Indonesia Signs Free Trade Agreement with Eurasian Economic Union

JAKARTA - Indonesia, represented by Trade Minister Budi Santoso, signed a free trade agreement (FTA) with the Eurasian Economic Union (EAEU) on Sunday.

The signing was carried out on the sidelines of the EAEU Summit in St. Petersburg, which was attended by Russia, Armenia Belarus, Kazakhstan and Kyrgyzstan.

The signing of this agreement was carried out by Minister of Trade Budi Santoro with the Deputy Prime Minister of Armenia Mher Grigoryan, Deputy Prime Minister of Belarus Natalia Petkevich, Deputy Prime Minister - 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 and Chairman of the Council of the Eurasian Economic Commission Bakytzhan Sagintayev.

In a statement on its website, the Eurasian Economic Commission said that a free trade agreement with Indonesia, which is the fourth largest country in the world by population and the largest economy in ASEAN, is expected to bring trade between the EAEU and Indonesia to a qualitatively new level.

Work to finalize the agreement began in December 2022. Over three years, the parties managed to draft a comprehensive document, the commission said.

"As part of the new trade agreement being developed, the Indonesian party has opened preferential access to 90 percent of various products. The Union concessions cover 90.5 percent of various partner products," explained the Minister of Trade of the Eurasian Economic Commission Andrey Slepnev, launching the commission's website (22/12).

As a result of this agreement, the average tariff applied by Indonesia to EAEU goods will be reduced fivefold, from 10.2 percent to 2 percent.

In terms of goods, preferential access will be granted for the main agricultural goods of the EAEU, such as food crops (wheat, millet, rye, oats), spices, some types of flour, bread products, fish and beef, dairy products, including powdered milk and cheese, mineral water and many other goods.

In the industrial sector, concessions are granted for metallurgical industrial products, petroleum products (including light distillates and others), coal and anthracite, fertilizers, primary polymers, complex products of the forestry industry (plywood to furniture furniture), construction equipment and various types of other equipment.

Indonesia will also be able to increase the supply of various types of consumer goods, including automotive components, electronics (household appliances), and some types of clothing and footwear.

"The impact of this agreement goes far beyond tariff reductions. Its significance is also determined by a series of regulatory provisions designed to remove trade barriers and make them simpler and more predictable, which is very relevant given the ongoing changes in international trade," Slepnev said.

This includes simplifying procedures in the field of technical standards and sanitary regulations, customs administration, and rules for determining the origin of goods, as well as the establishment of a legal framework for the implementation of various industrial cooperation tools in the field of economic development that determine the future of the economies of the participating countries.

"Understanding the potential for developing our trade and observing Indonesia's significant economic growth rate, we believe that in the next 3-5 years after this agreement comes into force, our trade turnover can double," said the EEC Trade Minister with full confidence.

It is known that the free trade agreement that has been signed will be submitted for ratification procedures in Indonesia and EAEU countries, which are required before the agreement takes effect.