TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
RI, Australia aim to conclude RCEP negotiations in November
Indonesia and Australia have expressed optimism that the Regional Comprehensive Economic Partnership (RCEP), a landmark trade deal between ASEAN countries and six major economies, will be concluded in November, with the agreement 82 percent complete
Change Size
I
span>Indonesia and Australia have expressed optimism that the Regional Comprehensive Economic Partnership (RCEP), a landmark trade deal between ASEAN countries and six major economies, will be concluded in November, with the agreement 82 percent complete.
The Trade Ministry’s director general for international trade negotiations, Iman Pambagyo, said negotiators had agreed on 185 of 225 agreements in the deal, with each agreement covering one of three areas, namely investment, services and goods.
Thirty-two agreements were in the yellow, which means the negotiators were nearing an agreement, while eight were in the red, meaning negotiators were unable to reach an agreement and thus ministerial-level dialogue was required.
Imam said the participating countries aimed to conclude negotiations by November this year and sign the trade deal by the same month next year. In between that time frame, the countries would deal with technicalities such as translation and legal wording.
“Since [our most recent meeting] last weekend, I have been very optimistic — even more optimistic than before — that the RCEP will stay at 16 parties [until the signing date],” he said in Jakarta on Tuesday.
The RCEP is an ambitious trade deal involving six multilateral deals between ASEAN member countries and Australia, China, India, Japan, New Zealand and South Korea.
Indonesia first proposed the RCEP to ASEAN members in 2011, back when the country chaired the association, and has been coordinating negotiations ever since. Talks between ASEAN and the six other participating countries began the following year.
“We had a good discussion about the RCEP agreement […] We’re very keen to try and bring this together this year and that’s something that Indonesia also shares as an objective,” Australian Prime Minister Scott Morrison said in Jakarta on Sunday.
“And so we’re hopeful of some good progress on that meeting in November before the East Asia Summit and the ASEAN Forum later this year.”
Economist Yose Rizal Damuri, lead economic researcher at the Jakarta-based Centre for Strategic and International Studies (CSIS), said the RCEP, whose 16 members contribute 30 percent of the global economy, was “one of the largest [trade deals] to exist in the world today”.
The RCEP is on a scale similar to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), whose 11 members — excluding the United States, which pulled out in January 2017 — contribute 13 percent to the global economy.
Yose said Indonesia’s participation in the RCEP, which aimed to better integrate the country into Asia’s manufacturing value chain, was vital to increasing the competitiveness of domestic industries.
“There are several strategies Indonesia could execute to improve its industries’ competitiveness but the most suitable is by joining the regional value chain, as China has been doing the past 20 to 40 years,” he told The Jakarta Post. “[Otherwise], Indonesia’s participation in the regional value chain is still lower compared to other ASEAN countries.”
Iman explained the RCEP differed from other agreements in that it added new trade sectors in e-commerce and government procurement.
“However, our chapters [on e-commerce and procurement] are limited to transparency, coordination and discipline. We did not add market access,” he said, noting Indonesia would only discuss e-commerce market access after it better grasped its own digital economy.
Trade Minister Enggartiasto Lukita said in a statement in September that it was “very urgent” for participating countries to finalize the RCEP by November this year as escalating trade tensions risked derailing the agreement, which was seven years in the making.
Media outlets reported that the source of tensions was disagreement between China and India. Recently, tension between India and Malaysia heightened after Malaysian Prime Minister Mahathir Mohamad sent a statement to the United Nations last month saying India “invaded and occupied” Kashmir.
As a result, an influential group of palm oil processors in Mumbai asked its members on Monday to refrain from buying tropical oil from Malaysia, the second-largest producer of the commodity.
Indonesia’s Trade Ministry projected in 2013 that the RCEP would boost the country’s exports by 8 to 11 percent in the first five years following the agreement’s ratification and 18 to 27 percent in subsequent years.
However, Iman noted that the estimation was calculated prior to the escalating US-China trade war and, thus, real export growth would likely be smaller than projected.
Indonesia’s exports declined 5.74 percent year-on-year to US$14.1 billion last month and its imports decreased a slimmer 2.41 percent during the same period, giving the country a $160 million trade balance deficit, according to Statistics Indonesia (BPS). This is the Indonesia’s 11th consecutive month of yoy export declines.
“To increase investment, transparency needs to be improved and permit processes simplified. Even with the RCEP, we will have a trade deficit until 2040. After 2040, our exports will rise but that rise will only happen once investments start flowing in. This is long-term growth,” Iman said.
