EU and Indonesia to negotiate Free Trade Agreement

The EU Commission has announced today that EU and Indonesia will start negotiating a Free Trade Agreement. Trade Commissioner Cecilia Malmström and Indonesian Minister of Trade Tom Lembong have today agreed to launch the preliminary talks.

The announcement follows today’s decision by the EU Council to give the green light to the European Commission to open negotiations based on intense preparatory work in the last couple of months.

Commissioner Malmström and Minister Lembong jointly declared: “The EU and Indonesia represent a huge market of 750 million consumers. These negotiations are key to unleash synergies between our economies. Our trade relationship has enormous untapped potential. The EU – the world’s largest trading block – and Indonesia – the largest player in the dynamic region of South-East Asia – have lots to gain from a deeper trade and investment relation. The Agreement holds a promise of new great opportunities for businesses and people in our countries. That is why we engage today with a firm resolve to make these talks succeed.”

Both sides agreed to negotiate an agreement that facilitates trade and investments and covers a broad range of issues, including customs duties and other barriers to trade, services and investment, access to public procurement markets, as well as competition rules and protection of intellectual property rights.

The agreement will also include a chapter aiming to ensure that closer economic relations between the EU and Indonesia go hand in hand with environmental protection and social development. The first round of negotiations is expected to take place later in 2016.

The first round of negotiations is expected to take place later this year.

Trade in goods between the EU and Indonesia amounted to over €25 billion in 2015 with EU exports worth almost €10 billion and EU imports from Indonesia worth more than €15 billion, resulting in over €5 billion trade surplus for Indonesia.

The EU is Indonesia’s fourth largest trading partner. Indonesia’s key exports to the EU include agricultural products, which amounted to €4.3 billion in 2015. Other products exported by Indonesia are machinery and appliances, textiles and footwear, plastic and rubber products.

Indonesia is the EU’s fifth largest trading partner in South-East Asia but ranks only 30th in the general EU trade ranking. The EU exports to Indonesia mostly industrial products, including machinery and appliances, transport equipment and chemical products.