Jayanty Nada Shofa, Jakarta – Indonesia and the Russia-backed Eurasian Economic Union (EAEU) have just signed a free trade pact, a document that is expected to act as a cushion against rising US protectionism.
Trade Minister Budi Santoso represented Jakarta at the signing ceremony in St. Petersburg on Sunday local time. The accord aims to ease virtually all tariffs on Indonesia's goods trade with the EAEU members, namely Russia, Armenia, Belarus, Kazakhstan, and Kyrgyzstan. Indonesia's export-import activities with the four latter members remain modest to this day.
"Indonesia will give the EAEU access to an open market, while the bloc will expand its market access for our goods. We can strengthen the global supply chain together, advance energy transition, and develop the digital economy," Budi told the live-broadcasted meeting.
He said that the trade pact "reflected commitment to collaboration, openness, and long-term resilience amidst global uncertainties and protectionism", alluding to US President Donald Trump's tariff hikes. Budi highlighted how the agreement could provide legal certainty while creating a more efficient business climate for enterprises of all sizes.
Russian President Vladimir Putin said that the pact would open up good prospects with Indonesia, which he described as "one of the largest and most dynamic economies in both Asia and globally". He went on to say that the document establishes a free trade area that covers over 90 percent of the goods, and about 95 percent of the mutual trade turnover.
Indonesia primarily trades with Russia within the EAEU, with figures nearing $4 billion in 2024. Jakarta's next biggest trading partners in the group are as follows: Kazakhstan ($398.4 million), Belarus ($128.5 million), Armenia ($10 million), and Kyrgyzstan ($3.2 million). This brings Indonesia's total trade with the Eurasian bloc to around $4.5 billion last year. Palm oil – a vegetable oil key in cooking and cosmetics – makes up quite a huge chunk of Indonesia's exports to the EAEU.
The Indonesia-EAEU free trade agreement will be subject to ratification, namely the process of gaining lawmakers' approval, before the tariff reductions can come into effect. Jakarta wants to have the deal enter into force in Q4 2026 or by 2027.
Countries across the globe, including Indonesia, have been rushing to expedite their trade deal negotiations since the announcement of Trump's Liberation Day tariffs in April. Earlier this year, Indonesia already sealed similar trade accords with Canada and Peru, respectively. Jakarta finalized its long-awaited tariff-slashing agreement with the European Union (EU) after almost a decade of talks.
Washington has agreed to bring down the import duties on Indonesian goods from 32 percent to 19 percent. Both sides are currently finalizing a bilateral trade deal document to be signed by President Prabowo Subianto and President Trump next year.