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Indonesia ready to lower tariffs on EU products

Publication Date : 12-02-2013

 

Indonesia is ready to lower the tariff it imposes on commodities from European countries as long as they also allow Indonesian products to enter the European market, according to a top economic minister.

So far, several Indonesian commodities are restricted from entering the European market because they fail to meet strict standards.

Trade Minister Gita Wirjawan said yesterday the country wanted open access for its commodities such as cocoa, rubber and crude palm oil on the European market so that free trade with the European Union (EU) could proceed.

“We are willing to impose minimum tariffs. It depends on their demands. We just don’t want our products [to be denied entry into Europe] as they are classified as not environmentally friendly,” Gita told reporters on the sidelines of a business luncheon with representatives from the German Embassy in Indonesia yesterday.

The minister emphasised that Indonesia wanted free trade with Europe, commonly known as the Comprehensive Economic Partnership Agreement (Cepa), to proceed this year, saying it would bring huge economic benefits for the archipelago.

The fact that many Indonesian products still face difficulties in entering the European market, however, disturbs the negotiation process.

Indonesia-EU talks on the Cepa will begin this year with the agreement expected to eliminate over 95 per cent of import tariffs on goods and improve bilateral investment.

Indonesia actually wanted negotiations on the Cepa to be completed this year, Gita said. Talks should have already concluded when European Commission president Jose Manuel Barosso visited Bali in November last year.

Unfortunately, at that time the issue was not raised as Barosso unexpectedly had other more pressing issues to address, Gita added.

“Negotiations on the issue must be held,” the trade minister said. “It can take one year, four years, [that is not a problem] as long as our products can meet the ‘sustainably developed’ requirements — whether it is palm oil, forestry products such as rubber and cocoa, or others.”

If the EU was a country, it would be Indonesia’s second-largest destination for non-oil and gas exports in 2012 after China, accounting for 11.73 per cent of Indonesia’s total exports of US$190 billion, according to data released by the Central Statistics Agency (BPS) this week.

Indonesia saw a trade surplus of $3.89 billion with the EU throughout 2012, although it suffered a trade deficit with several European countries, notably Germany ($1.1 billion) and France ($764 million).

Gita was optimistic that the implementation of the Cepa would boost Indonesia’s exports to the region, saying that it would make the trade deficit with the aforementioned countries “more balanced”.

Also speaking at the business luncheon was German Ambassador to Indonesia Georg Witschel. He spoke as a representative of German Foreign Minister Guido Westerwelle, who had to depart early to Germany due to the death of his father.

The ambassador agreed with Gita on the economic importance of the implementation of the Cepa for both Indonesia and European countries. “With Indonesia, we wish to see progress toward a comprehensive economic partnership agreement. The Cepa will create jobs and growth in Indonesia and Europe. There is, ladies and gentlemen, no time to waste in [the implementation of] the Cepa.”

Witschel, however, took a swipe at Gita’s protectionist stance, which he described as “the nature of the constraint in the German-Indonesia partnership”.

“An open market is key to increasing productivity,” the ambassador noted.

 

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