US, Indonesia eye future free trade agreement

By Doug Palmer Tue Apr 4, 6:14 PM ET

WASHINGTON (Reuters) - The United States and Indonesia launched talks on Tuesday to curb illegal logging that threatens the Southeast Asian country's rain forests and advanced other initiatives that could lead to a free trade pact, top trade officials from both countries said.
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"Illegal logging depresses timber prices and damages the environment. Together we'll seek to take concrete steps ... to tackle the present environmental problem while facilitating trade," U.S. Trade Representative Rob Portman (news, bio, voting record) said at a joint news conference with Indonesian Trade Minister Mari Pangestu.

Nearly 80 percent of Indonesia's annual timber harvest is estimated to be illegal, threatening the environment of indigenous tribes and many rare species.

At present cutting rates, natural forests in Indonesia will be logged out in 10 years, according to a report released last month by the Environmental Investigation Agency, an independent organization with the self-described mission of "investigating and exposing environmental crime."

The report identified the United States, Japan and the
European Union as major markets for furniture and wood products made from illegally logged timber. China imports much of the wood and transforms it into furniture, plywood and other processed products for exports, the report said.

The proposed U.S.-Indonesia pact would boost law enforcement efforts and create new public-private partnerships to fight the problem, Portman said.

The U.S. lumber industry welcomed the announcement.

"The flood of illegal timber into world markets drives down the value of legally sourced timber from places like the United States. Our companies are losing $460 million in business each year" because of depressed prices, said W. Henson Moore, president of the American Forest and Paper Association.

Portman and Pangestu said they hoped the logging talks and other bilateral initiatives in areas ranging from customs to investment to copyright, patent and trademark protections would lead to the negotiation of a bilateral free trade agreement.

"We are not prepared to launch yet, but are starting down this track ... so both sides can see what the potential benefits are and the potential challenges there might be," Portman said.

The Bush administration's current authority to negotiate trade deals that Congress cannot change expires in the middle of 2007. The United States already has a free trade pact in Southeast Asia with Singapore and plans to start talks soon with Malaysia. But two-year-old talks with Thailand have been suspended because of political turmoil there.
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