The Council of the European Union has received a proposal from the European Commission for a Council Decision to conclude a Comprehensive Economic Partnership Agreement (CEPA) between the EU and Indonesia, with the full text of the Agreement annexed. The proposal, published on 29 June 2026, establishes a free trade area aimed at liberalising and facilitating trade and investment between the two parties.
The Agreement provides for the reduction or elimination of customs duties on originating goods according to each Party's schedule in Annex 2-A, with base rates specified there. Four years after entry into force, the Parties shall consult on accelerating tariff reduction or elimination upon request of a Party. A Party may unilaterally accelerate tariff reduction but can raise duties back to the scheduled level. Goods under tariff lines marked "X" in Annex 2-A are excluded from any future reduction or elimination.
Export duties, taxes or charges are generally prohibited, but measures adopted or maintained prior to 13 July 2025 are excluded, except for goods subject to commitments in Annex 2-B. Future measures on goods obtained in mineral processing in the pre-smelting phase are also excluded. If a Party applies export measures other than those excluded, the duty on exports to the other Party shall be reduced by 50 %. The Trade Committee may amend Annex 2-A and Annex 2-B.
The proposal now awaits adoption by the Council, after which the European Parliament will need to give its consent before the Agreement can enter into force. The CEPA is expected to boost bilateral trade, particularly in goods such as palm oil, textiles, and machinery, while also addressing non-tariff barriers and investment protections.
Stakeholder impact EU exporters to Indonesia, especially in manufacturing and agriculture, stand to benefit from phased tariff elimination, reducing costs and improving market access. Indonesian exporters, particularly in palm oil and textiles, will gain preferential access to the EU market, though they face competition from other trade partners. EU producers of sensitive goods, such as certain agricultural products, may face increased competition from Indonesian imports, though exclusions and phase-in periods offer some protection. Consumers in both regions could see lower prices and greater product variety as trade barriers fall.
Institutional follow-up The Council will now examine the Commission proposal and is expected to adopt the Decision in the coming months. The European Parliament will then be asked to give its consent under the ordinary legislative procedure. Once ratified, the Agreement will establish a Joint Committee to oversee implementation and a Trade Committee to handle tariff amendments.