EU and Indonesia Reach Free Trade Deal 

Indonesia and the European Union concluded a free trade agreement Tuesday after nearly a decade of negotiations, with officials from both sides hailing the deal as a milestone aimed at boosting exports and investment, while also insulating their economies from global tariff wars, Reuters reported. 

Signed in the Indonesian tourist hub of Bali, the Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA) will remove tariffs on more than 90 percent of products, most immediately, and the rest within five years, including Indonesia’s 50 percent duty on European cars.  

EU exporters are expected to save about $708 million annually in duties, while Jakarta expects bilateral trade – valued at $30.1 billion last year – to double within five years of implementation. 

The pact will open Indonesian access to the EU’s markets for palm oil, textiles, coffee, footwear, and fisheries, with 80 percent of exports to the bloc set to become tariff-free.  

Speaking in Bali, EU Trade Commissioner Maroš Šefčovič said the deal will provide EU companies new opportunities in chemicals, machinery, and food products, as well as access to critical minerals – such as nickel, copper, bauxite, and tin – that are vital for the bloc’s clean tech industries. 

Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto also said Jakarta is negotiating partnerships with European automakers on batteries and electric vehicle production. 

The parties have been negotiating a free trade agreement since 2016.  

Analysts said the agreement was strongly shaped by global pressures, with US President Donald Trump’s sweeping tariff policies prompting urgency on both sides to secure alternative markets, Agence France-Presse added. 

Since Trump’s reelection, the EU has forged new trade alliances with a number of nations and economic blocs, including Singapore, Vietnam, Mexico, and Latin America’s Mercosur. 

The Indonesia-EU CEPA agreement must still undergo legal review and ratification by both sides, with implementation expected by January 1, 2027. 

Still, lingering tensions remain over the EU’s deforestation regulation, which bans imports linked to forest clearance after December 2020.  

The bloc has delayed its implementation to the end of this year, and Hartarto said Šefčovič promised “special treatment” for partners with trade deals.  

Environmental groups warned the pact could worsen deforestation.