Indonesia and the European Union have finalized negotiations on a comprehensive trade agreement, marking a significant milestone after nearly a decade of talks. The Indonesia‑European Union Comprehensive Economic Partnership Agreement (CEPA) is the third deal Brussels has signed with Southeast Asian countries, following similar agreements with Singapore and Vietnam.
The pact, signed by EU Trade Commissioner Maroš Šefčovič and Indonesian Minister of Economic Affairs Airlangga Hartarto, aims to open investment in strategic sectors such as electric vehicles, electronics, and pharmaceuticals. According to EU President Ursula von der Leyen, EU exporters will save approximately €600 million ($708 million) annually in duties on goods entering the Indonesian market, making European products more affordable and accessible to Indonesian consumers.
Negotiations began in 2016 but initially made little progress because of disputes over palm oil and deforestation. The urgency to reach an agreement grew after U.S. President Donald Trump’s sweeping tariff policy, noted Deni Friawan, a researcher at the Centre for Strategic and International Studies. The final deal includes a protocol on palm oil, although the details have not been disclosed.
When the agreement comes into force, around 80 percent of Indonesian exports to the EU will be tariff‑free, benefiting top shipments such as palm oil, footwear, textiles, and fisheries. The EU is Indonesia’s fifth‑largest trading partner, with bilateral trade reaching $30.1 billion last year, and the deal will further open EU access to Indonesia’s market of roughly 280 million people.
Tensions remain, however, over the EU’s deforestation regulation, which bans exports of goods produced on land deforested after December 2020. Activists worry the trade agreement could spur increased deforestation driven by demand for Indonesian palm oil.
The agreement now faces legal checks, translation, and ratification by EU member states, the European Parliament, and Indonesian authorities. Implementation is expected by 2027. Its signing marks a significant step toward strengthening economic ties between the two parties and promoting open, rules‑based international trade.
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