EU-INDONESIA COMPREHENSIVE ECONOMIC PARTNERSHIP AGREEMENT (CEPA)

The Ministry of Economy, Investments and Industry has announced the conclusion of negotiations on the Economic and Trade Partnership Agreement (CEPA) between the European Union and Indonesia, which is expected to be signed by the end of 2026.

Negotiations on a free trade agreement with Indonesia began in July 2016. In July 2025, a political agreement was reached on the conclusion of the free trade agreement, leading to the completion of negotiations on September 23, 2025.

Key aspects of CEPA

The agreement between the European Union and Indonesia will create a free trade area covering more than 700 million consumers, based on transparency and predictability. It is mutually beneficial because the economies of the EU and Indonesia are highly complementary, with both sides producing and exporting products that, to a significant extent, do not compete directly with each other. The agreement will bring significant benefits to key economic sectors on both sides. In addition, CEPA represents an important milestone for the EU and Indonesia in promoting sustainable growth and the green transition.

The agreement will provide EU economic operators and companies with preferential access to the Indonesian market through:

• Eliminating import duties on 98.5% of tariff lines and simplifying procedures for EU exports to Indonesia, including key export products such as motor vehicles and agricultural and food products. Indonesia will eliminate high tariffs on industrial products such as motor vehicles (current tariffs are as high as 50%), machinery and electrical equipment, pharmaceuticals and chemicals, as well as agricultural and food products.
• Expanding opportunities in services and digital trade. One of Indonesia’s key commitments is that, for the first time, the country has agreed to prohibit the imposition of customs duties on electronic transmissions.
• Creating new investment opportunities, thereby promoting the integration of supply and value chains on both sides.
• Establishing a bilateral safeguard mechanism allowing the EU and Indonesia to impose temporary measures if a significant increase in preferential imports causes or threatens to cause serious injury to their domestic industries.
• Establishing clear rules for the application of sanitary and phytosanitary (SPS) requirements, covering food safety and animal and plant health. The way in which the EU adopts and applies its food safety rules will remain unchanged, regardless of whether products are produced domestically or imported.

The agreement will provide EU farmers with significantly improved opportunities to sell their products in Indonesia through the elimination of tariffs on key EU exports such as dairy products, meat, fruit and vegetables, as well as a wide range of processed foods.

The agreement will protect 221 EU geographical indications and 72 Indonesian geographical indications covering agricultural and food products. It also protects sensitive agricultural and food products such as rice, sugar and fresh bananas, for which existing tariffs will be maintained, while access to the EU market for other sensitive products will be limited through tariff-rate quotas.

The EU-Indonesia Economic and Trade Partnership Agreement (CEPA) has a strong sustainability pillar, fully integrating the objectives of the EU’s approach to Trade and Sustainable Development (TSD) with regard to climate, environmental and workers’ rights commitments and their implementation.

The agreement designates the Paris Agreement as an essential element and promotes trade and investment in products that are vital to achieving environmental and climate objectives, including renewable energy sources and low-carbon technologies. CEPA will also establish a platform for cooperation, trade facilitation and dialogue on a range of trade-related environmental and climate issues.

The signing of CEPA is expected to take place by the end of 2026, after which the agreement is expected to enter into force in the first quarter of 2027.

The agreed texts of the agreement have been published in English HERE.