While 12 countries have already signed the Trans Pacific Partnership (TPP) and now in the ratification process, one Southeast Asian nation is mulling whether it should join the pact at all.
The debate over whether the free trade deal is right for Indoensia rages on within the island nation as other Pacific Rim countries enter the beginning stages of ratification. Whether the 12 nations – Australia, Brunei Darussalam, Chile, Japan, Canada, Malaysia, New Zealand, Mexico, Peru, Singapore, Vietnam and the US – complete ratification is no guarantee, the other countries have at least signed the deal. Indonesia was a late entrant into the conversation, and within its borders there are concerns about whether the free trade agreement will prove truly beneficial to the country. Indonesian Textile Association's (API) advisory board chairman was the latest concerned party to invoke uncertainty about the advantages of hitching on to the pact.
"If there's one thing that we need to watch out when we join the Trans-Pacific Partnership [TPP], that's the yarn-forward clause," Benny Soetrisno explained, according to The Jakarta Post.
Apparel and fabrics industries in member countries will be affected by changes the TPP introduces. Experts weigh the pros and cons of joining the TPP
The API advisory board chairman noted that the deal will most likely benefit textile producers. However, he added there are portions of the agreement that concern him. If the country's textile industry does not prepare for the upcoming changes properly, the TPP could harm it. The provision requires that textile and apparel products made using TPP members' yarn and fabrics should be eligible for zero-tariff in trades between the deal's participants.
Other experts have put forth reasons for Indonesia to sign on to the trade agreement. For example, one economist suggested TPP is necessary to offset the country's dependence on Chinese goods.
"If we relied heavily on China, our exports will be mainly commodities, cheap low-value-added products with a lack of technology but lots of environmental issues. We need the TPP to balance our trade," David Sumual, chief economist of Bank Central Asia (BCA), told The Jakarta Post.
Sumual, like Soetrisno, did not indicate that he leaned one way or the other completely, but instead noted how the deal could affect Indonesia while suggesting caution moving forward. He explained that though independence from Chinese goods could be a good thing, the government should carefully examine TPP before signing the deal. He added that it would be wise to put together a special team dedicated to studying the potential costs and advantages of joining the deal.
"The government is ramping up discussions on the agreement."
Joining the TPP would require changes in Indonesia
Some of the most recent news out of Indonesia regarding the TPP indicates that the government is ramping up discussions on the free trade agreement. The Jakarta Post reported that the House of Representatives' discussions on the trade deal would "intensify." The issue being mulled by the House is the fact that several laws in Indonesia would have to change for the country to comply with requirements set by the TPP.
The Indonesian government will consider changing laws that pertain to state-owned enterprises and intellectual property, among other things. The process to amend all the regulations necessary could take up to two years.
As it is, the agreement covers more than 40 percent of the world's trade. If Indonesia joined the deal, it would grow even more substantial. The TPP is controversial though. Many claim the dealings that went into the agreement were too opaque, and that it could ultimately could have an adverse impact on employment, among other things, in the member countries.