The European Union (EU) and Indonesia have reached a historic trade agreement that will eliminate tariffs or reduce them to near zero on almost all goods, strengthening trade ties amid protectionist US moves.
EU Trade Commissioner Maros Sefcovic said the deal also eases restrictions on key raw materials, with an estimated tariff savings of around $700 million for European exporters.
The deal is expected to boost EU exports to Indonesia by at least 30% or €3 billion over five years, with 96% of goods enjoying zero tariffs.
Key benefits include a cut in EU car duties from 50% to zero, and a reduction in machinery and equipment tariffs from 30% to zero.
While Indonesia's ban on nickel exports remains a contentious issue at the WTO, the EU has secured preferential treatment for other raw materials after the first stage of processing.
For the EU, the agreement opens up a major opportunity to diversify supply chains, strengthen markets in Southeast Asia and reduce dependence on the US, which currently imposes a 15% tariff on most European exports.
For Indonesia, it brings greater access to the high-value EU market, although issues such as deforestation regulations remain a challenge in the bilateral relationship.
