After nearly a decade of negotiations, Indonesia and the European Union have signed the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA), marking a transformative milestone in bilateral trade relations. The agreement promises sweeping tariff eliminations, expanded market access, and strategic support for Indonesia’s labor-intensive industries and MSMEs. Set to take effect on January 1, 2027, IEU-CEPA is poised to reshape Indonesia’s export landscape and deepen its integration into the global economy.
Key Facts & Background:
- Agreement Name: Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA)
- Signing Date & Location: September 2025, Nusa Dua, Bali
- Key Signatories:
- Airlangga Hartarto, Coordinating Minister for Economic Affairs (Indonesia)
- Maros Sefcovic, EU Commissioner for Trade and Economic Security
- Witnessed by 21 EU ambassadors
- Ratification Process:
- Requires approval from both Indonesian and EU parliaments
- EU must translate the agreement into 27 official languages before ratification
- Implementation Target: January 1, 2027
- Trade Commitments:
- Elimination of tariffs on over 98% of goods
- Nearly 99% of import value covered
- Immediate zero-percent tariffs for ~90% of Indonesian products entering EU markets
- Export Projections:
- Indonesia’s exports to EU expected to grow 2.5x within five years post-implementation
- Key sectors: palm oil, coffee, textiles, fisheries, electronics, footwear, forestry products, and furniture
- Economic Context:
- EU ranks among top five foreign investors in Indonesia
- Bilateral trade volume: ~$30 billion
- Indonesia’s exports to EU: ~$13 billion
- Indonesia is the third ASEAN country to sign such an agreement, after Singapore and Vietnam
Strategic Insights:
The IEU-CEPA agreement represents a strategic leap forward for Indonesia’s trade diplomacy, unlocking unprecedented access to one of the world’s largest and most regulated markets. By securing near-total tariff elimination, Indonesia positions itself to significantly boost exports, particularly in labor-intensive and value-added sectors. This is a critical opportunity for MSMEs, which form the backbone of Indonesia’s economy and stand to benefit from simplified market entry and increased demand.
The agreement also signals a shift in Indonesia’s global trade posture—from commodity-driven exports to diversified, standards-compliant goods and services. With the EU’s stringent environmental and quality regulations, IEU-CEPA will likely accelerate domestic reforms in sustainability, certification, and supply chain transparency. This alignment not only enhances Indonesia’s competitiveness but also strengthens its reputation as a reliable trading partner.
For the EU, the agreement deepens engagement with Southeast Asia’s largest economy, offering access to a dynamic consumer base and strategic investment opportunities. As geopolitical tensions reshape global supply chains, IEU-CEPA provides a stable framework for long-term cooperation, innovation, and mutual growth.
The ratification process, while procedural, underscores the complexity of multilateral agreements. Translating the deal into 27 languages and securing parliamentary approval across member states reflects the EU’s commitment to democratic legitimacy and legal precision. Indonesia’s proactive diplomacy and readiness to meet these standards demonstrate its maturity as a global economic actor.
In the long term, IEU-CEPA could serve as a catalyst for broader regional integration, encouraging other ASEAN nations to pursue similar partnerships. It also reinforces the importance of inclusive trade—where benefits extend beyond large corporations to small businesses, workers, and local communities. As implementation unfolds, success will depend on robust institutional support, capacity building, and continuous stakeholder engagement.
Ultimately, IEU-CEPA is more than a trade deal—it’s a strategic platform for sustainable development, economic resilience, and global relevance. For Indonesia, it marks a new era of opportunity, where openness and innovation drive prosperity across sectors and borders.