Negotiators from the European Commission and Indonesian administration are meeting again from Monday 19 to Friday 23 February, in Surakarta, for the fourth round of the talks that were launched in summer 2016 for an EU-Indonesia free trade and investment agreement.
The negotiation teams will this week address the issues to be covered by the future agreement, including trade in goods and services, technical barriers to trade, investment and dispute settlement on this, rules of origin, protection of intellectual property rights, and trade and sustainable development.
"During this round, the Commission aims to make progress across the board and consolidate parts of the negotiating texts on the table", a source close to the issue states.
"This week marks the beginning of the substantial stages, particularly for market access for goods and services”, the chief Indonesian negotiator, Iman Bambagyo, said in a statement published on Monday by the Indonesian ministry of trade.
Palm oil is most controversial element. One of the key issues for Indonesia, and the most controversial in these negotiations, is that of the trade of palm oil. Indonesia is the top global producer of palm oil and the European Parliament backs a ban on using it in biofuels in the EU transport sector from 2021 onwards (see EUROPE 11941).
Palm oil is the main engine of deforestation and of the rise in carbon emissions in Indonesia. The EU is the second biggest global importer, and a free trade agreement would increase its imports of Indonesian palm oil, NGO Friends of the Earth warned ahead of the Surakarta round.
"The production of palm oil in Indonesia is causing tremendous environmental, social, human rights and labour problems. Existing voluntary certification schemes have proven to be a false solution", the NGO added.
Asked about this controversial issue on Monday 19 February, a European Commission source only reiterated that "the rules that the EU has proposed to Indonesia would help ensure that increased trade or investment are supporting environmental protection and social development, and do not come at the expense of the environment or of labour rights".
"As with other (similar) agreements, the EU aims to ensure effective implementation of multilateral environmental agreements, including notably the Paris climate agreement, as well as the core standards and fundamental conventions of the International Labour Organisation. In line with our approach, we aim for an agreement setting a good framework to address issues such as sustainable management of forests, protection of biodiversity, sound working conditions, and responsible business practices", the source stated.
Investor protection. Friends of the Earth also criticises the inclusion in the future agreement of a clause on investment dispute settlement that would enable foreign investors to take the Indonesian state to court should there be a negative impact of its public policies on their expected profits.
"After being repeatedly sued by mining companies, Indonesia terminated a number of international agreements that give investors the right to sue. The new free trade agreement would lock in VIP protection for foreign investors in Indonesia and the EU", the NGO warned.
The Commission defends the inclusion in the future agreement of a dispute settlement agreement between investors and states based on the EU proposal of an Investment Court System (ICS) – which aims at replacing private ISDS-type arbitration courts, and which is provided for in all the free trade or investment agreements it is negotiating or has recently concluded, like the EU-Canada or EU-Vietnam free trade agreements. (Original version in French by Emmanuel Hagry)