Indonesia and the European Union concluded a free trade agreement on Tuesday in Bali, following negotiations that had lasted almost a decade and gained momentum after the rise in US tariffs.
The agreement, signed by Indonesian Economy Minister Airlangga Hartarto and EU Trade Commissioner Maros Sefcovic, is designed to facilitate trade between the 27 EU member states and Southeast Asia’s largest economy.
It is expected to open a new market for European companies, strengthen supplies of critical raw materials and boost investment in Indonesia’s fast-growing sectors.
In 2024, the EU was Indonesia’s fifth-largest trading partner, while Indonesia ranked 33rd for the EU. Bilateral trade between the two markets reached €27.3 billion last year.
The trade deal, known as the Comprehensive Economic Partnership Agreement (CEPA), will reduce tariffs on European agri-food and traditional products, while also protecting key sectors such as automotive, chemicals, and machinery, the European Commission stated in a press release.
Around €600 million in annual tariffs on EU exports to Indonesia will be eliminated, covering a range of products including cars, agri-food products, dairy, meat, fruit, and vegetables.
Sensitive items, such as rice, eggs, bananas, chicken, and ethanol, will be excluded, while limited quotas will apply to garlic, mushrooms, and sweetcorn.
The agreement also contains sustainability guarantees, including commitments on climate change, the environment, and workers’ rights.
Exports of critical raw materials, such as nickel, cobalt, copper, and tin, will be expanded. Indonesia holds the world’s largest nickel reserves and accounted for more than half of global production last year; it is also the world’s second-largest producer of tin.
The European Parliament must still ratify the deal, as must EU member states and Indonesia's parliament.
