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Govt aims to conclude 12 trade deals
The Trade Ministry has set a target to sign or at the very least conclude in 2019 negotiations over 12 trade agreements, some of which were originally intended to be signed in 2018
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span>The Trade Ministry has set a target to sign or at the very least conclude in 2019 negotiations over 12 trade agreements, some of which were originally intended to be signed in 2018.
Quoting President Joko “Jokowi” Widodo, Trade Minister Enggartiasto Lukita emphasized the importance of the trade deals in opening new markets that could eventually boost export demand.
Exports slumped throughout 2018 partly due to the United States-China trade war, which contributed to Indonesia’s US$7.52 billion trade deficit as of November.
“We can only imagine what would happen [to our exports] if we insisted on exporting only to our traditional markets,” Enggartiasto said at a press conference on Thursday. “Therefore, we will strive to open [new markets] by concluding our ongoing trade agreements.”
Three of them are preferential trade agreements (PTA) with African nations Mozambique, Tunisia and Morocco, whose signings await post-tariff agreements between Indonesia and each of the countries.
Additionally, the ministry hopes to sign the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), which has been dragging on for months since it was concluded in late August last year.
It is also looking to conclude big regional agreements in 2019, such as the Regional Comprehensive Economic Partnership (RCEP) between 16 Asia-Pacific countries and the Indonesia-European Union CEPA.
The ministry would also begin picking up trade talks that were halted or slowly progressing, Enggartiasto said, such as the Indonesia-Turkey CEPA, Indonesia-Korea CEPA (IK-CEPA), Indonesia-Iran PTA, ASEAN Trade in Services Agreement, the First Protocol to Amend the ASEAN-Japan CEPA in investment and services, and a general review of the Indonesia-Japan Economic Partnership Agreement.
Meanwhile, two agreements are awaiting ratification this year. They are the Indonesia-Chile CEPA and the ASEAN-Hong Kong Free Trade Agreement on investment.
The Trade Ministry’s director general for international trade negotiations, Iman Pambagyo, said the third round of IT-CEPA negotiations would take place later this month in Jakarta. It would be followed by the first round of IK-CEPA talks, which initially began in 2013 before being halted in 2014.
“I have talked to Seoul and they say they are ready to start discussions with us [...] probably in February,” Iman told The Jakarta Post at the press conference. “However, we are not just going to carry on with whatever was discussed, but rather start over because a lot of things have changed.”
Enggartiasto said the deals would be implemented in 2020 at the earliest due to the their complicated nature.
Therefore, despite the trade agreement goals, the ministry set a moderate export growth target of 7.5 percent to US$175.9 billion this year.
“The 7.5 percent growth takes into account the projected global trade growth at 4 percent [...] and the 4.8 percent import growth in developing countries,” said Enggar. “It is highly unlikely that Indonesia sees an impact from these 12 agreements this year.”
In the meantime, it would resolve several issues related to international trade this year through methods other than trade agreements, he said.
For example, Indonesia was in talks with India to import the latter’s raw sugar in return for lower tariffs for Indonesian palm oil products. In early January, India set a 40 percent tariff for crude palm oil from Southeast Asian suppliers, including Indonesia.
In 2018, the government ratified eight agreements that could potentially improve exports by $1.9 billion.
