Indonesia-EU trade agreement negotiations

The Indonesian government is accelerating preparations for the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA). Officials have set a target to sign the agreement by late September or October 2026, with full implementation aimed for early 2027. To ensure a seamless transition when Indonesia’s Generalized System of Preference status expires at the end of 2026, the government intends to use a Presidential Regulation mechanism for ratification.

The agreement is designed to liberalize trade by reducing tariffs, with expectations that approximately 90% to 98% of tariff lines will eventually drop to 0%. This is intended to boost Indonesian exports in sectors including palm oil, footwear, textiles, furniture, coffee, and agriculture. Trade Minister Budi Santoso stated that administrative documents and ratification drafts are prepared, pending the readiness of the 27 European Union member states. Industry leaders, including the Indonesian Palm Oil Association (Gapki), anticipate the agreement could potentially double national export values. Specifically, a provision for zero-tariff access for crude palm oil exports with a quota of up to 1 million tons is expected starting in 2027.

Beyond trade liberalization, the partnership seeks to drive European investment into high-value and sustainable sectors in Indonesia, such as renewable energy, the digital industry, electric vehicle manufacturing, and pharmaceuticals. However, industry experts warn that non-tariff barriers remain a challenge, particularly the European Union Deforestation Regulation (EUDR). Compliance with EUDR regarding forest degradation and geolocation requirements for smallholder farmers remains a critical factor for continued market access.