INDONESIA-CHILE TRADE COOPERATION: INDONESIA'S INITIAL STEPS TO ENTER THE TPP

The Trans-Pacific Partnership (TPP) is a trade agreement between twelve countries in the Asia-Pacific region with the aim of encouraging trade liberalization in member countries, especially in terms of tariff setting, trade protection, and economic equality. Indonesia expressed its desire to join the TPP to expand the market share of Indonesian exports. Indonesia currently has a trade partnership with almost all TPP member countries, except with Chile and few others. The analysis was carried out by analyzing the Indonesia-Chile trade data in 2011 to 2015, analyzing Chile's trade results with Canada, Singapore, and Vietnam and also based on the results of simulations conducted by Petri (2016). The simulation results showed that TPP collaboration can benefit the countries involved in it, seen by the increase in GDP from its member countries. In addition, the TPP also increased more inward than outward investments, especially inward investment coming from countries with high GDP. However, Indonesia's Free Trade Agreement (FTA) with the main trading partner countries must also be considered before Indonesia joins the TPP. comprehensive


Research Method
The problem to be discussed in this study was to look at the potential development of Indonesia's export and import trade to Chile by looking at the simulation results conducted by Petri (2016) that only considered economic factors, although the influence of geopolitics is also important. Petri Analysis (2016) to produce quantitative assessments of TPP and Asia-Pacific integration using a Computable General Equilibrium (CGE) analysis model was calculated based on interactions between companies, households, and government in several product markets in several regions of the world economy. Companies and consumers were assumed to maximize profits and welfare to prices. In addition, secondary data was also used on export and import trade data, observations of increases in export and import transactions on changes in tariffs, as well as observations of the development of commodities traded in the FTA scheme that Indonesia currently has.

Indonesia Trade Development
Based on data from the Indonesian Central Bureau of Statistics -BPS (2016), Indonesia's exports in January-August 2016 reached a volume of 329,974.9 thousand tons with a value of USD 91,846.4 million, consisting of USD 8,634.9 million from the exports of oil and gas and USD 83,211.4 million from export of non-oil and gas commodities. Compared to the same period in 2015, the export value in 2016 fell by USD 10,770.5 million due to a decline in oil and gas exports worth USD 4,309.9 million. Likewise, the non-oil and gas commodities declined by USD 6,460.7 million, down 7.20 % compared to the same period the previous year. In August 2016, the price of Indonesian crude oil was USD 41.11 per barrel, down by USD 1.70 per barrel compared to the August 2015 decline in Indonesian exports at that time.
Viewed from export destination countries, BPS (2016) noted that in August 2016, oil and gas exports to the East Asia and South & Southeast Asia were recorded at USD 580.9 million and USD 449.1 million, a decline compared to 2015 as shown in Table 1. The country that showed a decline in oil and gas exports was China with a decrease of 38.78 %, Japan with a decrease of 20.81 %, and Singapore with a decrease of 38.17 %. While Thailand and Malaysia showed an increase compared to 2015, with a percentage increase of 14.83 and 0.56 % respectively. Table 1 also shows the total oil and gas exports in August 2016 fell by 25.63 % to USD 1,138.6 million.

Chile Country Profile
Chile is a member of the OECD (the Organization for Economic Co-operation and Development) and has an open economy with a large number of regional or bilateral trade agreements. Chile has diversified its trade network and is a member of the Pacific Alliance. Its main economy, based on intra-data (2014), relies on copper exports, with a strong agricultural sector. In the trade sector, there is a need to reduce dependence on commodity exports and strive to improve the competitiveness of their SMEs. Chile's Human Development Index (HDI), based on HDI (2015) data in Figures 1 and 2, continues to increase and compete with Argentina (Table 2) for fellow countries in Latin America and the Caribbean.
The biggest added value contribution to Chile's GDP according to data from World Bank (2016) lies in the agricultural, industrial, manufacturing, and service sectors (Table 3).   Based on data from World Bank (2016) in Figure 3, the dependence of the Chilean Government on aid was smaller than those in Latin America, except Argentina, and countries in the Caribbean. Chile was also still a little dependent on imports based on data from Intracen (2016) in figure 4, which based on data from 2011 -2015 shows the difference in import-export to% GDP in the range of -1.4% (consumption of imported goods was higher in 2013) up to 1.2% (surplus income from exports in 2014). The total value of Chile's export-import from 2011 to 2015 can be seen in Figure 5. In service products, based on intraclass data (2016) in figure 6, Chile still relies on the importation of services.

Chile Trade Cooperation With Some Countries
Chile has collaborated with several countries in the world, including Canada (Canada-Chile Free Trade Agreement) on July 5, 1997; Singapore (Trans-Pacific Strategic Economy Partnership Agreement) on July 18, 2005; and Vietnam (Chile-Vietnam Free Trade Agreement) on February 4, 2014.

Chile-Canada Partnership
Based on data from the Office of the Chief Economist, Foreign Affairs and International Trade Canada (2013), since the implementation (CCFTA) in 1997, in term of Canadian macroeconomic conditions, the value of Canadian export trade to Chile increased more than twice from the previous USD 392 million in 1997 to USD 819 million in 2011 (figure 7). More than 15 years since the collaboration began, the value of Canadian exports to Chile has increased 5.4% annually, beating exports to other Latin American countries such as Argentina and Brazil, where Canada does not have a special trade agreement. During the same period, Canadian exports of goods to all Latin American regions also increased by 5.4%. As a result, Chile ranked the third in Latin America, after Mexico and Brazil in 2011 where before, Chile only ranked the seventh largest Canadian export trade destination in the region (table 4).
A different situation occurred with other countries in ASEAN that are TPP members, which experienced rapid economic growth while the aim of Indonesia was to expand the export market share in the prospective market and international trade hubs to improve the national economy. However, the opinion of Deardorff (2013) which states that the TPP will not have a large influence on the economy of non-TPP countries should also be considered. This is because Indonesia based on Indonesia's oil and gas and non-oil and gas export data in Table 1 shows that the main market of Indonesian products (oil and gas and non-oil) is the Asian region where Indonesia already has an FTA agreement with them.
While in the United States, non-oil and gas exports have a high value compared to oil and gas exports. If Indonesia joins the TPP scheme, there are challenges that Indonesia needs to face, especially in terms of trade policies, including transparency, equal treatment for State-Owned Enterprises (BUMN), private companies, and labor. It is better off that before Indonesia p-1412-3789 www.journalmabis.org e-2477-1783 54 joins the TPP, Indonesia needs to maximize existing FTAs. The steps of Indonesia to cooperate with Chile are decent to explore the market potential of Indonesian products to the country in the US before entering the TPP. However, there are a number of challenges that Indonesia needs to face in terms of trade policy, especially in terms of transparency, equal treatment for State-Owned Enterprises (BUMN), private companies, and so on.

Figure 7. Canadian Trade Value with Chile (in million USD)
Source: Office of the Chief Economist, Foreign Affairs and International Trade Canada (2013) (2013) The import value of Canadian products from Chile also increased significantly. The value of total imports increased six times from the previous USD 326 million in 1997 to USD 1.9 billion in 2011. This value was equivalent to 13.5% per year and when compared to growth for values originating from all Latin American countries, others were only around 9.5%.
The value of Canadian trade imports increased faster from 1996 to 2011. In figure 8, it can be seen that the value of imports from sectors experiencing tariff cuts of more than 10 % grew by 1.190 %, compared to sectors with tariff reduction from 5.1 to 10 %. The value of imports with deductions of less than 5 % decreased by 36% over the same period. While the value of Canada's import trade, which has been released, has increased by 750% over the same period.  (2013) The value of Chile's trade imports from Canada did not increase significantly over the period of 1996 to 2011. In figure 9, the value of Chile's imports of goods from Canada increased by 189 % for sectors that applied tariff reductions of more than 10 %. This is in contrast to the sector where the tariff reduction is below 10 % where there was no growth. Whereas for sectors that are exempt from tariffs, they experienced a strong increase of more than 500%. Table 5 reports the growth of Canadian imports with goods originating from Latin America when the tariff reduction was implemented after the CCFTA has been implemented. The biggest growth occurred in sectors that were exempt from tariffs, while in sectors without tariff reduction there was a tendency not to have import growth in Canada.
The export growth trend (table 6) is the same as Canadian exports to Chile compared to exports to countries without FTAs. However, the choice for reference countries is limited because of the many FTA partners from Chile.  (2013) The Chilean economy, according to Finance and Development magazine, IMF (2000), experienced a significant decline in the late 1990s and the early 2000s due to the Asian financial crisis in early 1997 and remained sluggish until 2003. Chile's import value from the world declined sharply between 1996 and 2003. During this period, the value of imported merchandise from Canada fell by a total of 18.5 % and from the US fell sharply by 32.7 %. In the five product categories under the tariff reduction category under the CCFTA, four categories reportedly dropped significantly in the value of imports for products originating from the US compared to Canada. Products with a tariff reduction of more than 10 % experienced the most significant decline in the value of imports from the US, while in the same p-1412-3789 www.journalmabis.org e-2477-1783 56 period the value of imports from Canada grew. The data pattern presented in Table 4 shows how strong the CCFTA helped reduces the loss of Canadian exports in the Chilean market during the economic crisis in Chile.  (2013) Comparisons between Canada and Australia present a completely different picture. From 1996 to 2008, Chile has increased imports from Australia in two product categories while import values from Canada only increased for products with tariff reductions of more than 10 % according to Table 6. According to the Office of Chief Economist (2013) report, Canada and Australia have many similarities in economic characteristics, for example, both are major exporters of commodities, but the composition of their exports is very different. Australia's exports to Chile were concentrated in two product categories, namely products from coal and beef. While Canadian exports to Chile were more diverse, starting from coal, wheat, mineral products, and seed oil to machinery and equipment. This makes a direct comparison of the two p-1412-3789 www.journalmabis.org e-2477-1783 57 difficult. For example, in the product category with a tariff reduction of more than 10 %, the value of Chile's imports from Canada increased to 106.5 %, but Australia did not export the same products as Canada in this category. At the sectoral level, the growth of Canadian exports to Chile was concentrated in two product categories namely product with a tariff reduction of more than 10 % and product that already has free access to the Chilean market prior to the implementation of CCFTA.

Chile's Cooperation With Singapore
Singapore's cooperation with Chile began in 2005 under the Trans-Pacific Strategic Economy Partnership Agreement (TPP) scheme together with Brunei Darussalam and New Zealand commonly called P4. The objective of this agreement, according to Kawai (2010), was to reduce 90 % of entry rates among member countries and reduce all tariffs to zero in 2015. The TPP agreement is comprehensive agreement that includes many additional elements of the WTO including ROO (Rules of Origin), trade improvement, rules related to sanitary and phytosanitary, technical barriers to trade, intellectual property, government procurement, and competition policy. As part of the conclusion of the negotiations, the P4 countries agreed to negotiate on the issue of financial and investment services within two years of this TPP. In 2016, TPP membership has increased with the entry of Australia, Canada, Japan, Malaysia, Mexico, Peru, the United States, and Vietnam. Based on trade data from trademap (2016) in table 7, growth occurred in 2011 to 2015 where there was a growth in the trade value of products that received zero % entry rates to Chile.

Chile's Cooperation With Vietnam
Vietnam, based on Online data (2016) regarding the Asia Regional Integration Center, signed a TPP agreement in which there was Chile on February 4, 2016. The collaboration between Vietnam and Chile has not been felt because it is still new and has not affected the economy of Vietnam. However, based on trade data from Trademark (2016) in Table 8, there  p-1412-3789 www.journalmabis.org e-2477-1783 58 was a high potential for growth based on data from 2011 to 2015 where there was a growth in the trade value of products that received 0 % entry rates to Chile. Higher potential can occur on products that still have an entry rate above 0 % but growth remains high, such as products with HS code 58 in table 8, even though the 2% entry rate was applied, export growth remains high up to 120 %. Furthermore, products with HS code 73 with 4% tariff experienced growth of 120%.

Trade Partnership Scheme In TPP and APEC
TPP has the potential to grow and include many other countries based on the accession agreement clause. According to Kawai (2010) in September 2008, the US announced its intention to enter comprehensive negotiations in order to join. Shortly after that, Australia and Peru announced that they would join the negotiations, as did Malaysia and Vietnam. Thus, the TPP can help expand and strengthen economic and strategic relations among fellow APEC members and can lay a broader foundation for the Free Trade Area of the Asia-Pacific (FTAAP). APEC itself, according to Williams (2013), sees itself as an "incubator" of the FTAAP and one of its goals is to support the TPP.
According to Hoang (2015), TPP set a new standard in future trade agreements. This agreement is comprehensive and ambitious in all areas: competition; cooperation and capacity building; provide cross-border services; customs; e-commerce; environment; financial services; government procurement; intellectual property; infestation; labor; law problem; goods market access; original provisions; sanitary and phytosanitary (SPS); technical barriers to trade (TBT); telecommunication; natural human movement; and trade improvement.
Based on the results of a study of quantitative assessments of TPP and Asia-Pacific integration by Petri (2011), the journey towards the realization of FTAAP is shown in Figure  10. The research scenario was based on the Asian Track which is built on the efforts of Asian integration, including the planned ASEAN Economic Community blueprint and bilateral trade agreements with China, Japan and Korea. This agreement covers a wide range of trade, but involves fewer agreements and allows wider acceptance than trade agreements from the TPP Track

Analysis Of The Effect Of Tpp Cooperation On World Economy Based On CGE Model
Petri (2016) developed the results of previous studies and estimated changes in Gross Domestic Product (GDP) with the TPP agreement in Asia and the World over the period of 2015 to 2030 using the Computable General Equilibrium (CGE) analysis model (Tables 9 and  10). Table 9 is the result the latest estimate of the quantitative assessment of TPP and Asia-Pacific integration carried out by Petri (2016) where the results of the analysis obtained were the main measure of benefits called "real income profit". This term refers to a rigid technical definition of variations in equations, indicators that economists often use to assess policy changes. This is used to measure how much additional income the country needs, without TPP, to spend the desired actual expenditure equal to when participating in the TPP. Expenditures p-1412-3789 www.journalmabis.org e-2477-1783 60 usually depend on income derived from production, so that real income profits will be the same (but not identical) with profits in real GDP. Because real GDP and real income are both presented at constant prices, the relationship between the two depends on relative prices. For example, if the TPP lowers output prices relative to the prices of consumer goods, then the increase in GDP given will correspond to a smaller increase in real income. Petri (2016) projected profits to occur in Japan, Malaysia, and Vietnam. Japan benefited from increased market access throughout the TPP region, including the initial liberalization of imported cars in markets other than the United States, and from domestic reforms to reduce distortions in services and the investment sector that were previously protected by TPP member countries. A very large percentage of profits were earned by Vietnam and Malaysia, where the agreement must also stimulate reform in their country and the availability of access to previously protected foreign markets. The percentage of other significant profits is projected for the economies of Brunei, Peru, Singapore, and New Zealand.
In general, the TPP is not expected to have a large effect on the income of non-member countries. The decline was mostly due to TPP members shifting their trade from previously non-member countries to member countries due to reduced preference in the TPP market. Losses can occur in China, India, and Thailand, which compete with TPP members for the market to get the TPP market. For the South Korean country, the TPP will erode the profits obtained on the US market under the KORUS agreement. Except for Thailand, this loss is smaller than GDP. Some non-member countries, including the European Union and Hong Kong, experience increased net profits, partly due to the assumption that TPP provisions liberalize some trades with non-member countries. Table 9 shows the influence of the TPP on foreign direct trade and investment in 2030. The annual export value of the United States increases by USD 357 billion or 9.1 % and the total for all TPP countries is USD 1,025 billion or 11.5%. The pattern of the increase in export is similar to the increase in income; The United States, Japan, Vietnam, and Malaysia lead the table, where export of Japan, Vietnam, and Malaysia each grows by 20 % or more. Influence on non-members varies; some benefit from exports and others suffer losses. As the effect of imports is similar to the effect of exports based on the normal trade balance assumption, therefore the value is not reported.
Investment in all TPP countries increases by USD 446 billion or 3.5 % during the 2030 period and outgoing investments amounted to USD 305 billion or 2 %. This change is partly due to GDP growth in various regions and partly due to a reduction in investment barriers. The biggest recipients of inward investments included in the TPP are the United States, Canada, Japan, and Malaysia, while the biggest sources that carry out outward investments are the United States, Japan, and the European Union. The TPP country attracts more investment (USD 446 billion) than they spend to invest out (USD 305 billion). This reflects the net income generated from investments due to the increase in investment climate improvement.

Analysis Of The Effect Of TPP Cooperation Based On Indonesia FTA Schemes
It is different from the opinion of Deardorff (2013) where the TPP will not have a major influence on the economy of non-TPP countries due to:  From table 10 below, it can be seen that the countries involved in the 10 FTAs that have been running contribute greatly to Indonesia's oil and gas and non-oil and gas export trade. Whereas, the American region contributes greatly in terms of non-oil and gas exports.

Conclusion
Based on the results of economic modeling analysis, TPP will benefit the countries involved, as seen from the increase in GDP from its member countries. In addition, the TPP also increased more inward than outward investments, especially inward investments originating from countries with high economies such as the United States, Japan, and the European Union. The position of Indonesia based on the results of the Petri analysis (2016) in table 9 seems to have not experienced an increase in the economy within 15 years because it was outside the TPP.
A different situation occurred with other countries in ASEAN that are TPP members, which experienced rapid economic growth while the aim of Indonesia was to expand the export market share in the prospective market and international trade hubs to improve the national economy. However, the opinion of Deardorff (2013) which states that the TPP will not have a large influence on the economy of non-TPP countries should also be considered. This is because Indonesia based on Indonesia's oil and gas and non-oil and gas export data in Table 1 p-1412-3789 www.journalmabis.org e-2477-1783 64 shows that the main market of Indonesian products (oil and gas and non-oil) is the Asian region where Indonesia already has an FTA agreement with them.
While in the United States, non-oil and gas exports have a high value compared to oil and gas exports. If Indonesia joins the TPP scheme, there are challenges that Indonesia needs to face, especially in terms of trade policies, including transparency, equal treatment for State-Owned Enterprises (BUMN), private companies, and labor. It is better off that before Indonesia joins the TPP, Indonesia needs to maximize existing FTAs. The steps of Indonesia to cooperate with Chile are decent to explore the market potential of Indonesian products to the country in the US before entering the TPP. However, there are a number of challenges that Indonesia needs to face in terms of trade policy, especially in terms of transparency, equal treatment for State-Owned Enterprises (BUMN), private companies, and so on.