Indonesia, EU sign long-awaited trade deal

Around 80% of Indonesian exports to the EU will be tariff-free after the deal comes into force,” Indonesian Minister of Economic Affairs said in June. “It is expected to benefit the country’s top shipments to the bloc including palm oil, footwear, textiles and fisheries,

Introduction

Indonesia and the European Union have officially signed the Comprehensive Economic Partnership Agreement (CEPA) in Bali, concluding nearly a decade of negotiations. This marks Brussels’ third major deal in Southeast Asia after Singapore and Vietnam, strengthening trade ties in a rapidly growing region.

What the Deal Covers?

The agreement opens doors for investments in electric vehicles, electronics, and pharmaceuticals, while addressing long-standing disputes around palm oil and deforestation.

EU Trade Commissioner Maros Sefcovic said the deal highlights a shared commitment to rules-based, fair, and open trade.

Key Takeaways

• €600 million annual savings for EU exporters through tariff reductions.

• 80% of Indonesian exports to the EU to become tariff-free, supporting palm oil, footwear, textiles, and fisheries.

• 280 million consumers in Indonesia will gain wider access to affordable European products.

• Disputes over deforestation policies led to a special protocol on palm oil.

• Global tariff wars and protectionism accelerated the final push for the deal.

• Expected implementation by 2027 after legal reviews and ratifications.

• Environmental groups warn of potential forest loss if palm oil demand spikes.

Why It Matters?

The Indonesia-EU CEPA provides stability amid global trade tensions, ensures long-term market access, and positions both partners for growth in strategic sectors. For the EU, it secures deeper access to Southeast Asia’s largest economy, while for Indonesia, it boosts exports and foreign investment opportunities.