A free trade agreement was signed today in Bali between Indonesia and the European Union, following extensive negotiations that gained momentum due to rising American tariffs.
The deal, finalized by Indonesian Minister of Economy Erlangga Hartarto and European Trade Commissioner Maroš Šefčovič, aims to enhance trade between the EU’s 27 member states and Indonesia, the largest economy in Southeast Asia.
Maroš Šefčovič stated, “The EU and Indonesia are sending a strong message to the world that we are united in our commitment to open international trade based on rules and mutual benefit.”
Negotiations, which faced delays over deforestation issues, sped up due to U.S. President Donald Trump’s imposition of increased tariffs on various countries. With a 19% tariff on its exports to the U.S., Indonesia sought preferential access to the EU market.
The 27 EU countries, also affected by Trump’s trade policies, are looking to diversify their trade partnerships.
Bima Yudhistira Antinegara, executive director of the Jakarta Center for Economic and Legal Studies, noted, “This agreement (…) was finalized due to Donald Trump’s trade war. Indonesia needs to seek an alternative market in Europe and Europe needs a market to penetrate.”
According to Erlangga, the agreement will allow for zero tariffs on 80% of Indonesian products exported to the EU.
This is expected to benefit key Indonesian exports, including footwear, textiles, fishery products, and palm oil.
Ursula von der Leyen, President of the European Commission, remarked that the agreement “creates new opportunities for businesses and farmers” and ensures a stable supply of essential raw materials.
The EU ranks as Indonesia’s fifth-largest trading partner, with trade valued at $30.1 billion (€25.6 billion) in 2024. Denny Friavanti, a researcher at the Center for Strategic and International Studies (CSIS), highlighted that this agreement will facilitate EU product entry into Indonesia, a market of 280 million consumers. (23/9/25)
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