Three trade deals could unlock about US$15.4 billion in extra Indonesian exports
The government says exporters need to make better use of trade preferences to realise the potential gains from agreements with the EU, Canada and the Eurasian Economic Union.
Three trade agreements awaiting implementation could generate additional Indonesian exports worth up to about US$15.4 billion, according to trade impact studies cited by the government. The estimated gains concern agreements with the European Union, Canada and the Eurasian Economic Union.
Coordinating Minister for Economic Affairs Airlangga Hartarto gave the following estimates for the individual agreements:
- Indonesia-European Union Comprehensive Economic Partnership Agreement (I-EU CEPA): a potential export increase of up to US$10.9 billion.
- Indonesia-Canada CEPA (I-CA CEPA): an estimated increase of about US$1.6 billion.
- Indonesia-Eurasian Economic Union Free Trade Agreement (I-EAEU FTA): potential additional exports ranging from US$2.2 billion to US$2.89 billion.
Airlangga said tariff reductions or removal, wider access to overseas markets and more predictable trading conditions could support Indonesian products. However, the government said exporters must use those benefits more extensively for market opportunities to produce actual export growth.
The government used Export Potential Analysis to assess the gap between existing exports and the export values potentially achievable in partner countries. For the EU, European Free Trade Association and Britain, it identified opportunities in products including palm oil and its derivatives, motor vehicles, coffee, cocoa, rubber, iron and steel, processed wood and fisheries products.
Products identified for Canada included minerals and metals, chemicals, vehicles, wood, rubber, machinery and electronic equipment. In the Eurasian Economic Union, the government saw opportunities across chemicals, plant products, vehicles, minerals and metals, wood, paper, rubber and plastics. Palm oil, footwear, shrimp, natural rubber, coffee and essential oils could benefit from better tariff terms there.
Airlangga said the government would concentrate use of the agreements on leading commodities supported by strong domestic production and potential demand abroad. The gains ultimately realised would depend on exporters using tariff preferences, meeting destination-market trade requirements and improving product competitiveness.
