Govt sees no need for further rounds of IEU-CEPA negotiations
The Jakarta Post - 1 August 2024
Govt sees no need for further rounds of IEU-CEPA negotiations
By Deni Ghifari
Indonesian authorities say no more negotiation rounds are needed to conclude the long-delayed Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), even as the EU says “key” points of difference remain unresolved.
Jakarta and Brussels concluded the 19th negotiation round for the agreement on July 5. The Indonesian side has said it should be the last before the document is signed.
However, according to the EU’s report on the negotiation, “discussions remained inconclusive on key outstanding issues, such as export and import restrictions, as well as investment conditions”.
The report added that the parties would continue working on the issues in the coming weeks.
Djatmiko Bris Witjaksono, director general of international trade negotiations at the Trade Ministry, told The Jakarta Post on Tuesday that the 19th round was sufficient to conclude the agreement and that it would be the last.
Djatmiko acknowledged that issues still remained but said they were now in the hands of the chief negotiators, who were on their way to resolving them through intensive meetings.
“God willing, it will be settled soon,” said Djatmiko.
The ministry’s bilateral negotiations director, Johni Martha, who represented Indonesia in the chief negotiator meetings, did not immediately respond to the Post’s request for comment.
Bara Krishna Hasibuan, expert staffer for the trade minister, told the Post on Tuesday that the government was seeking to conclude the agreement by September.
“So far, we don’t see the need to schedule the next, or the 20th, round of negotiations as there are only a few technical issues that we believe can be worked out at the chief negotiator level,” said Bara.
The EU’s representation in Jakarta did not immediately respond to a request for comment.
The CEPA, if completed, is expected to eliminate 95 percent of tariffs on goods and services traded between Indonesia and the EU and to expand foreign direct investment. Some 6.78 percent of Indonesia’s exports by value went to the EU last year, placing it behind Japan, which was the fourth largest, after China, the United States and India.
Since negotiations began in 2016, the agreement has missed multiple deadlines, including a first one in 2019 and others in 2021 and 2022.
In May of last year, Brussels said it expected to finish the negotiations by the end of 2023, partially to avoid complications related to Indonesia’s 2024 general election.
Meanwhile, Trade Minister Zulkilfi Hasan had planned to conclude the negotiations in July, setting the target after President Joko “Jokowi” Widodo called attention to the prolonged process.
The focus of the negotiators’ disagreements has shifted periodically over the years, ranging from a proposed anti-deforestation rule to tariffs on carbon-intensive products, among others.
But both parties have said they plan to finish the CEPA before President Jokowi steps down in Oct. 20 and president-elect Prabowo Subianto takes office.
Anne Patricia Sutanto, head of the Permanent Committee for International Treaties at the Indonesian Chamber of Commerce and Industry (Kadin), told the Post on Wednesday that the notion of wrapping the deal up before the change of administration was to avoid a “reset”.
“We aim to complete [the negotiations] now, so when the new government comes in, they can focus on the implementation, not another negotiation,” said Anne, who has represented Indonesia as a negotiator at the IEU-CEPA meetings.
She said the remaining issues would not be “an obstacle” because Brussels’ stance had now “softened”.
Anne did not specify what points were still being negotiated but mentioned that the issue of non-tariff barriers was a sticking point.
EU-ASEAN Business Council executive director Chris Humphrey told the Post on Wednesday that there would be a “significant delay” if the deal was not completed before Jokowi left office.
“The concern for businesses on both sides is that if the deal is not concluded before October, the new administration will want to take time to take stock of the progress made,” said Humphrey.
“It is clear that the CEPA will bring significant benefits to businesses on both sides and enhance Indonesia-EU relations. It is our view that a rough diamond is better than no diamond at all,” he added.
Indonesian Employers Association (Apindo) chair Shinta Kamdani told the Post on Wednesday that unsolved issues before the conclusion of such agreements were normally “very crucial” and, at times, constituted “make-it-or-break-it” situations.
“In principle, if both sides’ political will to finish the negotiation is very strong, compromise can take place and the negotiation can be concluded easily and relatively swiftly,” said Shinta.
Shinta said a successful CEPA would bring Indonesia an investment increase like the one that followed a similar, 2019 agreement between the bloc and Vietnam.
However, the effect would be gradual, she said, citing Indonesia’s manufacturing limitations.
