The Council of the European Union has been asked to approve the Comprehensive Economic Partnership Agreement (CEPA) between the EU and Indonesia, concluding nine years of negotiations. The proposal, published on 29 June 2026, would eliminate tariffs on over 98% of tariff lines, with 80% liberalised upon entry into force and reaching 96% after a five-year phase-out. Bilateral trade in goods stood at EUR 28.9 billion in 2025, while services trade reached EUR 9.3 billion in 2024. The agreement also protects 221 EU and 72 Indonesian geographical indications and removes technical barriers to trade, notably by recognising EU test reports and certificates for electronics, machinery, and energy-efficient products.
The CEPA includes a bilateral safeguard mechanism allowing temporary measures if import surges cause serious injury to domestic industry. It establishes a Trade Committee to supervise implementation, plus Domestic Advisory Groups that meet at least once a year. Indonesia will graduate from the Generalised Scheme of Preferences (GSP) on 1 January 2027, making the CEPA its preferential trade framework with the EU. Foregone EU customs duties are estimated at EUR 630-700 million annually upon full implementation.
The Council will adopt the decision after obtaining the European Parliament's consent. The agreement is expected to boost trade and investment between the two economies, with EU exporters gaining improved market access for industrial goods, agricultural products, and services. Indonesian exporters will benefit from tariff elimination on nearly all products, enhancing their competitiveness in the EU market.
EU producers in sectors such as machinery, electronics, and chemicals will gain from reduced tariffs and regulatory alignment, but may face increased competition from Indonesian imports in labour-intensive sectors like textiles and footwear. EU consumers will benefit from lower prices and greater variety of Indonesian goods, including palm oil, furniture, and textiles. EU taxpayers will bear the cost of foregone customs duties, estimated at up to EUR 700 million annually, which will reduce EU budget revenues. Indonesian producers will gain preferential access to the EU market, supporting economic growth and employment, but will need to comply with EU standards and regulations. The agreement also includes provisions for sustainable development, labour rights, and environmental protection, which may impose compliance costs on Indonesian exporters.