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The European Union and Indonesia have concluded a free trade agreement that will eliminate most tariffs, marking the end of nearly a decade of negotiations.

The Comprehensive Economic Partnership Agreement (CEPA), signed in Bali, will cut duties on over 90% of products once fully implemented. Tariffs on European cars, currently 50%, will be phased out within five years, while levies on machinery, appliances, and chemicals will also fall to zero. The European Commission expects EU exporters to save about €600 million annually.

Indonesia projects the accord will boost shipments of palm oil, coffee, furniture, textiles, and clothing, with around 80% of its exports to the bloc set to enjoy tariff-free access. Bilateral trade, valued at roughly $30 billion in 2024, could double within five years of implementation.

The deal is scheduled to take effect on 1 January 2027, subject to ratification in both jurisdictions. However, Jakarta’s ban on nickel ore exports remains in place, while the EU’s Deforestation Regulation could limit palm oil exports despite the removal of tariffs.

The agreement comes as both sides seek to expand trade networks, with Brussels concluding deals with Mercosur and Mexico and Jakarta joining the BRICS grouping earlier this year.

Written: Aiman Haikal 

Country
Indonesia