Indonesia has pushed back the deadline for its trade pact with the European Union or EU with Jakarta eyeing to complete the negotiations within the first half of 2025.
Both sides have been negotiating the Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA) since 2016. Former President Joko “Jokowi” Widodo wanted to finish the trade pact last year, although time has shown that they failed to come to a conclusion in 2024. As Indonesia welcomes a new year, the Trade Ministry has renewed the Indonesia-EU CEPA target, now aiming to conclude the talks no later than this June.
“We have already substantially concluded 85 percent of the Indonesia-EU CEPA,” Trade Minister Budi Santoso told reporters in Jakarta on Monday.
Budi did not say what had been causing the delay, forcing the pact to undergo 19 rounds of talks and counting. Bogor hosted the most recent round of negotiations that would significantly ease trade barriers in mid-2024. A report from the meeting revealed that both sides had not come to an agreement on export and import restrictions. Their discussions on investment conditions also remained inconclusive.
Indonesia has set an export target of nearly $294.5 billion for 2025. The archipelagic country also wants its micro, small and medium businesses to contribute $19.3 billion to the overall export figures this year.
In 2023, Indonesia-EU trade amounted to $30.8 billion with Jakarta posting a $2.6 billion surplus, government data shows. Indonesia mainly exports palm oil to the EU.
Despite being a consumer of Indonesian palm oil, the European bloc has been critical of the country’s top commodity. It has even raised trade barriers by launching the anti-deforestation policy EUDR which mandates exporters to prove that their palm oil does not come from deforested land. The EUDR was supposed to enter into force late last month. Companies now have a year to comply with the rules with micro and small-scale enterprises having extra time until the end of June 2026. President Prabowo Subianto recently commented on the EUDR.
“Europe has threatened to cut down on its palm oil imports, so we told them ‘thank you’. We will just not sell our palm oil to Europe. And they are panicking because that would disrupt their chocolate, detergent, and cosmetic production, [all of which] use palm oil,” Prabowo said in Jakarta last week.
