Working towards mutually beneficial economic relations: Indonesia’s expected challenges in pursuing an FTA with the EU

The document argues that a proposed Indonesia-EU FTA (IEUFTA) could deepen economic imbalances unless Indonesia's development interests are prioritized. It identifies key friction points including policy space, market access barriers, and the risk of 'WTO-plus' commitments that could marginalize poor populations.

• The economic relationship between the EU and Indonesia is characterized by a significant imbalance, with the EU exercising global influence through its rules on manufacture, design, and safety that most global manufacturers must follow.
• Indonesia requires 'policy space' to maintain sovereignty over its trade and industrial policies, specifically through Special Products (SPs) and Special Safeguard Mechanisms (SSM) to manage the costs of trade liberalization, though the EU often views these as protectionist.
• Indonesian exports to the EU face contradictory barriers: while some agricultural tariffs are low, stringent sanitary and phytosanitary (SPS) measures—described as 'WTO-Plus' standards—impede market entry, and processed goods face 'tariff peaks' and 'tariff escalation'.
• The EU's General System of Preferences (GSP) scheme no longer benefits several Indonesian products, such as wood products and animal and vegetable fats, because Indonesia was considered to have 'graduated' from the scheme in June 2005.
• There is a risk that 'WTO-plus' commitments in the FTA, particularly regarding Trade-Related Intellectual Property Rights (TRIPs)-plus arrangements, would benefit European pharmaceutical and agro-industrial firms while harming Indonesian poor and local farmers' control over seeds.
• The author recommends that Indonesia prioritize domestic economic reforms before committing to a bilateral FTA with the EU to ensure the resulting agreement is balanced and equitable.

APA

Chandra, A. C. (2009). Working towards mutually beneficial economic relations: Indonesia’s expected challenges in pursuing an FTA with the EU. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/tkn_working_towards_eco_relations.pdf

Chicago

Chandra, Alexander C. Working towards mutually beneficial economic relations: Indonesia’s expected challenges in pursuing an FTA with the EU. International Institute for Sustainable Development, 2009. https://www.iisd.org/system/files/publications/tkn_working_towards_eco_relations.pdf.

Wikipedia

{{cite report |last1=Chandra |first1=Alexander C. |title=Working towards mutually beneficial economic relations: Indonesia’s expected challenges in pursuing an FTA with the EU |publisher=International Institute for Sustainable Development |date=September 2009 |url=https://www.iisd.org/system/files/publications/tkn_working_towards_eco_relations.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{chandra2009working, author = {Chandra, Alexander C.}, title = {{Working towards mutually beneficial economic relations: Indonesia’s expected challenges in pursuing an FTA with the EU}}, institution = {International Institute for Sustainable Development}, year = {2009}, month = sep, url = {https://www.iisd.org/system/files/publications/tkn_working_towards_eco_relations.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }