The Council of the European Union has been asked to authorise the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the EU and Indonesia, following the conclusion of negotiations on 23 September 2025. The proposal, published on 29 June 2026, would eliminate tariffs on over 98% of tariff lines, covering close to 100% of trade value, with 80% liberalised upon entry into force and full implementation within five years.
The agreement marks a significant shift in EU-Indonesia trade relations. Indonesia will graduate from the EU's Generalised Scheme of Preferences (GSP) on 1 January 2027, moving to a reciprocal preferential framework. The CEPA provides direct protection for 221 EU and 72 Indonesian geographical indications, safeguarding product names such as Champagne and Parmigiano-Reggiano in the Indonesian market.
A dedicated automotive annex ensures that EU vehicles holding UN type-approval certificates face no additional testing or marking requirements in Indonesia, a key concession for European carmakers. The agreement also includes a bilateral safeguard mechanism allowing temporary measures if a surge in preferential imports causes serious injury to domestic industry.
The Commission estimates that foregone duties could reach between EUR 630 million and EUR 700 million per year upon full implementation, representing a substantial reduction in tariff revenue for both sides but also lower costs for exporters and consumers.
The Council must now decide whether to sign the agreement. If signed, it will be submitted to the European Parliament for consent before ratification. A Trade Committee will supervise implementation, and Domestic Advisory Groups will meet at least once a year to monitor the agreement's impact.
EU exporters, particularly in automotive, food and beverages, and machinery, stand to benefit from tariff elimination and streamlined regulatory requirements. Indonesian exporters of palm oil, textiles, and electronics gain preferential access to the EU market, though they face increased competition from EU products. EU consumers may see lower prices on Indonesian goods. Domestic industries in both regions could face adjustment pressures from import competition, with the safeguard mechanism providing a limited safety net.