The Eurasia Economic Union (EAEU) has approved Indonesia’s proposal to enter into a Comprehensive Economic Partnership Agreement (CEPA) with the pact in a bid to reach both parties’ target to double trade value between the two partners to US$5 billion in the next two to three years.

Trade Minister Enggartiasto Lukita, however, said that Indonesia was still required to study the memorandum of understanding (MoU) draft from Eurasia member countries before proceeding with the agreement.

“We hope to sign the MoU by the end of this year, when they [Eurasia Commission is scheduled to] visit so we can form a working group to form the CEPA text,” he told reporters on Thursday after paying a ministerial visit to Russia last week.

If the text was completed by the end of this year, Enggartiasto further said, the CEPA could be sealed in 2018 at the soonest. “And, we should score $3 billion in trade [with Eurasia] next year with the $5 billion [target] reachable by 2019 or 2020,” he added.

The minister emphasized that the process should be expedited to catch up with Vietnam that signed a Free Trade Agreement (FTA) with the pact last year, “Vietnam has high flexibility [in trade negotiations], hence it moves fast.”

Other Asian countries such as India, China and Singapore are also working on trade agreements with the Russia-backed bloc comprising the former leader of the Eastern bloc, Armenia, Belarus, Kazakhstan and Kyrgyzstan with an integrated market of 184 million people.

The CEPA with Eurasia would be the 17th trade pact tabled by Indonesia, with 16 other ongoing accords, including separate CEPAs with Peru and Chile. Despite the large market potential, total trade between Indonesia and the Eurasia countries reached only $2.3 billion in 2016, with Indonesia enjoying a surplus of $245.68 million.

Indonesian exports to the bloc reached $1.28 billion, 27 percent of which consisted of palm oil and its derivatives, followed by thermometers, light vessels, fire floats and dredgers, as well as coconut oil and coffee.

Eurasian exports to Indonesia, on the other hand, reached $1.03 billion, dominated by chemical fertilizers, iron and steel, sporting shotguns and rifles, helicopters components and aluminum.

International Law and Trade expert Mahmud Syaltout from the University of Indonesia advised the government to carefully study which products should be exempted from entry tariffs to prevent the country from becoming a mere export target for Indonesia’s counterparts.

He underlined that the government also needed to boost industrialization in the country to increase value added products, so that Indonesia would not depend on natural resources and crude palm oil (CPO) exports.

“There are many ways to boost trade. They include outbound investment for our competitive products that are highly demanded by our trading partners, inward investment with strict local rules for products we don’t have the expertise to manufacture and business-to-business trade for non-strategic products with low bargaining value,” he told The Jakarta Post on Friday.

Efforts to seal trade pacts with Eurasia, Peru and Chile are part of the government’s strategy to expand export markets outside traditional markets such as China, Japan and the United States, preferably those with populations of more than 60 million, or small countries with active trade.

Peru and Chile were small countries with small populations but they occupied strategic positions as gateways to South American because of the many trade agreements they had with various countries there, the minister said.

Aside from approaching Eurasia for a possible CEPA, Indonesia is also in negotiations with South Africa and Nigeria to draft preferential trade agreements (PTA) with their respective regional economic pacts, namely the Southern African Customs Union (SACU) and the Economic Community of West African States (Ecowas).

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