JAKARTA. In January 2010 the Government of Indonesia (GOI) began to fully implementing ASEAN-China Free Trade Agreement (ACFTA).  This is not the first one, as Indonesia has joined a number of free trade agreements before: the ASEAN Free Trade Area (AFTA), ASEAN-Australia-New Zealand FTA, ASEAN-South Korea FTA, and the Indonesia-Japan Partnership Agreement.

The difference between ACFTA and other various free trade agreements is that this treaty was signed and implemented in stages since 2002. ACFTA has to deal with the readiness of ASEAN countries in eliminating tariffs, which long before the FTA come into force, already been sensitive issue.

Looking in the context of economic, human resources, and industries in the ASEAN level, GOI has taken a wrong foot by participating in this agreement. ACFTA has been and will continue to harm and threaten the sustainability of industry, labor, and domestic market. ACFTA implementation so far shows how the policy is no longer sided in peoples’ small economic.

Indonesian Peasants Union (SPI) looks at five aspects (at least) that needs to be highlighted.

First, the export-import balance between these two countries is uneven. In the last three years, ratio of export and import balance between Indonesia and China had always shown a deficit figures. Bank Indonesia data (May 2009) states that in 2006 we had a deficit of US$ 0.993 billion. In year 2007 the number rose to US$ 2.708. In 2008, the figure skyrocketed to US$ 7.898 billion.

These figures show Indonesia’s how bad the situation is for Indonesia. And certainly the situation continues to this day. The amount of this deficit would not change the business in this country become more competitive, as it often conveyed by the Minister of Trade. Otherwise, Chinese imported goods are to invade Indonesian market freely. The result is predictable: Industry will lose money and out from competition with cheap China goods.

In 2010, almost all import duties of Chinese manufactured products will be lowered to 0 percent, except for some ‘sensitive products’. Reflecting the recent three-year experience with sharply deficit increased and domestic manufacturing slumped, Rest assured that the next few years Indonesia will have de-industrialization, increased termination of employment, and widespread of unemployment. Next, the bleak business climate would have a major impact on national economy.

Manufacturing industry in danger of collapse are particularly textile, iron and steel, footwear, food and beverages, and plastics.

The GOI’s statement in earlier 2010 even gave the impression that we must let go of the sectors that are not competitive and move into more promising sectors. Even with this scenario, in short to medium term the risk of layoff is millions of people. In this case, the GOI should fail to be consistent with the obligations stated in the Indonesian Constitution to protect the people of Indonesia and to ensure a decent livelihood for the sake of humanity. What must be underlined by GOI is that protection and incentives are needed primarily to build the economy and domestic markets.

Second, the potential loss of revenue from tariffs. Plunging ourselves in free trade, we tend to continue reducing and even eliminating tariff rates. In ACFTA, decreasing tariff to 0 percent will reduce state revenues. Meanwhile, massive free trade scheme since mid 1990 has led to loss of potential income—at least starting from free trade within the framework of the World Trade Organization (WTO), ASEAN Free Trade Area (AFTA), Indonesia-Japan Partnership Agreement (IJEPA).

Third, on the side of Indonesia’s export also has its own constraint. Free trade scheme in ACFTA will only make Indonesia’s economy to be trapped in the snare of export-oriented model. It have been discussed in various global alternative economic forum, that it is not export-oriented model that improve domestic economy. This fact raises a very strong dependence on the market and international prices, while fluctuations and market uncertainties are not always in the favor of people nowadays. In most cases, market mechanisms and international prices have no correlation whatsoever to the cost of production. This is also questioning who benefits from this situation? The market and international prices are mostly controlled by big companies and/or transnational corporations (TNCs). It is sometimes so oligopolistic or in cartel-like model.

If we look the case of food crisis in 2008, the international market and prices become asymmetric against domestic production and prices. Coupled with speculation, food producer countries (and thus the producers) are not necessarily benefiting from price upsurges at that time.

In palm oil commodity and Crude Palm Oil (CPO), the dependence on market and international prices for exports caused many losses to palm oil farmers and producers. At the time of falling prices (which the farmers and producers have no control at all for that), they lose money. This is also happened to many other commodities, especially agriculture and plantation. This fact raises a question, because these commodities are the ones that expected to be triumphed via ACFTA.

Consequently, Indonesia continues to be raw materials exporter only, so that our upstream-downstream industry will continue to be undeveloped and not-integrated. This of course reminds us of what happened in the colonial era, when Indonesia was only a raw material dredged area, a condition that has resemblance in this case.

Another consequence is: If some non-oil and non-gas products such as palm oil, rubber, pulp and paper, coconut (and copra) are superior products in ACFTA, in export-oriented logic we would boost up production. Related to this, there will be a lot of plantation expansions, which their socio-economic and environment consequences still have many problems. Deforestation in the name of plantation expansions and the eviction of indigenous peoples and small farmers are common problems that continue in encouraging export commodities. Plantations are also less useful for the economic empowerment of the people, because people in rural areas do not have their own plantations, or working as plantation worker, or in some cases only have a small portion of land and often are evicted because of the expansion.

Fourth, consequences to the environment, as well as on emission reduction commitments of both countries are not contributing to halt climate change impacts. This agreement has the potential to increase carbon emissions rather than to reduce it. In case of Indonesia, it is clearly inconsistent with the commitment to decrease emissions 26 percent as has been targeted by the GOI. On the other hand, for the sake of profits from exports, China will boost its industry—which will add to China’s poor reputation as one of the world’s largest emitters. Briefly, ACFTA potentially exacerbate the climate injustice and would be counterproductive to the efforts of sustainable development and global justice.

Fifth, the issue of process. There was no public consultation process, particularly to the Parliament as the legitimate representation of the people. This caused a lot of contradictions with the wishes and aspirations of the parties that will get benefit and those who will suffer losses related to this ACFTA. This is also a bad influence on peoples’ trust to their own government. Earlier this year, the government tried to review the options ranging from ACFTA delay until renegotiation. Rice has become porridge. Demonstrations, rejection and criticism of this agreement will be larger and larger because the impacts of this agreement will harm the peoples’ livelihoods in many aspects.