Lilian Budianto, Jakarta – Preparations for the Free Trade Agreement (FTA) between Indonesia and New Zealand under the ASEAN framework have been progressing well despite the economic downturn, with both countries expecting to conclude the bilateral arrangement within months.
In a press conference after a meeting with New Zealand Foreign Minister Murray McCully on Thursday in Jakarta, Indonesian Foreign Minister Hassan Wirajuda said both countries had negotiated the arrangement for halal certification for New Zealand meat products and a scheme for agricultural technical assistance from Wellington in return for market access for New Zealand products in Indonesia.
"We discussed general trade issues and, more specifically, halal certification of meat we import from that country. On the Indonesian side, the Indonesian Ulema Council [MUI] will deal with the [issuance of] halal meat certification [for imported New Zealand products]," he said.
Hassan said there would be further discussions between both countries on the technical requirements of halal certification.
Halal certification would require meat producers to adhere to Islamic methods of slaughtering animals. Indonesia is home to the world's largest Muslim population but halal certification is not mandatory for producers. Some food and beverage products are sold in the local market without halal certification. McCully said New Zealand respected the requirements of Indonesia's importers and consumers for halal certification, but asked for "flexibility to make a way forward to meet those requirements".
"I am very satisfied with reports we have made progress on those issues. we look forward to concluding the arrangements in coming months," McCully said.
New Zealand and the ASEAN signed the FTA under one deal with Australia during the bloc's 14th summit in Thailand in February. The FTA is expected to boost two-way trade between the region and New Zealand, which reached US$6 billion in 2008. Indonesia and New Zealand bilateral trade stood at $1.2 billion in 2008, an increase from $865 million in 2007.
Under the FTA, by 2020 Jakarta will scrap tariffs on imported dairy and meat products from Australia and New Zealand, which are currently subject to tariffs of 5 percent on average. Australia and New Zealand are the largest exporters of meat and dairy products to Indonesia. In return, New Zealand, which has already near-zero tariffs on most imports, will open its labor market for a quota of Indonesian chefs, teachers and semi-skilled workers.
Indonesia has also been negotiating an agricultural technology transfer from New Zealand and for a wider labor market for Indonesian skilled migrant workers in exchange for opening its local market.
Concerns have arisen that unless local meat and dairy producers are equipped with sufficient technology and knowledge, the FTA would have an adverse impact on similar local industries which the Agricultural Ministry estimates employs around 20,000 workers.
New Zealand had not asked for any review of elements of the bilateral arrangements reached previously amid the current economic downturn or possible efforts to protect the domestic market, McCully said.
"We need to trade our way out of current challenges, and the framework that has been negotiated will give us the opportunity to grow... We look forward to the conclusion of the arrangement so we can emphasize to the leaders and business community that trade does happen."
McCully, who arrived in Jakarta on Wednesday, is also scheduled to meet Trade Minister Mari E. Pangestu, ASEAN Secretary-General Surin Pitsuwan and members of Indonesia's business community, during his first visit to Jakarta since assuming the post in November 2008.