<h6><strong>Eduardo González/Ane Barcos</strong></h6> <h4><strong>Prime Minister Pedro Sánchez welcomed the free trade agreement between the European Union and Indonesia on Tuesday, which will help Europe “continue building bridges to the rest of the world to become stronger and more prosperous.”</strong></h4> The European Union and Indonesia concluded negotiations on Tuesday for the Comprehensive Economic Partnership Agreement (CEPA) and the Investment Protection Agreement (IPA), a pact that eliminates more than 98% of tariffs, seeking to facilitate access to strategic sectors such as electric vehicles, agriculture, and electronics, and strengthens collaboration in areas such as the green transition and digital cooperation. “Opening more markets for European companies is something that Spain supports,” Pedro Sánchez wrote on social media. “Today we take another step forward: the European Commission closes an agreement with Indonesia,” he continued. “I welcome Europe's continued building bridges to the rest of the world to become stronger and more prosperous,” the Prime Minister added from New York, where he is attending the UN General Assembly High-Level Week. European Trade Commissioner Maroš Šefčovič emphasized that this agreement marks a significant change in economic relations between the two parties, opening up new opportunities for trade, investment, and cooperation in sectors that are fundamental to the future of both regions. “Today we have reached a historic milestone with the conclusion of CEPA, a transformative step forward for our economies and our relationship,” the Commissioner stated. Trade in goods between the EU and Indonesia is expected to exceed €27 billion in 2024, with a trade surplus in favor of Indonesia. However, Šefčovič emphasized that the agreement seeks to tap into the enormous untapped potential between the two economies, as Indonesia currently ranks only fifth among the EU's trading partners in the ASEAN region. The Trade Commissioner emphasized that, with the elimination of more than 98% of tariffs, key sectors on both sides will benefit. These sectors range from palm oil, textiles, and footwear in Indonesia to the agri-food, automotive, and chemical industries in the EU. “European exporters will benefit from more than €600 million in savings from customs duties, funds they can reinvest in innovation, expansion, and job creation,” he explained. The agreement, the EU executive explained, is designed to respect the sensitivities and priorities of both sides. It includes, for example, the gradual elimination of the 50% tariff on imported cars in Indonesia, which will be progressively reduced over the next five years, thus opening the door to EU car exports and boosting investment in electric vehicles, a key sector for both markets. Furthermore, CEPA seeks to strengthen cooperation in cutting-edge sectors, such as electric vehicles, pharmaceuticals, and electronics, which are fundamental to the future of both economies. The agreement also guarantees the supply of critical raw materials for the digital and green industries, promoting investment in renewable energy and respecting strict labor and environmental standards. Another key objective of the agreement is to facilitate digital trade, especially for small and medium-sized enterprises, creating a favorable environment for innovation and competitiveness. “In a world marked by rising protectionism and vulnerable supply chains, the CEPA sends a clear message: the EU and Indonesia choose openness and cooperation to improve their competitiveness, create jobs, and strengthen resilience,” added Šefčovič. Beyond the economic benefits, Brussels insisted, the CEPA also aims to strengthen political and social relations between the EU and Indonesia. The Commissioner emphasized that Indonesia is a key strategic partner for the EU in the Indo-Pacific region, which opens the door to closer political collaboration. Šefčovič also mentioned the "1,000 Green Engineers" initiative, which will promote greater connectivity between the EU and Indonesia through shared innovation and mutual learning. "Both sides will benefit and grow from this new chapter in our relationship," the Trade Commissioner concluded. Following the conclusion of the negotiations, the agreement texts will be legally reviewed and translated into the official EU languages. Once approved by the Council, the agreements can be signed and subsequently sent to the European Parliament for ratification.
