Indonesia’s textile industry players are hoping a free-trade agreement with four non-EU countries will give local garment and footwear manufacturers greater access to the European market.
Indonesian Textile Association (API) chairman Ade Sudrajat said on Tuesday that the agreements with Switzerland, Norway, Iceland and Liechtenstein, collectively known as the European Free Trade Association (EFTA), were expected to open more widely the door to other European countries as well.
“While the countries are small in size and population, their per-capita income is relatively high […], and there’s a chance for an agreement between the EFTA and the EU that will ease the flow of our products,” he said.
According to Ade, Indonesian textile products are currently subject to import tariffs between 11 and 30 percent in the four countries. Reducing tariffs to zero percent would make Indonesian goods more competitive.
Indonesian Footwear Association (Aprisindo) chairman Eddy Widjanarko, meanwhile, said an agreement with the EFTA would definitely help increase shoe exports to the four countries, but he said he did not expect too much.
Footwear and apparel are among Indonesia’s foremost export goods to the EFTA countries. Indonesian footwear exports to the EFTA countries rose from US$46.87 million in 2010 to $93.26 million in 2014, when they accounted for almost 18 percent of total Indonesian exports to the four countries, according to EFTA data. Woven and knitted apparel contributed a further 20 percent of Indonesian exports to EFTA countries.
Ade from the textile association added that EFTA markets harbored great potential for Indonesian textile products, as the countries’ four seasons encouraged fashion trends.
Meanwhile, Mahmud Syaltout, an international trade law and policy expert with the University of Indonesia (UI), argued that the government needed to aim for a wider partnership with the EFTA countries, as trade links were “already good”.
According to Mahmud, the government could lobby for more investment from the four countries, transfer of technology and greater involvement in the global value chain.
The Trade Minister’s special staff member for international trade policy, Iman Pambagyo, said the government would resume talks on Indonesia-EFTA trade this year and that it would seek for lower tariffs on processed agricultural goods as well as bigger investment in various sectors.
EFTA countries currently imposed price compensation measures in addition to import tariffs on processed agricultural goods, subjecting Indonesian agricultural products to total levies of 40 percent, he said. –