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The Indonesia-European Union Comprehensive Economic Partnership Agreement (CEPA) is the third deal Brussels has signed with Southeast Asian international locations, after Singapore and Vietnam.
The pact was signed by EU Trade Commissioner Maros Sefcovic and Indonesian Minister of Economic Affairs Airlangga Hartarto in Bali and can open funding in strategic sectors resembling electrical autos, electronics, and prescribed drugs.
“By finalising this settlement, the EU and Indonesia are sending a strong message to the world that we stand united in our dedication to open rules-based and mutually useful worldwide commerce,” Mr. Sefcovic stated after the signing.
“In all, EU exporters will avoid wasting €600 million ($708 million) a 12 months in duties paid on their items coming into the Indonesian market, and European merchandise will likely be extra reasonably priced and accessible to Indonesian customers.” EU President Ursula von der Leyen stated in an announcement.
The proper second
Indonesia has been in talks with the EU since 2016, however negotiations for a commerce deal initially noticed little progress.
Issues resembling palm oil and deforestation posed obstacles, however U.S. President Donald Trump’s sweeping tariff coverage “created the urgency” to expedite an settlement, stated Deni Friawan, researcher on the Centre for Strategic and International Studies.
The commerce deal additionally included a protocol on palm oil, the EU stated in an announcement, with out offering particulars.
President Prabowo Subianto travelled to Brussels in July and introduced with EU chief Ursula von der Leyen that the 2 sides had reached a “political settlement” to conclude the deal after 19 rounds of negotiations.
Indonesian Chief Economic Minister Airlangga Hartarto stated uncertainties attributable to the “tariff warfare and protectionism” between main international locations pushed the 2 sides “to hunt certainty by means of a steady bilateral settlement”.
“This is a ten-year journey that has resulted in a milestone that displays our dedication and the dedication of stakeholders to an open, truthful, and sustainable financial help,” he advised a information convention.
The settlement was anticipated to “mitigate dangers from the impression of the worldwide tariff warfare”, Mr. Airlangga advised AFP in an announcement.
“This signing got here on the proper second. It was finalised due to Donald Trump’s tariff warfare, and we have to search another market in Europe, and Europe has the identical curiosity, they want a market to penetrate,” Bhima Yudhistira Adhinegara, govt director of the Center of Economic and Law Studies, advised AFP.
“Around 80% of Indonesian exports to the EU will likely be tariff-free after the deal comes into drive,” Mr. Airlangga stated in June. “It is predicted to learn the nation’s high shipments to the bloc together with palm oil, footwear, textiles and fisheries,” he added.
The EU is Indonesia’s fifth-largest buying and selling associate with bilateral commerce reaching $30.1 billion final 12 months.
“The settlement would additional open up EU entry to the Indonesian market of round 280 million folks,” Mr. Deni stated.
Green coverage tensions
Ties had been frayed by points together with a proposed import ban by Brussels on merchandise linked to deforestation that has angered Indonesia, a serious palm oil exporter.
Under the EU deforestation regulation, exports of an enormous vary of products – together with soy, timber, palm oil, cattle, printing paper and rubber – are prohibited if produced on land deforested after December 2020.
Mr. Airlangga stated Mr. Sefcovic had promised to offer “particular remedy” concerning the regulation for international locations which have signed commerce agreements with the bloc.
The EU has postponed the rule’s implementation to the top of this 12 months after a backlash.
However, activists are involved the commerce settlement will result in extra deforestation pushed by elevated demand for Indonesian palm oil.
“The remaining pure forests in palm oil concessions will doubtlessly be cleared within the close to future (and) transformed into plantations,” stated Syahrul Fitra of Greenpeace Indonesia.
Brussels reportedly pushed to incorporate provisions about deforestation within the settlement, however particulars haven’t been made public.
After Tuesday’s (September 22, 2025) signing, the 2 sides are anticipated to hold out steps together with authorized checks and translation of the official paperwork, Mr. Airlangga stated.
The deal will then should be ratified by EU members in addition to lawmakers within the European Parliament and Indonesia.
“The settlement is predicted to be applied by 2027,” Mr. Airlangga added.
