https://thediplomat.com/2025/08/indonesia-and-perus-new-fta-is-a-model-for-south-south-cooperation/
Both countries, despite having a free trade agreement with the U.S. (Peru), and having negotiated with the Trump administration on their terms (Indonesia), received a 10 percent and 19 percent tariff, respectively.
Against this backdrop, the signing of the Indonesia-Peru Comprehensive Economic Partnership Agreement (IP-CEPA) on August 11 is more than a diplomatic milestone – it is the opening of a strategic route that, if properly leveraged, could accentuate the deepening trade integration of the Global South, in stark contrast to the protectionist shift in the West.
In many ways, the IP-CEPA is a representative case of the burgeoning South-South cooperation. Indonesia and Peru aren’t united by culture, language, or tribe, but by the motivation to escape the middle-income trap at the behest of free trade and raise the living standards for their citizens. And in a time of global competition between the U.S. and China, the IP-CEPA shows that countries in the Global South are crafting their own pragmatic path, multialigned, and unencumbered by the geopolitical agendas of the legacy major powers.
For Indonesia, access to Peru means not just entry into a new market of 33 million people, but also the opportunity to use it as a springboard to Brazil, Chile, Argentina, and the rest of South America. For Peru, Indonesia is the gateway to ASEAN – a bloc of over 650 million consumers – and to a domestic Indonesian market that is currently growing strongly, fueled by a middle class with increasingly sophisticated consumption habits. This corridor is not an isolated trade route, but a link between two regional platforms with significant weight. Logistically, new international trade infrastructure developments such as the new Port of Chancay in Peru – promoted and operated by China’s COSCO Shipping – can play a key role, reducing connection times and costs with Asia and reinforcing the viability of this new trans-Pacific axis.
On the other side, the Peruvian market will progressively receive Indonesian vehicle parts and spares, motorcycles, footwear, and textiles, as well as products like certified palm oil, paper, light machinery, and household appliances – all of which could lower costs for local companies that use these inputs. In a context of imported inflation and rising global logistics costs, diversifying suppliers can be as strategic as diversifying export markets.