PALMOILMAGAZINE, JAKARTA — Indonesia has reached a significant milestone in its trade relations with the European Union through the successful conclusion of the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU-CEPA), paving the way for duty-free exports of Indonesian palm oil to the European market.
Coordinating Minister for Economic Affairs, Airlangga Hartarto, revealed that the negotiations were intense—particularly on palm oil—due to the EU’s earlier stance against its inclusion in the agreement. At one point, the EU even threatened to enforce the European Union Deforestation Regulation (EUDR), which could have hampered Indonesia’s palm oil exports.
“In the beginning, they didn’t want palm oil in the agreement at all, hence the emergence of the EUDR. But in the final moments, it became clear they needed palm oil. They agreed to a 0% import tariff,” Airlangga said during the 2025 Investor Daily Round Table (IDR).
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As part of the deal, Indonesia will apply a quota-based rating system for EU products entering the country. In return, exports of crude palm oil (CPO) and palm kernel oil (PKO) from Indonesia will be exempt from both import and export duties.
Trade volume will be controlled through mutually agreed export quotas, which aim to align with national trade policies and prevent unexpected surges. Companies with EU affiliations operating in Indonesia will also benefit from this arrangement. If the quota is exceeded, a reduced tariff of 3% will apply—still far lower than the previous 19%.
According to Airlangga, this breakthrough minimizes the threat posed by the EUDR, offering a new chapter in diplomatic and economic ties between Indonesia and the EU.
“With this agreement, the pressure from EUDR is significantly reduced. We no longer need to worry as much—IEU-CEPA has opened a major gateway,” he concluded.
The IEU-CEPA is seen as a positive development for Indonesia’s palm oil industry, which has long faced criticism from global markets. The government hopes this agreement will not only boost export performance but also enhance Indonesia’s leverage in promoting a more sustainable global supply chain. (P2)
