BALI: Indonesia and the European Union will sign a comprehensive trade agreement on Tuesday following nearly a decade of negotiations.
The deal represents a strategic response to mitigate the effects of US President Donald Trump’s tariff policies on global trade.
This agreement marks the EU’s third trade partnership with Southeast Asian nations after similar deals with Singapore and Vietnam.
US tariff policies created urgency for both parties to finalise the agreement after 19 rounds of negotiations.
Indonesian exports to the EU will enjoy tariff-free access for approximately 80% of goods once the agreement takes effect.
Key Indonesian exports benefiting from the deal include palm oil, footwear, textiles, and fisheries products.
The EU gains improved access to critical raw materials necessary for clean energy and digital transitions through this partnership.
Bilateral trade between Indonesia and the EU reached $30.1 billion last year, making the bloc Indonesia’s fifth-largest trading partner.
The agreement provides equal legal protection for businesses from both Indonesia and the European Union.
Deforestation concerns surrounding palm oil production created significant tensions during negotiations.
The EU has postponed implementation of its deforestation regulation until year-end following backlash from trading partners.
Environmental activists express concerns that increased palm oil demand could accelerate deforestation in Indonesia.
Both parties must complete legal verification and translation processes before ratification can proceed.
The agreement requires approval from EU member states, the European Parliament, and Indonesia’s parliament.
Implementation of the comprehensive economic partnership is expected by 2027. – AFP