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CEPA: Free trade on a geopolitical mission The importance of Indonesia and the Philippines for European trade and climate policy stems primarily from their wealth of raw materials, particularly as the world's number one and second largest producers of nickel – a key metal for battery production in electromobility. Indonesia holds approximately 22 percent of the world's nickel reserves and has established itself as a major global supplier – a fact that the EU intends to strategically leverage in its raw materials and climate foreign policy. Securing these supply chains is considered important for the European Green Deal and reducing dependence on China. The SIA findings also paint a worrying picture in the agreement with the Philippines : The economically weaker sectors – textiles, clothing, and electronics – are expected to grow, even though they are already known for exploitation, child labor, and poor working conditions. Women, children, and informal workers would be particularly affected. Indonesian non-governmental organizations (NGOs) also warn against adopting elements of the Indonesian "Omnibus Job Creation Law" into the trade agreement, as this would worsen human rights and labor protection in Indonesia . Unfortunately, the sustainability chapter proposed by the EU in its negotiations with Indonesia does not adequately address these problems. The draft text demonstrates that while the EU formally pursues ambitious goals and refers to key international standards, as long as binding dispute settlement mechanisms, clear sanctions, and consistent implementation obligations are not incorporated, this chapter will remain politically symbolic and legally weak. A truly human rights-based and environmentally sound trade policy requires more than voluntary cooperation formulas – it requires enforceable standards and civil society oversight mechanisms. Industrial policy sovereignty under pressure Not only would the regulations on commodity trading and public procurement restrict the regulatory scope of the partner countries; the planned agreements are also expected to contain comprehensive investment protection clauses, although it remains unclear to what extent these will be included in the agreement with the Philippines. Investment protection clauses with corporate rights of action (Investor-to-State Dispute Settlement (ISDS)) are highly problematic for several reasons. They enable foreign investors to sue states before private arbitration tribunals if political measures reduce their expected profits, thus forming the basis for massive interference with democratic sovereignty. Indonesia and the Philippines could be sued by EU companies in the future if, for example, they impose new environmental regulations, introduce stricter climate protection laws, or implement measures to protect indigenous rights. The prospect of billions in compensation claims can deter political decision-makers from even initiating urgently needed regulations – an effect known as "regulatory chill." For Indonesia, which has consciously distanced itself from existing ISDS agreements in the past, the reintroduction of such a system would be particularly contradictory. The government had already terminated numerous old investment protection agreements after they were repeatedly used against public interests . In a country struggling with massive environmental problems, land disputes, and social tensions related to resource extraction and palm oil production, ISDS mechanisms would further restrict the already limited political space for action. Time for fair trade relations Both Indonesia and the Philippines are pursuing their own strategic interests with the planned free trade agreement. For Indonesia, the main goals are improved access to the EU market for processed raw materials – especially nickel –, attracting foreign direct investment, and geopolitically reducing dependence on China. The Philippines, on the other hand, sees CEPA primarily as a hedge against the possible loss of the unilateral EU trade preferences (GSP+), from which the country currently benefits. CEPA is being used as an instrument to promote exports of electronics, textiles, and agricultural products and is interpreted as a symbol of a new economic policy orientation under President Ferdinand Marcos. In both cases, however, there is a tension between government industrial policy and criticism from civil society, which warns of human rights risks, ecological exploitation, and democratic deficits . The EU, for its part, intends to conclude the agreement with Indonesia swiftly. Negotiations with the Philippines are still in their early stages. The EU's desire to accelerate these agreements is an expression of a trade policy strategy that combines economic interests with geopolitical power. This strategy serves to secure raw materials for Europe's green transformation, but at the same time undermines the human rights situation, environmental standards, and industrial policy sovereignty of the respective partner countries. A fair and sustainable trade policy would look different. It would have to enshrine environmental standards, labor protection provisions, and the rights of indigenous communities in binding terms – including effective sanction mechanisms. It should also focus on regional value creation, technological cooperation, and raw material reduction through recycling and substitution. Furthermore, one thing is clear: a sustainable and fair trade policy must not only serve the interests of European industry. Instead of pursuing one-sided interests, what is needed are genuine partnerships – on equal terms. https://www.rosalux.de/news/id/53364? Back |
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