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Indonesia wants to wrap up trade pact talks with EU before elections

Jakarta Globe - 28 November 2023

Indonesia wants to wrap up trade pact talks with EU before elections
By Jayanty Nada Shofa

A senior minister recently said that Indonesia should substantially wrap up the negotiations of its trade pact with the European Union (EU) before the elections.

Both sides have been negotiating the Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA) since 2016. The long-awaited trade agreement was high up on the agenda during a recent meeting between Chief Economic Affairs Minister Airlangga Hartarto and EU Ambassador to Indonesia Denis Chaibi in Jakarta.

The CEPA negotiations will enter its 16th round next month. Previous reports say that the upcoming talks will take place in Brussels, Belgium. According to Airlangga, the 16th round of negotiations should be a “golden time” for the substantial conclusion of the trade pact because Indonesia and the EU will hold their elections next year.

As many as 204.8 million Indonesians will cast their ballots in February. Millions of Europeans will also vote for members of the European Parliament in June.

“Our two leaders since last year have been calling for the substantial conclusion of the Indonesia-EU CEPA by the end of 2023 or early 2024 at the latest,” Airlangga told Chaibi, as reported by a ministerial press release.

“Indonesia already has a clear high-level mandate from President [Joko “Jokowi” Widodo] on the five strategic policy issues on this CEPA agreement,” Airlangga said.

The EU representatives also told Airlangga that the ongoing concerns over Indonesia favoring domestic processing of its critical minerals would not hamper the CEPA conclusion. The EU was alluding to its World Trade Organization lawsuit against Indonesia over Jakarta’s ban on nickel ore exports. Indonesia has stopped exporting unprocessed nickel ores to capture more added value out of the silvery-white metal.

The five strategic issues that Airlangga mentioned earlier refer to the outstanding matters in the negotiations, which if resolved, could result in a timely conclusion of the Indonesia-EU CEPA. These issues include cooperation related to Indonesian state-owned enterprises (SOEs), export duties, and investment dispute resolution. Indonesia hopes to see the EU recognize its national sustainability standards for palm oil, the ISPO. The EU also wants Indonesia to be more transparent in its government procurement.

“So Indonesia proposed to prepare a ‘positive list’ that lays down which goods are open for international access,” Airlangga said at a press briefing in July, commenting on EU’s government procurement concerns.

Government data shows that Indonesia-EU trade totaled $33.2 billion in 2022. Indonesia’s exports to the European bloc totaled $21.5 billion that year, almost double its imports of $11.7 billion. Indonesia mainly exported palm oil and its fractions, industrial monocarboxylic fatty acids, coal, copper, and footwear with leather uppers to the EU. Indonesia’s top imports from the regional grouping were iron and steel pipes, medicines, vaccines, pulp-making machines, as well as recycled paper or cardboard.

 source: Jakarta Globe