Indonesia: Not a Priority in the European Union Bilateral FTA Negotiations with ASEAN

Abstract

This explains why Indonesia was not a priority for the European Union (EU) in negotiating a bilateral FTA (Free Trade Agreement). Qualitative analysis was used and data was collected in the form of books, articles, journalism, and official pages from relevant organizations. Foreign Policy theory was employed to define Indonesia's status in regard to the EU. Using this theory, the internal and external factors of the EU were analyzed. The analysis revealed that Indonesia was indeed not a priority for the EU when bilateral FTA negotiations began in 2010. The EU internal factors demonstrate the fact that Indonesia is not popular in Europe; the EU had experienced a trade deficit with Indonesia; the EU was occupied with the election of the European Parliament; the EU conducted economic relations with many other countries in the world, hence it had to divide its priorities; and the EU's perception of Indonesia related to environmental issues is also unfavorable. Whereas, there were also two external factors that greatly influenced the EU's decision not to prioritize Indonesia. The first was the condition of Indonesia-EU economic relations and Indonesia's domestic condition. Indonesia is not the EU's primary trading partner in ASEAN (Association of Southeast Asian Nations). The EU economic relations with other countries in ASEAN like Singapore and Malaysia are more significant than those with Indonesia. In terms of Indonesia's domestic condition, Indonesia is not as competitive as other countries in ASEAN like Singapore, Malaysia, and Thailand. In terms of GDP (Gross Domestic Product), Indonesia is also behind Singapore, Brunei Darussalam, Thailand, and Malaysia. Moreover, the policies and regulations issued by Indonesia in 2014 were also unfavorable for in terms of trade with the EU. Likewise, the investment climate in Indonesia is not more favorable than in Thailand, the Philippines, and Vietnam. For Indonesia, the EU is equally not a priority target for cooperation because Indonesia is focusing on cooperation with countries in ASEAN and China. As an international actor, the EU is also less known in Indonesia.

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“…With Indonesia, commercial relations reach a total value of €17 billion in annual trade and €4 billion in investment from EU companies, with the EU being the second most important destination for Indonesia's exports (except oil and gas). 24 The two sides also forged a deep political friendshipwhich was confirmed in November 2009 with the signing of the EU-Indonesia Partnership and Cooperation Agreement (PCA) which strengthened the relationship that Europe and Indonesia have lived for centuries and the values and principles shared by the European Union and Indonesia. 25 It begins with a policy response to the dynamics of the business world and international economic diplomacy.…”