NO BRA TRADE BAR

BTW: What’s free about Free Trade?

On occasional trips to Australia my wife heads to a major no-frills store that sells almost everything.  Here she buys bras that fit, are comfortable, long lasting and cheaper than in her mother country. 
They’re made in Indonesia.

She also stocks up with a brand of Indonesian noodles she won’t buy in her homeland.  She reasons that exporters have to meet Australian quality and content standards, so consumers in Indonesia get second class goods or foods with additives not allowed Down Under.

Sounds daft – but maybe she’s right.  Garden tools bought in Oz are still snipping sharply after their local equivalents – three times more expensive - have rusted away.  

In the Australian store domestic electrical appliances, also from Indonesia, are guaranteed for a year.  If a purchase is crook (defective) it’s speedily swapped,  plus an apology. Try doing that in Indonesia where complainants are considered criminals out to swindle.  

Australian politicians have been crying hallelujah over a new free trade deal, the clumsily titled Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA).

After ten years in the talking the agreement was signed in March.  It’s waiting for the new politicians in the DPR  to uncap their pens and sign away some tariffs.

In reality the underwear and kitchenware now on shelves Down Under didn’t jump excise hoops as none have existed for many years.  So the agreement is no big deal to flexible Indonesian exporters.
They’re the smarties who’ve learned that one size doesn’t fit all markets.

Indonesians want cheap so get cheap.  Australians also want cheap, but with quality that’s enforceable by law.  So the  kettle or toaster on display in Australia may have been built with more care than those on sale in the Republic, though both came from the same factory.

Tariffs are taxes often added for political rather than economic reasons.  Nationalist governments use them to shield slack producers from cheaper imports.  

When you’ve finished enjoying this BTW take a peek in your pantry.  If you’re prone to xenophobia best sit down before reading the small print on the sack:  the Archipelago’s staple food may have come from Thailand or Vietnam where they grow the white grain cheaper than in Java.

Australian cockies (farmers) are highly-mechanized growers of wheat, sugar, rice and other foods in such huge quantities they need to sell overseas.  Importers want the goodies but don’t want to upset farmers or self-sufficiency advocates.

If the IA-CEPA is eventually waved through, we shoppers have a question:  Will prices plummet?  Let’s be optimistic:  the chances are about equal to sea levels dropping and Jakarta air becoming refreshing.  

There are many other outstretched hands to fill  before Indonesians get a taste of Australia – particularly if it’s alcoholic.  Here the issue is religion for Muslims aren’t supposed to booze.  So no free trade here.

A bottle of red or white wine starts below AUD $10 (RP 96,000) in its state of origin.  Jakarta doesn’t want us suffering hangovers and Islamic organizations getting stroppy, so slaps on taxes of up to 140 per cent.

Indonesian exporters face similar imposts, like quarantine and packaging rules. This nation is a mighty producer of tobacco but Canberra doesn’t want citizens getting lung cancer so adds a 70 per cent tax.

Nicotine addicts should not expect  packs below AUD $35 even though the Indonesian product retails for under $2.  If you’re thinking of stuffing  fags in your bags check your credit card limit; only 25 sticks are allowed duty free. A fine reason to quit.

Is the deal being oversold? It’s certainly complex (21 chapters plus annexures and schedules) so not a holiday page-turner. A business organization survey this year found many members unmoved by the FTAs which so excite politicians.

The ABC's business editor Ian Verrender claims FTAs ‘have very little to do with trade, free or otherwise. (They’re) diplomatic agreements, designed to cement relationships and shore up political and defence alliances.

‘The very idea of a free trade agreement is a contradiction. You don't need a complex agreement to trade freely.’

So here’s a holiday tip: To back Indonesian businesses, lift standards and help the nation’s economy, go shop in Australia. Though not for smokes.

 First published in The Jakarta Post 23 November 2019