European Union–Indonesia Comprehensive Economic Partnership Agreement (2025)

The Comprehensive Economic Partnership Agreement (CEPA) between the European Union and Indonesia was signed on 23 September 2025 in Bali following negotiations launched in 2016 and has reached the stage of substantive conclusion. It is a comprehensive framework for free trade and investment protection covering goods services investment and sustainability.

Negotiation Process and Conclusion of the Agreement

Negotiations for the Comprehensive Economic Partnership Agreement (CEPA) between the European Union and Indonesia were launched in 2016. The European Commission officially opened talks with Indonesia on 18 July 2016 with the approval of member states. Prior to this date both parties conducted a scoping exercise to define the framework and objectives of the future trade agreement. The scoping exercise was completed in April 2016 and negotiations began in July 2016.

A total of 19 rounds of negotiations were held between 2016 and 2024. The last official round took place in July 2024 after which discussions continued in informal and ad hoc formats. On 13 July 2025 European Commission President Ursula von der Leyen and Indonesian President Prabowo Subianto reached a political agreement on the terms of the deal. This development marked a decisive turning point in concluding the agreement.

Following this political agreement the substantive conclusion of the agreement was signed on 23 September 2025 in Bali Indonesia by Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto and European Commission Executive Vice-President for Trade and Economic Security Maroš Šefčovič. On the same day the parties also agreed on an Investment Protection Agreement (IPA) in addition to the free trade component.

The next steps in the agreement’s process involve legal review of the texts translation into all official languages of the European Union and subsequent approval by the Council of the European Union and the European Parliament. Indonesia must also complete its internal legal procedures. The agreement is targeted to enter into force on 1 January 2027 after ratification.

Scope and General Objectives

The EU–Indonesia Comprehensive Economic Partnership Agreement (EU–CEPA) is a broad free trade arrangement covering trade in goods and services as well as investment. Its primary objective is to increase trade between the two parties facilitate investment and support sustainable development.

The agreement includes tariff reductions and market access provisions as well as customs and trade facilitation measures. The parties have agreed on mechanisms to ensure faster and more transparent customs clearance for products. In addition provisions have been introduced to reduce technical barriers cooperation on sanitary and phytosanitary measures safeguard fair competition and ensure transparency in state subsidies.

Under digital trade the agreement provides for the protection of cross-border data flows recognition of electronic contracts and invoicing systems and consumer protection clauses. Intellectual property rights are also covered with provisions for the protection of copyright trademarks designs patents and geographical indications.

In the energy and raw materials section the parties commit to cooperation on critical minerals such as nickel copper bauxite and tin and to promoting renewable energy investments. Under sustainability the agreement addresses environmental protection climate change mitigation protection of workers rights and support for women’s economic participation.

The agreement also provides specific facilitations for small and medium-sized enterprises (SMEs). The parties have agreed to establish digital platforms and communication points to help SMEs access market information.

Institutionally the agreement establishes joint bodies to oversee implementation and dispute settlement mechanisms. A mechanism similar to that of the World Trade Organization has been adopted for resolving intergovernmental disputes. Consultative groups and forums have also been foreseen to involve civil society organizations in the process.

Tariff Arrangements and Trade in Goods

Under the EU–Indonesia CEPA the majority of customs duties applied to trade between the parties have been eliminated. More than 98 percent of tariff lines will be removed with nearly all trade value becoming duty-free. Eighty percent of this liberalization will take effect upon entry into force and the remainder will be phased in over a five-year transition period.

Indonesia has committed to gradually eliminate high customs duties on industrial products. Tariffs of up to 50 percent on motor vehicles will be removed within five years. Significant tariff exemptions will apply immediately upon entry into force for machinery and electrical equipment with the remaining small portion eliminated within five years. Most duties on pharmaceutical products will be removed immediately with the remainder phased out over three years. Similarly most duties on chemical products will be eliminated immediately with the remainder removed within five years.

Significant adjustments have also been made for the European Union’s agricultural and food exports. Tariffs of up to 30 percent on processed foods will be removed. Duties of up to 10 percent on dairy products will be eliminated upon entry into force. Most tariffs on meat products ranging from 5 to 20 percent are also expected to be removed upon entry into force.

From Indonesia’s perspective the agreement provides improved market access for key export items such as palm oil textiles footwear coffee and agricultural products. While the agreement foresees the elimination of customs duties on palm oil the European Union’s Deforestation Regulation (EUDR) remains a sectoral barrier.

EU exporters anticipate annual customs duty savings of approximately 600 million euros on goods exported to Indonesia. Indonesia aims to double its exports to the EU within the first five years of the agreement’s implementation.

Trade in Services and Investment

The EU–Indonesia CEPA includes comprehensive provisions on trade in services and investment alongside trade in goods. In 2023 trade in services between the two parties amounted to 8.8 billion euros with 5.7 billion euros from EU exports and 3.1 billion euros from Indonesia’s exports.

The agreement provides a predictable and transparent environment for service providers and investors. EU service providers and investors will be treated no less favourably than local actors in Indonesia. Licensing and qualification procedures will be transparent fair and timely and requirements to establish local offices will not apply in specific sectors. Furthermore the parties have committed to avoiding restrictions on the number of service providers or transaction values in the services sector.

In terms of investment the EU’s stock of direct investment in Indonesia reached 25.1 billion euros as of 2023. During the same period Indonesia’s investment in the EU amounted to 1.1 billion euros. The agreement is expected to enable EU companies to achieve annual customs duty savings of 600 million euros.

Professional mobility is also an important element of the agreement. The parties have agreed to facilitate temporary entry for service providers in specific categories. This arrangement will support cooperation in sectors such as financial services postal and telecommunications maritime transport manufacturing mining and renewable energy.

The Investment Protection Agreement (IPA) aims to safeguard investments by both parties. Investments will be protected against unfair treatment discrimination or expropriation and investors will be entitled to fair compensation. However both parties retain the right to regulate in the public interest. Disputes will be resolved through intergovernmental mechanisms and negotiations will continue for the inclusion of a modern system to resolve investor–state disputes within three years.

Digital Trade and Intellectual Property

The EU–Indonesia CEPA contains comprehensive provisions on digital trade. The parties have agreed to allow free cross-border data flows and prohibited unjustified data localisation requirements. Electronic contracts authentication and security services are legally recognised and the commercial validity of transactions conducted electronically is guaranteed. Furthermore customs duties on electronic transmissions are prohibited.

Consumer protection is also addressed in the digital trade section. Protective measures against fraud and misleading online activities have been introduced and safeguards against unsolicited direct marketing practices have been defined. Mechanisms to enhance cooperation between consumer protection authorities have been established.

Under intellectual property detailed provisions have been made for the protection of copyright trademarks designs patents trade secrets and plant varieties. The parties have regulated the effective protection of intellectual property rights and the legal and administrative measures to be applied against infringements. The agreement also provides protection for 221 European Union origin and 72 Indonesian origin geographical indications. This arrangement safeguards the authenticity and market value of products such as European meats and cheeses and Indonesian spices and coffees.

The agreement prohibits mandatory transfer or disclosure of source code except in exceptional cases necessary for competition regulation or security. Provisions encouraging the use of transparent and interoperable standards in cybersecurity have also been included.

Energy Raw Materials and Green Transition

The parties have agreed to liberalise trade in energy and raw materials secure supply chains and facilitate investment. Under the agreement monopolistic practices and double pricing in energy and raw material exports are prohibited. This framework prevents export prices from being set above domestic market prices. Furthermore arbitrary price adjustments by government intervention are limited.

Transparency has been enhanced in licensing and authorisation processes with the aim of ensuring more predictable and fair issuance of permits in hydrocarbon electricity and raw material sectors. These measures contribute to improving investment conditions and strengthening governance.

The environmental dimension is also a significant component of the agreement. The parties have committed to conducting energy and raw material investments in accordance with environmental impact assessment principles. These provisions based on the Aarhus and Espoo Conventions guarantee the evaluation of environmental impacts and public participation in decision-making.

Under the green transition the agreement facilitates trade in clean and renewable energy and energy efficiency products. Renewable energy suppliers are guaranteed non-discriminatory access to energy grids and these processes are to be conducted under the oversight of an independent regulatory authority. Furthermore the parties have committed to supporting environmental social and governance (ESG) standards in renewable fuels and raw material value chains.

The agreement also holds strategic importance regarding critical raw materials. The European Union has gained access to minerals essential for clean technologies and the steel industry such as nickel copper bauxite and tin found in Indonesia.

Implementation and Ratification Process

Following its substantive conclusion on 23 September 2025 the EU–Indonesia CEPA entered the technical and legal review phase. This process involves detailed examination of the agreement texts and translation into all official languages of the European Union.

For the European Union the agreement must be formally signed and concluded by the Council of the European Union. After Council approval the texts will be submitted to the European Parliament for its consent completing the process. Member state ratification is also a mandatory step for the agreement’s validity.

In Indonesia similar domestic legal mechanisms will be applied. The agreement will be reviewed and ratified by the Indonesian legislature. The agreement is targeted to enter into force on 1 January 2027 after both parties complete their internal ratification procedures.