Freshfel Europe warns: success of CEPA with Indonesia for fruit and vegetables trade depends on removing SPS barriers
The EU and Indonesia have announced a Comprehensive Economic Partnership Agreement (CEPA). The deal aims to eliminate over 98 % of tariffs, with key focus areas including cars, pharmaceuticals, electronics, and agri-food products. As too often, the benefits for EU fruit and vegetables exports …
The EU and Indonesia have announced a Comprehensive Economic Partnership Agreement (CEPA). The deal aims to eliminate over 98 % of tariffs, with key focus areas including cars, pharmaceuticals, electronics, and agri-food products. As too often, the benefits for EU fruit and vegetables exports remain uncertain and subject to unresolved SPS. Is the EU–Indonesia CEPA good news for Fruit and Vegetables?
The European fruit and vegetables sector export around 7.000.000 T of high quality, sustainable and nutritious fruit and vegetables to more than 150 destinations. This volume remains however well below its potential and demand given excessive SPS barriers imposed by third countries. The recent finalisation if the Comprehensive Economic Partnership Agreement (CEPA) with Indonesia could be an new opportunities for the EU fresh produce business and further market diversification in a buoyant South East Asian markets.
Despite being a distant market, Indonesia is a highly promising and strategically important market in the current geopolitical and trade context. With a population of 286 million, a growing middle class, and GDP growth consistently above 5 %, Indonesia offers significant opportunities for EU exporters. The EU assortment of temperate fruits and vegetables is complementary and not competing with the local Indonesian production.
However, access to this market is currently undermined by a series of trade barriers, administrative burdens, discriminatory measures and complex business environment that prevent unleashing the full potential from the EU supply given a unlevelled playing field with competitors, most notably from the Northern Hemisphere such China (prices competition) and the United States (enjoying more favourable market access conditions). As a result, European export is limited to around 20.000 T (< €15 Million). EU fresh produce only represents a small share of the Indonesian import assortment (1,5 %). Currently, EU shipments are limited to onions and kiwifruit and some exports in a sample mode with apples or blueberries. Beyond the market access irritants, the EU sector also needs to monitor and to cope with other important commercial aspects for a successful growth of business: negotiating direct, and costs effective reefer logistics, addressing detrimental exchange rate fluctuations, or converting EU sustainability achievements from a handicap into an asset within a global & competitive trade environment.
Upon signing the CEPA, European Trade Commissioner Šefčovič underlined that this is a strong signal for openness and partnership in a world facing rising protectionism and fragile supply chains. The deal aims to eliminate over 98 % of tariffs, with key focus areas including cars, pharmaceuticals, electronics, and agri-food products. Commissioner Hansen also highlighted a victory for high-quality EU foods and 200 Geographical Indications (GIs).
Philippe Binard , General Delegate of Freshfel Europe stated: “These are encouraging steps, but EU external trade should not be limited to cars! When it comes to fresh fruit and vegetables, there’s a critical issue that remains unresolved. Tariff elimination alone will not improve market access for EU exporters if non-tariff barriers, particularly SPS (Sanitary and Phytosanitary) measures, are not effectively addressed”. In Indonesia, these barriers are numerous and complex ranging from costly, lengthy, and fragmented PRA processes (product-by-product, member-state-by-member-state), to lack of EU-wide recognition for plant health standards. Limited laboratory accreditation and also opaque licensing and quota systems are failing to generate a business friendly model further excarcerbated by discriminatory port logistics practices.
Despite the EU having robust, common food and plant safety regulations, Indonesia does not recognised the EU as a signle entities and continues to impose applications process member state by member state and duplicate requirements and conditions treating each EU member state separately, while Indonesia enjoying seamless access to the EU’s 450 million consumers for their export.
Philippe Binard commented: “For CEPA with Indonesia to truly deliver its benefit for fresh fruit and vegetables, SPS provisions of the agreement must tackle these systemic issues head-on. Let’s see if the SPS provisions of CEPA provide the tools for eliminating these excessive and duplicating measures “ He added “Otherwise, CEPA tariff concessions on fruit and vegetables will be void and risk becoming an empty gesture, as seen with past FTAs with Mexico, Chile, Peru, South Korea, and Japan.Most of these countries take huge benefit of exporting to the EU markets by too often remain hermetically close in breach of basic reciprocity principles”
So the question remains: Will this time be different for fresh fruit and vegetables? Freshfel Europe is calling the European Commission to secure and deliver the expected market opening for fruit and vegetables trade based on the momentum of CEPA and a phasing out of all excessive protectionist barriers allowing safe trade for the benefit of both EU trade, Indonesian importers and retailers and Indonesian consumers.