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Indonesia-EU trade agreement: The right time for strengthening ties is now
The imposition of US tariffs has spotlighted that now is the time to conclude negotiations on the IEU-CEPA as an agreement between equal partners that offers mutual benefits for both Indonesia and the EU.
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A worker supervises loading and unloading services on March 28, 2023, at the Jakarta International Container Terminal in Tanjung Priok, North Jakarta. (AFP/Adek Berry )
T
he last time I packed my suitcase for traveling to Indonesia was in June 2023, almost two years ago. As chair of the Committee for International Trade in the European Parliament, I took part in a delegation to speak with representatives of the Indonesian government, businesses and civil society about the negotiations of the Indonesia-EU trade agreement (IEU-CEPA).
The delegation served to deepen our mutual understanding as we discussed important issues like the Indonesian raw materials industry, the EU Green Deal and labor laws. I had the impression that the visit renewed euphoria for strengthening our trade relations and gave the negotiations new momentum.
Today, I pack my suitcase again for traveling to Indonesia, and the conclusion of a trade agreement between Indonesia and the EU is more important than ever.
The global trading landscape has changed dramatically in the last few years and in particular, in the last four months.
According to the latest annual Trade Monitoring Report of the World Trade Organization (WTO), trade restrictive measures experienced a sharp rise. In October 2023, they covered US$337.1 billion of trade, and by October 2024, they already covered $887.6 billion. Moreover, the WTO reported concerning trade fragmentation linked to geopolitical tensions.
We are witnessing this undermining of the global free trade order that was established carefully over the past decades.
Two countries stand out with their trading strategies in particular. On the one hand, the United States administration of President Donald Trump imposes tariffs on trading partners that are completely unjustified, illegal and disproportionate. On the other hand, China distorts global competition with unfair subsidies for its domestic industry, thereby creating overcapacity and flooding global markets with cheap products.
