11 July 2025 (closed)
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Trade Deals: Indonesia-European Union Comprehensive Economic Partnership Agreement
During his official state visit to Belgium, Indonesian President Prabowo Subianto had the opportunity to meet European Commission President Ursula von der Leyen at the European Union (EU) headquarters in Brussels, on 13 July 2025, with the aim to strengthen and expand the partnership between Indonesia and the EU.
This meeting had a particular focus on accelerating the finalization of the Indonesia-European Union Comprehensive Economic Partnership Agreement (or IEU-CEPA), a free trade deal that has been in the making for nearly a decade (negotiations having started in July 2016), and which already witnessed 19 rounds of official meetings in addition to numerous intersessional meetings.
Interestingly enough, President Prabowo’s meeting with Von der Leyen now seems to have borne fruit since a political agreement was confirmed by both sides in a joint (televised) press conference on 13 July 2025.
When Will the IEU-CEPA Come into Effect?
Before becoming too enthusiastic, it is important to stress that this free trade deal is not signed yet. If everything goes according to plan (with both sides finalizing the legal text), this deal will be signed in September 2025. However, once signed, it will still take months (perhaps even more than one year) before this deal can come into effect, with the main issue being the ratification process (a bureaucratic procedure).
While we do not expect to see significant hurdles in Indonesia’s ratification process (since Indonesian parliament is expected to support this deal), it is a more complex process in the EU as this agreement needs to be ratified by the European Parliament as well as by all 27 individual EU member states (according to their own domestic procedures). The latter can be a lengthy process.
But even though it might be 2027 before this trade deal comes into effect (and some products might not instantly enjoy zero tariffs as there could be a gradual transition toward zero), it’s still a positive development because the IEU CEPA is considered to make about 80 percent of Indonesia’s export products to the EU more competitive.
Comparison Between the European Union and Indonesia
Political Structure
While Indonesia is one single sovereign nation state, the EU is a bloc of 27 countries (all individual nation states) that together form a political and economic union. One could label it ‘an alliance of sovereign nation states’ that delegated sovereign power (on a couple of crucial matters, but not all) to the European Commission in Brussels.
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