardize customs rules that would have been the first global trade reform in two decades, as India demanded concessions on agricultural stockpiling.
Lutfi sat with The Jakarta Post’s Tassia Sipahutar after attending a Group of Twenty (G20) trade ministers’ Meeting in Sydney, Australia, recently, to discuss the realization of free trade and the country’s role in it.
Question: How will these free trade talks play out for Indonesia?
Answer: Indonesia can be a success story because we are growing and our middle class is growing. We are undergoing a transformation from a consuming country to a producing one.
We have to improve our infrastructure to enable us to produce and we need to invest or make purchases for that.
We will build new airports and purchase new aircraft. There are so many things that we can buy from other countries and we have the money.
However, as a country we face challenges and obstacles in selling our products. Our most advanced industries are crude palm oil and its derivatives, forestry and its derivatives, and rubber.
These are things we can offer the world, but we face challenges into selling them, not just from G20 members but also from others.
Post-Bali, I noticed a vicious cycle of mistrust was still apparent among countries. We reached an agreement then, but every country still wanted to protect its own market. We are not seeing eye-to-eye with the WTO, developed countries and developing countries.
Is a lack of ambition holding countries back from reaching the global growth target and freer trade?
No, it’s a lack of commitment. Of the 2 percent global growth target that has been set, we have only reached 0.9 percent. The US is protecting its market, European countries are doing the same. Every country is protecting its market.
From what I know, as many as 130 cases have been resolved at the DSB (the WTO’s Dispute Settlement Body), but 250 more have been submitted. So, what is it that we actually want? I’ve been asking that question to representatives of the countries.
Do they want us to have a good trading system with trust for each other or do they want us, including Indonesia, which is on the brink of industrialization, to be factories of trading remedies with safeguards and anti-dumping measures?
Indonesia can only offer the three things that I mentioned before and they won’t even let us sell them. Other countries have so many mechanisms that can impede trade, while Indonesia only has 17.
What needs to be done?
In my view, we need equality between developed countries and developing ones. I propose that the bigger (country) gives more. It’s like playing golf with a handicap system. It allows players of different proficiency to play on a level playing field.
Suppose the US wanted to establish a trade agreement with the Ivory Coast. The US could assist the Ivory Coast to develop its industry and provide the technology. In the end, the Ivory Coast could expand its agriculture sector and services.
This is not an apple-to-apple situation and it cannot be an apple-to-apple situation. We need to talk about this and Indonesia can bridge the gap.
What is Indonesia’s role?
Indonesia has a democratic system that allows us to gain from what we give. We can apply the same principle to make trade beneficial for all parties, the seller and the buyer.
We must sit together and reach that common understanding. The fairer the trade, the more developed countries purchase from developing ones. Eventually we will all become more advanced.
Will countries listen to Indonesia?
They have listened and I hope they will continue to listen. Our leverage is that we have a huge market and we have purchasing power. We can end this vicious cycle of mistrust.
The WTO on Thursday failed to reach a deal to standardize customs rules that would have been the first global trade reform in two decades, as India demanded concessions on agricultural stockpiling.
Lutfi sat with The Jakarta Post’s Tassia Sipahutar after attending a Group of Twenty (G20) trade ministers’ Meeting in Sydney, Australia, recently, to discuss the realization of free trade and the country’s role in it.
Question: How will these free trade talks play out for Indonesia?
Answer: Indonesia can be a success story because we are growing and our middle class is growing. We are undergoing a transformation from a consuming country to a producing one.
We have to improve our infrastructure to enable us to produce and we need to invest or make purchases for that.
We will build new airports and purchase new aircraft. There are so many things that we can buy from other countries and we have the money.
However, as a country we face challenges and obstacles in selling our products. Our most advanced industries are crude palm oil and its derivatives, forestry and its derivatives, and rubber.
These are things we can offer the world, but we face challenges into selling them, not just from G20 members but also from others.
Post-Bali, I noticed a vicious cycle of mistrust was still apparent among countries. We reached an agreement then, but every country still wanted to protect its own market. We are not seeing eye-to-eye with the WTO, developed countries and developing countries.
Is a lack of ambition holding countries back from reaching the global growth target and freer trade?
No, it’s a lack of commitment. Of the 2 percent global growth target that has been set, we have only reached 0.9 percent. The US is protecting its market, European countries are doing the same. Every country is protecting its market.
From what I know, as many as 130 cases have been resolved at the DSB (the WTO’s Dispute Settlement Body), but 250 more have been submitted. So, what is it that we actually want? I’ve been asking that question to representatives of the countries.
Do they want us to have a good trading system with trust for each other or do they want us, including Indonesia, which is on the brink of industrialization, to be factories of trading remedies with safeguards and anti-dumping measures?
Indonesia can only offer the three things that I mentioned before and they won’t even let us sell them. Other countries have so many mechanisms that can impede trade, while Indonesia only has 17.
What needs to be done?
In my view, we need equality between developed countries and developing ones. I propose that the bigger (country) gives more. It’s like playing golf with a handicap system. It allows players of different proficiency to play on a level playing field.
Suppose the US wanted to establish a trade agreement with the Ivory Coast. The US could assist the Ivory Coast to develop its industry and provide the technology. In the end, the Ivory Coast could expand its agriculture sector and services.
This is not an apple-to-apple situation and it cannot be an apple-to-apple situation. We need to talk about this and Indonesia can bridge the gap.
What is Indonesia’s role?
Indonesia has a democratic system that allows us to gain from what we give. We can apply the same principle to make trade beneficial for all parties, the seller and the buyer.
We must sit together and reach that common understanding. The fairer the trade, the more developed countries purchase from developing ones. Eventually we will all become more advanced.
Will countries listen to Indonesia?
They have listened and I hope they will continue to listen. Our leverage is that we have a huge market and we have purchasing power. We can end this vicious cycle of mistrust.