Indonesia will settle major Free Trade Agreements with European Union
The Indonesian Trade Ministry said it will settle major trade agreements such as Regional Comprehensive Economic Partnership Agreement (RCEPA) with European Union (EU), Regional Comprehensive Economic Partnership (RCEP) and other free trade agreements (FTA) in 2016, said one senior official.
The launch of RCEPA has been delayed since 2012 because of several issues, including tariff reductions, service liberalization and restrictions on foreign ownership. Currently, the EU is in the process of negotiating trade agreements with several ASEAN countries.
Bachrul Chieri, the director general of international trade cooperation at the Trade Ministry told that once the RCEPA with EU is in place, Indonesia could boost its exports by $7 billion to the EU region. In 2014, total export between two countries recorded 24 billion euro ($26.93 billion) in which Indonesia enjoyed a trade surplus of 4.9 billion euro, according to Trade Ministry data.
Bachrul said Indonesia’s fisheries products, among various exported goods, were currently lacking competitiveness because of high import duties totaling 22.5 percent charged by the EU, while other ASEAN member countries pay zero percent.
He added the RCEP, which would create one of the world’s largest free-trade zones between 10-member ASEAN and its major trading partners such as Japan, China and Australia, will likely be finalized in the middle of next year. Bachrul said. the RCEP would cover 40 percent of annual global trade.
The government has started talks on the FTAs since 2012, but most have been delayed due to disagreements over tariff reductions, limitations on foreign ownership, and service liberalization.
President Joko Widodo has ordered his economic ministers to review and revitalize all existing FTAs and upcoming negotiations to improve Indonesia’s international trade. Among the FTAs and CEPAs in the pipeline are including those with Japan, Australia, Chile, the EU, Pakistan, India, Iran, South Korea and Turkey that have been ongoing for several years. These agreements mean that Indonesia has FTAs with trading partners that account for about 67 percent of Indonesia’s total trade with trading partners.
Indonesia’s exports in the January-to-August period went down by 13 percent to $102.52 billion compared to the same period last year, while imports declined 19 percent to $96.3 billion, according to the Central Statistics Agency.