EU and Indonesia finalize major trade deal after nine years of negotiations
- The EU and Indonesia signed a trade agreement eliminating customs duties on EU goods, improving market access for EU exporters.
- Sensitive products such as rice and sugar will continue to have tariffs to protect European markets.
- This agreement represents a strategic effort by the EU to diversify trade relations amid tensions with the US.
On September 23, 2025, the European Union and Indonesia successfully concluded negotiations for a Comprehensive Economic Partnership Agreement (CEPA) in Bali, ending over nine years of discussions. This agreement aims to eliminate customs duties on a vast array of goods, including agricultural products and car parts, facilitating greater access for EU exporters to the Indonesian market. European Commissioner for Trade, Maroš Šefčovič, emphasized the strategic importance of such trade relationships in today's fluctuating global economy, which not only promote economic gains but also foster trust and resilience between nations. The deal is particularly significant for the EU as it opens up the largest economy in Southeast Asia, providing European firms the opportunity to penetrate this vibrant market. As part of the accord, while almost all tariffs on agricultural products will be removed, certain 'sensitive products' like rice, sugar, and bananas will still incur tariffs to protect local markets in Europe. The abatement of tariffs extends to automobiles as well, with a gradual reduction of Indonesia's existing 50 percent import duty on vehicles, benefiting EU automotive exports and potential investments in electric vehicles. Furthermore, this trade agreement is seen as a gateway to enhancing the supply chain for critical raw materials needed by the EU, especially nickel, which is essential for batteries and cleaner technology industries. The EU has been increasingly motivated to diversify its trade partnerships in light of deteriorating relations with the United States. The agreement with Indonesia follows other significant negotiations aimed at broadening trade including ongoing discussions with India and the Mercosur countries. The finalization of this trade deal marks a notable milestone in EU-Indonesia relations, creating opportunities for businesses and farmers in both regions. The agreement has to be ratified by EU member states and the European Parliament to come into effect, but it signifies a strong commitment to enhancing economic cooperation in a strategically important part of the world.