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Peoples’ economic sovereignty and human rights protection must be prioritized over Indonesia-EU CEPA negotiation

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Indonesia for Global Justice - 7 December 2023

Peoples’ economic sovereignty and human rights protection must be prioritized over Indonesia-EU CEPA negotiation

We, the Indonesian Civil Society Coalition for Economic Justice (Indonesia Coalition), hereby urge the Indonesian Government to stop free trade negotiations with the European Union in order to adhere to the main principles of international cooperation in accordance with the Constitution. Indonesia-EU CEPA has the potential to conflict with the principles of prioritizing the protection of human rights, people’s economic sovereignty and the fulfillment of democratic principles.

Indonesia-EU CEPA (IEU CEPA) negotiations have entered its 16th round which started in 2016. The negotiations have a broad scope, not only about exports and imports, but also how broader policy in Indonesia can be adjusted to European Union business interests. The provisions in I-EU CEPA have the potential to erode the economic sovereignty of the people and have social and human rights impacts and are contrary to the Constitution.

The following are the "Red Lines" drawn up by the Coalition to put pressure on the Indonesian Government in relation to Indonesia-EU CEPA negotiations:

The Principle of Prioritizing People’s Economic Sovereignty
President Joko Widodo has committed to realizing Indonesia’s economic transformation by creating a highly competitive economy through a national industry downstreaming agenda. However, the deal which will be carried out by the Indonesian Government within the Indonesia-EU CEPA will only facilitate and strengthen the investment, monopoly, and dominance of multinational corporations to extract people’s economic resources and continue to encourage extractive economic growth models.

One of the European Union’s goals is to encourage the expansion of international trade cooperation with ASEAN, Latin American and African countries to secure the supply chain of critical mineral sources for industrial development especially since they issued a Critical Raw Material Act (CRMA). Essentially, the Indonesia-EU CEPA will include provisions that facilitate the EU’s strategic interests in order to access critical raw materials in Indonesia. The EU will combat "unfair" trade regulations related to critical minerals, in particular the elimination of restrictions on exports of raw minerals that have been implemented by Indonesia. This has the potential to hamper Indonesia’s efforts to strengthen policy space to support industrial downstreaming. This will encourage further expansion of trade liberalization and investment in extractive industries in developing countries, especially Indonesia, which is rich in natural resources.

The Indonesian Coalition considers that on-going industrial downstreaming agenda will only create dependency of Indonesia on the EU. For this reason, the Coalition urges the Indonesian Government to focus on development based on a people-centered economy and prioritizing small-scale community-based production as the main part of a production chain process from upstream to downstream. The success of this agenda will depend heavily on the implementation of several policies that support its industrial development based on the people’s economy in the country. However, international trade agreements, especially the Indonesia-EU CEPA, are potentially weakening the people-based economy Industrial Strengthening agenda.

For this reason, the Coalition views that economic development based on a people’s economy can only be carried out without economic liberalization which is legitimized by international trade agreements. And, it is a must for the Indonesian upcoming ruling regime after the 2024 elections not to continue the Indonesia-EU CEPA and review all international trade agreements that Indonesia has signed and ratified.

The following are some of the Indonesia-EU CEPA provisions that must be rejected and become the basis for stopping negotiations and strengthening people’s economic-based industrialization:

1. The Intellectual Property Rights (IPR) chapter in the Indonesia-EU CEPA reflects the EU’s interest in providing protection for technological monopolies and new technological discoveries, including distribution and price controls resulting from monopolies by multinational corporations. With this provision, the Indonesian government cannot access this knowledge for the purposes of its industrial transition in any sector, especially health and agriculture. Indonesia will continue to be dependent on the European Union as the country of origin of these multinational corporations. In fact, IPR protection related to digital technology is carried out through confidentiality rules for processing data through source code. Source code is protected for business aspects, not for public safety and security. Lack of access and control over source code allows many things to be hidden, including violations and criminal activities, such as tax evasion, unfair competition, illegal data mining, espionage, and more. On top of that, the European Union proposal which encouraged Indonesia to implement the provisions of the 1991 UPOV which would potentially threaten farmers’ rights to seeds.
2. Local content requirements within Indonesia-EU CEPA are prohibited. In fact, this policy is an important instrument to ensure that incoming investment will effectively contribute to the national development trajectory which aims to increase competitiveness, add value to local industry and increase local employment. Local content requirement is very important to open the way for a people-centered industry in Indonesia.
3. Liberalization of government procurement of goods and services within the Indonesia-EU CEPA will again weaken the role of local industry, especially the MSME group, in the national economic development agenda. If this happens, people will continue to have their economic sovereignty eroded by the monopolistic practices and exploitation of multinational corporations over all of Indonesia’s economic resources. In fact, this provision has eliminated full policy space to prioritize local production produced by the people to meet national needs in order to reduce rural poverty and improve the welfare of local farmers and fishermen.
4. The privatization of state-owned enterprises operating in the health services, education, clean water and energy (including electricity) sectors has led to discrimination of peoples’ rights to public services and increased costs that only the rich can access. Health, education, water and energy should be excluded from liberalization and privatization obligations. In addition, public services must be protected based on domestic regulations that protect against liberalization in accordance with the mandate of the Constitution.
5. We are also concerned that the chapter on Good Regulatory Practices/GRP in the IEU CEPA will create an intervention space for EU companies in the ’domestic regulatory drafting process’ to review, or eliminate existing domestic regulations. This proposed chapter also requires national & MFN/most favored nation treatment in terms of allowing companies from around the world to comment on the proposed regulations and Indonesia should consider the comments received. Without a doubt, multinational corporations and their industry associations will generate more comments/input/views than Indonesian SMEs because multinational corporations and their industry associations have more resources, funds, and lawyers to generate comments/views, etc.

Principle of Prioritization of Human Rights Protection

• The Indonesia-EU CEPA negotiations prioritize protecting the rights of foreign investors over the rights of the people and this is contrary to the Constitution. This can be seen from several provisions regulated in this agreement such as: First, the Indonesian government will base its binding commitments on the unconstitutional Job Creation Law (Government Regulation in Lieu of Job Creation Law No. 2 of 2022) into the Indonesia-EU CEPA. These regulations also facilitate access and extraction of natural resources by investors, labor exploitation on a larger scale, without guaranteeing the protection of human rights, the environment, or a commitment to economic justice. For this reason, the Indonesia-EU CEPA will only legitimize the decline in human rights protection for the people both in Indonesia and the European Union; Second, The Investment and Protection Chapter regulates investment dispute resolution mechanisms that still adhere to the concept of a dispute resolution mechanism between the state and investors (ISDS). This mechanism will only give investors the right to sue the state, especially Indonesia, when national policies are deemed detrimental to their interests. For this reason, the Indonesian Government and the DPR RI must stop negotiations and calculate the broad impact that the Indonesia-EU CEPA regulations will have on people’s lives.
• Protection of intellectual property rights (IPR), the EU proposal in CEPA will strengthen and prolong the monopoly of multinational pharmaceutical companies over medicines so that access, availability and affordability of the basic rights of the Indonesian people, especially access to medicines, will worsen. The EU also continues to try to weaken or even eliminate farmers’ rights to seeds by imposing plant variety protection policies in accordance with the interests of multinational companies in the agricultural and chemical industries.
• Indonesia, as a country that has consistently voiced an end to the Israeli genocide in Gaza and the struggle for independence of the Palestinian people, must discontinue negotiating an agreement with a country that is stained with the blood of children, women and all the Palestinian people. The Indonesian government must immediately stop the Indonesia-EU CEPA negotiations as part of its solidarity action for the Palestinian people and urge the European Union to take responsibility for their support in these crimes against humanity. The European Union’s double standards in human rights protection are unacceptable.

Principles of Prioritizing the Implementation of True Democracy
The Indonesia-EU CEPA has deepened the democratic crisis due to the lack of transparency in the contents of the negotiation text and public participation in the negotiation process. This certainly harms the democratic process, especially since the I-EU CEPA negotiations will have a direct impact on the wider community. In fact, the content is very comprehensive and has the potential to impact on the state’s fulfillment of basic public rights. Based on the above, it is fundamental for the Indonesian Government and the DPR to make decisions regarding the I-EU CEPA democratically as mandated by the 1945 Constitution of the Republic of Indonesia to approve or disapprove the Indonesia-EU CEPA to be ratified by Indonesia.

Based on the Constitutional Court Decision Number 13/PUU-XVI/2018 concerning Law No. 24 of 2000, which was won by the Indonesian Coalition for Economic Justice, it states "regarding in what cases or under what circumstances an international agreement material causes broad and fundamental consequences that related to the state’s financial burden and/or requiring changes or formation of laws, this cannot be determined in limits but must be assessed casuistically.” Interpretation The Constitutional Court’s decision mandates the DPR RI to carry out an assessment of the economic, social and human rights impacts, so that all decisions to approve or disapprove the ratification of an international agreement must be made in accordance with the Constitution’s mandate to the DPR RI.

Contact Person:
Rahmat Maulana Sidik (0812-1002-5135)
Olisias Gultom (0882-9829-3959)