Indonesia-Korea Comprehensive Economic Partnership Agreement (IK-CEPA) is a free trade agreement between Indonesia and South Korea signed on September 5, 2020. This agreement, which took almost a decade to negotiate, is expected to enhance the economic ties between the two countries and provide a platform for cooperation in various sectors.
The IK-CEPA is the most comprehensive economic agreement signed between Indonesia and South Korea. It covers a broad range of sectors including trade in goods, services, investment, intellectual property, and e-commerce. The agreement also includes several chapters on non-tariff measures, rules of origin, and dispute settlement mechanisms.
Under the agreement, both countries have agreed to eliminate tariffs on almost all goods over time. Initially, tariffs on approximately 92% of goods traded between the two countries will be removed, with the remaining goods being gradually phased out over a period of 20 years. This will provide a significant boost to trade between the two countries, which stood at USD 20 billion in 2019.
In addition to the removal of tariffs, the agreement also aims to increase investment flows between the two countries. South Korean companies are already the largest foreign investors in Indonesia, and this agreement is expected to further enhance investment opportunities in sectors such as manufacturing, infrastructure, and services.
Moreover, the agreement includes chapters on intellectual property and e-commerce. These chapters are significant as they cover issues related to patents, trademarks, copyrights, and trade secrets. The e-commerce chapter will provide a framework for online transactions between the two countries, which is expected to boost cross-border e-commerce and digital trade.
The IK-CEPA is not just about the benefits to trade and investment. It also includes provisions for cooperation in other areas such as education, culture, and tourism. The agreement aims to promote people-to-people exchanges and enhance the understanding between the two countries.
Overall, the Indonesia-Korea Comprehensive Economic Partnership Agreement is a significant development for both countries. It will enhance economic cooperation, promote investment and trade, and provide a framework for cooperation in other areas. This agreement is expected to lead to increased economic growth, job creation, and prosperity for both Indonesia and South Korea.
