After over 8 years of negotiations, Indonesia and the European Union (EU) officially announced the “substantive conclusion” of the Indonesia–EU Comprehensive Economic Partnership Agreement (IEU-CEPA) on September 23, 2025, in Bali against the backdrop of growing uncertainty in the global economy due to U.S. tariff policies.

EU Trade Commissioner, Maros Sefcovic and Indonesia's Coordinating Minister for Economic Affairs, Airlangga Hartarto jointly declared the substantive conclusion of the Comprehensive Economic Partnership Agreement in Bali on Tuesday. This marks a historic milestone, ushering in a new chapter for trade and investment relations between Southeast Asia’s largest economy and the EU. 

Source: Sonny Tumbelaka/AFP/Getty Images

Indonesia’s Coordinating Minister for Economic Affairs, Airlangga Hartarto, announced that the agreement is expected to take effect on January 1, 2027, creating major opportunities to boost two-way trade. The agreement in the coming months will need to undergo legal checks and be translated into the EU's official languages before being submitted for approval by EU member states and the European Parliament.

Under IEU-CEPA, around 80% of tariff lines on Indonesian exports to the EU will be eliminated upon entry into force, covering key products such as palm oil, seafood, textiles, and footwear. Industrial goods from the EU, including automobiles, machinery, and electrical equipment, will also benefit from preferential access to the Indonesian market. 

With the new trade deal, both sides expect the figure to double within five years, driven by tariff elimination, streamlined customs procedures, and simplified rules of origin. EU Trade Commissioner emphasized that the deal would not only foster trade but also encourage greater European investment in Indonesia, particularly in renewable energy and critical mineral sectors. 

The conclusion of IEU-CEPA negotiation reflects the EU’s determination to deepen its economic footprint in the Indo-Pacific, a region increasingly pivotal to emerging global value chains. The deal represents a crucial milestone, elevating EU–Indonesia relations to a deeper level of partnership and potentially generating a positive spillover effect for ASEAN’s broader economic integration.

Source: Compiled by the Multilateral Trade Policy Department, Ministry of Industry and Trade of Viet Nam