Indonesia-Korea Comprehensive Economic Partnership Agreement

(goods and services)

Note on the Meeting of 2 July 2024

Chair: Ambassador H.E. Salomon EHETH (Cameroon)

1.1.  The 110^th Session of the Committee on Regional Trade Agreements (hereinafter "CRTA" or the "Committee") was convened in Airgram _WTO/AIR/RTA/36/Rev.1 dated 21 June 2024.

1.2.  Under Agenda Item 7.2, the CRTA considered the Agreement establishing a Comprehensive Economic Partnership Agreement between Indonesia and the Republic of Korea, goods and services, (hereinafter "the Agreement"). The Chair stated that the Factual Presentation had been prepared by the Secretariat on its own responsibility in full consultation with the Parties, in accordance with paragraph 7(b) of the Transparency Mechanism for Regional Trade Agreements (document _WT/L/671).

1.3.  The Agreement had entered into force on 1 January 2023. It had been notified to the WTO by the Parties on 15 June 2023 under Articles XXIV:7(a) of the GATT 1994 and Article V:7(a) of the GATS as an agreement establishing a free trade area for trade in goods, within the meaning of Article XXIV of the GATT 1994, and for trade in services, within the meaning of Article V of the GATS (documents _WT/REG469/N/1 and _S/C/N/1135 respectively). The text of the Agreement, together with its Annexes, was available on the Parties' official websites and in the WTO RTA database. The Factual Presentation, document _WT/REG469/1, and questions and replies, document _WT/REG469/2, had been distributed.

1.4.  The representative of the Republic of Korea expressed her gratitude to the Secretariat for the preparation of the Committee meeting and the factual presentation, and to Members for their interest and insightful questions on the Agreement. She also thanked Indonesia for their cooperation in the preparation of the meeting.

1.5.  As a strong supporter of the multilateral trading system, Korea had been actively pursuing regional trade agreements which were compatible with the WTO disciplines and principles. The Agreement was the 19^th FTA signed by Korea. Negotiations on the Agreement had been launched in March 2012 and concluded in November 2019 after the 10th round of negotiations. The Agreement had been signed in December 2020 and entered into force on 1 January 2023. The Agreement had been concluded with the aim of liberalizing and promoting trade in goods and services, and investment between the two countries, facilitating economic growth and mutual benefit, improving their already excellent bilateral relations and contributing to the expansion and development of world trade within the framework of the WTO. Since then, the Agreement had been implemented smoothly.

1.6.  The Agreement reflected the strong will of Korea and Indonesia to strengthen their close economic relations and their common regional interests and ties. They believed that the Agreement would enhance the existing commitments between the two countries under the Korea-ASEAN Free Trade Agreement and the Regional Comprehensive Economic Partnership (RCEP), develop potential areas of complementary strengths and deepen bilateral economic relations.

1.7.  The Agreement was a comprehensive and high-standard trade agreement aimed at enhancing bilateral trade, investment and economic cooperation. It aimed to deepen economic and trade relations between the two countries by liberalizing trade and investment, expanding market access for services, enhancing investment protection, and laying the foundation for promoting economic cooperation. The Agreement covered substantially all trade in goods and substantial sectoral coverage in services, in accordance with GATT Article XXIV and GATS Article V. It was fully consistent with both countries' WTO obligations, and in many areas built on and went further than their WTO commitments.

1.8.  In the area of goods, Korea and Indonesia conducted negotiations for further liberalization based on the Korea-ASEAN FTA, which had been in force between the two countries since 2010. As a result, by the end of the implementation period, which was within 20 years, almost all products, over 95.5% of Korea's tariff lines and 92% of Indonesia's tariff lines, would have been finally liberalized under the Agreement. For Korea, an additional 5.4% percentage points of tariff lines would be liberalized compared to under the Korea-ASEAN FTA. In terms of import value, 97.3% of Korea and 97% of Indonesia would have been liberalized. Korea and Indonesia would have achieved an additional liberalization of 3.8% percentage points and 8.4% percentage points respectively compared to the Korea-ASEAN FTA.

1.9.  With respect to services, the Agreement adopted a positive list approach similar to the existing GATS and the Korea-ASEAN FTA. Both countries' commitments under the Agreement expanded their GATS commitments by removing some restrictions and including commitments in new sectors. The agreement also covered the four modes of supply of services established in the GATS. In addition, the level of liberalization of concessions in key services sectors, had been increased through the application of the ratchet mechanism and most-favoured nation treatment to prevent backsliding on liberalization.

1.10.  With respect to investment, the Agreement adopted a negative list approach, whereby all sectors were subject to commitments except those explicitly included in a list of reservations. In addition, provisions on ISDS were also included in the Agreement.

1.11.  Also, the Agreement included components to further strengthen the complementary bilateral trade structures of the two countries by including a separate chapter on economic cooperation, which contained detailed provisions for closer cooperation in sectors related to industry including automotive and chemicals, agriculture, fisheries and forestry, rules and procedures for trade, movement of natural persons and other areas.

1.12.  It was too early to assess the impact of the Agreement as it had only been in force for one and a half years. However, it was expected to play a pivotal role in contributing to the expansion of bilateral trade, investment and economic cooperation, with a view to facilitating economic growth, enhancing the capacity of economic operators and enabling both countries to play a key role in an increasingly integrated global economy. To this end, Korea and Indonesia would do their best to facilitate the implementation of the Agreement through the Joint Committee and its subcommittees so that the people and companies of both countries could fully enjoy the benefits of the Agreement.

1.13.  Members wishing to learn more about the Agreement were encouraged to visit the website www.fta.go.kr which contained the full text of the Agreement and other relevant information.

1.14.  In conclusion, she hoped that the session would contribute to further facilitating the WTO's Transparency Mechanism by enhancing Members' understanding of the Agreement. While listening to the views of other Members, she would try her best to answer any additional questions. Once again, on behalf of the Korean delegation, she thanked the Secretariat for its hard work in preparing the factual presentation. She looked forward to a fruitful discussion.

1.15.  The representative of Indonesia thanked the Korean Delegation for its statement and presentation on the Agreement, outlining its scope and benefits. Indonesia joined Korea in expressing gratitude to the Secretariat for preparing a thorough factual presentation of the Agreement. He also thanked Türkiye for their question regarding the Agreement.

1.16.  It was important to note that the Agreement had been a strong testament to both countries' interests in to elevating their bilateral trade relations to a new height. Since they had begun their engagement in the ASEAN-Korea FTA in 2010, they continued to seek further enhancement of economic cooperation through the comprehensive bilateral agreement.

1.17.  As noted by the Korean Delegation, negotiations for the Agreement had begun in 2012 and had been concluded in 2019. The Agreement had later been signed in 2020 and had entered into force on 1 January 2023. More importantly, the agreement further complemented both the ASEAN-Korea FTA and RCEP.

1.18.  Indeed, the implementation of the Agreement was expected to benefit both countries across various sectors covered in the Agreement. For example, on trade in goods, Indonesia would benefit from an additional 5.5% of Korea's tariff liberalization compared to 90% in ASEAN-Korea FTA. Indonesia would also eliminate tariffs for 92% of tariff lines for Korea by the end of the staging period. Indonesia would also provide tariff elimination through the User Specific Duty-Free Scheme (USDFS) for import of raw materials needed by Korean invested industries in Indonesia.

1.19.  Furthermore, the Agreement provided a comprehensive framework aimed at further improving trade in services, in which Indonesia opened over 100 sub-sectors to 100% foreign equity participation. Additionally, both countries had committed to facilitating the movement of intra-corporate transferees, business visitors, and independent professionals, particularly benefiting Indonesian professionals in IT and engineering.

1.20.  With regard to investment, the Agreement provided protection, non-discriminatory treatment, fair and equitable treatment, and an Investor-State Dispute Settlement mechanism.

1.21.  In addition, the Agreement provided a framework for economic cooperation in various fields, including industry, agriculture, fisheries and forestry, rules and procedures, movement of natural persons, as well as other areas of cooperation.

1.22.  To conclude, Indonesia was committed to ensuring the full utilization of the Agreement, maximizing its benefits for both economies. He appreciated the excellent collaboration with the Korean Government in preparing for the review and looked forward to further deepening their trade and economic relations. He believed the exercise underscored Indonesia's commitment to transparency, as one of the WTO's principles, and it would enhance Members' understanding of the Agreement.

1.23.  The representative of the European Union thanked Korea and Indonesia for the presentation and wished them success in the implementation of the Agreement.

1.24.  The representative of China expressed her appreciation to all the Parties for their efforts in implementing the Transparency Mechanism which had provided them useful information to better understand the Agreement. She also expressed her appreciation to the Secretariat for preparing the factual presentation and wished the Parties success in implementation of the Agreement.

1.25.  The Chair noted the consideration of the goods and services aspects of the Comprehensive Economic Partnership Agreement between Indonesia and the Republic of Korea, had allowed the Committee to clarify a number of questions and conclude oral discussion of the RTA in accordance with paragraph 11 of the Transparency Mechanism. Any delegations wishing to ask follow‑up questions were invited to forward submissions in writing to the Secretariat by 9 July 2024 and Parties were asked to submit replies in writing by no later than 23 July 2024. In accordance with paragraph 13 of the Transparency Mechanism all written submissions, as well as minutes of the meeting would be circulated promptly, in all WTO official languages, and made available in the WTO database on RTAs.

1.26.  The Committee took note of the comments made.

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