Indonesia – EU Comprehensive Economic Partnership Agreement (CEPA)

Background & Controversies

Roos van Os (SOMO, Netherlands)

Outline- Context- CEPA- Main elements CEPA- Critical issues & Controversies

Context EU Trade Agenda EU Negotiates on behalf of the 27 European Member

States Openness trade key element of overall development

strategy Aggressive (outdated) model of trade liberalisation and

market opening (deregulation) not always in the interest of developing countries and their industries.

Takes away developing countries’ policy space to regulate. Especially since accompanying framework of economic

social and regulatory policies tends to be largely absent

Current FTAs & negotiations EU preferred a region-to-region approach. However, this model largely failed. While for several years the EU is engaged in more than trade negotiations with more than 80 countries, it appeared very difficult to finalize one agreement.

o In 2009 first major FTA in years: South Korea o In 2010 of the “conclusion” of FTAs with Colombia/Peru and

Central America. Not yet ratified o India, Singapore and Malaysia are still on-going. Singapore =

reference point for rest of ASEAN countrieso Thailand wants to wait (busy with India)o Vietnam and Indonesia are expected to begin this year?

Main features of the EU-Indonesian CEPA Comprehensive agreements (market access, capacity building

and facilitation) Market access in goods - reduction to zero percent of 95 percent

of the tariffs on at least 95 percent of the value of the two sides` bilateral trade within a maximum of nine years` time -

Services liberalization (also public services) Intellectual property rights Investment (access and protection) Government procurement and competition Sustainable development: Green economy (privatization of public

goods)

Some implications for development Market access for developing countries in trade in goods

(depending on production, supply and marketing capacity) But potential adjustment costs and long term costs –

- Loss of policy space in development planning and in responding to financial crisis, etc- Loss of revenue from tariff reduction/elimination - Developing countries continue to be commodity producers and natural resource extractors- Imports of subsidized and artificially cheap agricultural products from developed countries displaces local farmers (CAFTA)- Obstacles to research and innovation due to intellectual property rules and standards favoring developed country firms- Social costs (unemployment, access to medicines and public health, access to knowledge, etc)- More gender inequity and thus negative impact on long term development

What works? -EU governments are responsive to cases (companies, sectors, industries), but this does not lead to systematici solutions-EU parlement plays, with regard to human rights and sustainable development, a more progressive role that the other EU institutions -Investment protection agreements and IPR have been part of succesfull campaigns lately (India and LA)-Strategies?

- “Coalition is king.”-  Balance ideal policy objectives with political

strategy are the most successful in actually achieving change

Thanks for you attention! Questions? Contact: Roos@somo.nl