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Indonesian exports to EU might drop 20% without trade deal, union warns
The remark comes after a 10th negotiation round over a comprehensive trade deal concludes "without major breakthroughs".
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European Union flags fly outside the European Commission headquarters in Brussels on Feb. 19, 2020. (Reuters/Yves Herman)
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European Union official has said that Indonesia might lose a fifth of its exports to the region annually if talks over a bilateral Comprehensive Economic Partnership Agreement (CEPA) hit a wall, an apparent jab at Indonesian parties for failing to swiftly conclude negotiations over the trade deal.
According to the EU, the losses would come as Indonesian products become less competitive than that of its ASEAN peers, such as Singapore and Vietnam, both of which have effective free trade agreements with the EU.
The loss would also come as the EU excludes Indonesia from its Generalised Scheme of Preferences (GSP) – a preferential tariff reduction on various products given to developing countries – following Indonesia's ascent into middle-income country status.
“Without a comprehensive CEPA, Indonesia’s exports to the EU could drop by 20 percent or US$4.4 billion annually,” Marika Jakas, head of the EU Delegation to Indonesia and Brunei Darussalam's trade and economic section, wrote in her presentation on Tuesday during the CEPA Roadshow and Business Forum for East Kalimantan.
The EU's remarks are seemingly meant to pressure Indonesian negotiators into quickly concluding talks over the Indonesia-EU (IEU) CEPA, which has been ongoing since 2016, as policies on palm oil and high-emission goods remain major sticking points.
Indonesian and EU negotiators completed their 10th round of negotiations in March and are slated to have their 11th round in November.
The Office of the Coordinating Economic Affairs Minister, which oversees the Trade Ministry, initially hoped to finish IEU-CEPA negotiations this year, but rounds were postponed several times because of the COVID-19 pandemic.
