The European Union (EU) and Indonesia have concluded a long-anticipated trade agreement that eliminates tariffs on nearly all European exports to Southeast Asia’s largest economy, while enhancing the bloc’s access to vital raw materials.
The agreement eliminates import duties on 98.5% of tariff lines and streamlines procedures for goods exported to Indonesia. According to the European Commission, the deal is expected to save EU exporters around EUR 600 million (approximately USD 650 million) each year in levies on cars, machinery, chemicals, and pharmaceuticals. The Comprehensive Economic Partnership Agreement (CEPA) includes provisions protecting 221 European Union food products, including specialties such as Roquefort cheese and Lübecker Marzipan.
Indonesia, the world’s fourth most populous country, serves as a vital source of raw materials essential to Europe’s clean-tech and steel sectors. The trade agreement further removes tariffs on a range of agricultural and food exports, including dairy products, meat, fruits, vegetables, and processed foods.
Under the agreement, Indonesia will gain tariff-free access to the European market for a designated quota of palm oil, an export long criticized for its links to deforestation. The deal also incorporates legally binding sustainability commitments, which can be enforced through a formal dispute settlement mechanism.
The recent tariff measures imposed by the U.S. President on both Europe and Indonesia have accelerated the pace of trade negotiations. In response, Brussels has been actively seeking to expand its trade partnerships amid growing geopolitical uncertainty and a shift toward protectionism in Washington. The new agreement follows the European Union’s recent moves to advance the ratification of trade deals with Mercosur and Mexico.
The agreement still requires approval from the Council and the European Parliament, though Indonesia has expressed hope that the ratification process will be expedited.
(Source: Euractiv)
