Indonesia to Sign FTA with EU This Month Ahead of US Tariffs

Trade Diversification
Indonesia Expects 50% Increase in Exports to the EU Within Four Years

Indonesia, the largest economy in Southeast Asia, is accelerating the process of concluding a free trade agreement (FTA) with the European Union (EU) ahead of the upcoming imposition of reciprocal tariffs by the United States. The agreement is reportedly on the verge of being finalized after nine years of negotiations.

According to AFP and other sources on June 8, Airlangga Hartarto, Indonesia's Coordinating Minister for Economic Affairs, announced in a statement the previous day that the FTA with the EU would be concluded within this month.

A port in Jakarta, Indonesia. Photo by Reuters Yonhap News

He stated, "Indonesia and the EU have agreed to finalize discussions on unresolved issues and to announce the substantive results of the negotiations within this month."

Minister Airlangga explained that Indonesia would receive tariff-free benefits on 80% of its exports to the EU, and that non-tariff barriers would also be eliminated. He also said that Indonesia is seeking to expand market access in Europe for Indonesian-made footwear, apparel, palm oil, and seafood. In addition, he noted that discussions with the EU included regulations on the use of domestic materials in products sold in Indonesia, as well as cooperation in the automotive industry and trade in critical minerals.

Earlier, on June 5, Minister Airlangga met with Maros Sefcovic, Executive Vice-President of the European Commission, in Brussels, Belgium.

Indonesia has been negotiating an FTA with the EU since 2016, but had not reached an agreement until now. However, with the prospect of reciprocal tariffs being imposed by the United States, the pace of negotiations has accelerated. The Indonesian government expects that, once the FTA is concluded, exports to the EU will increase by more than 50% within three to four years.

The EU is Indonesia's fifth-largest trading partner. Last year, trade volume between the two reached 27.3 billion euros (approximately 42.356 trillion won). The EU exported 9.7 billion euros worth of goods to Indonesia and imported 17.5 billion euros worth from Indonesia.

Meanwhile, Indonesia is also negotiating with the United States to reduce the 32% reciprocal tariff rate imposed by the US.

This content was produced with the assistance of AI translation services.