Jayanty Nada Shofa, Jakarta – A minister said Monday that Indonesia's decision to let European goods enter its market duty-free would not backfire on its economy, as work is underway to finalize a trade deal dubbed the CEPA.
Indonesia and the European Union (EU) are putting the finishing touches on the CEPA – short for Comprehensive Economic Partnership Agreement. They have been negotiating the pact since 2016 and are now eyeing to finalize the document by September.
As expected from a trade deal, both sides will drop their tariffs to 0% for virtually all goods. The government remains tight-lipped on the type of goods that can go into each other's markets at zero tariff. Trade Minister Budi Santoso, however, reassured reporters that the facility for European goods would not affect Indonesia's national interests.
The Indonesia-EU CEPA negotiations took a decade. Why did it take so long? It's because we were upholding national interests, so it was not easy, but the agreement will certainly be mutually beneficial. We will gain market access to the bloc's 27 members, Budi told reporters.
And the commodities that we will open up [our entire market to] will not interfere with our national interests, he said.
The minister also estimated that the pact could double trade to $60 billion.
His aide Djatmiko Bris Witjaksono told a separate business forum of the set timeline for the CEPA. Indonesia and the EU will likely announce the conclusion of the substantial negotiations this September, followed by a legal scrubbing and domestic procedures.
The signing is set to take place in the second or third quarter of 2026. The ratification – the process that will see both sides make the law legally binding – will occur by no later than the first quarter of 2027 before the agreement can finally enter into force.
We don't know if the legal document in our country will be in the form of law or presidential decree. Once it is ratified, we will officially implement the agreement, Djatmiko said in Jakarta on Monday.
Trade Ministry data showed that the document would include a commitment from both sides to eliminate the duties on 98 percent of tariff posts. The deal would also get rid of the tariffs placed on 99 percent of the import value.
The EU will grant Indonesia a comparative advantage for its palm oil despite the group's tough stance on the farm commodity. Senior minister Airlangga Hartarto had said that the EU would eliminate the tariffs on no more than 1 million tons of crude palm oil (CPO) each year but would possibly raise the rate to 3 percent once it has hit the limit.
Indonesia reported it had enjoyed a surplus of almost $3.8 billion in non-oil and gas trade with the 27 EU members between January and June 2025. Aside from tariff elimination, the pact will open doors for investments in renewable energy and pharmaceuticals.
Source: https://jakartaglobe.id/business/indonesia-says-eliminating-tariffs-for-eu-goods-wont-backfir