Zero tariff: opportunities for export to Indonesia

It will become significantly cheaper to export agricultural raw materials, such as dairy products and meat, to Indonesia. The EU has today signed a trade agreement with Indonesia, which will establish a zero tariff for most goods. According to the European Commission, exporters will save a total of around €600 million annually on import duties. In addition, the procedures will become more flexible and faster. For a company like FrieslandCampina, this will yield only limited benefits, as it produces a lot for the local consumer market, although good relationships are always valuable. The current import tariffs that Indonesia applies are now on average 10% to in some cases 150%. The EU currently exports around €1 billion worth of agricultural products and food to Indonesia per year, more than it imports from there. This mainly concerns dairy and other animal products. The Netherlands does not export much dairy products to Indonesia. In the past two years, between 1,000 and 2,000 tons have been sent to the Asian country each month. Volumes may increase now that the tariffs are being eliminated. The European Commission expects that EU countries will export more to the country. Very little impact is expected for the European market, as Indonesia does not produce many agricultural products and food that are in high demand in Europe and that are not produced here. The main import products from the Asian country are palm oil, cocoa, and coffee. The imported products must continue to meet the same requirements. Indonesia has more than 280 million people, making it a huge market. According to the European Commission, farmers from the EU will get 'much better opportunities to sell their products in Indonesia because the tariffs on important EU export products such as dairy products, meat, fruits, and vegetables, and a wide range of processed food will be eliminated'. For certain 'sensitive' products such as rice, sugar, and bananas, import tariffs will remain in place, and for several others, a quota will be introduced, such as for garlic, mushrooms, and sweet corn. Protected products with geographical indicationWith the trade agreement, 221 European food and agricultural products with a geographical indication (the so-called GIs) will also be protected. This includes varieties of cheese like Gouda Holland, Camembert de Normandie, Feta, and Pecorino Romano. This also applies to 72 products from Indonesia. President of the European Commission Ursula von der Leyen states in a press release: Our agreement with Indonesia creates new opportunities for businesses and farmers in a large and growing economy. According to Agriculture Commissioner Christophe Hansen, 'the EU is strengthening its position as the world's largest exporter of agri-food products'. FrieslandCampina welcomes the trade agreement, a spokesperson has stated upon request. Indonesia is an important market for the processor of cheese and especially high-quality ingredients. Other dairy products, including baby food, are produced in Indonesia itself (partly using the high-quality ingredients imported from the Netherlands). Last year, Frisian Flag Indonesia opened a new factory involving an investment of €257 million. Because local production in the country is (still) not sufficient for the demand from the consumer market, products are also purchased on the world market, from nearby countries, especially Australia and New Zealand. The company indicates that the good relationships are also positive for local business. The agreement still needs to be approved by the European Parliament and Indonesian politics.