Indonesia and EU near major trade deal, promising zero tariffs on key exports
Indonesia Business Post (16/06/2025) - The Indonesian government has announced significant progress in finalizing a trade agreement with the European Union that could lead to zero tariffs on key Indonesian exports such as textiles, fishery products, footwear, and crude palm oil (CPO).
The agreement, officially known as the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA), is now 90 percent legally drafted, according to Coordinating Minister for the Economy Airlangga Hartarto.
“Indonesia hopes this can be fast-tracked. If all documents are finalized by September, ratification could be completed within a year in each country. However, full implementation can only occur once all 27 EU member states have ratified it,” Airlangga told a press conference in Jakarta on Friday, June 14, 2025.
He emphasized that the agreement’s enforcement cannot be done unilaterally − every EU member state must approve it based on their respective legal systems. The Indonesian government has already laid out a roadmap for the agreement’s implementation, beginning with domestic procedures in each country from September 2025 through Q2 2026.
The official signing is targeted between Q2 and Q3 of 2026, with Indonesia’s parliament expected to ratify it between Q2 and Q4 of 2026. Full implementation is projected to begin in Q1 of 2027.
On the same occasion, Director General of International Trade Negotiations at the Ministry of Trade, Djatmiko Bris Witjaksono, said that the EU has been committed to granting special tariff treatment for nearly all Indonesian goods once the deal is enacted.
Both parties have agreed to a broad liberalization of tariffs. Indonesia will reduce import duties on 97.75 percent of its national tariff lines, covering 98.14 percent of its imports from the EU. In return, the EU will offer duty-free access on 98.61 percent of its tariff lines, which will cover nearly 99 percent of Indonesian exports to the EU market.
“The EU will provide preferential treatment on around 98.61 percent of their total tariff lines. Essentially, 100 percent of Indonesia’s exports to the EU will enjoy special tariffs, with approximately 99 percent benefiting from zero tariffs. Some will be duty-free from day one, while others will follow in the second or third year. But eventually, God willing, they will all reach zero,” Djatmiko said on Friday, June 14, 2025.
Although tariff reductions will be phased in, nearly all Indonesian products will eventually be exempt from import duties. The government anticipates that the IEU CEPA could boost Indonesia’s exports to the EU by as much as 50 percent within three years of full implementation. This deal is expected to significantly enhance Indonesia’s trade competitiveness and deepen its economic ties with one of the world’s largest trading blocs.