Brussels: Europe and the Arabs
The European Union announced on Tuesday that it had reached a free trade agreement with Indonesia. In response from various European circles in Brussels, the Socialists and Democrats in the European Parliament welcomed the anticipated signing of the Comprehensive Economic Partnership Agreement (CEPA) between the European Union and Indonesia, the largest economy in Southeast Asia. In a statement, a copy of which was received by the MEPs, they said, "Amid growing geopolitical uncertainty and shifting alliances, this agreement represents an important strategic achievement for the EU in diversifying its partnerships and securing sustainable trade relations beyond its traditional allies.
Indonesia, with its enormous economic potential, is a key partner not only in trade, but also in securing essential raw materials for Europe's green transition, including nickel, a vital component for batteries and electric mobility. However, the Socialists and Democrats (S&D) Group emphasizes that this partnership must be accompanied by strong commitments to combating deforestation, protecting workers' rights, and upholding human rights. Given growing concerns about human rights in West Papua and the increasing militarization of Indonesian society, the S&D Group will carefully study the final texts and ensure that this partnership truly benefits people and the planet." Kathleen van Brempton, S&D Alliance Vice-President for International Trade and Shadow Rapporteur on the issue, said, "In an increasingly fragmented world, building bridges with new partners like Indonesia is crucial." While Indonesia still faces serious challenges, particularly in the areas of deforestation and human rights, we recognize the clear desire to move forward and cooperate with the European Union.
It is very important for us that this agreement includes the Paris Agreement as a key element, reflecting our commitment to sustainability. But signing the Comprehensive Economic Partnership Agreement (CEPA) is just the beginning. We will continue to use our own European tools, such as the Deforestation Regulation and the Carbon Border Adjustment Mechanism, to encourage real progress on the ground.
We expect this agreement to help Indonesia achieve a qualitative leap towards higher environmental and labor standards, while ensuring Europe's strategic interests."
Maroš Šefčović, European Commissioner for Trade and Economic Security, said, "We have achieved a historic milestone with the conclusion of the EU-Indonesia Comprehensive Economic Partnership Agreement, a step that will transform our economies and our partnership.
Trade between the EU and Indonesia is already strong.
In 2024, trade in goods exceeded €27 billion, with Indonesia maintaining a surplus in goods.
Meanwhile, the EU leads in services trade, which added nearly €9 billion.
European investment in Indonesia exceeds €25 billion, underscoring the growing confidence and opportunities.
Nevertheless, Indonesia is the EU's fifth largest trading partner among ASEAN countries. This means there is enormous untapped potential.
This agreement eliminates more than 98% of customs duties, removing virtually all trade barriers and opening up new investment avenues.
Key sectors will benefit from both sides. From palm oil, textiles, and footwear in Indonesia to the EU’s agribusiness, food, automotive, and chemicals industries.
Importantly, the agreement was crafted with full consideration of each side’s priorities and sensitivities, ensuring a balanced outcome.
For example, Indonesia’s 50% import duty on cars will be phased out over five years—opening the door to EU car exports while boosting much-needed EU investment in electric vehicles, among other sectors.
EU exporters alone will save over €600 million in customs duties on goods shipped to Indonesia, money that can be reinvested in innovation, expansion, and job creation.
Most importantly, the Comprehensive Economic Partnership Agreement (CEPA) paves the way for closer cooperation in cutting-edge sectors, such as electric vehicles, pharmaceuticals, and electronics, which are vital to the future of our economies.
CEPA also helps secure essential raw materials for green and digital technologies, encourages investment in renewable energy, and maintains environmental and labor standards. Strong.
In addition, the agreement facilitates digital trade, particularly helping small and medium-sized enterprises.
Overall, in a world of rising protectionism and fragile supply chains, where many are turning inward, the Comprehensive Economic Partnership (CEPA) sends a clear signal that the EU and Indonesia are choosing openness and partnership to enhance their competitiveness, create jobs, and strengthen their resilience.
Moreover, today's agreement goes beyond economic aspects. Indonesia is a key partner for the EU in the Indo-Pacific region, and this opens the door to closer political relations as well. I am confident that this partnership will strengthen people-to-people ties.
Indonesia is already among the top twelve countries for the number of postgraduate students in the EU—around 4,000 in total.  The European Commission in Brussels said that following the political agreement reached by President von der Leyen and President Prabowo Subianto on July 13, the European Union and Indonesia have concluded negotiations on the Comprehensive Economic Partnership Agreement (CEPA) and the Investment Protection Agreement (IPA). On the EU side, the negotiations were led by Commissioner for Trade and Economic Security Maroš Šefčović. Šefčović is currently visiting Indonesia to mark this historic occasion and engage with European and Indonesian companies to support the anticipated ratification and next steps.
According to a Commission statement, draft negotiated texts will be published soon. These texts will undergo legal review and translation into all official EU languages. The European Commission will then submit its proposal to the Council for the signature and conclusion of the CEPA and the IPA. Once the Council adopts them, the EU and Indonesia can sign them.
After signing, the texts will be submitted to the European Parliament for approval. Following approval by the European Parliament and ratification by Indonesia, the CEPA and IPA can enter into force. Free trade agreement negotiations with Indonesia began in July 2016. The nineteenth and final round of formal negotiations was held in July 2024, followed by intersessional discussions at the technical and political levels. Presidents von der Leyen and Prabowo reached a political agreement on the conclusion of the free trade agreement in July 2025, paving the way for the conclusion of negotiations on September 23, 2025.
The European statement read, "These comprehensive, forward-looking, and mutually beneficial agreements represent a key milestone in achieving the EU's diversification and partnerships strategy, strengthening trade and investment ties with a major economy, and creating new export opportunities and more secure supply chains for energy and raw materials." European Commission President Ursula von der Leyen stated, "We have committed to redoubling our diversification and partnership efforts to support EU jobs and boost growth. Our agreement with Indonesia opens up new opportunities for businesses and farmers in a large and growing economy." This agreement also provides us with stable and regular supplies of essential raw materials, which are essential for Europe's clean technology and steel industries."
The CEPA will significantly benefit European farmers, as it will reduce tariffs on agricultural and food products and protect traditional EU products, as well as key industrial sectors such as automotive, chemicals, and machinery. In total, EU exporters will save around €600 million annually in tariffs on their goods entering the Indonesian market, and European products will be more affordable for Indonesian consumers.
The CEPA also represents a major achievement for the EU and Indonesia to promote sustainable growth and the green transformation. Furthermore, it is a testament to the EU and Indonesia's commitment to openness and a rules-based system, creating a free trade area with over 700 million consumers, based on transparency and predictability. Privileged access for European companies, large and small
The agreement will give EU companies privileged access to the Indonesian market through:
The elimination of tariffs Imports on 98.5% of tariff lines, and simplified procedures for EU goods exports to Indonesia, including key exports such as cars, agricultural products, and food.
Allowing EU companies to offer fully owned services in key sectors such as computers and telecommunications.
Opening new opportunities for EU investment in Indonesia, particularly in strategic sectors such as electric vehicles, electronics, and pharmaceuticals, strengthening the integration of supply chains and value chains for both sides.
Protecting intellectual property, such as trademarks, enables EU companies to protect their brand identity and reputation, guarantees remedies against infringers, and provides effective tools to combat counterfeit products, helping small businesses through tailored provisions and benefiting Indonesian consumers.
A big win for EU farmers: Boosting EU exports and protecting its sensitivities
This agreement will give EU farmers significantly better opportunities to sell their produce in Indonesia thanks to the elimination of tariffs on key EU exports, such as dairy products, meat, fruits, vegetables, and a wide range of processed foods.
The agreement will also protect 221 EU agricultural and food geographical indications and 72 Indonesian geographical indications. Finally, the agreement protects sensitive agri-food products, such as rice, sugar, and fresh bananas, where current tariffs apply, and limits access to the EU market for other sensitive products through carefully calibrated quotas.
Excluding imports of Indonesian crops not grown in the EU, the EU already exports more agri-food products to Indonesia than it imports, with exports worth €1 billion annually.