Indonesia eyes European market through trade talks with the EAEU

_ Jakkarta, 19 Februay 2019.

Indonesia is striving to improve its access to the European market via three different arrangements with economic unions on the continent.

The latest development came last week when Minister of Trade Enggartiasto Lukita signed a joint ministerial statement on trade with Tatyana Valovaya, the integration and macroeconomics minister of the Eurasian Economic Union (EAEU).

In the ministerial statement, the two ministers expressed a commitment to sign a memorandum of cooperation (MoC) within the first half of this year to strengthen the bilateral relationship, Enggartiasto said.

“We plan to sign the MoC during one of the business forums we will hold this year . . . either in Vladivostok or St Petersburg [both in Russia] or at the upcoming Trade Expo Indonesia,” he said at the ministry’s office in Jakarta recently.

The members of EAEU are Russia, Kazakhstan, Belarus, Armenia and Kyrgyzstan. Trade between the EAEU and Indonesia totalled $2.79 billion in 2017.

Through the MoC, Enggartiasto said the figure could double over the next five years.

The Ministry of Trade said in a statement in January last year that discussions with the EAEU were projected to result in a comprehensive economic partnership agreement (CEPA).

However, Enggartiasto said it would be difficult to reach a more detailed agreement as the deal would involve a union of five countries, hinting that any negotiations on a prospective CEPA would take a long time.

Valovaya lauded the joint-ministerial statement, saying the door remained open for the two sides to turn the upcoming MoC into a free trade agreement after both parties held more in-depth talks.

Getting to know each other

In the meantime, the MoC would help the EAEU and Indonesia reduce trade barriers, she added.

“A lack of information about trade [between both parties] is one of the trade barriers between us [and Indonesia],” Valovaya said on the same occasion. “Hopefully, with this [signing] we will get to know more about Indonesia, and Indonesia about the union, as well as our regulations.”

Indonesia and the EAEU first started trade talks in December 2017. Throughout 2017, Indonesia’s exports to EAEU countries reached $1.25 billion, with crude palm oil, machinery and coffee being the main commodities.

Meanwhile, Indonesia’s imports from the EAEU totalled $1.54 billion with the main commodities being half-finished steel products, fertiliser, wheat and aluminium.

“We agree that it is very fruitful to have this business forum as Indonesia is one of the key business partners for the EAEU,” said Valovaya.

The recent joint statement with the EAEU came after Indonesia signed a CEPA with the European Free Trade Association (EFTA) in December last year. EFTA’s member countries are Switzerland, Liechtenstein, Norway and Iceland.

The Indonesia-EFTA CEPA ended eight years of arduous talks as ministers of both parties made a joint statement last November in Geneva, Switzerland. It is expected to boost the trade value between the two parties, which totalled $2.4 billion in 2017.

On the other hand, Indonesia continues to face difficulties concluding talks on a CEPA with the EU, with negotiations ongoing since 2016. The government missed its target to conclude the negotiations by the end of last year.

The Indonesia-EU CEPA would be Indonesia’s largest trade arrangement with European partners, as the EU includes the largest economies in the region.

According to Statistics Indonesia (BPS), the EU accounted for over 10 per cent of Indonesia’s exports last year, totalling $17.03 billion. The EU also accounted for 8.86 per cent, or $14.08 billion, of Indonesia’s imports.

Enggartiasto said last month that the Indonesia-EU CEPA is one of 12 trade arrangements the government targeted to conclude this year.

“The Indonesia-EU CEPA is not easy to talk through but we are working on it,” he said separately. “Crucial and more sensitive aspects like palm oil . . . are still being discussed, similar to what occurred during the Indonesia-EFTA CEPA negotiations.”


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