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Indonesia | Brussels, 18 July 2016

EU and Indonesia Launch Bilateral Trade Talks

EU Trade Commissioner Cecilia Malmström and Indonesian Minister of Trade Tom Lembong today agreed to officially launch the negotiations for a Comprehensive Economic Partnership Agreement (CEPA) between the EU and Indonesia with the aim to deepen and strengthen a key aspect of the bilateral relationship.

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 ambitious 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 comprehensive 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.

Background

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.

Total bilateral trade in services between the EU and Indonesia amounted to €6 billion in 2014, with a surplus of €2.2 billion for the EU. The EU has a foreign direct investment stock in the country of nearly €26 billion, second only to Singapore.

The general EU-Indonesia relations are governed by the Partnership and Cooperation Agreement into force since May 2014. Indonesia also benefits from the EU's one-way customs duty discounts for developing countries under the standard Generalised Scheme of Preferences (GSP).

Indonesia is one of ten member states of the Association of South East Asian Nations (ASEAN) and the 6th one in the region to start negotiations for a bilateral Free Trade Agreement (FTA) with the EU, after Singapore (2010), Malaysia (2010), Vietnam (2012), Thailand (2013) and the Philippines (2015). To date, the EU has completed negotiations for bilateral agreements with two of them: Singapore (2014) and Vietnam (2015). Bilateral Free Trade Agreements between the EU and ASEAN countries will serve as building blocks towards a future EU-ASEAN agreement, which remains the EU's ultimate objective.

ASEAN, as a whole, ranks as the 8th economy in the world and is the EU's 3rd largest trading partner outside Europe, after the United States and China. Bilateral trade in goods and services between the EU and ASEAN reached €246.5 billion in 2015. Indonesia is the largest and most populated economy in ASEAN (36% of ASEAN GDP and 255 million people). It is also one of the fastest growing economies in South East Asia (average GDP growth of 5.6% in the past 10 years).
 

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