On the side-lines of the second session of technical level talks for an EU-Indonesia free trade agreement taking place in Jakarta this week, European Commissioner for Trade Cecilia Malmström underlined, on Thursday 26 January, the importance of sealing a trade agreement with this dynamic market of 250 million inhabitants, to which Australia and other countries from the Trans-Pacific Partnership (TPP), now dumped by new US President Donald Trump, would like to open the door.
"The Indonesian market undoubtedly represents a huge business potential. The ambition is to conclude an economic agreement between the EU and Indonesia that makes trade and investment easier and covers a broad range of issues" including customs duties, regulatory barriers to trade, services, public procurement, competition rules, intellectual property rights, sustainable development and investment, Malmström blogged.
"Needless to say, this is a challenging negotiation, and we have a lot of work ahead of us before we would be able to conclude. But the reasons for a deal are clear – with more than a third of the region's GDP, Indonesia is also the largest economy of the ASEAN countries", she added.
The value of bilateral trade in goods exceeds €25 billion per year. EU imports from Indonesia comprise agri-food products, appliances, textiles and shoes, and plastic and rubber materials, while the EU exports various industrial goods – machines, cars, and chemicals (two thirds of which come from France, Germany and Italy).
With a foreign direct investment stock of nearly €26 billion, the EU is the second biggest investor in Indonesia (after Singapore). "It's also worth getting better bilateral rules in place in that area", Malmström said.
The negotiations for a free trade agreement were launched in July 2016 (see EUROPE 11596). After an initial round of negotiations in September 2016 (see EUROPE 11632), European and Indonesian negotiators this week addressed all the subjects covered by the future agreement. The EU was due to present its specific proposals for several chapters, Malmström stated.
On the side-lines of the round, the EU organised a workshop in Jakarta on 20 January devoted to its proposal for an investment court system (ICS) to arbitrate in disputes between investors and states.
At the end of the round, officials from the European Commission and the Indonesian administration are expected to meet again as part of a bilateral working group on trade and investment to discuss trade disputes.
In 2016, the EU lifted several barriers to access for its companies to the Indonesian market, such as a heavy system of non-automatic import licences acting as import restrictions for over 800 products, heavy sanitary and phytosanitary authorisation procedures, requirements for local content in public procurement and several other sectors (telecoms, oil and gas, distribution and insurance), and a decree from the Indonesian standardisation body aimed at baby and children's clothes. (Original version in French by Emmanuel Hagry)