EU and Indonesia finalize significant trade deal on agricultural products
- The EU and Indonesia have reached a trade agreement to abolish most tariffs on agricultural products.
- Key raw materials for the green industry, such as nickel, will be included to enhance trade.
- The deal marks new opportunities for businesses in both regions and requires approval from EU member states.
On September 23, 2025, the European Union, represented by European Commissioner Maroš Šefčovič, announced a significant trade agreement with Indonesia aimed at abolishing almost all tariffs on agricultural products. This agreement represents the culmination of negotiations that have been ongoing since 2016 and signals a strategic effort by the EU to strengthen trade ties with Southeast Asian economies amidst declining relations with the United States. The deal notably excludes certain 'sensitive products,' such as rice, sugar, and bananas, to prevent market flooding in Europe. In addition to tariff reductions, the agreement is designed to facilitate increased imports of valuable raw materials crucial for the green industry, such as nickel, which is used in batteries and accumulators. This is particularly important as the EU aims to boost its green technology sectors. Furthermore, the deal promises to simplify processes for EU companies looking to offer services within Indonesia’s rapidly expanding computer and telecommunications sectors, enhancing bilateral economic opportunities. The European Commission anticipates that EU exporters could save approximately 600 million euros in import costs annually as a direct result of this agreement. This financial saving underscores the economic benefits that are expected to emerge from improved trade relations between the EU and Indonesia, potentially increasing market competitiveness for EU exporters. This development aligns with the EU’s broader strategy to secure trade agreements worldwide, especially as relations with the U.S. have become less favorable since the presidency of Donald Trump. The EU is also looking to finalize a free trade agreement with India and complete talks with the Mercosur countries, indicating its commitment to diversifying its trade partnerships globally. The agreement with Indonesia is seen as a pivotal step in opening new markets for European businesses, while also presenting opportunities for Indonesian farmers and businesses in a growing economic landscape.