A proposal for a Council decision on the signing of the Comprehensive Economic Partnership Agreement (CEPA) between the European Union and Indonesia, published on 29 June 2026, includes annexes detailing tariff elimination schedules for chemical and pharmaceutical products. Under the agreement, all listed nitrogen-function compounds, organo-inorganic compounds, heterocyclic compounds, nucleic acids, sulphonamides, provitamins, vitamins, hormones, glycosides, and alkaloids will receive immediate duty-free access (staging category 'A') upon the agreement's entry into force.
The document, part of a larger package, covers products under chapters IX (nitrogen-function compounds), X (organo-inorganic compounds, heterocyclic compounds, nucleic acids, sulphonamides), XI (provitamins, vitamins, hormones), and XII (glycosides, alkaloids) of the tariff schedule. Base rates range from 0% to 6.5%, with specific rates for individual tariff lines such as methylamine at 6.5%, ethylenediamine at 6%, and pyridine at 5.3%. No exclusions are stated in this text.
Policy orientations and trade-offs The immediate tariff elimination represents a significant liberalisation of trade in chemicals and pharmaceuticals between the EU and Indonesia. For EU producers, this means improved market access and cost savings, potentially boosting exports of these products to Indonesia. For Indonesian consumers and downstream industries, duty-free access could lower input costs for pharmaceuticals and chemical products. However, Indonesian domestic producers of similar chemicals may face increased competition from EU imports, potentially impacting local industry. The agreement balances trade liberalisation with the need to protect sensitive sectors, though no exclusions are listed in this annex.
Impact on stakeholders - EU chemical and pharmaceutical exporters: Benefit from immediate duty-free access, reducing export costs and enhancing competitiveness in the Indonesian market. The elimination of tariffs up to 6.5% provides a direct cost advantage. - Indonesian chemical and pharmaceutical producers: Face increased competition from EU imports, which could pressure margins and market share, particularly for products where EU producers have cost or quality advantages. - Indonesian downstream industries and consumers: Gain access to cheaper imported chemicals and pharmaceuticals, potentially lowering production costs and consumer prices. - EU and Indonesian customs authorities: Must implement and enforce the new tariff schedules, requiring updates to customs systems and procedures to ensure correct application of duty-free treatment.
Institutional follow-up The proposal is part of the EU's process to sign and ratify the CEPA. The Council will need to adopt the decision to authorise signing, after which the agreement will be signed and submitted to the European Parliament for consent. Ratification by both parties is required for the agreement to enter into force, at which point the tariff elimination schedules will take effect.