Indonesia and EU Prepare to Sign Trade Pact as Palm Oil Access Remains Unsettled
Indonesia and the European Union are completing technical preparations for the IEU-CEPA trade agreement, with signing scheduled for late October 2026 and implementation expected in 2027. Most Indonesian tariff lines would receive immediate duty-free treatment, but the terms for palm oil remain under technical discussion.
Signing scheduled for late October
Indonesia and the European Union are completing preparations for the Indonesia-European Union Comprehensive Economic Partnership Agreement, or IEU-CEPA. Indonesia expects the agreement to expand access for its products, including crude palm oil, coffee and other agricultural goods, to the EU market, according to UkrAgroConsult, citing Prestasisawit.
Negotiations were successfully concluded in September 2025. Indonesian Trade Minister Budi Santoso is scheduled to sign the agreement at the end of October 2026, while practical implementation is expected to begin in 2027. The Indonesian government is coordinating the remaining technical work with Brussels and the capitals of EU member states.
The agreement's text was formally submitted to the Council of the European Union on 22 August. After signing, it will be sent to the European Parliament for ratification. Indonesia estimates that the procedure could take about 90 days under the most optimistic scenario, potentially allowing the pact to take effect at the beginning of the following year.
Most tariff lines set for immediate liberalisation
Once the agreement enters into force, zero customs duties are expected to apply immediately to 90.4% of Indonesia's tariff lines. Another 8.37% of goods will be covered by phased tariff reductions combined with tariff-rate quotas. These provisions are intended to improve the competitiveness of a broad range of Indonesian products in Europe, including coffee and other agricultural commodities.
The scale and timing of the tariff changes matter for producers and exporters assessing future sales to the EU. Immediate liberalisation across most tariff lines could reduce landed costs and strengthen Indonesian suppliers against competitors already benefiting from preferential arrangements. Products subject to staged reductions or quotas, however, will continue to face volume limits or a slower decline in border costs.
Palm oil treatment remains under discussion
Indonesia is the world's largest producer and exporter of palm oil, making the commodity one of the most commercially significant elements of the prospective agreement. Greater market access could reinforce the position of Indonesian suppliers in Europe and affect procurement decisions by EU processors and importers. However, the current terms do not explicitly guarantee immediate duty-free entry for palm oil itself.
Whether palm oil will be included among the products receiving free access remains subject to technical discussions between the parties. The distinction is important: broad tariff liberalisation does not automatically establish the treatment of every sensitive commodity. Until the final schedules and quota terms are confirmed, palm oil exporters and European buyers cannot assume that the sector will receive the same immediate benefits as the majority of tariff lines.
The pact therefore establishes a wide framework for closer trade while leaving a central agricultural issue unresolved. For Indonesian coffee and many other goods, the agreement offers a clearer route toward lower tariffs. For palm oil, the commercial impact will depend on the final product classification, the pace of any tariff reduction and whether access is limited by a quota.
