Signing of the EAEU–Indonesia Free Trade Agreement: A strategic step to promote Asia–Europe–ASEAN economic cooperation
On the sidelines of the meeting of the Supreme Eurasian Economic Council held in St. Petersburg on 21 December, a Free Trade Agreement (FTA) was officially signed between the Eurasian Economic Union (EAEU) and the Republic of Indonesia.
The Agreement was signed by senior representatives of the parties, including: Armenian Deputy Prime Minister Mher Grigoryan; Belarusian Deputy Prime Minister Natalia Petkevich; Deputy Prime Minister and Minister of National Economy of Kazakhstan Serik Zhumangarin; First Deputy Chairman of the Cabinet of Ministers of Kyrgyzstan Daniyar Amangeldiev; Deputy Prime Minister of the Russian Federation Alexey Overchuk; Chairman of the Board of the Eurasian Economic Commission Bakytzhan Sagintayev; and Indonesia’s Minister of Trade Budi Santoso.
Indonesia is currently the world’s fourth most populous country and the largest economy in ASEAN. The signing of the FTA is expected to usher trade relations between the EAEU and Indonesia into a new phase of development—deeper and more effective in quality.
Negotiations and finalization of the Agreement began in December 2022. After nearly three years of active work, the parties agreed on a comprehensive text covering many key areas of economic and trade cooperation.
According to Andrey Slepnev, Minister for Trade of the Eurasian Economic Commission, under the new trade regime Indonesia will grant preferences to about 90% of its product list, while the EAEU will grant preferences to 90.5% of its partner’s goods. The scope of the EAEU’s export preferences will cover more than 94% of current export value. Thanks to trade liberalization, the average tariff applied by Indonesia to EAEU goods is expected to be reduced fivefold, from 10.2% to around 2%.
In terms of product structure, key agricultural products of the EAEU benefiting from preferences include grains (wheat, millet, rye, oats), spices, certain types of flour, bakery products, fish, livestock meat, milk and dairy products (milk powder, cheese), mineral water, and many other items. In the industrial sector, preferences apply to metallurgical products, petroleum products (including light distillation fractions), coal and anthracite, fertilizers, basic polymers, products of the forestry industrial complex (plywood, furniture, etc.), construction equipment, and various types of machinery and equipment.
Conversely, Indonesia will have opportunities to increase exports to the EAEU of many consumer goods such as automotive components, electrical and electronic equipment (especially household appliances), clothing, and footwear.
Mr. Andrey Slepnev emphasized that the impact of the Agreement goes beyond tariff reductions, extending to a system of legal provisions aimed at removing trade barriers, simplifying procedures, and enhancing transparency and predictability of trade activities amid a highly volatile international trade environment. Key contents include simplification of technical standards procedures, sanitary and phytosanitary regulations, customs administration, rules of origin, as well as the establishment of a legal framework for industrial cooperation in sectors of decisive importance for long-term growth.
Based on strong trade potential and Indonesia’s impressive economic growth, the EAEU believes that within 3–5 years after the Agreement enters into force, bilateral trade turnover could double.
The EAEU–Indonesia Free Trade Agreement will be submitted to the competent authorities of Indonesia and EAEU member states for the necessary ratification procedures before officially entering into force./.
Source: Eurasian Economic Union
Video
