Tuesday, September 26, 2023

Indonesia Sees Opening to Conclude Long-Awaited Trade Deal with EU

Jayanty Nada Shofa
August 9, 2023 | 12:12 am
Chief Economic Affairs Minister Airlangga Hartarto speaks at the Investor Daily Round Table in Jakarta on August 8, 2023. (B1 Photo/David Gita Roza)
Chief Economic Affairs Minister Airlangga Hartarto speaks at the Investor Daily Round Table in Jakarta on August 8, 2023. (B1 Photo/David Gita Roza)

Jakarta. The formation of a joint task force on the European Union's anti-deforestation law gave Indonesia some hope that it would be able to conclude its overdue trade deal with the 27-member bloc, according to a senior minister.

Indonesia is currently negotiating a comprehensive economic partnership agreement (CEPA) with the EU. Talks first began in July 2016, and have already reached 15 rounds of negotiations to this day. Indonesia aims to wrap up the negotiations by the end of this year. 

Meanwhile, the EU Deforestation-Free Regulation (EUDR) has caused a setback for Europe’s ties with palm oil-producing Indonesia. However, the EU, Indonesia, and fellow palm oil producer Malaysia recently agreed to establish an ad hoc joint task force on the EUDR. This task force aims to identify the best possible solution to the anti-deforestation law.

Indonesia perceives the task force’s establishment as a sign of the EU possibly softening its stance. And this will likely translate into the long-awaited conclusion of the CEPA talks.


"Negotiations have been going on for seven years and we have already seen 14 EU presidents. So there is something wrong here. … The issue is already crystal clear. There are matters that we can resolve, while there are other things that we hold back," Chief Economic Affairs Minister Airlangga Hartarto said at the Investor Daily Round Table forum in Jakarta on Tuesday evening.

“I do hope we can wrap up the [Indonesia-EU CEPA] negotiations, especially since the EU has given us a chance,” Airlangga said before going on to the EUDR.

The EUDR ad hoc joint task force just last Friday kicked off its meeting in Jakarta. The European Commission sent its green diplomacy and multilateralism director Astrid Schomaker to join the discussions.

"The task force recently visited Indonesia. The implementation guidelines [of the EUDR] will hopefully accommodate [what we wish for]. I do hope this can help expedite the CEPA talks,"  Airlangga said.

The establishment of the task force followed Indonesia-Malaysia’s joint mission to Brussels in May. At the time, Airlangga together with Malaysian Plantation Minister Fadillah Yusof flew to the EU headquarters to fight back against the EUDR.

“The EU was surprised as they had never seen delegates of two countries speak of a policy in Europe. This really surprised the EU and so they agreed to set up a task force,” Airlangga said.

Palm oil is one of the commodities that is subject to the EUDR. The EUDR calls for the geolocation coordinates of where the palm oil is grown to prove that it does not come from deforested land before it enters the European market. Indonesia fears that this geolocation requirement would only complicate things for smallholders.

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