Indonesia and the European Union will launch talks for a trade agreement in November that would link Southeast Asia’s largest economy and the world’s biggest market, a senior Indonesian diplomat said.
Trade and business officials lauded the potential of a deal worth an estimated 6.8 billion euros ($9.7 billion) that could make 95 percent of goods traded between the two populous regions move duty-free, free up flows of services and investment and go some way in harmonizing patent and competition rules.
Talk of such a deal came as trading powers, abandoning hopes for a global trade accord, increasingly race to secure bilateral treaties with booming markets.
“We will launch talks in November on the side of the G20 meeting. It’s probably the last major free trade agreement we’ll ever launch,” Indonesia’s ambassador to the EU, Arif Havas Oegroseno, said after unveiling a report touting the benefits of a bilateral treaty together with Europe’s trade commissioner.
The report by senior government and business officials showed Indonesia’s trade balance would benefit from the deal while creating investment opportunities for European firms in a state with a 240 million population and long-term GDP growth estimates of 7 percent.
Indonesian light industries and transport equipment makers would benefit in particular, while poverty in the largely Muslim state would fall thanks to a 1.5 percent average rise in incomes resulting from a deal, the report said.
EU firms likely would focus on investing in the pharmaceutical sector, and benefit from the removal of red tape slowing EU food and drinks sales and courier services.
“European business is in favor of negotiations. We want to have more trade with Indonesia, also in investment,” said Pascal Kerneis, senior adviser for Europe’s largest business lobby, BusinessEurope, and co-author of the report.
European Trade Commissioner Karel De Gucht said Europe would insist that Indonesia, where legislation varies widely between far-flung regions, agrees to European intellectual property rules and guarantees their enforcement.
“The only raw material we have in Europe is intellectual property rights,” he told industry executives and officials.
Trade talks would start “once conditions are met”, he said.
Despite such concerns, Europe has been laying the foundations for a deal, agreeing in May to strict controls aimed at stopping illegal timber imports from Indonesia at Jakarta’s request.
The two sides will also have to address Indonesian concerns that Europe could close its markets to Indonesian palm oil traditionally used for making biodiesel, on environmental grounds, according to the report.
Reuters
Source: The Jakarta Globe
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