Jakarta: Malcolm Turnbull’s desire for a “high quality” free trade agreement with Indonesia will confront Jakarta’s protectionist impulses, with chief negotiator Deddy Saleh saying his country was shooting for a “good quality” agreement instead.
“High quality” free trade was different to “good quality”, Mr Deddy explained to Fairfax Media, because, “A ‘high quality’ agreement suggests opening the markets fully”.
Mr Deddy told Fairfax Media that Jakarta questioned the purpose of opening its markets to n exports if it disrupted Indonesia’s domestic industries, saying “the biggest hurdle is the level of ambition”.
“I’m saying the agreement must be mutually beneficial. So that is where the negotiation lies right now. We are negotiating the ‘good’ (versus) the ‘high’ quality agreement.”
The two countries have two more negotiating rounds before a deadline they have set for themselves of signing an agreement by the end of the year.
But on a number of matters – including ‘s education exports and Indonesian nurses coming to work in – negotiations are still underway.
“In order to complete the negotiations we must compromise because our mandate as negotiating teams is to complete it by the end of this year,” Mr Deddy said. “So it takes mutual understanding.”
Asked if he was optimistic a deal would be reached in the time frame, Mr Deddy said: “I have always been optimistic as long as each country understands the situation”.
Indonesia is deeply suspicious of “neo liberal” policies, and the country’s political agenda is geared towards encouraging domestic production, with self-sufficiency goals for a number of key commodities including beef, sugar, rice and soybeans.
Mr Deddy said it was the right of every country to open or not to open its market.
He said there were sensitivities on both sides. For example, he said wanted 100 per cent access to the education sector in Indonesia, which was not permitted under existing policies.
The n Department of Education and Training said that, despite the great demand for education and training in Indonesia, barriers remained to expanding n education exports to Indonesia.
“Unlike in Singapore and Malaysia, no n higher education provider is able to operate a standalone campus in Indonesia,” it said in a submission to an n parliamentary inquiry into the trade relationship.
“n education and training providers face a host of barriers in prohibitive laws and regulations that undermine the value proposition of investing in Indonesia to deliver their services.”
Meanwhile, Mr Deddy said Indonesia wanted to send nurses to but it was difficult for them to meet the very high standards of English required. “So we are still talking about issues like these.”
The Indonesia- Business Partnership Group said Indonesian stakeholders believed that qualifications required to enter the n services market were unfair.
“For instance, Indonesian nurses find it difficult to practise in because of the stringent requirements which must be met,” it said in a submission.
The group also said Indonesian graduates from n universities had voiced concerns about the difficulties of obtaining post-graduation work experience or job opportunities.
In February Prime Minister Malcolm Turnbull said both countries’ leaders had committed to “intensify our efforts to achieve a high quality Indonesia- Comprehensive Economic Partnership Agreement (IA-CEPA)”, as the trade deal is called.
However analysts have warned that hopes of a meaningful agreement should be treated with caution given the protectionist political climate in Indonesia.
“Expanded n trade and and investment with Indonesia is limited by market access, unequal treatment for foreign and domestic service providers and market issues stemming from extensive state intervention in the economy,” Lowy Institute research fellow Matthew Busch told Fairfax Media.
“Restrictions are widely dispersed through the Indonesian legal and regulatory framework and will not be banished via a single international agreement – even one that applies an innovative approach.
“Indonesia is not an active trade negotiating country and so there could well be a sluggish or limited local response for behind the border commitments.”
However Mr Busch said that because the bilateral relationship is important and and Indonesia are “forever” neighbours, it may still be in ‘s interest to go through with a deal and lend “neighbourly assistance” with economic cooperation activities that do not come at great economic cost.
“But we should perhaps tamp down expectations of what IA-CEPA will immediately deliver for our trade and investment.”
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