Indonesia-EU Trade Deal Finalized After Decade of Talks

DENPASAR, Indonesia – After nearly ten years of negotiations, Indonesia and the European Union have finalized a landmark trade deal that could reshape economic ties between Southeast Asia and Europe. The Indonesia-European Union Comprehensive Economic Partnership Agreement (CEPA) was signed in Bali by EU Trade Commissioner Maros Sefcovic and Indonesian Minister of Economic Affairs Airlangga Hartarto.

The agreement promises to open strategic sectors for investment, including electric vehicles, electronics, and pharmaceuticals, while significantly reducing tariffs on trade between the two regions. EU exporters are expected to save around €600 million ($708 million) annually on duties, making European goods more affordable for Indonesian consumers.

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A Decade-Long Journey

Talks between Indonesia and the EU began in 2016 but faced numerous obstacles, particularly concerns over palm oil production and deforestation. Analysts say the urgency to finalize the deal increased amid global trade tensions, notably due to US tariff policies, which highlighted the need for closer economic partnerships.

“This is a ten-year journey that reflects our commitment to fair, open, and sustainable trade,” said Airlangga Hartarto during a press briefing. The deal is projected to be implemented by 2027.

Tariff Reductions and Export Opportunities

Once the agreement takes effect, about 80 percent of Indonesian exports to the EU will be tariff-free. Key sectors expected to benefit include palm oil, footwear, textiles, and fisheries. For Indonesia, whose population exceeds 280 million, this opens access to one of the world’s largest consumer markets.

The EU is Indonesia’s fifth-largest trading partner, with bilateral trade reaching $30.1 billion last year. European businesses will gain improved access to Indonesia’s market, while Indonesian products may see greater competitiveness in Europe.

Environmental Concerns

Despite the economic promise, environmental activists have raised concerns over the potential impact on deforestation. Greenpeace Indonesia warned that increased palm oil demand could lead to further clearing of natural forests. The EU had previously planned import restrictions on goods linked to deforestation but recently proposed delaying the implementation of these rules by a year following backlash.

The agreement also includes a protocol on palm oil, aimed at addressing sustainability, though specific details have not been disclosed.

The Indonesia-EU CEPA represents a major step in strengthening economic relations, balancing trade growth with ongoing environmental and regulatory challenges. Both sides emphasize mutual benefits, signaling a new era of collaboration in one of Asia’s fastest-growing markets.