Malmström: EU, Indonesia Trade Negotiations On the Move

2 February 2017

Trade negotiations between the 28-nation European Union and Indonesia are kicking into gear, according to EU Trade Commissioner Cecilia Malmström.

The two sides launched negotiations last year, confirming plans to hold their first negotiating round in 2016. According to Malmström, officials met for two days in September to help lay the groundwork for future talks, and began to take on more “detailed discussions” during their first full round from 24-27 January. (See Bridges Weekly, 21 July 2016)

Iman Pambagyo, who serves at the Indonesian Trade Ministry as its international trade negotiation director general, confirmed that last week’s round was meant to get all sides on the same page in understanding their desired levels of ambition and proposals.

“Only then in the next rounds will we have comprehensive negotiations. Hence, this round is crucial to determine the direction ahead,” said the Indonesian official, according to comments reported by the Jakarta Post.

Malmström also referred specifically to the value of engaging the Asian market further in light of geopolitical decisions being taken by other major trade partners, citing US President Donald Trump’s move last week to withdraw his country from the Trans-Pacific Partnership (TPP) Agreement. (See Bridges Weekly, 26 January 2017)

While Indonesia is not one of the TPP signatories, she cast the bilateral talks as an opportunity to tap a vast Asian market which “undoubtedly represents a huge business potential” for the European Union going forward.
“It is clear that our Asian trade talks will be of particular importance in the years ahead,” said the EU trade chief in a blog post released last week describing the state of play.

When the negotiations were launched last year, the two sides confirmed that they would be looking at addressing goods and services trade, intellectual property rights, public procurement, competition, and sustainable development topics, among others. They would also be looking to facilitate investment, given the high levels of foreign direct investment that the EU has in the Southeast Asian archipelago.

Indonesia is the largest economy within the Association of Southeast Asian Nations (ASEAN), a 10-country grouping that also includes Brunei Darussalam, Cambodia, Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam. Along with being the largest economy in the regional grouping, Indonesia also is home to over 250 million people who live across its various islands.

The EU had previously sought to ink a region-to-region deal with ASEAN as a group, with those negotiations beginning a decade ago and going on hold shortly thereafter. In the years since the focus has been on reaching agreements with individual countries.

The 28-nation bloc has completed negotiations with Singapore and Vietnam, though the ratification of the former is pending an official ruling from the European Court of Justice regarding the European Commission’s competences to conclude the agreement on its own. The EU is also involved in trade negotiations with Malaysia, Thailand, and the Philippines.  (See Bridges Weekly, 19 January 2017)

The EU and ASEAN said in 2015 that they were considering the option of eventually resuming their region-to-region negotiations. (See Bridges Weekly, 7 May 2015)

According to a document from the European Commission that was updated last month, the bloc’s executive arm “continues exploratory informal talks with other individual ASEAN member states with a view to assess the level of ambition at bilateral level. A regional agreement remains the ultimate objective.”

ICTSD reporting; “2nd round of negotiations kicks off for Indonesia-EU CEPA,” THE JAKARTA POST, 24 January 2017.

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