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Merkel Calls For FTA With Indonesia

by Ulrika Lomas, Tax-News.com, Brussels

07 March 2013


After a meeting in Berlin on March 5 with Indonesian President Susilo Bambang Yudhoyono, German Chancellor Angela Merkel confirmed that European Union (EU) negotiators should conclude a free trade agreement (FTA) with Indonesia as soon as practicable.

Merkel said that she would push for such an FTA with Indonesia, the largest economy within the member countries of the Association of Southeast Asian Nations (ASEAN), as an essential move before the EU can move towards its future aim of signing a regional trade treaty.

Both leaders commented that increasing trade between Europe and Southeast Asia was of primary importance for both regions. Merkel herself looked on such trade as increasing the possibilities of economic growth in the EU, while Yudhoyono also gave his support for increasing trade links as a favorable move in contributing to a global economic recovery.

The Indonesian president also stressed that trade and investment should be intricately linked in the conclusion of any future agreement, as the two topics should not be considered as separate.

In 2007, the EU member states agreed to launch negotiations on a region-to-region FTA with ASEAN, but those were put on hold in December 2009. Europe then decided to pursue free trade talks with ASEAN countries in a bilateral format, whilst preserving the strategic objective of a region-to-region FTA for a later date.

The EU first began FTA negotiations with Singapore in March 2010, and completed them in December last year. It has also commenced such talks with Malaysia and Vietnam, and has negotiations with Thailand in the pipeline. Indonesia would therefore be the fifth country, out of the ten ASEAN member states, intending to conclude a bilateral FTA with the EU.

As a whole, in 2011, ASEAN was the EU's fifth largest trading partner with EUR212.8bn (USD277.3bn) of trade in goods and services. The EU is ASEAN's third largest trading partner after China and Japan, accounting for around 10.5% of the bloc's trade. The EU is by far the largest investor in ASEAN countries accounting for an average of 17.1% of the region’s foreign direct investments during the period 2009-2011.

TAGS: tax | free trade agreement (FTA) | tariffs | trade treaty | agreements | Germany | Indonesia | trade | European Union (EU) | services | Europe

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