logo logo

Indonesia urges fair treatment from EU amid prolonged trade talks

Jakarta Globe - 17 May 2024

Indonesia urges fair treatment from EU amid prolonged trade talks

Chief Economic Affairs Minister Airlangga Hartarto emphasized Indonesia’s desire for fair treatment from the European Union in a recent interview with German media outlet Handelsblatt. This comes amid the prolonged and unresolved negotiations of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), ongoing for the past seven years.

"Considering how Europe treats Indonesia differently compared to Vietnam and Thailand, the IEU-CEPA negotiations have dragged on for the past seven years. Yet, Indonesia plays a significant role in the global economy. We don’t want to wait too long," Airlangga said in his statement on Friday in Jakarta.

Airlangga highlighted Indonesia’s leadership during the 2022 G20 summit, reflecting the voices of southern countries. He stressed that Indonesia is open to investments from all nations, pointing out the significant growth in Indonesia’s nickel sector, where exports increased from $2 billion (Rp 32 trillion) in 2014 to $26-30 billion annually.

Looking ahead, Airlangga mentioned that Indonesia’s nickel production would transition to green energy, using smelters powered by hydro, gas, or solar energy. Despite the shift, maintaining competitiveness and managing costs remain crucial.

Airlangga dismissed trade restrictions as obstacles in the free trade negotiations with the EU, emphasizing Indonesia’s right to manage its natural resources. The export ban on unprocessed raw materials aims to boost Indonesia’s global competitiveness and bring added value domestically. However, this policy draws criticism from the EU, seeing it as a form of protectionism.

He expressed optimism about Indonesia’s future as a developed nation. Currently the world’s 16th largest economy, Indonesia aims to have a population of around 320 million and a GDP of $30,000 per capita by 2045, resulting in an economy worth $9 trillion.

"Germany’s economy is currently about $4 trillion. So you can compare how significant Indonesia will be in 2045. However, there are many challenges ahead, including the need for value-added efforts to create jobs for the Indonesian people," he concluded.

Indonesia and the EU recently conducted another round of negotiations on the long-awaited trade agreement, with a target deadline of 2024. In the 17th round held in Bandung last week, Indonesia and the EU reached a “technical conclusion” on three chapters of the pact, including sustainable food systems, technical barriers to trade, and institutional provisions.

"There are around 20 chapters in the CEPA. We have agreed on 11 chapters so far. There are matters that we need to discuss at length to find the perfect ‘landing zone’ for both sides. We wish to finish the negotiations by 2024,” Djatmiko Bris Witjaksono, the director-general for international trade agreements at the Trade Ministry, said in a virtual press conference in March.

In 2023, Indonesia-EU trade amounted to $30.8 billion, with Indonesia’s exports to the EU worth $16.7 billion and imports from the EU totaling $14.1 billion. Palm oil remains one of Indonesia’s top exports to the EU despite ongoing attempts by the bloc to restrict its access with the anti-deforestation law.

 source: Jakarta Globe