President Joko “Jokowi“ Widodo talks to The Jakarta Post's journalists during an interview at the Presidential Palace, Jakarta, on Nov 2. - Photo: The Jakarta Post file
JAKARTA: Indonesia, now a member of the world’s biggest free trade agreement, the Regional Comprehensive Economic Partnership (RCEPP), has applied to join the world’s next biggest Comprehensive and Progressive Agreement on Trans-Pacific Partnership (CPTPP), which has been left by the United States but joined by China.
Indonesia has conveyed a formal request to join the CPTPP via New Zealand.
By joining the CPTPP, which accounted for 10 percent of global GDP in 2023, Indonesia aims to open more trade and investment opportunities, especially with countries with which it does not yet have free trade agreements, such as Mexico, Peru and Chile, which together accounted for only 0.57 percent of Indonesia’s total trade in 2021.
Based on the initial study, by joining the CPTPP, Indonesian exports are projected to increase by 19 percent and foreign direct investment flows to the country by 11 percent.
As a result, it will add US$1.6 billion to Indonesia’s GDP. Coordinating Economic Affairs Minister Airlangga Hartarto has argued that joining the CPTPP will not be hard, as 70 percent of domestic rules already align with the 30 chapters of the CPTPP.
The CPTPP is a free trade agreement that liberalizes trade and investment among 11 countries in Asia-Pacific, namely New Zealand, Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, Peru, Singapore and Vietnam.
It was originally known as the Trans-Pacific Partnership Agreement (TPP) when it was signed in February 2016. The US under President Barack Obama was a signatory and main sponsor.
A year later, when President Donald Trump came to power in the US, he decided to withdraw from the TPP, and the remaining TPP signatories decided to rename the TPP the CPTPP in March 2018.
On Dec 30, 2018, the CPTPP came into force after being ratified by most members.
Indonesia’s move to join the CPTPP follows other major countries in the region, such as China, Taiwan, South Korea and Thailand that had earlier applied to join the CPTPP, along with Ukraine, Uruguay, Ecuador and Costa Rica.
They are still in the accession process to complete their membership of the CPTPP.
The United Kingdom is going to join the bloc in December after a lengthy accession process of 2.5 years.
Previously, due to its focus on the RCEP, Indonesia had been hesitant to join the CPTPP.
The RCEP initiative was introduced for the first time when Indonesia was the chair of Asean in 2011.
The RCEP consists of the 10 Asean countries and five main trading partners China, Japan, South Korea, Australia and New Zealand, minus India, which pulled out of RCEP negotiations in 2019.
As one of the largest trading blocs, the RCEP accounted for 31.6 percent of global GDP in 2023.
Although RCEP rules are similar to those of the CPTPP, they are not as comprehensive as the CPTPP, and RCEP rules on trade in services, intellectual property rights, labor and the environment, are not of the same degree as the CPTPP.
With its membership of the RCEP and its eagerness to join the CPTPP, China has strengthened its position in the Asia Pacific region, vis a vis the US.
US President Joe Biden recognizes this, and he expressed US interest in renegotiating with the CPTPP during the presidential campaign in 2020.
But since then the US has remained outside the CPTPP. - The Jakarta Post/ANN
