Indonesian Civil Society Group Letter
Responding to the Indonesia-EU CEPA Negotiations in Bali 6-10 February 2023

Jakarta, 8 February 2023

Dear.

Mr. Joko Widodo, President of the Republic of Indonesia
Chairman and Vice Chairman of the DPR RI

Cq.

Minister of Trade of the Republic of Indonesia
Coordinating Minister for the Economy of the Republic of Indonesia
Minister of Foreign Affairs of the Republic of Indonesia

Indonesian Civil Society Coalition for Economic Justice or the MKE Coalition as the undersigned hereby convey our urging regarding the negotiation of the Comprehensive Economic Partnership Agreement between Indonesia and the European Union or the Indonesia-European Union Comprehensive Economic Partnership Agreement (I-EU CEPA). The Government plans to conclude the I-EU CEPA negotiations at the end of 2023 so that the 13th round of negotiations will be held on 6-10 February 2023 in Bali, Indonesia.

For this reason, the MKE Coalition urges the Government of Indonesia and the European Union Commission to not continue negotiations and completion of the I-EU CEPA before they can guarantee people’s democratic rights in the process of making decisions especially for policies that have a broad impact to all Indonesian people including the protection of human rights, social justice, and sustainable environment that potentially caused by the implementation of the IEU CEPA in Indonesia. The loss of those rights mentioned above has made the I-EU CEPA an agreement that has contributed greatly to the crisis of democracy, the climate crisis, and the crisis of social justice in Indonesia.

1.  Democratic Crisis and Abandonment of the Constitution in Indonesia

The problem of the crisis of democracy in the I-EU CEPA is not only the issue of transparency of the contents of the negotiating text and public participation in the negotiation process, but the I- EU CEPA will legalize the implementation of the Job Creation act (Perppu Cipta Kerja) by the Government of Indonesia. Even though the Indonesian Constitutional Court has stated that the Job Creation Law is contrary to the Indonesian Constitution and asked the Indonesian Government to amend the law within two years of the decision being issued. However, there has been no attempt by the Government of Indonesia and the DPR RI to carry out the Constitutional Court’s decision as mandated by the Constitution. This was done by using the Job Creation Law as a basis for binding commitments to liberalization by the Government of Indonesia in the agreement. In fact, last December 2022, President Joko Widodo announced a Perppu so that the Job Creation Law could be implemented immediately. This is a form of neglect by the Indonesian Government towards the Indonesian Constitution.

For this reason, negotiations and settlements for the I-EU CEPA use substances in the Job Creation Law and have been declared contrary to the Constitution must be stopped immediately. In that case, the European Union Government also has contributed to the deepening of the democratic crisis in Indonesia and legalized the disregard for the Constitution by the Government of Indonesia. For this reason, the European Union must take responsibility for the loss of democracy and the narrowing of civic space in Indonesia.

The basic problem with the Job Creation policy is that the discussion and ratification of the Omnibus Law is carried out in an undemocratic and unconstitutional way. The urgency of coercing into the argument for legalizing the Job Creation policy also calls for broader regulations in making it easier for investors to be able to access natural resources, labor and the market on a larger scale without any balance to fulfill the protection of human rights, the environment and commitment to sustainable economic development.

The Job Creation Law has negative social, economic and environmental impacts. For example, workers do not get certainty of working status and decent wages; farmers are threatened with losing their land and access to seeds, the impact of extractive industries without environmental impact assessment. The spirit of expanding investment for job creation has sidelined people’s economic sovereignty.

The I-EU CEPA negotiation process was also held behind closed doors and did not involve active public participation, especially civil society groups, to provide views on the contents of the agreement. Even civil society did not receive information regarding the schedule for the round of negotiations until the negotiations took place. This certainly injures the democratic process; especially since the I-EU CEPA negotiations will have a direct impact on the wider community.

2.  The climate crisis and ongoing environmental damage

The I-EU CEPA negotiations are a strategy for the European Union to push for its Green New Deal agenda. Many interests have taken into realization of the green economy, however, a green economy transition based on energy and digitalization issues will only again encourage the expansion of the extractive economy in Indonesia, especially to meet the need for various mineral raw materials needed in the green economy transition.

The green energy transition has increased the demand for essential minerals in the world. Free trade agreements are again a tool used to guarantee the supply chain of important minerals without any barriers to trade, especially the ban on mineral exports. In this regard, the European Union is accelerating its policy on the EU Critical Raw Materials Act in order to diversify trade cooperation in guaranteeing the supply of essential mineral materials. For this reason, in the I-EU CEPA, the European Union will ensure that the Energy and Raw Materials chapter regulates general discipline and commitments related to trade in goods, services and investment that will apply to raw materials and energy, including non-discrimination, elimination of import duties and export and other restrictions relating to import or export.

Previously, Indonesia had lost at the WTO over a European Union lawsuit related to the policy of banning raw nickel exports and domestic processing obligations. The EU’s interest in gaining access to Indonesian minerals through the Energy and Raw Materials Chapter in the I-EU CEPA will only deepen the exploitation of Indonesia’s extractive sources and exacerbate environmental damage and increase the potential for human rights violations experienced by affected communities around industrial areas. The industrial downstream agenda for the green energy transition in Indonesia is a fake solution that is being promoted by the Government. Therefore, trade and investment cooperation in the I-EU CEPA will further deepen the climate crisis and ongoing environmental damage. This is a serious problem in realizing a just transitional agenda for the Indonesian people.

In addition, setting up the Investor-State Dispute Settlement (ISDS) mechanism in the I-EU CEPA Investment chapter will only open up the potential for Indonesia to be sued again by multinational corporations in international arbitration institutions such as ICSID. Moreover, the competition for important mineral materials in the world will open up opportunities for increased ISDS lawsuits by foreign investors. Previously, Indonesia was sued by 9 foreign investors, the majority of which were foreign mining companies, and this lawsuit had an impact on the loss of the state financial budget, as well as hindered the Government of Indonesia from improving policy governance in Indonesia, especially in the extractive sector.

The Trade and Sustainable Development (TSD) chapter is proposed to make the I-EU CEPA a “green FTA” also does not show the serious commitment of both parties to protecting the environment and protecting human rights. For example, the absence of regulations regarding law enforcement and conflict resolution mechanisms. Even though the TSD regulates, among other things, Indonesia’s leading commodities such as palm oil. Palm oil is currently associated with many unresolved problems, especially related to conflicts in Indonesia. In a report (Pocaji, 2020), shows that conflicts in the palm oil sector are relatively rarely resolved. Even when the conflict is resolved, it takes a very long time, an average of nine years. In addition, for example, the working situation of oil palm plantation workers, especially migrant workers in Malaysia, who work without documents in bad working conditions and experience prolonged violations of their rights. Then they were arrested and detained in an immigration deportation detention center due to undocumented immigration status with conditions and treatment in detention that did not meet human rights principles.¹ This kind of thing has never been a concern in FTA negotiations even though the commodity is one of Indonesia’s main export commodities.

This means that it will be difficult for the I-EU CEPA to indirectly push for changes in environmental management policies, especially the management of oil palm plantations, if there is no strong commitment from both parties. Apart from that, politically, the European Union issued regulations on Deforestation-Free Products or the European Union Deforestation Regulation (EUDR) in late 2022. This law prevents commodities such as palm oil, timber, coffee and cocoa from entering the European Union market if they are proven to cause deforestation and land degradation.

This rule then forces all producing countries to comply with all the principles and criteria regulated in it. Many parties, especially the Government of Indonesia itself, consider this step a form of trade barrier, especially since the law is implemented unilaterally. So continuing the I-EU CEPA without considering other aspects such as how the regulatory mechanism for environmental protection and human rights protection as well as consideration of the European Union’s policy situation will undermine Indonesia’s own position.

3.  Gender and Social Justice Crisis

The I-EU CEPA negotiations do not only regulate export-import matters, but also regulate all aspects of social life, especially women, workers, farmers, fishermen, and indigenous peoples. This agreement will only facilitate monopoly and corporate economic control over the entire living space of the people.

Through the Intellectual Property Rights (IPR) chapter, the European Union continues to urge Indonesia to become a member of the UPOV 91 Convention. This has the potential to exacerbate the biodiversity crisis in Indonesia. For farmers, the 1991 UPOV provisions in the I-EU CEPA negotiations also have the potential to threaten the sustainability of small farmers where the 1991 UPOV will limit farmers’ rights to seeds, both the right to store, use, exchange, and sell seeds of dispersal material stored in agriculture as well as farmers’ rights. in participating in policy-making related to seeds. Corporate domination of seed intellectual property rights will kill subsistence and traditional agricultural practices by women farmers.

In the context of the European Union’s push towards Indonesia not only through the proposals put forward in the I-EU CEPA negotiations. But also in several forums such as East Asia Plant Variety Protection (EAPVP) which urged developing countries, one of which was Indonesia, to join as members of the 1991 UPOV. The 1991 UPOV Convention had a serious impact on the sustainability of the rights of small farmers, especially small breeders and seed farmers.

Furthermore, the provisions of the intellectual property chapter also have major implications for public access to cheap and affordable medicines. Through this agreement, the European Union urges the application of more stringent intellectual property protection beyond the standard protection of Trade-Related Aspects of Intellectual Property Rights, otherwise known as TRIPS Plus. This provision will threaten people’s access to drugs due to the loss of opportunity to produce generic drugs. Though medicine is a crucial sector that is needed. Departing from various health crises such as the COVID-19 and HIV pandemics, pharmaceutical companies use TRIPS to massively monopolize all needs including drugs, vaccines and other needs through high prices and production restrictions. Pharmaceutical companies also take advantage of this provision to gain maximum profit by ignoring public health interests. The implementation of TRIPS Plus will further exacerbate the situation of drug access in Indonesia.

The digital trade chapter in the I-EU CEPA has the potential to open up a wider impact on people’s lives due to the strong control of big tech over data obtained from various digital activities in society. Giant digital companies want data to move freely and want to remove all barriers to data movement across national borders, such as in cross-border data free flow arrangements in free trade agreements. Data monopoly by giant digital companies will only make developing countries become dependent again and are under their control. Personal data protection alone is not enough to protect against the threat of massive data collection in Indonesia. For this reason, there needs to be regulation regarding data governance that protects the interests of developing countries and is fair. And, the I-EU CEPA is not the right instrument to regulate this.

For this reason, the I-EU CEPA must remove or at least correct in principle and in detail provisions that benefit digital giant companies such as Cross Border Data Flow (cross-border data transmission), Prohibition of data localization, Prohibition of local data processing, Non- disclosure of sources software codes and algorithms, Elimination of import duties on digital products and/or electronic transmissions, Authorization on digital sales, Non-discrimination against digital products, Online consumer protection.

Market access and free trade, one of which is encouraged through the IEU CEPA, will only harm marginalized groups if it is carried out without referring to the realities that occur at the grassroots and is oriented towards economic growth without equal distribution efforts and increased welfare through the fulfillment of human rights.

In general, there is no mechanism for monitoring or analyzing social and environmental impacts arising from trade agreements or economic cooperation similar to the I-EU CEPA even though the trade and sustainability chapter has been covered and negotiated. That way, the trade and sustainability chapter has the potential to become a green washing tool for corporations and investors to put forward climate projects that take away living space and actually worsen the environment and the communities that live around it. Women, indigenous and rural communities, workers, farmers and fishermen will be directly affected by investment flows and corporate monopoly where their source of life will be lost. This was exacerbated by the weakening of domestic policy which was increasingly eroded due to encouragement from outside and the government’s permissive attitude.

Coalition demands:

In relation to all of the above, we, the civil society coalition for economic justice (MKE Coalition) urge that:

• Stop negotiating and finalizing the I-EU CEPA, which it has potential to legitimizes the Job Creation Policy (UU/Perppu Cipta Kerja) that is contrary to the Indonesian constitution.
• Cancel Perpu No 2 of 2022 concerning job creation.
• Implement the Constitutional Court Decision No. 91/PUU-XVIII/2020 which has declared the Job Creation Law unconstitutional.
• Open all the text and the information during negotiations on the I-EU CEPA, as well as space for conveying opinions and aspirations of civil society in the negotiation process that is being carried out.
• Stop the I-EU CEPA negotiations, which have the potential to take away space and sources of life for women, fishermen, farmers, laborers and indigenous peoples.

Best regards,
Indonesian Civil Society Coalition for Economic Justice:

1. Indonesia for Global Justice (IGJ)
2. Indonesia AIDS Coalition (IAC)
3. Serikat Petani Indonesia (SPI)
4. Konfederasi Serikat Buruh Seluruh Indonesia (KSBSI)
5. Kesatuan Perjuangan Rakyat (KPR)
6. Ekologi Maritim Indonesia (EKOMARIN)
7. Kaoem Telapak
8. Wahana Lingkungan Hidup (Walhi)
9. Sahita Institute (HINTS)
10. Solidaritas Perempuan (SP)
11. FIAN Indonesia
12. Koalisi Buruh Sawit (KBS)