New momentum for Indonesia-EU free trade.

Incoming administrations in Brussels and Jakarta offer hope for progress in negotiations

After nearly a decade of negotiations, the proposed free trade agreement between the European Union and Indonesia may be becoming more feasible. This is according to Alif Alauddin in an analysis published in The Diplomat. Indeed, Indonesia aims to conclude negotiations under the administration of new President Prabowo Subianto, who officially took office on Sunday, Oct. 20. At the same time, the European Union unveiled a new European Commission team under the second term of Ursula von der Leyen, which began Sept. 17. The last roundtable between Brussels and Jakarta, held in July, showed that the remaining open issues are largely related to the domestic interests of both sides, which are concerned about protecting domestic industries from any disadvantages once the agreement enters into force. Since negotiations began in 2016, the EU has remained steadfast in enforcing sustainability standards, while Indonesia has found it difficult to meet these expectations. “Both sides now need to look more broadly at the changing geopolitical landscape,” argues The Diplomat, according to which Prabowo wants to seek Western trade and investment partners. This includes accelerating efforts to obtain environmental, sustainability and governance (ESG) certification for nickel mining sites to comply with EU and U.S. market standards. The ambition to achieve 8 percent annual economic growth during his first term will be largely driven by foreign investment, with a focus on green energy, electric vehicle manufacturing, advanced technology and the digital services sector. “Prabowo's inauguration should therefore be welcomed by the EU as an opportunity to revive talks on the free trade agreement,” it reads. “Likewise, ensuring Indonesian market access is a priority of the EU Commission,” as Jakarta could help it diversify its economic relations, reducing dependence on Beijing. Moreover, points out the Diplomat, “compared to imposing unilateral measures such as to dictate terms on key Indonesian products, a free trade agreement can be a more effective tool of external influence to meet global sustainability standards.”