After nearly a decade of discussions, Indonesia and the European Union have officially concluded negotiations on a comprehensive economic partnership agreement aimed at strengthening trade and investment ties. The deal will eliminate import tariffs on 98.5 percent of goods originating from the EU and entering Indonesia, while also streamlining market access for European products such as automobiles, dairy, meat, chocolate, and baked goods. According to the European Commission, this arrangement is expected to save European exporters approximately 600 million euros ($707.40 million) annually in duties, with an average reduction of 10 percent on EU exports to Indonesia. n nOn the other side, Indonesian exports will benefit from duty-free access to 90 percent of the EU market once the agreement takes effect. Key Indonesian exports like palm oil, coffee, textiles, and garments are anticipated to see increased demand in Europe. Airlangga Hartarto, Indonesia’s Coordinating Minister for Economic Affairs, expressed hope that the pact would become effective on January 1, 2027, pending legal review, translation, and formal ratification processes. n nBoth parties project that bilateral trade, which reached $30.1 billion in 2024, could double within the first five years following implementation. The agreement also aims to enhance cooperation in areas such as renewable energy, innovation, and critical mineral supply chains—resources Indonesia possesses in significant quantities. EU Trade Commissioner Maros Sefcovic highlighted that the deal would encourage greater European investment in Indonesia and support diversification of supply networks, particularly for materials essential to green technologies. n nEuropean Commission President Ursula von der Leyen emphasized the importance of securing reliable access to key minerals like nickel and cobalt, which are vital for battery and electric vehicle production. Indonesia is already engaging with European automakers to explore joint ventures in these sectors. n nDespite the progress, challenges remain. Eddy Martono, chairman of the Indonesian Palm Oil Association (GAPKI), noted that while tariff barriers are being lifted, non-tariff obstacles such as the EU Deforestation Regulation (EUDR) still pose difficulties. The EUDR mandates that palm oil shipments must be accompanied by proof they were not sourced from land deforested after 2020—a requirement Indonesia’s producers are working to meet ahead of the regulation’s full enforcement later this year. Martono stressed that resolving compliance issues under EUDR is crucial to fully realizing the benefits of the new trade agreement. n
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Indonesia, EU finalise trade deal after nine years of talks
NUSA DUA, Indonesia, Sept 23 (Reuters) – Indonesia and the European Union on Tuesday finalised their negotiations on a comprehensive economic partnership agreement after nine years of talks, aimed at boosting trade and investment. n nThe agreement will remove import duties on 98.5% of EU goods exported to Indonesia and simplify procedures for entry for EU products including cars and food products such as milk powder, cheeses, meats, chocolates and bakery items, the EU said. n nSign up here. n nFor the EU, the deal will result in savings of 600 million euros ($707.40 million) of duties averaging 10% a year on EU exports. n nIndonesian goods will enjoy zero tariffs in 90% of the EU market upon implementation, the Indonesian economic ministry said, which should boost shipments for palm oil, coffee, textile and clothing and other products. n nIndonesia ‘s Coordinating Minister for Economic Affairs Airlangga Hartarto said he is aiming for the pact to enter into force on January 1, 2027. n n”As we look ahead for the next stage, the legal scrubbing, translation, ratification, we reaffirm the determination to bring this (agreement) into force at the earliest opportunities,” Airlangga said at a signing ceremony in Bali. n nTrade between Indonesia and the EU is expected to double in the first five years of implementation, Indonesia said. n nIn 2024, trade between the two parties was $30.1 billion, according to Indonesia ‘s economic ministry. n n”We are looking forward for a supply chain between Indonesia and Europe including for critical minerals, renewable energies, innovation, as well as for investment,” Airlangga said. n nIndonesia is in talks with European automakers on partnerships in battery and electric vehicle production in the Southeast Asian country, Airlangga told reporters. n nEU Trade Commissioner Maros Sefcovic said in Bali the agreement would bolster investment into Indonesia by European companies and help diversify the supply chain, particularly for critical minerals, which Indonesia has in abundance. n nIn a separate statement, European Commission President Ursula von der Leyen said the agreement would help to provide “a stable and predictable supply of critical minerals, notably nickel and cobalt.” n nThe Chairman of the Indonesian Palm Oil Association (GAPKI) Eddy Martono said the deal would remove tariff barriers to the EU, a major buyer of palm oil. n nHowever, non-tariff barriers, including the EU Deforestation Regulation (EUDR), remain a hurdle for the industry, he said in a text message to Reuters. n nIndonesia is the world ‘s biggest palm oil producer and the EUDR requires its growers to provide documentation proving shipments did not come from areas deforested after 2020. n n”There is still homework to be done, namely the EUDR which must also be resolved immediately because it will be implemented later this year,” he said, which could reduce the effectiveness of the trade agreement. n n($1 = 0.8482 euros) n nReporting by Sultan Anshori in Nusa Dua, Bernadette Christina Munthe, Fransiska Nangoy in Jakarta, Philip Blenkinsop in Brussels; Editing by John Mair, David Stanway and Christian Schmollinger