Germany backs EU-Indonesia trade pact to curb China reliance

German Chancellor Olaf Scholz said Sunday that he will press for a trade agreement between the European Union and Indonesia as part of his country’s efforts to reduce its reliance on China for crucial raw materials

German Chancellor Olaf Scholz said Sunday that he will press for a trade agreement between the European Union and Indonesia as part of his country's efforts to reduce its reliance on China for crucial raw materials.

Speaking at the opening of the annual Hannover trade fair, Scholz told Indonesian President Joko Widodo that a trade deal between Southeast Asia's most populous nation and the 27-nation bloc would create an economic area with 700 million people.

“I am working to finally get this agreement across the finish line,” Scholz said of the negotiations between Jakarta and Brussels, which have been ongoing since 2016.

The German leader said he was similarly hopeful about talks between the EU and the Mercosur bloc in South America, Mexico, Australia, Kenya and India.

“Here too, a whole new dynamic has emerged in recent months,” he said, adding that such agreements were necessary to help countries reduce their dependence on particular markets.

Germany is particularly concerned about becoming too reliant on China, including for crucial commodities needed for digitalization and the shift toward a zero carbon economy.

“At the moment we import many of them from China,” Scholz said.

“And that's despite the fact that rare earth, copper or nickel are often not extracted there but in countries such as Indonesia, Chile or Namibia,” he said. “We want to change that.”

Scholz said building processing facilities for such raw materials in the countries where they are found would benefit the local economy and should be part of any new trade deal.

Indonesia is the partner country of this year's Hannover fair.