JAKARTA (TheInsiderStories) – The Indonesian government will intensify its talks with the European Union on a Comprehensive Economic Partnership Agreement (I-EU CEPA) which is now entering the fourth round. This round, the government will intensify negotiations on market access, in particular for Indonesian goods and services exports.

The fourth I-EU CEPA is being held from Feb. 19-23 in Surakarta, Central Java. The fourth round was a follow-up of the Round 3 negotiations held in Brussels in September 2017.

The Indonesian delegation is chaired by Director General for International Trade Negotiations at the Trade Ministry Iman Pambagyo, while the EU delegation is chaired by Helena König, Director for Asia and South America, who is also Director General for Trade of the European Commission.

The talks in the fourth round will cover all issues, including the trade of goods and services, investment, intellectual property rights, business competition, sustainable trade development, SMEs, government goods and services trade, quarantines, standard regulations, a dispute settlement mechanism, as well as cooperation and capacity development.

“We see the fourth-round negotiations as very important in moving to a substantial phase, in terms of market access, in particular for goods and services,” Iman Pambagyo said.

The I-EU CEPA is considered one of the most ambitious negotiations undertaken by Indonesia as the country and its trading partner EU are targeting elimination of more than 90 per cent of import tariff posts.

Iman Pambagyo said Indonesia and EU have agreed in principle to create a modern and comprehensive agreement, which will not only move the economic relationship between Indonesia and EU to a higher level, but also bind the two sides’ economies in a mutually beneficial value chain.

Indonesia, he said, aims to boost its exports to EU countries by widening market access for the country’s products as well as bringing in more investment from EU to Indonesia.

He noted that Indonesia is keen to finalize negotiations in order to prevent Indonesian market access to EU being diverted to other countries. “However, speeding up negotiations will not sacrifice the interests of Indonesia or the quality of the final agreement,” said Iman Pambagyo.

Indonesia currently is facing trade barriers in exporting its products to the EU market, including crude palm oil (CPO).

One issue high on the agenda is the decision of the EU Parliament on Jan. 17, 2018 to increase the use of renewables in EU’s energy mix to 35 per cent by 2030 and the planned phase-out of biofuels from palm oil by 2021. Indonesia regrets the EU Parliament’s decision, as it could have an impact on Indonesia’s CPO exports to EU countries.

Indonesian business players have called on the Indonesian government to expedite the I-EU CEPA negotiation in order to come to a positive conclusion. Anne Patricia, a member of the Working Group Team of the Indonesian Chamber of Commerce and Industry (KADIN) and the Indonesia Employers Association (Apindo), said that the business community hopes the IEU CEPA talks can be concluded this year as that would have a ‘multiplier effect’ on the business sector.

Patricia expects the conclusion of the talks will help bring down import tariffs for Indonesian product exports such as textiles and other products, hence increasing the competitiveness of Indonesian products.

Negotiations with the EU on CEPA are carried out as the world is facing rising protectionism and escalating uncertainties, triggered by (among other factors) the demise of the TPP following Donald Trump’s election victory and Brexit.

The World Trade Organization (WTO) estimate for growth in world merchandise trade volume in 2017 was reset to 3.6 per cent, after previously being estimated at 2.4 per cent (set within a range of 1.8-3.6 per cent, reflecting a high level of economic and policy uncertainty). The new estimate shifts the focus to the top end of that range.

The growth of 3.6 per cent would represent a substantial improvement on the lackluster 1.3 per cent increase reported in 2016. Reflecting a continued forecast risk arising from deep uncertainty about near-term economic and policy developments, the range of estimates for world trade growth has been adjusted to 3.2-3.9 per cent.

Stronger growth in 2017 was attributed to a resurgence of Asian trade flows as intra-regional shipments picked up and as import demand in North America recovered after stalling in 2016.

Email: roffien@theinsiderstories.com