The Indonesian Government's Resistance to Complete the IEU-CEPA

The Coordinating Minister for the Economy Airlangga Hartarto said five strategic issues would soon be finalized so that negotiations on the Indonesia-EU economic partnership agreement would be completed by the end of 2023. This is a form of Indonesia's resistance to European discrimination.

The following article was translated using both Microsoft Azure Open AI and Google Translation AI.

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Minister of Economic Affairs Coordination Airlangga Hartarto gave a press statement at the Presidential Palace Complex in Jakarta, Thursday (13/7/2023).

JAKARTA, KOMPAS - President Joko Widodo held a limited meeting with his staff to discuss the completion of negotiations for the Indonesia-European Union Comprehensive Economic Partnership Agreement or IEU-CEPA. There are five strategic issues that need to be resolved as soon as possible in order for the negotiations to be completed by the end of 2023.

“It is hoped that if these five issues can be resolved, by the end of this year the IEU-CEPA can be completed. There is only one negotiation left," said the Coordinating Minister for the Economy Airlangga Hartarto at the Jakarta Presidential Palace Complex when giving a press statement after a limited meeting of President Jokowi and his staff at the Merdeka Palace, Jakarta, Thursday (13 /7/2023).

Airlangga said the first strategic issue to be discussed was related to government spending or purchases. The European Union requests that Indonesia conduct government spending openly. "Indonesia proposes that we will prepare a positive list, which items we can provide for international access," he said.

Also read: IEU-CEPA Negotiations Will Get Tougher

The second issue is related to state-owned enterprises (BUMN). Indonesia's position says that there are SOEs that get special assignments and this can be accepted by the European Union. "(SOEs) that do not receive special cooperation assignments are asked not to discriminate and for those that are commercial in nature based on business to business. Well, we are currently in negotiations as well. So that means we are giving access to BUMN that are commercial in nature," said Airlangga.

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Minister of Coordination for Economic Affairs Airlangga Hartarto walked in the Presidential Palace Complex in Jakarta on Thursday, July 13, 2023.

The third issue related to export duties. Indonesia remains committed to developing domestic industries and therefore will not waive export duties.

The fourth issue concerns Indonesia's demand for greater market access. "Then we ask for access totrade and sustainable developmentproducts that are environmentally sound. Indonesia emphasizes the importance of standardization, such as for furniture SVLK, for palm oil ISPO, or RSPO< /a>, said Airlangga.

We remain firm that a settlement based on ICSID is the most appropriate for us.

Finally, the fifth issue relates to the settlement of investment disputes. Indonesia encourages that the settlement of these disputes refers to The International Centre of Settlement of Investment Disputes (ICSID). "So, we insist that the ICSID-based settlement is the most appropriate for us," said Airlangga.

Another matter discussed in President Jokowi's meeting with his staff was the implementation of the European Union Deforestation-Free Regulations (EUDR). The government pays attention to the rules that have been promulgated in Europe.

RIZA FATHONI

Workers harvest oil palm in the plantation area of ​​PT Sawit Sumbermas Saran Tbk (SSMS) in Pangkalan Bun, Central Kalimantan, Thursday (29/4/2021). PT SSMS produces crude palm oil (CPO) with a production capacity of 2,500 tons per day. Downstream PT SSMS has produced CPO derivative products in the form of olein (cooking oil), stearin (basic ingredients for cakes and cosmetics), RBDPO (refined, bleached, and deodorized palm oil), and PFAD (palm fatty acid distillate) or distillated palm fatty acid. PT SSMS manages a concession area of ​​116,029 hectares consisting of 23 nucleus and plasma plantations of 81,485 hectares. PT SSMS's plantation and mill are RSPO certified. Its derivative products penetrate export markets to China, Bangladesh, India and Pakistan.

The government hopes that the guidelines for implementing these regulations adopt what has been the best practice so far. "Including timber (with) SVLK (timber legality verification system), then palm oil RSPO (roundtable on sustainable palm oil), ISPO, or yesterday's joint mission with Malaysia to become MSPO ,” Airlangga said.

Furthermore, Airlangga stated that EUDR will impact seven Indonesian commodities, including cattle, cocoa, palm oil, soybeans, wood, and rubber. The European Union requests that goods entering Europe be free of deforestation, depending on the laws in each country and equipped with suitability tests.

"The problem is for Indonesia country benchmark. So, the country will be classified as high risk (high risk), standard risk (standard risk), and low risk (low risk). When he becomes high risk, then 8 percent of these goods must be verified, standard risk 6 percent, while low risk 4 percent," he said .

The problem is for Indonesia country benchmark. So, the country will be classified as high risk (high risk), standard risk (standard risk), and low risk (low risk). When he becomes high risk, then 8 percent of this item must be verified, standard risk 6 percent, while low risk 4 percent.

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Minister of Trade Zulkifli Hasan gave a press statement at the Presidential Palace Complex in Jakarta on Thursday (July 13, 2023).

Airlangga said, in various cases, they still need verification. The question is, who bears the cost of the verification. "This is very disturbing for small holders, 15 million to 17 million of our smallholders will be affected by this. We also object to the geo location problem because we don't need to check the geo location for each product because we have it based on the RSPO or SVLK standards," he said.

Read also: European Union Trying to Press Indonesia via EUDR

Airlangga said that later there would be an implementing regulation that would take effect 18 months after it was promulgated, namely June 2025. "Well, Indonesian products that have been affected are valued at 7 billion USD," he said.

The EUDR is discriminatory

Separately, Minister Trade Zulkifli Hasan said EUDR was very discriminatory because it was intended only for Indonesian products.

"The law is highly discriminatory, aimed only at us and our products which include coffee, pepper, chocolate, palm oil, rubber, cloves that will later be linked to deforestation. It is highly discriminatory. Therefore, we will resist, negotiate, and invite countries with similarities such as Malaysia to join our resistance."