Jakarta. Indonesia wants to fast-track its European Union (EU) trade deal as Jakarta tries to find alternatives to the tariff-agressive US.

US President Donald Trump had just extended his tariff regime by imposing new tariffs of 10% and 12.5% on dozens of economies over lax enforcement of forced labor bans. As Jakarta gets hit by a 10% rate, the government is now putting its thinking cap on to minimize the impact on trade. Haryo Limanseto, a spokesperson from Indonesia’s Ministry for Economic Affairs, recently confirmed that market expansion was on the plan.

“We will aggressively open up new markets. That includes through our trade deal — the Comprehensive Economic Partnership Agreement (CEPA) — with the EU, as an alternative to the US market,” Haryo recently told the Jakarta Globe.

The CEPA will gradually remove virtually all tariffs on EU-bound Indonesian goods exports and vice versa. Key products such as palm oil, footwear, and textiles are expected to reap benefits from this agreement that is set to enter into force by early 2027. Haryo went on to say that Indonesia will also “capitalize on its existing trade deals with South Korea and Australia”.

“We will also simplify the rules on raw material imports to slash production costs so our exports can be more competitive,” Haryo said. 

Foreign Minister Sugiono had talked of the CEPA with EU chief diplomat Kaja Kallas on the margins of ASEAN’s Manila gathering, about a day before the forced-labor tariff. Sugiono described the deal as being “very strategic to boost bilateral trade, investment, and economic cooperation”. 

The new duties officially replaced the temporary tariff that Trump had put in place after the Supreme Court derailed his trade protectionism agenda. The now-effective 10% tariffs followed a probe into whether Jakarta had failed to curb imports associated with forced labor. The tariff on the EU stands at 10%.

Indonesia is also now holding its breath for the US probe related to overproduction in the manufacturing sector, which could lead to new trade measures.

The EU reported that its goods trade with Indonesia totaled 28.9 billion euros (nearly $33 billion) last year, with the numbers heavily favoring Jakarta. Some 18.7 billion euros  ($21.3 billion) of those commerce activities were EU imports.

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