0) To this end, the paper endeavors to divulge on how the Indonesia is badly affected owing to the free trade agreement signed between China and South East Asia.
China and the South East Asian countries signed the Free Trade Agreement on the midnight of 31st December 2009. The agreement has caused mixed apprehensions in the business circle. Some expect that owing to the agreement tariffs would decrease on diverse commodities ranging from rubber, textiles, and vegetable oil to steel. Some others are found to be quite tense to the aftermath of such agreements. Estimates made reveal that trade between the South East Asian countries and China increased from $59.6 billion in 2003 to $192.5 billion in 2008. Thus, the enactment of free trade policy between the nations would certainly help in augmenting the economy of the two countries for it focuses on removing tariffs on some items. In spite of such positive interfaces regarding the free trade agreement manufacturers of South East Asia are concerned with cheap Chinese commodities eating up their established market. (Gooch, 2009)
The labor unions in Indonesia feel that many workers would be made unemployed owing to the enactment of the Free Trade Agreement. It is observed that the Indonesian workers lack needed expertise in regards to the Chinese workers. Thus, protection of workers right in the Indonesian industries constitutes high priority. Despite these reasons the exports between Indonesia and China is continually growing. In the light of the above fact, the shoe industry of Indonesia has recorded a growth of 10 percent in the first quarter of 2009. The main reason attributed to the above fact owes to the increase of exports to Indonesia. (Padden, 2010)
The China ASEAN Free Trade Agreement (CAFTA) is expected to raise the level of unemployment. It is observed that the introduction of The China ASEAN Free Trade Agreement (CAFTA) would weaken the national manufacturing backbone of Indonesia making many jobless.