Voices of Support for the Anti-Cross-Strait Service Trade Agreement Movement: International Testimony Against Free Trade (2)

FTA and TPP: Impact on the People of the Asia-Pacific and Their Resistance
- Indonesia

Translated by: Hsu Po-jen, Chen Ssu-ying

Editor's note:

This article is excerpted from the booklet "Understanding Free Trade through the KORUS FTA & the Necessity of Regional Economic Cooperation," published by La Via Campesina. This booklet collects the discussions from two La Via Campesina conferences held in Seoul and Japan on "Strategies for Responding to Economic Integration in the Asia-Pacific Region." It focuses on the impact of the KORUS FTA and the TPP, and also discusses alternative models of regional integration. This article, "FTA and TPP: Impact on the People of the Asia-Pacific and Their Resistance," contains analyses of the impact of free trade agreements signed by three countries: Indonesia, Japan and Australia. For easier reading, it will be translated and published in installments.

The agricultural sector is the most vulnerable

More than 43 percent of Indonesia's population depends on the agricultural sector, and 56 percent of them are farm laborers and small farmers (with an average land area of about 0.3 hectares). These figures show that the agricultural sector is the most vulnerable sector under the influence of the WTO and FTAs, and that small farmers will be the biggest victims under the current free trade mechanism.

In order to meet the demands of the free market and to facilitate free trade negotiations, the Indonesian government had to propose amendments to existing laws. These amendments have all been completed, mostly achieved through liberalization, deregulation and privatization.

FTAs and the expansion of agrofuel crops

In December 2005, the EU adopted the "Biomass Action Plan and Strategy," which is expected to raise agrofuel consumption to 10% by 2020 (approximately 1 to 1.5 million tons). The EU considers this a rather ambitious plan that requires substantial investment in the development of agrofuels. Developing countries in tropical regions were selected by the EU as production sites for agrofuels because of their advantages in output, productivity and cost.

The EU has sought to expand the supply of raw materials for agrofuels through multilateral and regional negotiations. This policy successfully drove large-scale palm oil exports and sparked competition; for example, Malaysia and Indonesia in Southeast Asia both placed particular emphasis on producing the palm and cassava needed to make bioethanol.

Another policy concerning agrofuels is "Lahan Energi Abadi development." This plan would develop 5 million hectares of land for energy supply. However, the actual scale of this plan far exceeds 5 million hectares; in mid-2007, the plan opened a new 1.8 million-hectare palm oil plantation on the border between Kalimantan in Indonesia and Malaysia, and by the end of 2008 it would expand by another 1.5 million hectares to the Merauke area.

The continuous expansion of oil palm cultivation in Indonesia has seriously threatened the people's food sovereignty, and has also triggered conflicts within the agricultural sector, with agricultural resources being reduced for public use. In order to develop oil palm plantations, the land of many members of Indonesian small farmer alliances has been seized. In West Java, land clearing for oil palm plantations cut off the flow of irrigation systems, and farmers' corn fields were consequently reduced. In South Sumatra, irrigation facilities for rice fields were shut down in order to build a 1 million-hectare oil palm plantation. In North Sumatra, farmers were arrested and imprisoned for protecting their land from being seized by oil palm plantations. In short, the agrofuel industry threatens the people's food sovereignty and has caused the loss of millions of tons of local food production.

From the consumer's standpoint, competition between palm oil for food and palm oil for fuel has also driven up the price of cooking oil nationwide. The palm oil processing industry would rather export crude palm oil at a higher price to Europe, causing a cooking oil shortage in Indonesia in 2006.

Overview of Indonesia's FTA signings

Free trade agreements take many forms, such as the Korea-US Free Trade Agreement (KORUS FTA), the Trans-Pacific Strategic Economic Partnership Agreement (TPP), and regional agreements such as ASEAN, which promotes neoliberal regional integration. ASEAN began deepening and expanding its reach to other regions of the world in the 1990s. Indonesia has signed many FTAs, the first of which was the ASEAN Free Trade Agreement. That agreement cut tariff barriers among ASEAN countries, with the goal of establishing the ASEAN Economic Community by 2015. Since 1992, the trend of neoliberalization has unfolded. Its forms are quite diverse, such as ASEAN + EU, ASEAN + India, ASEAN + EU, ASEAN + 6 and so on.

Indonesia itself has also signed free trade agreements with Australia, Turkey, Tunisia and Pakistan. Obama is currently pressing ASEAN countries to also join the TPP; however, ASEAN cannot be seen as an alternative to the TPP. Rather, the TPP is a path toward the Free Trade Area of the Asia-Pacific (FTAAP), which will have many negative impacts on the people. After the ASEAN-China FTA took effect, free trade with China caused Indonesia to run a deficit in nuts, fruits and cocoa. In addition, about 180,000 small and medium-sized enterprises in agriculture and the toy industry collapsed; unable to compete with Chinese production, manufacturers became retailers. Cheap Chinese potato imports caused Indonesian potato prices to fall from 7,000 rupiah to 3,800 rupiah. Potato farmers lost money, and their incomes declined markedly.

Actions against free trade agreements

The People's Forum is resisting ASEAN economic integration and is also discussing the possibility of alternatives. Because social movement groups question whether two chapters of the ASEAN agreement violate the Indonesian constitution, Indonesia is conducting a constitutional review of the ASEAN agreement ratified by the government in 2008. The Indonesian constitution stipulates that economic activity must be based on a people's economy pursuing social justice, but the goals of the ASEAN agreement and the Indonesia-EU economic agreement are solely the pursuit of free markets.

We are committed to reminding the Indonesian people of the seriousness of the free trade problem. We launched a national farmers' forum to share information and experience, and have also published many books. We must intervene in the public sphere and find ways to reveal the truth about FTAs to society. Indonesia's situation is quite difficult, because society is full of the optimistic idea of "sign first, ask later." We face the same problems as other countries, so we can work together to resist neoliberalism.
Source:
La Via Campesina: "Understanding Free Trade through the KORUS FTA & the Necessity of Regional Economic Cooperation."

Original text:

In Indonesia, more than 43% of the population is dependent on the agricultural sector. Out of these

people, 56% are either farm laborers (landless) or small farmers (land ownership of about 0.3 hectares). These

statistics reveal that agriculture is a fragile sector that will be directly affected by the WTO and FTA; small farmers will become the most affected elements in this free trade mechanism. The government has had to introduce amendments to existing laws in order to meet the needs of the free market and facilitate free trade negotiations: it has done so, namely, through liberalization, deregulation and privatization.

In December 2005, the EU commission adopted a Plan of Action and Strategy for agrofuels. The EU has a

target of 10% agrofuel consumption by 2020 (approximately 1 to 1.5 million tons). In the report, the

Commission admits the ambitiousness of the EU’s target. As a result, the development of agrofuels will

require significant economic investment. Developing countries in tropical areas are being selected for

agrofuel production due to their capacity for high levels of production and their high productivity due to lower

prices relative to developed countries, It was said that the EU seeks to encourage negotiations to expand the use of raw materials for agrofuels through multilateral and regional free trade agreements. This policy successfully boosts huge palm oil exports to compete here. For example, Southeast Asia, Malaysia and Indonesia have, in particular,

focused on palm oil and cassava production for ethanol.

Another policy on agrofuel is the Lahan Energi Abadi development that amounted to 5 million hectares of

land in order to provide a large energy supply. However, in reality the target was greater than 5 million

hectares. It started with the opening of a new 1.8 million-hectare palm oil plantation on the Kalimantan-

Malaysia border in mid-2007. It will be extended with 1.5 million hectares to Merauke towards the end of

2008.

The expansions of palm oil plantations in Indonesia have been seriously threatening the food sovereignty of

the people. This policy has raised agrarian conflict and also the loss of public access to agrarian resources.

Many members of SPI have experienced land grabbing for the development of palm oil plantations. In West

Java, the land clearing for palm oil plantation has cut the flow of irrigation, and peasant’s corn fields have

been seized. In South Sumatra, the opening of 1 million hectares of palm oil plantations has shut off irrigation

for hectares of rice fields. In North Sumatra, peasants who tried to defend their land from land grabbing by

palm oil plantations have been imprisoned. To conclude, the agrofuel industry threatens food sovereignty implementation and is responsible for the loss of millions of tons of local food.
From the consumer’s side, the competition between palm oil for food and palm oil for fuel has raised the

price of cooking oil nationally. The palm oil processing industry prefers to export Crude Palm Oil (CPO) to

Europe at a higher price. In 2006, there was a shortage of cooking oil in Indonesia.
The Free Trade Agreement can take many forms: KORUS FTA, TPP, and the form of regional blocks such

as ASEAN that create neoliberal regionalization. ASEAN has been deepening since the 1990s and is expanding

to another region in the world. Indonesia has signed many FTAs. The 1st FTA was the ASEAN Free Trade

Agreement (AFTA). It eliminated tariff barriers within ASEAN member countries. And its goal is to establish

the ASEAN Economic Community by 2015. Since 1992 there has been a trend of neoliberalization. Neoliberal

regionalization has taken many forms: ASEAN + China, ASEAN + India, ASEAN + EU, ASEAN + 6. Indonesia has also signed FTAs with Australia, Turkey, Tunisia, and Pakistan. Obama is pushing the ASEAN countries to

also join the TPPA, Therefore ASEAN must be seen not as an alternative to the TPPA but as a way to achieving

its higher form through the FTAAP. This will have many negative impacts to people.

After the full implementation of the ASEAN + China FTA, trade with China has resulted in a deficit on nuts, fruits, and

cocoa. In addition 180,000 SMEs in Indonesia collapsed in the agriculture and toys industry. Producers are also

becoming retailers since they can’t compete with Chinese production. Potato prices slumped from 7000

rupia (50,000 won) to 3800 rupia (25,000 won) due to the import of cheap Chinese products. This price for

potatoes is below that which farmers can break even. Thus we see a declining income for potato farmers.

People’s forum is resisting and discussing alternatives to ASEAN. In Indonesia, a judicial review of the ASEAN

charter was started, which the government ratified in 2008. Social movements are challenging the ASEAN

charter stating that 2 of its provisions are unconstitutional. While the constitution mentions

economic activity based on “people’s economy” for social justice, the ASEAN charter and the

Comprehensive Economic Agreement b/w Indonesia and the EU’s economic goals just free markets.

We are currently trying to determine how we make people in Indonesia aware about this problem. We are

creating a national farmers’ forum to share information and to share some experience about the FTA. Many

books are being published. We need to make interventions in the public sphere and figure out how to

reveal the truths about the FTA in society. The situation in Indonesia is difficult because there is the optimistic

thinking of: we will sign first and then ask later. We are facing the same problems in our countries. We can

work together against the neoliberal project.