Jakarta. Indonesia finds that trade deal negotiations tend to go more smoothly when they involve countries that are not Jakarta’s major trading partners, according to a minister, as Jakarta seeks to supercharge its exports.

Indonesia is in pursuit of fresh trade pacts with different parts of the world. However, the pace of the talks varies from one country to another, Trade Minister Budi Santoso revealed.

Indonesia and the European Union (EU) started negotiating their comprehensive economic partnership agreement (CEPA) in mid-2016, but only managed to reach a substantive conclusion in September of this year. On the other hand, Indonesia only needed 14 months to wrap up the CEPA talks with Peru.

“It’s easier for us to reach a deal with countries with whom the bilateral trade volume is low. However, it’s hard to do so when trade volume is huge. That’s why it took us almost 10 years for the EU CEPA. But we spent less than 2 years trying to reach an agreement with Peru,” Budi told a conference in Jakarta on Tuesday.

Official statistics showed a huge gap between Indonesia’s trade with the 27-strong EU and that of Peru. Last year, Indonesia recorded $30.1 billion in trade with the EU, and a $4.5 billion surplus. The EU -- known for its tough stance on palm oil -- is also Indonesia's fifth-largest trading partner. The Southeast Asian country also witnessed a surplus with Peru, albeit at a far modest level of $181.6 million. Bilateral trade with Lima stood at $480.7 million that year.

Peruvian ambassador Luis Tsuboyama told the same forum that it “made sense” for his country to have a trade deal with Indonesia as “Southeast Asia’s biggest market”. Lima mainly buys cars -- specifically those made by the local arm of the Japanese brand Toyota -- from Indonesia, according to the envoy. The carmaker already has factories in North Jakarta’s Sunter and West Java’s Karawang.

“We [Peru] already have trade agreements with many countries, including big markets in South America. So you [Indonesia] can use us as a platform to go to other markets," Tsuboyama said.

The current terms of the trade pact will see Peru either eliminating or slashing 90.68 percent of the tariff lines for Indonesia. The latter will give a similar treatment for Peruvian businesses for 92.26 percent of the tariff lines. Both governments will start the negotiations on expanding the accord’s scope to services trade and investment two years after the original agreement enters into force.

Indonesian palm oil, automotives, and footwear are some of the products that will gain easier market access to Peru. Budi signaled that these major tariff cuts can kick in around mid-2026 following some lawmaking processes. 

Indonesia wants to have its EU trade pact enter into force in early 2027. The CEPA with the European bloc is already more comprehensive in nature, having already covered chapters related to easing services trade and investment barriers on top of removing virtually all duties on goods imports. Indonesia has agreed to let European service suppliers of certain sectors into the country without requiring them to set up local branches.

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