Advancing Toward Economic Integration — Indonesia–EU CEPA Nears Finalization
Indonesia and the European Union are in the final stages of negotiating the Indonesia–EU Comprehensive Economic Partnership Agreement (IEU–CEPA). The agreement, initiated in 2016, aims to create a modern, balanced, and comprehensive partnership, covering trade in goods and services, investment, and sustainable development.
Admin
5/29/20251 min read
Progress So Far
According to the Indonesian Ministry of Trade, the negotiations are now 90% complete. Minister Zulkifli Hasan expressed confidence that the remaining issues could be resolved by September 2024. Eight out of the expected 15 chapters have already been finalized, with the latest being the Dispute Settlement Chapter, agreed during the 16th negotiation round in Brussels
Key Negotiation Issues
Trade in Goods and Services
Rules of Origin
Investment Protection and Dispute Resolution
Technical Barriers to Trade (TBT)
Digital Trade and E-commerce
Public Procurement
Trade and Sustainable Development (TSD)
Cooperation & Capacity Building
Geographical Indications and Subsidies
These issues are being negotiated to align with both parties’ regulatory environments while maximizing mutual benefits.
Economic Benefits for Indonesia
Export Growth: Potential to increase Indonesia's exports to the EU by 57.76%
GDP Boost: Expected to raise Indonesia’s real GDP by 0.1%
Revenue Impact: Estimated increase in national income of over USD 2.8 billion
The agreement is also expected to help Indonesian exporters face stricter EU regulations like the Carbon Border Adjustment Mechanism (CBAM) and the EU Deforestation Regulation (EUDR).
Remaining Challenges
Despite major progress, the talks are encountering delays due to additional EU requests and complex regulations related to palm oil, labor, and sustainability. Indonesia aims to settle these issues before the upcoming government transition in October 2024.
What’s Next?
Both sides have committed to intensify diplomatic efforts to finalize all chapters and legal scrubbing before ratification in 2025. If successful, IEU–CEPA could become Indonesia’s most comprehensive bilateral trade agreement to date.
Conclusion
IEU–CEPA marks a turning point in Indonesia’s global trade ambition. Once ratified, it will provide better market access, legal certainty for investors, and enhanced cooperation on sustainability and digital economy—positioning Indonesia as a stronger player in the EU market.
