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Strong benefits from CEPA-agreement Indonesia-EU

May 6, 2015

Export increases of 802 Bn. EUR per year possible, mitigating considerable risks for Indonesian exports

The renowned Indonesian Centre for Strategic and International Studies (CSIS) examines the impact of a Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and the European Union in a new study, published beginning of May 2015. CSIS concluded that such a partnership agreement would put both partners into a win-win-situation.

A CEPA-agreement would secure Indonesia’s competitiveness on the European market, thus generating an increase of exports to Europe by an estimated 802 Bn. EUR (+5,4 % from the current level). 38 % of this increase would be generated by traditional products, while the rest would come from newly created trade in diversified products.

Meanwhile, should a CEPA agreement not happen to be concluded, similar agreements with other ASEAN-countries like Vietnam would place Indonesia in a less competitive position, risking an loss of exports to EU-countries by 1,2 Bn. EUR per year (-8 % from the current level).

Indonesia currently still enjoys the status of a nation favoured by EU’s GSP-system, which allows less developped countries a preferential access to the European market. As Indonesia is developping well and GDP per capita is growing, this status will soon elapse and less favourable duties will be applied for Indonesian exports to Europe. This would imply a loss of 1,8 Bn. EUR in exports per year (-12 % from the current level) which could be avoided through the negotiation of favourable post-GSP-duties within the CEPA-framework.

Besides of all this, the trade exchange between Indonesia and the EU is highly complementary because of differences in both GDP per capita and in economic endowments. Thus the commercial interchange of goods benefits both partners and the conclusion of a CEPA-agreement would lead to improved bilateral trade and a further strengthening of the good relations between Indonesia and the EU.


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