T

he government will continue its negotiations with the European Union to conclude one of the country’s biggest trade deals, the Indonesia-EU Comprehensive Economic Partnership Agreement (I-EU CEPA), despite their ongoing dispute over palm oil.

The Trade Ministry’s international trade director general, Iman Pambagyo, who chairs the Indonesian delegation, said so far no issues had been raised in the talks that might halt progress on the deal, including palm oil.

“There is nothing, I would say, that has hampered the process. All is going according to plan. However, we need to speed up the engagement phase within the state agencies and ministries,” he told The Jakarta Post on Monday.

When asked about the deadline of the agreement, which is expected to be finished before the end of this year, Iman did not provide any assurances on whether it would be concluded on schedule or not.

He said simply that he was “instead focused on pushing the negotiation forward”.

According to the ministry’s data, both Indonesia and the EU are slated to ink the agreement by the end of 2018, with ratification and implementation to follow next year.

Separately, Vincent Guérend, the EU delegation head and ambassador to Indonesia and Brunei Darussalam, concurred that the palm oil issue would not hamper the agreement.

He said the EU had never considered palm oil to be a trade issue, because he claimed neither tariffs nor maximum duties had been imposed on the commodity.

Indonesia has protested strongly against the European Parliament’s plan to phase out palm oil as a transportation fuel by 2021.

“We are not specifically talking about palm oil [in the I-EU CEPA], because we have 15 chapters to discuss. It may be one aspect of a wider issue, but from our point of view we have no problems at all. We have imposed no tariffs and half the palm oil [products] enter with no duties,” he said recently.

Guérend explained that 95 percent of the I-EU CEPA covered trade issues; however, he expected the agreement to also touch on legal aspects such as intellectual property rights and labor, competition and public procurement laws.

“We also expect to have a discussion on investment,” he said, adding that the fifth round of the I-EU CEPA discussions was expected to be held in July.

Voicing a different perspective, Shinta Widjaja Kamdani, deputy chairperson of international relations at the Indonesian Chamber of Commerce and Industry (Kadin) expressed concern that the ongoing debate on palm oil could affect the I-EU CEPA negotiations.

“I hope the government sorts out [the palm oil dispute] immediately, because this negotiation is crucial for our nation, as we have fallen behind our neighboring countries [in trade relations with the EU], such as Vietnam,” she told the Post on Monday.

The EU is Indonesia’s third largest export destination with $25.2 billion in total trade value recorded in 2016. The EU is also Indonesia’s fourth-biggest investment partner, contributing $2.6 billion in investment in 2016.

Kadin, which represents Indonesia’s business community, held a seminar earlier this year on the importance of free trade agreements (FTAs), including the I-EU CEPA, for boosting Indonesia’s competitiveness among other Southeast Asia countries.

During the seminar, Anne Patricia, the CEO of major Indonesian textile manufacturer PT Pan Brothers, agreed that FTAs were the most effective way to compete on the global market.

She highlighted the example of Vietnam, which held a 6 percent share of the global textile market, a figure which will likely increase after the EU-Vietnam agreement.

“Meanwhile, we [Indonesia] only hold a 1.8 percent share. So, you can imagine how big an effect FTAs will have, “she said.

The Partnership and Cooperation Agreement between the EU and Vietnam came into force on October 2016. The agreement includes the elimination of nearly all tariffs with Vietnam expected to liberalize its tariffs over a 10-year period and the EU over a 7-year period.