On 23 September 2025, the European Union and Indonesia concluded negotiations on a Comprehensive Economic Partnership Agreement (CEPA) and an Investment Protection Agreement (IPA). This milestone reflects the EU’s strategy to diversify its trade relations through new strategic alliances.
The CEPA’s main goals are to:
– Strengthen economic ties with one of the largest economies in the Indo-Pacific region.
– Open major export opportunities to a market of more than 280 million consumers, particularly for agrifood products.
– Promote sustainable growth and support the green transition.
– Secure supply chains and diversify sources of energy and raw materials.
– Boost digital trade and investment flows.
– Contribute to economic growth and job creation on both sides.
Key facts about Indonesia
– Population: 283 million.
– EU exports to Indonesia: €9.7 billion (2024).
– EU investment stock: €25.1 billion (2023).
– Over 15,000 EU SMEs export to Indonesia.
– EU exports to Indonesia support 200,000 EU jobs.
– Indonesia is the 12th largest economy outside the EU, with a GDP of €1.3 trillion.
– It is the EU’s 5th largest trading partner in ASEAN and the largest ASEAN economy (35% of regional GDP).
Key benefits for EU companies
– Removal of 98.5% of Indonesian tariffs on EU products.
– Estimated savings of over €600 million in customs duties.
– Opening of Indonesia’s services market in sectors such as telecommunications and IT.
– A more attractive regulatory environment for EU investors in electric vehicles, renewable energy, and electronics.
– Simpler and faster customs procedures.
– Integration of supply chains in critical raw materials.
– Significant tariff reductions: 50% on cars, up to 15% on machinery, up to 25% on chemicals, and up to 15% on pharmaceuticals.
– Stronger protection of intellectual property and effective tools to combat counterfeiting.
New opportunities for EU farmers
– The EU already exports more agrifood products to Indonesia than it imports (€1 billion annually).
– Tariffs will be removed on dairy, meats, fruit, vegetables, and processed foods.
– Protection of 221 EU Geographical Indications (Roquefort, Kalamata olive oil, Lübecker Marzipan, etc.) and 72 Indonesian ones.
– Clearer and more predictable food safety procedures.
– No new market access granted to sensitive EU products such as rice, sugar, eggs, fresh bananas, or ethanol; limited quotas apply to garlic, mushrooms, sweetcorn, manioc starch, and high sugar-content products.
Boosting sustainability and the green transition
– The agreement includes a strong sustainability pillar, with enforceable commitments on labor, environment, and climate issues.
– The Paris Agreement is established as an essential element of CEPA.
– Enhanced cooperation on responsible trade, renewable energy, low-carbon technologies, and palm oil.
– Elimination of tariffs on green goods and improved regulatory framework for EU investors.
Supporting the digital transition
– A full digital trade facilitation package, including e-signatures, secure online transactions, and increased legal certainty.
– Prohibition of customs duties on electronic transmissions (software, digital content, etc.).
– For the first time, Indonesia will allow 100% foreign ownership in telecommunications and computer services.
Diversifying energy sources and securing critical raw materials
– Indonesia is a global leader in nickel and cobalt, vital for the green and digital transitions.
– CEPA ensures stability and predictability in access to these resources.
– Duty-free quotas for crude palm oil and palm kernel oil, strategic inputs for EU industries.
– Commitment to environmental impact assessments to avoid negative effects from mining activities.
The final CEPA and IPA texts will undergo legal review, be translated into all official EU languages, and then submitted to the Council and the European Parliament for signature and ratification. Once this process is complete, both agreements will enter into force.
