Indonesia Chile Free Trade Agreement

Indonesia and Chile have entered a new chapter in bilateral relations with the Indonesia-Chile Comprehensive Economic Partnership Agreement (IC-CEPA), which came into force on 10 August. The agreement grants Indonesia and Chile duty-free access for at least 8,000 products. Indonesia and Chile traded $274 million worth of goods in 2018 and this amount is expected to double in the next two to three years via the IC-CEPA. The entry into force of the IC-CEPA is timely considering that the government has undertaken integration efforts to increase exports to non-traditional markets, including Latin America. After the global economic downturn, the arrival of new markets is essential to maintain Indonesia`s trade surplus. The growing volume of trade between Indonesia and non-traditional markets has proven to be a buffer ed than the impact of the recent trade war between the United States and China. In non-traditional markets, demand for finished products is expected to increase. Chile is the first Latin American country with which Indonesia has signed a trade agreement. Following membership of the Pacific Alliance as an observer state, this agreement is the next step in Indonesia`s active engagement in the region. In particular, the agreement will increase exports to Chile, which will benefit Indonesian production-oriented sectors.

For Chile, the trade agreement consolidates its Asia-Pacific approach strategy. Southeast Asia, in particular, could strengthen Chile`s presence on the other side of the Pacific. For this reason, Chile has made efforts to strengthen its integration into ASEAN member states. Chile has already concluded agreements with Singapore (2006), Brunei Darussalam (2006), Malaysia (2012), Vietnam (2014) and Thailand (2015). Now it`s Indonesia`s turn. Chile is considered Indonesia`s best friend in the region because of similar values. These include non-interference, democracy, human rights and the importance of a multilateral order. Despite the distance between them, the two countries agreed on the importance of connectivity in removing the visa requirement. While Chileans do not need a visa to stay up to 30 days in Indonesia, Indonesians do not need a visa to stay 90 days in Chile. In trade relations, Chile is becoming more and more attractive.

It is a leading country in Latin America in countries of human development, competitiveness, per capita income and economic freedom. In May 2010, Chile was the first Latin American country to join the Organisation for Economic Co-operation and Development. For Indonesia, this process is led by the issuance of Presidential Decree No. 11 of 2019 on the authorization of IC-CEPA. This cooperation will represent 89.6% of Chile`s tariff positions for Indonesian products entering the Chilean market. While Indonesia will remove 86.1% of its customs posts for products imported from Chile. “The implementation of the IC-CEPA is a historical dynamic. In addition to the first trade agreement with the South American country, IC-CEPA will more easily open the door to export products in the Latin American region. Chile`s geographical location will strategically facilitate trade between Indonesia and South America,” Lukita said in her opening address.

Chile is a country that is quite proactive in international trade policy because it has 28 free trade agreements (CETAs) and partial preferential agreements (AAEs) with more than 60 countries. Chile signed a free trade agreement (FTA) with a network of countries, including a free trade agreement with the United States signed in 2003 and implemented in January 2004, Lukita said. In addition, Chile has signed free trade agreements with a network of countries representing 63 per cent of the world`s population and 86.3 per cent of the world`s gross domestic product.

Posted in Uncategorized