On 29 June 2026, the European Commission proposed a Council Decision to conclude the Comprehensive Economic Partnership Agreement (CEPA) between the European Union and Indonesia. The agreement aims to liberalise trade and investment, covering goods, services, public procurement, and sustainable development, and is expected to boost bilateral trade flows and economic cooperation.
The proposal marks the formal step toward ratification after negotiations, which began in 2016, were concluded in principle in 2024. The agreement will remove tariffs on a wide range of products, open services markets, and include commitments on labour rights and environmental protection. It also contains a dispute settlement mechanism and provisions for technical cooperation.
The Commission's proposal now requires unanimous approval by the Council of the EU, followed by consent from the European Parliament. Once ratified, the CEPA will replace the current bilateral trade framework and provide a comprehensive legal basis for EU-Indonesia economic relations. The agreement is part of the EU's broader strategy to deepen ties with the Indo-Pacific region and diversify supply chains.
EU exporters, particularly in machinery, chemicals, and agricultural products, stand to gain from reduced tariffs and improved market access. Indonesian exporters of palm oil, textiles, and electronics will benefit from lower EU duties, though the agreement includes sustainability provisions that may require compliance costs. EU consumers may see lower prices on Indonesian goods, while domestic producers in sensitive sectors such as rice and sugar face increased competition. The agreement also includes a chapter on small and medium-sized enterprises (SMEs) to help them utilise the new opportunities.
The Council is expected to examine the proposal in the coming months, with the European Parliament's Committee on International Trade (INTA) scheduled to review the text. The agreement is likely to be debated in the context of the EU's trade policy review and its engagement with ASEAN.