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Ref. Ares(2019)1598515 - 10/03/2019
Minutes of the First Meeting of the EU-Indonesia Vision Group  
2 December 2010, Hotel Borobudur, Jakarta, Indonesia. 
 
1.  4.1(b)
 
 the Indonesian Co-Chairman of the Vision Group, opened the 
meeting, affirming that the group should come to a joint vision towards a Comprehensive 
Economic Partnership Agreement, 4.1(a) and 4.3
 
. The delegates of both sides were urged to leave their nationalities outside the 
door and to pool their resources. “We want one team delivering one result and one 
common goal
.” The joint vision should be formulated in a comprehensive report 
eventually to be presented to Parliament. 
 
Morning Session on state of EU-Indonesian trade and investment relations. 
 
2.  4.1(b)
 from the Project Group (EU Delegation, Jakarta) then delivered a 
presentation based on a study entitled Trade and Investment between the EU and 
Indonesia: Opportunities and Obstacles (IBM). 
This focused on problems of access for 
EU firms wanting to enter the Indonesian market.  The EU was Indonesia’s second 
largest export partner representing trade of up to EUR 11 billion by September 2010, 
with a considerable trade surplus in favour of Indonesia. Over 700 EU firms are present 
in the country having invested a cumulative total of over 50 billion Euros and having 
helped to create over 500,000 jobs. The data and results of the IBM data were not 
presented in full, s they referred to the period 2005-2007.  
 
Although the EU firms and private sector were concerned at the level of protectionism 
and complexity of local regulations he was mindful that Trade Minister Mari Pangestu 
had urged a positive outlook and this report had some positive conclusions. The growing 
middle class comprising those earning more than $5,000 US dollars per year, and that this 
group would reach 100 million people within the next 5 years. The IBM study 
emphasised economic stability and continued economic growth despite global recession. 
The study, with a main section and five sectoral chapters (on power generation, non-
electrical machinery, consumer goods, pharmaceuticals and telecommunications) put 
forward some optimistic projections arising from an anticipated demographic dividend 
with Indonesia expecting a young productive population profile, in the context of 
continuing economic integration with ASEAN. However, less than optimum inward 
investment might leave the country with between 6 and 8% economic growth. Policy 
reform might already be opening the way to 7% growth but what was needed to reach the 
more favourable scenario of the upper 8% target? The main positive impacts of a possible 

agreement with the EU were expected to be upon investment, innovation and economic 
restructuring, convergent with these goals. 
 
3.  4.1(b)
, also from the Project Group and EU Delegation, then made a presentation 
on the main thrust of the more recent Study on Indonesia's Trade Access to the EU: 
Opportunities and Challenges, Transtec, 2010, which comprised a main report and five 
sectoral studies on areas of higher advantage and opportunity, namely fisheries, agri-
foods, consumer electronics, furniture and cosmetics. This Report focused on the export 
of Indonesian products into the EU, and on the sectoral advantages identified and the 
supply side constraints holding back the exploitation of these sectors already having high 
comparative advantage. However the overall EU market share of Indonesian trade had 
actually fallen from 14% percent at the start of the decade to about 10% now, and this 
was part of a pattern of relative decline in trade with traditional partners including the US 
and Japan. Had the identified supply constraints been addressed, then the report 
calculated that the trade income from these sectors in the last decade could have been 
28% higher by 2009 compared to the realisation.  
 
Moreover the pattern of trade from developed countries to emerging Asian countries had 
changed with a greater emphasis upon commodities (notably palm oil and coal) leaving 
Indonesia’s neighbours to take more advantage of processing and value-added. The 
conclusion of the report therefore was that Indonesia should put more emphasis in 
improving its Export Quality Infrastructure (EQI) system in order to move up the value-
added ladder. Although there had been a lot of improvements on Export Quality 
Infrastructure and standards in the last few years, for example via much improved 
laboratory facilities, notably in the fisheries sector, these improvements needed 
consolidation backed by trained personnel and these facilities needed to be sustainably 
extended to the provinces. There needed to be more capacity building, training and 
awareness to help these key targeted sectors to take up the market shares as Indonesia has 
a competitive advantage in those sectors.  
 
4.  4.1(b)
 introduced the older but informative report on Trade Sustainability 
Impact Assessment of the FTA between the EU and ASEAN(Ecorys, 2007), which 
concluded that an EU-ASEAN FTA could have made welfare gains worth 1.81% of 
Indonesian GDP by 2020, through efficiency and structural gains. The Report predicted 
(as of 2007) that gains could be expected to accrue to several key sectors, notably 
fisheries, apparel and textiles, while in ASEAN (not necessarily Indonesia) losses could 
be expected in gas production and services.  
 
The conclusion from this Report (originally written in a regional context) was that 
climbing the value chain was both necessary and a challenge that could be met, that there 

would be short-term losers as well as winners, but that the positive aspect of this report 
was its emphasis on sustainability, on flanking measures (such as capacity building) and a 
comprehensive approach. What the Report also conveyed was that non-trade gains have 
become increasingly important and went beyond tariffs to include health and education, 
welfare and increased income for households. The Report placed importance on social 
sustainability and that economic and trade agreements needed a social base as well as 
addressing environmental and sustainability issues.  
 
5.  The question as to what kind of analysis was needed to understand the impact of trade 
policy on economic growth was posed. In particular in the case of Indonesia could there 
be predictable downside results of GDP growth. . 
  
6.  Indonesia is making progress and the downside risks are very limited. A new National 
Economic Commission has recently been formed by the President, which has been tasked 
to form a strategy how Indonesia could leap to a higher level of economic growth. The 
effect of the political reform would be expected to improve the Indonesian economy, and 
also the economic policy. The economic growth should rely more and more on 
manufacturing and there have been some positive signs recently. 
 
7.  It was stated that trade policy can make a huge difference as an instrument of 
development but it cannot do everything. Trade policy gains are assumed “all things 
being equal” and without unexpected events or global financial shocks. What analysis the 
Vision Group would need to understand the impact of trade policy on economic growth? 
 
8.  EU-Indonesia trade is largely complementary (more so than with Japan or Australia). As 
the Vision Group would only meet three times the focus of the discussions need to be 
specific and on specific obstacles to EU-Indonesia trade. These obstacles appeared to be 
mainly in terms of trade facilitation and less in tariffs.  
 
9.  It is crucial for the Vision Group to define the definition of complementarity, since it 
would mean there would be no losers. 
 
10. Most of this complementarity in EU-Indonesia lies in services. Services around products 
are key to Indonesia's competitiveness. In the EU competitive products are produced and 
are supported by services especially marketing, advertising, insurance and logistics so 
that 75% of the EU economy is really about services and 65% of all EU outbound 
investment goes into services. For this reason, analysis would be needed for key services 
sectors. 
 

11. It was also said that there is also a need to discuss the direction of economic and policy 
reform developments in the EU and the "welfare crisis" that the EU is going through. It is 
little known in Indonesia what fundamental reforms and difficult changes Europe has 
gone through and that there are "losers" in the EU as well. Indonesia could learn from 
how EU has dealt with these "losers" of free trade. 
 
12. Some members put the emphasis on the importance of trade facilitation rather than tariffs, 
the former which appears to be hindering EU exports to Indonesia in agricultural 
products. The trade profiles of agricultural products of the EU and Indonesia were indeed 
very complementary. There is a need to work together to stress value added products and 
to push Indonesian production up the value chain,  
 
13. Since the Vision Group would use these studies as the basis for policy-making it should 
be aiming for mutual growth. The FTA with Japan is an agreement where conflict of 
interest was relatively small. The Consultants were urged to look at the dynamic effects 
of other FTAs and he wanted more than the same analytical approach as usual and to 
contrast business as usual with the impacts of previous FTA implementation.  
 
14. 4.1(b) and 
4.1(a)
 declared that EU-Indonesia economic relations have entered a new chapter. All 
stakeholders should work hard together to catch the momentum after the EU-Indonesia 
Business Dialogue (EIBD) and the Vision Group was encouraged to reflect upon how its 
recommendations would be followed up. The seven policy recommendations of the EU-
Indonesia Business Dialogue (EIBD) should be taken into account by the Vision Group 
(focusing on opportunities, exploring possibilities of a CEPA, formal consultations with 
business of both sides, regulatory cooperation, cooperation and technical assistance, 
cutting red tape and the investment climate). The need for infrastructure was also 
emphasised, especially roads, ports and power plants, and for more formal and clear 
mechanisms whereby 4.1(b) and 
4.1(a)
 could facilitate government-private sector cooperation in 
Indonesia especially with focal points in the Ministry of Trade and BKPM (the 
Investment Coordinating Board). The Vision Group had access to extensive paperwork 
and studies. A Pilot Project could become a locomotive to push forward these issues and 
priorities. Such a Pilot Project could follow on after the work of the Vision Group. This 
does not need to be a physical project but could be based on a more pragmatic approach 
to bring about “islands of success” on policy and regulatory reform. There is a need to be 
specific and concrete if a possible agreement would gain support from the political side. 
It was concluded that the recent EIBD recommendations presented concrete points and 
solutions to be taken on board by the Indonesian Government and the EU. There needed 
to be a clear plan for dialogue between business and government on both sides.  
 

15. The European side agreed that the level of dialogue had never been better and that EIBD 
had been very constructive. EuroCham's position papers were distributed to the Vision 
Group members, giving concrete recommendations in 14 sectors. Among those, the acute 
need for dealing with physical barriers was highlighted, e.g. infrastructure, in Indonesia, 
simplification of licensing and other administrative processes and dismantle barriers in 
services sectors (e.g. postal and horticulture laws). There is also a need to discuss the 
direction of economic and policy reform developments in the EU which faced many 
internal problems. It is little known in Indonesia what fundamental reforms and difficult 
changes Europe has gone through and is now facing. On the Indonesian side there was 
need for a better coordinated plan on how to promote Indonesia in Europe, with better 
coordination between different Ministries and agencies. The consultation groups 
recommended by the EIBD could be one way of helping overcoming some issues and 
support better coordination between government agencies. 
 
16. Other members agreed the need to be very practical. In particular Indonesia needed 
infrastructure, while the EU needed exports and jobs. How could these two issues be 
brought together? The financial sector was also important in this regard. Access to 
financing for SMEs is limited in Indonesia today despite sufficient there being sufficient 
capital available because financial structuring issues were not being addressed. 
 
Local companies could somehow benefit from poor infrastructure which they could 
navigate better while inward investors were at a disadvantage. EU efforts and resources 
could be deployed in a more effective manner, for instance through a working model on 
EU-Indonesia infrastructural cooperation that could compete with China, Korea and 
Japan.  
 
17. Some members that at the moment Indonesia is giving somewhat conflicting signals to 
foreign investors. The Vision Group should give a vision on how to attract investors, in 
particular for Indonesia to deal with legal certainty and the incentives to invest in 
Indonesia, such as FDI ownership limits. This could be done through regulatory reform, 
better investment conditions and changes in fiscal policy. Despite these problems a push 
forward was favoured and leading to a conclusion how the group could unite around 
concrete recommendations that can be applied in a political and institutional context.  It 
was concluded that proposals by the Vision Group should be done in a constructive 
manner focusing on solutions. 
 
18. EIBD put all priority issues on the table but the question is if it would lead to more 
investments from the EU? 4.1(a)
 To move forward we needed regulatory and 
bureaucratic reform and a push towards the green economy. The issue of access to land 

for development projects need to be properly addressed in Indonesia. 4.1(a)
 
 
 
 
19. It was concluded that it was right to raise the "hard issues". While the Vision Group 
should be critical and put all the problems on the table but find solutions to those 
problems and show the likely impact in case of action and no action. "The Vision Group 
should be friends of the EU and friends of Indonesia".  
 
20. The view that the real variable affecting Indonesian penetration of EU markets was the 
variation in GDP of EU Member States was put forward, which seemed to be the main 
determinant of demand for Indonesian goods. As European companies are more 
competitive, there would be potential losers in Indonesia of an agreement so that there 
needs to be a clear communication of facts underpinning the benefits. It was also noted 
that most of the bilateral trade is dependent on the EU economic growth patterns – 
meaning that the EU GDP is a push factor for trade and Indonesia's growth does not act 
as a pull factor. It was furthermore said that Indonesia needed continuing help to improve 
trade quality infrastructure, customs regulations and management, port efficiency and 
clear bottlenecks in the way of inward investment. It wasnoted that the EU was good on 
infrastructure and water supply and that Indonesia really needed help in these areas, 
especially to prepare ideas and project proposals that would meet EU requirements and 
specifications. Capacity building was key for Indonesia to benefit from a closer trade and 
investment cooperation (especially in respect of infrastructure, customs, port services, 
laboratories). The country needed many more small planes to connect provincial hub 
airline centres, more investment in inter-island connectivity, especially by sea (ports and 
ships) and air. The EU and Indonesia should showcase such proposals and prepare 
feasible projects so that they fit European interests for instance at exhibitions and trade 
fairs in EU countries, and invite EU investors to Indonesia. An innovative approach to 
these activities with a clear timeframe was encouraged. 
 
21. It was argued that there was an on-going transformation under way making progress on 
infrastructure, logistics and supply constraints. Therefore, the Report should make 
specific recommendations with time lines linked to them and that priorities for a CEPA 
should cover the needs of SMEs and for improvements in standards. The great benefit of 
a well conceived CEPA could act as a justification to push forward domestic reform in 
Indonesia. 
 
22. The Group should not consider one party losing or winning. The Vision should focus on 
liberalisation of trade in goods, services and investment and related to trade facilitation 
on standards compliance and customs issues. Agreements have in today's climate been 

imperative if a country does not want to be discriminated in another market. Innovative 
elements in the recommendations of the Vision Group are important and that the Group 
should bear in mind that the main purpose of the Vision is to upscale EU-Indonesia trade 
relations and not restrict itself so that issues would have to be brought up at a later 
occasion. 

23. Several members urged that the group look at the way the Japan FTA was structured in 
terms of commitment to capacity building and it was decided a short summary of these 
supportive measures would be useful. 4.1(a)
 
 
 EU has to compete 
with trade approaches that were strongly backed by governments, as in the case of China 
on the 10,000 MW accelerated electricity programme. The work of the group should help 
prepare for how to react to downside impacts affecting negative economic sectors in the 
context of an FTA and to help ensure that these downside impacts would be properly 
addressed. The group should look at potential negative impacts sector by sector. A quick 
resolution of a possible agreement due to elections approaching in 2014 was favoured. 
 
24. There should be a lot of cooperation included in a potential agreement. The growth of EU 
trade with Indonesia has been lower than with other countries. 
 
25. Fair rules on public procurement are important for the EU – not solely looking at the 
lowest price, in order to get the best value for tax payers' money. The banking sector in 
Indonesia is not conducive, particularly not for SMEs, as credit rules are too strict. 
 
26. It is crucial that the Vision Group performs an impact analysis for sector by sector to 
explain the benefits of an agreement to the business sector.  
 
27. Competition is beneficial for economic growth. This is however rarely discussed in an 
FTA context. Any analysis should focus on opportunities, for which hard analysis is 
needed. Protectionists will not listen but there is some scope for influence. With which 
countries should Indonesia compare itself? i) ASEAN and ii) BRICS might be relevant. 
What reforms are needed if Indonesia wants to catch up with those countries? 
 
28. Green development and sustainability issues should be seen as a competitive edge and 
not as a cost. Scientific cooperation between EU and Indonesia is needed to deal with 
environmental issues. Further progress in green energy is desirable, for example 
geothermal projects, and for power plant from EU countries, creating opportunities for 
sustainability and for EU firms. 
 

29. Implementation remains an issue in the reform process in Indonesia. For instance the 
experience of the Ministry of Fisheries where the assistance and support programmes 
from the EU had helped deal with export standards and quality issues by strengthening 
export infrastructure, especially laboratories.  
 
30. It was argued that losers might lose anyway with or without an agreement – but how to 
tackle them? There would be losers in the short-term but these become winners in the 
long term. The importance of flanking measures was stressed. Effective implementation 
and political commitment are key to successful reform and that Indonesia was benefiting 
a lot from its regional positioning with ASEAN (in terms of development towards an 
FTA and economic community). How far and how fast Indonesia could move further in 
this direction and towards BRIC status? Is Indonesia willing to become a BRIC and how 
to get there? 
 
31. In the context of the state-oriented economic structure of Indonesia it would take time to 
make further progress but that in terms of openness the economy was already one of the 
most open in the world with little emphasis on tariff barriers, plus special economic 
zones. It was furthermore pointed out that Indonesia is already a part of ASEAN regional 
networks. 
 
32. Trade policy has a large effect on economic gains, which is often forgotten. Trade 
facilitation requires relatively little efforts whereas the gains can be large. Indonesia 
needs a common vision if it is to be connected globally, not its own national vision. It 
was presented that the logic of the new EU trade strategy included how to deal with 
losers. Studies by ADB and others gave useful lessons on economic analysis in relation to 
FTAs but there is no need for an overdose of analysis rather than having a clear view of 
the main issues. For example ADB data made it clear that perhaps 50% of exporters in 
different countries did not make full use of FTAs perhaps because of lack of awareness, 
or sticking to what they knew and using GSP provisions instead. Any FTAs have to be 
used by traders and properly implemented. As Minister Mari Elka Pangestu had said it 
came down to understanding global value chains and getting involved in them to your 
advantage. Trade data did not always get at these issues and that it was necessary to look 
at data arising from the analysis of what happens when value added can be acquired. 
Value added analysis was not the same as trade analysis, and value added was a very 
important consideration. 
 
Afternoon session on different models for bilateral arrangements 
 

33.  4.1(b)

introduced a session on different types of bilateral agreement, and their different 

characteristics, by presenting a short typology of FTAs and their different effects and 
impacts. The EU has launched its new trade strategy and this looked at what trade policy 
could deliver to an economy. These days trade policy could deliver progress towards a 
greener economy and smart growth and greater competitiveness. The EU now aimed 
using this strategy to promote a 1% increase in its GDP per year, which did not sound 
much, but amounted to 150 billion Euros per year, representing average consumer gains 
of EUR 600 per person and year due to a wider and cheaper choice of goods. 4.1(b)
 
furthermore stated that 14 million workers in the EU depend on exports and 36 million 
workers are someway or the other linked to trade. A modern trade policy is therefore an 
important instrument for development. As openness to trade went up unemployment 
decreased, and vice versa. 
 
He noted the EU trade policy follows a three-thronged approached: multilateral 
agreements (WTo/DDA), bilateral agreements and autonomous agreements (like the GSP 
and EBA – which offered unilateral preferences). EU FTAs have three different 
rationales: preparing for EU membership, enhancing relationships with neighbouring 
countries, and development (in the case of ACP countries and reciprocal market access, 
i.e. promoting competitiveness on both sides. Shallow FTAs have mostly included tariff 
reduction in goods, whereas deep and comprehensive FTAs also included government 
procurement, competition policy and technical barriers to trade. For the EU the home 
market is still important (intra-EU trade is twice as big as external trade) but global value 
chains are key. EU exports depend critically on imports as more than two-thirds o EU 
imports are intermediates. He also showed the negative impacts of lack of competition on 
domestic markets and price fixing – for instance that developing countries imported more 
that US$ 81 billion of goods from industries affected by price-fixing conspiracies in the 
1990s, leading to US$ 20-25 billion in excess consumer prices. A comprehensive FTA is 
more beneficial as removal of tariffs in goods is not sufficient to fully realise gains of 
trade liberalisation and in some cases tariff removal is not enough to give a balanced 
outcome for every partner.  
 
In Asia, FTAs are on the rise and Singapore, China and India sticks out with relatively 
numerous cross-regional FTAs. Most countries favour a WTO+ approach in their FTAs 
while China and India generally seems cautious to conclude very comprehensive FTAs. 
 
Economic impact of an FTA could lead to two different effects: i) trade creation: 
inefficient domestic products are replaced and ii) trade diversion: low cost imports from 
non-FTA countries are replaced by inefficient imports from FTA members. 
 
There are different models to assess the impacts of FTAs. The Computable General 
Equilibrium (CGE) model gives the bif picture of dynamic effecs in the long and short 

term, efficiency gains and demand factors. The Partial Equilibrium Models has a greater 
emphasis on sectoral approaches. There are also econometric and gravity models. Partial 
eqiuilibrium did not calculate efficiency gains and econometrics approaches were aimed 
more at new areas of trade, services and non tariff barriers. 
 
Deep integration is important in an FTA context. The deep bilateral relationship between 
the EU and Japan put more emphasis on non tariff barriers (NTBs) where the gains on 
both sides are more than double and more mutually beneficial than without considering 
dismantling non-tariff barriers.  
 
Looking forward, the need for good economic analysis is useful in assessing trade policy 
options. Comprehensive agreements produced the most benefits for the wider economy. 
Trade policy around the world is in motion and others are moving. 
 
34. 4.1(b)
 then introduced an overview of Bilateral and Regional FTAs of 
Indonesia.; The Vision Group had been provided with an overview of concluded 
agreements or agreements under negotiation, and that some of the agreements would be 
analysed in more detail for the next meeting of the Vision Group. The table would also be 
complemented with a short text describing the agreements. An overview of the 
agreements can be found in the presentation forming an integral part of these minutes. 
 
35. 4.1(b)
 continued to present the FTAs concluded or under negotiation by the 
EU. The FTAs already concluded cover 22.3% of imports and 27% of exports. Another 
20% of imports and 26% of exports are currently under negotiation. When concluded, 
44% of EU imports and 53% of exports would be covered by FTAs. The EU has many 
types of FTAs: 
 
¾  Customs Union: with Turkey and EFTA countries. 
¾  Stabilisation and Association Agreements: include country specific issues, 
including political issues, capital movement; legislation and justice affairs. These 
are agreements for candidate and potential candidate countries for EU accession. 
¾  Economic Partnership Agreements: regional agreements for former colonies in 
the ACP countries. As of now, EPAs have been concluded with the 
CARIFORUM countries and with the remaining countries there are interim 
agreements in place. The EPAs are motivated by development objectives and are 
less relevant from a trade perspective but more out of a development perspective. 
¾  Euro-Mediterranean Agreements: Including economic and political stability 
issues. The agreements mainly cover industrial goods, NTBs as well as social and 
cultural cooperation. 

¾  Commercially oriented FTAs (competitiveness FTAs): Have been concluded 
with countries such as Mexico, Chile, South Africa and are under negotiation with 
MERCOSUR. The liberalisation is mostly in agricultural goods but they are also 
covering services, investment and competition. 
¾  New generation FTAs: These deep and comprehensive FTAs go beyond WTO 
and include IPR, public procurement, competition, sustainable development. 
Examples include South Korea, Singapore, India and Malaysia (under 
negotiation), Peru and Colombia. 
 
4.1(b)
 furthermore posed some questions for reflection by the Vision Group: 
 
¾  How can regional and bilateral FTAs be compared? 
¾  What are good elements to integrate in a potential agreement? 
¾  What lessons have been learnt from the processes of previous FTAs for both sides? 
¾  How can the strategies of the two sides match? 
 
36. Following this presentation, a major discussion on what is meant by the concept of deep 
and comprehensive FTAs – if these concepts need to go together or if they can be seen in 
isolation?was launched. Some CEPAs did seem to include cultural and political as well as 
economic issues and should that be included in the vision as well?  
 
37. Calculations of benefits of growth in trade should not only focus on employment but also 
diversification of products, which is an important issue in Indonesia. In terms of 
employment, SMEs are also important. Indonesia already has a competition law and does 
a potential agreement mean that the competition policies of Indonesia and EU have to be 
harmonised? Finally, it is important for Indonesia to maintain benefits from the GSP 
throughout a possible negotiation process, and it should be extended to GSP+. 
 

38. The EU had one single unified competition policy and also state aid is included in this 
policy – thus there is a lot to be gained by SMEs. SMEs are not only important in 
Indonesia, but also very vital in the EU. Regarding the design of FTAs and CEPAs there 
was no simple model to follow but all elements are important to consider in an FTA 
context as they are interlinked. In preparation for FTAs, the EU talks closely to the 
industry on which barriers are the most significant and which can be quantified. However 
EU experience and its new competition policy stressed a strong link between mobilisation 
of inward investment (FDI) and services, and also prioritised SMEs as key stakeholders 
whilst recognising their systemic weaknesses. Signing an FTA/CEPA also did not rule 
out using previously gained trade benefits like GSP. Although new FTAs were usually 
more comprehensive than the GSP, some companies still preferred to utilise the benefits 
and systems they understood, rather than new ones. For example in Japan surveys 

showed that 30% of companies did not yet understand what was available to them under 
the new EU-Japan bilateral agreement. Thus, awareness building is crucial in any FTA 
process. An FTA is only one part of a new relationship and that trade facilitation and 
capacity building are also vital to a new approach. 
 
39. It was added that social, political and cultural aspects are more relevant in a Partnership 
and Cooperation Agreement (PCA) context. Any comprehensive economic agreement 
should for the EU's interests include tariffs, non-tariff barriers, services, IPR (including 
TRIPS+ on agricultural products), technical assistance, investment, competition policy, 
public procurement (also at decentralised level).  The example of automobiles was given, 
which is a traded good to be covered by a Trade in Goods (TIG) agreement but that this 
actually involved also Trade in Services (of TIS). Making and selling cars involves 
design, engineering, management, financing, insurance, logistics and advertising and 
these all contribution to the production, distribution and value of cars. Hence trade in 
goods becomes inseparable from trade in services. IPR is essential to give comfort to 
investors and that TRIPs represented a minimum standard to be attained under WTO 
rules. 
 
40. TRIPS+, Rules of Origin (RoO) ans sustainability issues should also be features of any 
agreement. 
 
41. What stops investors from investing in a particular country? In particular if the legal 
system did not work then contracts were unenforceable. This aspect would need to be 
handled in a comprehensive agreement. 
 
42. A dialogue could help to strengthen the legal framework. The legal system in Indonesia 
might be slow but it is working and improving.  
 
43. There is a difference in the definition of SMEs in Indonesia and the EU. There needs to 
be a clarification on the concept of Corporate Social Responsibility (CSR), since this is a 
legal requirement in Indonesia. 
 
44. Although the Vision Group should not become negotiators of an agreement, there needed 
to be clarity on definitions used in the report, such as on SMEs, CSR and 
comprehensiveness. Facilitation and cooperation would enable both sides to benefit from 
a comprehensive agreement. 
 
45. 4.1(b)
 of RELEX (Directorate General of External Relations of the European 
Commission) explained the background to the bilateral Partnership Cooperation 
Agreement (PCA) between the EU and Indonesia. This bilateral PCA is the first of its 

kind that the EU has signed with an Asian country. It was signed in November 2009 after 
negotiations since 2005. Four countries (Denmark, Poland, Latvia and Estonia) have 
already ratified the PCA and hopefully all 27 EU Member States would follow suit 
during 2011. In addition, the PCA has not yet been ratified by. In Indonesia it was not yet 
clear if the PCA would have to be ratified by a Presidential Decree or the House of 
Representatives.  
 
The PCA is regarded as the political base towards the negotiation of an FTA. The PCA is 
really a preferential political relationship which provides a legal framework and political 
basis for future cooperation in a wide range of areas including climate change, energy, 
maritime matters, narcotics, organised crime and corruption, human rights, counter-
terrorism, regional political cooperation, weapons of mass destruction, intellectual 
property rights (IPR), sanitary and phyto-sanitary standards (SPS), international 
standards, customs administration, investment and services (covering more than 50 
topics). This also provides for a dynamic relationship between the private sector and 
government. 
 
46. 4.1(b)
 then provided an overview of current EU economic cooperation activities 
with Indonesia including the new Trade Support Program II, aimed at supporting Export 
Quality Infrastructure in Indonesia. This programme should help Indonesia improve 
product standards and quality in order to better access the EU and other developed 
markets, which should help Indonesia benefitting from any potential agreement. The 
programme amounts to EUR 15 million and has already started with its policy 
component, whereof the first topic is the study presented in the morning on Indonesia 
trade access to the EU. Another study is also in the making mapping out the EQI system 
in Indonesia and giving recommendations for improvement. In addition, the EU is 
starting Trade Cooperation Facility in 2011, which is a demand-driven facility aimed at 
improving various trade and investment issues in Indonesia such as IPR, trade policy 
analysis, domestic trade, science and technology, energy planning and investment 
facilitation. The TCF amounts to EUR 12.5 million during five years. At the moment, the 
TCF is awaiting the approval of the financing agreement by the Indonesian Government, 
which is delayed due to one government agency not having decided about their 
participation in the programme. The TCF is also complemented by a civil society 
component of EUR 2.5 million, aimed at strengthening business associations and NGOs 
in their role as giving input to government policies and providing services to their 
members. KADIN could be one of the beneficiaries of such a programme. In the 
presentation it can also be seen that the EU also gives substantial support to ASEAN 
economic integration through various regional cooperation programmes dealing with 
inter alia product standards, IPR and various economic policy issues. Regional 
cooperation programmes and cooperation programmes offered by EU Member States 

should also be taken into account when looking at the total picture of EU support to 
Indonesia. The issue was – what else would be needed in support of an FTA? In fact EU 
support could come by at least four different modalities including trade support funds via 
ASEAN, from EU Member States from the EU Commission (DEVCO) or from 
multilateral agencies (ADB, World Bank etc.) which have been funded by the EU. 
Participants expressed interest in the accessibility and usability of such funds and the 
effectiveness of use in support of trade support measures and activities. 
 
47. It was expressed that the technical support requirement of an FTA should be additional to 
and on top of any trade support already in place or planned. Capacity building should 
cope with both losses and gains, and other aspects of implementation should all be 
additional to any programmes already in place. 
 
48. The Vision Group should look at the working of the Indonesia Japan bilateral agreement 
which had included capacity building.  
 
Main conclusions by the Co-Chairman and issues for follow-up. 
 
49. 4.1(b)
 as Vision Group Co-Chairman then pulled together some of the 
suggestions and ideas emerging from the day’s discussion. He concluded that the group 
needed more solid understanding of some issues and suggested that the members of the 
group should help elaborate the way forward. 4.1(b)
 said that in the context 
of a wider CEPA we would need mechanisms to manage our bilateral relationship. He 
suggested the following issues for follow-up and papers to be produced by the Vision 
Group members to the Chairs, in a short and brief format (1-2 pages): 
 
(1) 4.1(b)
 to describe the capacity building component of the Indonesia-Japan 
EPA as a model for a potential agreement with the EU. 
(2) That 4.1(b)
 should seek to clarify what are 
the major hurdles regarding sanitary and phyto-sanitary measures (SPS) on both 
sides. 
(3) 4.1(b)
 to specify what could be included in the concept of a 
“comprehensive” CEPA and how to structure an effective dialogue mechanism 
between Government and KADIN. The Project Group proposes that also 4.1(b)  
 is involved in this work. 
(4) 4.1(b)
 were tasked to address infrastructure 
recommendations arising from the EIBD, in particular focusing on Public Private 
Partnerships A brief guideline should be produced depicting a model as to how 
infrastructure projects could be prepared to attract EU investors, including financing 
and implementation. 

(5) That 4.1(b)
 should look at measures to attract EU 
investors to come to Indonesia, with a focus on the five priority sectors in the 
Transtec Report (fisheries, agri-foods, consumer electronics, furniture, natural 
cosmetics), also those in the IBM Report (power, machinery, consumer goods, 
pharmaceuticals and telecom). 
(6) 4.1(b)
 were tasked to look at the issues arising from the 
liberalisation of trade and services and especially with ways of identifying and 
dealing with potential losers 
(both goods and services). 4.1(b)
 offered from 
DG Trade that he might assist in this area with some of the analytical work. 
(7) 4.1(b)
 should look at communications strategies and communication with 
wider stakeholders with a view to identifying ways and means for dialogue to 
mobilise support for a potential CEPA between Indonesia and EU. 
(8) 4.1(b)
 should deal with trade and investment regulatory reform and 
a possible pilot project for trade and investment regulatory reform, in cooperation 
with 4.1(b)

(9) 4.1(b)
 to produce a one page summary of EU's support to Indonesia in the 
education sector, including ERASMUS-MUNDUS scholarships in higher education. 
 
Furthermore, the Co-Chairman suggested: 
 
(1) That the working dates for the next VG meeting in Europe should be on the 22-23 
February 2011, probably with the VG meeting on Wednesday 23 February and 
possible meetings with high level officials from the European Commission to be 
explored the day before. All delegates noted this date. 
(2) That working documents should be completed by 1 February 2011 at the latest so 
that the Project Group could finalise draft preparations on 11 February and the Co-
Chairmen could review all the papers to be distributed to the Vision Group members 
on 15 February.