EU Free Trade Area ( FTA ) idea first appeared when Indonesian President Susilo Bambang Yudhoyono met with European Commission President Jose Manuel Barroso in December 2009 they discussed ways to improve bilateral relationship. The two Presidents agreed that bilateral trade and investment relationship has a great potential.
Attention and commitment to establish closer collaboration currently and then realized with the signing of the Partnership and Cooperation Agreement (PCA) EU-Indonesia. An FTA is a commitment by signatory members to remove tariffs across member states while continuing to maintain independent tariff regimes on imports from outside countries. Indonesia has several free trade agreements earlier such as , Indonesia-Japan Economic Partnership Agreement (IJEPA) and ASEAN-China Free Trade Agreement (ACFTA).
Positive impact from FTA are economic scale and variety, potential in Foreign Direct Investment (FDI), reform structural policy change, and Competitiveness and Long-Run Growth Effects. The important question is free trade correct decision? Based on experience with two country before, we always defisit in trade balance that means import values is higher than export value. Now EU Country facing with crisis. It’s makes demand from is going down and be impact export reduction. Before government open the market, they should prepare economic competitiveness seriously so the economy competition level in a high position.
There are at three problems must be government concern before open the market as follows first looking for the Another sector that can a footstool besides industry sectoral, second integrated policy to create economic competitiveness, and the last create a good investment atmosphere. international trade interaction is unavoidable impossible meet all needs from domestic production. However, open market without calculations, including disregard competitiveness of domestic commodities, as well as destroy the national economy. Thus, the market can be opened selectively in order do not cause economic losses.
