The RI-EU CEPA Is Not A Panacea For Trump's Tariffs

Faced with US tariff pressure, Indonesia and the European Union are accelerating free trade negotiations. This is a breath of fresh air, although it hasn't removed all obstacles. 

Indonesia and the European Union are now nearly 10 years into negotiations on the Comprehensive Economic Partnership Agreement (IEU-CEPA). Two other ASEAN countries, Singapore and Vietnam, have already signed it, and it entered into force in November 2019 and August 2020, respectively. 

On Sunday (July 13, 2025), President Prabowo Subianto and European Commission President Ursula von der Leyen announced that Indonesia and the European Union (EU) had reached a political agreement to conclude the CEPA negotiations. The European Commission stated that finalization of the CEPA negotiations is targeted for September 2025. This is a decisive milestone, according to the European Commission, the EU's executive body. 

The encouraging news from the European Commission headquarters in Brussels, Belgium, comes almost a week after Jakarta received a letter from US President Donald Trump announcing a 32 percent tariff on Indonesian exports to "Uncle Sam's Country." The Indonesian negotiating team negotiated with the US before the tariffs took effect on August 1. 

Like Indonesia, the EU—a 27-member country—was hit by Trump's 30 percent tariffs. As Jakarta seeks to diversify its economic partnerships beyond the US, amidst uncertainty in transatlantic relations, Brussels is also seeking to strengthen economic ties to the Pacific with countries such as South Korea, Japan, Vietnam, Singapore, the Philippines, and Indonesia. 

In short, Indonesia and the EU are sailing in the same boat facing the same threat: Trump's tariffs. This may have been one of the catalysts for the Jakarta-Brussels political agreement last weekend. The Indonesian Ministry of Trade stated that once the Indonesia-EU CEPA comes into effect, 80 percent of Indonesian exports to the EU will enjoy a 0 percent tariff. 

However, it's important to remember that this political agreement does not yet officially constitute a free trade agreement within the framework of the CEPA. The process leading to its entry into force still requires time. In addition to the administrative process in the 27 EU member states, ratification by both parties is also required. If all goes smoothly, the Indonesia-EU CEPA is expected to come into effect in 2026. 

Tag: CEPA European Union