IEU-CEPA to offer Indonesia's highest tariff commitments: Minister

Indonesia has announced that its forthcoming trade agreement with the European Union, known as the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA), will include the country’s highest-ever tariff commitments in any trade pact. Trade Minister Budi Santoso made the declaration during an implementation dialogue held in Jakarta on Friday. The minister emphasized that the deal will significantly enhance access for Indonesian goods to the European market at competitive rates. Under the terms of the agreement, approximately 98 percent of tariff lines will be liberalized, encompassing nearly 99.5 percent of the total import value exchanged between Indonesia and the EU. This move is anticipated to provide Indonesian exporters with access to the EU’s 450 million consumers and its combined GDP of around $22 trillion. Key Indonesian exports such as palm oil and its derivatives, textiles, footwear, and rubber products will benefit from zero tariffs once the agreement comes into force. In exchange, Indonesia will remove tariffs on several major EU exports, including wood pulp, aircraft and their components, railway equipment, and fertilizers. “For Indonesia, this tariff commitment level is the highest ever set in a trade agreement,” Budi stated in a formal statement. According to the minister, the pact is designed to broaden European market access, draw investment into strategic sectors, reinforce Indonesia’s position in global supply chains, and deepen economic relations with the EU. Beyond reducing tariffs, the agreement seeks to streamline trade processes and enhance business confidence through digitalization, expedited customs procedures, collaboration on standards, and sanitary and phytosanitary measures. The agreement also encompasses institutional cooperation and capacity-building initiatives, including more transparent governance rules for state-owned enterprises and provisions focused on environmental sustainability. The Trade Ministry is working alongside other government departments and agencies to complete legal documentation, harmonize domestic regulations, and ensure technical preparedness prior to the agreement's implementation. Negotiations between Indonesia and the EU commenced in 2016, culminating in a substantial agreement in September 2025. Both parties are currently concluding internal procedures, aiming to sign the agreement in the fourth quarter of 2026. Following the signing, the document will undergo parliamentary ratification before entering into force. The announcement follows related developments, including efforts to strengthen cooperation on sustainable forest trade and statements highlighting the importance of trade agreements in attracting foreign investment. These initiatives underscore the broader strategic goals of both Indonesia and the EU in fostering economic growth and mutual prosperity through enhanced trade relations. The Trade Ministry has been actively engaging with stakeholders across various sectors to prepare for the implementation of the agreement. Officials have stressed the need for coordination among different governmental bodies to ensure seamless integration of the new trade framework into existing policies and practices. This includes updating relevant laws and regulations to align with the provisions of the IEU-CEPA. Industry representatives and analysts have expressed optimism about the potential benefits of the agreement, particularly for export-oriented sectors. They anticipate increased competitiveness in international markets and greater opportunities for Indonesian businesses to participate in global value chains. However, some experts caution that successful implementation will require careful management of transitional challenges and effective support mechanisms for affected industries. As the final stages of preparation proceed, attention is turning toward the specific timelines and procedural steps required for the official signing of the agreement. The Trade Ministry has indicated that detailed discussions are ongoing regarding the exact schedule for the signing ceremony and subsequent ratification process. All parties remain committed to ensuring that the IEU-CEPA becomes operational as soon as possible, thereby realizing the anticipated economic benefits for both Indonesia and the European Union.