Indonesia officially applies to join the Trans-Pacific Trade Pact

Indonesia has officially applied to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in a bid to boost its exports, a senior minister said yesterday.

Airlangga Hartarto, the Coordinating Minister of Economy, said his ministry has handed over its official application letter to New Zealand, which is the “depository” of the CPTPP responsible “for various functions, including receiving and disseminating specified notices and requests made under the Agreement.”

Indonesia’s membership bid was “aimed at promoting structural reforms in the country and opening markets for the Indonesian economy,” he said at a press conference in Jakarta yesterday. according to the state news agency Antara. “Imports and exports will increase and ultimately trade between CPTPP member states will increase,” he added.

Airlangga said that President Joko “Jokowi” Widodo had pushed for Indonesia to join the 11-member pact, but the decision was also backed by newly elected President Prabowo Subianto, who will be sworn in next month.

The CPTPP started life as the Trans-Pacific Partnership, which was led by the United States under President Barack Obama before his successor Donald Trump pulled the US out of the agreement in 2017. The pact currently includes twelve countries: Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United Kingdom and Vietnam.

In addition to Indonesia, seven countries, including China and Costa Rica, have expressed interest in becoming CPTPP members. Britain is the first country to join the pact since the US withdrawal; the country is expected to accede to the treaty once it is ratified by parliament and by all member states, and it is expect this to happen by December this year.

Jakarta announced its intention to join the pact in May, hoping to attract investment by increasing access to the export market.

With a young and growing population in urgent need of economic opportunity, Indonesia under Jokowi has actively pursued foreign investment. His government has set itself the goal to be an advanced economy by 2045when it will celebrate the centenary of its independence – a project that the Jokowi government “Indonesia Emas”, or Golden Indonesia.

To support its domestic economic goals, the country has prioritized concluding multilateral trade agreements. The time has come in November 2022 ratified the Regional Comprehensive Economic Partnership (RCEP) agreement, which includes all ten ASEAN member states, Australia, New Zealand, China, Japan and South Korea. The agreement subsequently entered into force in January 2023.

In February this year, the Organization for Economic Co-operation and Development (OECD) announced that it would also open accession negotiations with Indonesia, following approval from the group’s 38 members. Although the criteria for OECD membership are strict and run counter to the protectionist policies that have characterized Jokowi’s decade in office, if it were to be conceded, Indonesia would become the first Southeast Asian country to join what is often a is called a ‘rich country club’. .”

The request to join the CPTPP reflects Jakarta’s intention to leave no stone unturned in its pursuit of increased trade and investment that can help develop the economy and support the current dominant political dispensation. While the CPTPP’s membership criteria are arguably less stringent than those of the OECD, they are also likely to conflict with certain elements of Indonesian economic policy, particularly Jakarta’s willingness to use state power to protect local industries and maintain political and economic stability. This includes the complex register of energy subsidies and industrial policies surrounding nickel mining and processing.

However, if admitted, membership will undoubtedly strengthen Indonesia’s position on the world stage as the first country from the Association of Southeast Asian Nations (ASEAN) in the G-20 to join the CPTPP. In Southeast Asia, Thailand and the Philippines have also expressed interest in joining the pact. Together, these current and future members include seven of ASEAN’s 10 members, including six of the largest economies.