Indonesia and the European Union (EU) have agreed to extend ongoing negotiations over the Comprehensive Economic Partnership Agreement (CEPA) into the first half of 2025. Both parties have been engaged in discussions since 2016, aiming to establish a framework that will strengthen economic ties and facilitate smoother trade relations. However, key issues remain unresolved, particularly concerning export-import regulations and investment conditions, prompting the need for additional negotiation rounds.
As of early 2025, approximately 85 percent of the agreement has been finalized. Yet, differing views on import permit requirements, trade restrictions, and sustainable trade practices have stalled final consensus. Indonesia has voiced concerns over certain EU regulatory measures, especially those related to environmental and sustainability standards, which Jakarta argues could limit its access to the European market.
One significant area of contention is the European Union’s impending anti-deforestation regulation. Originally set to be enforced in December 2024, the EU has postponed the implementation of the law until December 2025. The regulation is designed to curb imports of key commodities linked to deforestation, including palm oil, soy, beef, coffee, and rubber. Importers will be required to provide proof that their products do not contribute to deforestation, a move welcomed by environmental groups but criticized by some exporting countries.
Indonesia, as one of the world’s largest palm oil producers, has expressed apprehension about the regulation’s impact. Industry stakeholders argue that the compliance requirements could create additional hurdles, particularly for small-scale farmers and exporters. Eddy Martono, chairman of the Indonesian Palm Oil Association, has called for further postponement of the policy’s enforcement to 2026, emphasizing the need for broader consultation and consideration of economic impacts.
While the EU maintains that the regulation aligns with global efforts to combat climate change and deforestation, several trading partners, including Indonesia, view it as a potential non-tariff barrier to trade.
The outcome of the extended CEPA negotiations will play a critical role in shaping future trade dynamics between Indonesia and the European Union. Both sides continue to express willingness to engage in dialogue to resolve the outstanding issues, seeking a balanced agreement that supports economic growth while addressing regulatory and environmental concerns.
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