Jakarta. An Indonesian minister recently revealed why it took years for Jakarta to finalize a trade pact with the European Union or EU, citing the group’s size while refusing to put the blame on the bloc’s anti-deforestation law on palm oil.

In 2016, both sides officially kicked off the negotiations for the Indonesia-EU Comprehensive Economic Partnership Agreement (CEPA), a trade deal that would greatly eliminate import duties.

However, their bilateral relations had witnessed some setbacks over the years, especially after Europe decided that any palm oil entering its market must prove they are not linked to deforestation. This EU Regulation on Deforestation-Free Products (EUDR) has faced opposition from many countries, including the world’s leading palm oil exporter, Indonesia.

Fast forward to June 2025, the CEPA pact has now neared completion as Chief Economic Affairs Minister Airlangga met with the bloc’s senior officials at the EU’s headquarters in Brussels on Friday local time. They have also agreed to wrap up the substantial negotiations by the end of June 2025.

“It’s taking a long time [for us to wrap up the CEPA negotiations] because its content is complex and comprehensive. Finding common ground with 27 European countries is not as simple. But, the talks have now entered the final stage, meaning that we have addressed almost all matters in this pact,” Airlangga told a videoconference over the weekend.

He said the EUDR had nothing to do with the CEPA negotiations, noting that both are separate agreements. The EUDR requires palm oil producers to provide geolocation data as evidence that their products do not come from deforested land.

Such robust traceability measures can be hard to implement for Indonesian smallholders who represent over 40 percent of the country’s oil palm plantations as of 2023. Airlangga revealed that Europe would give special treatment to Indonesian palm oil, without providing further details.

“They have also postponed the EUDR for a year, and I think the main issues on sustainability and traceability of our forest products have been relatively resolved. Indonesia has prepared all the mechanisms, which just need to be in sync with the EU,” Airlangga told the press.

The anti-deforestation law will enter into force at the end of 2025 for large and medium-sized companies, but micro and small-scale enterprises have until June 30, 2026.

Indonesia also said that it's pushing the EU to recognize Jakarta’s existing sustainability standards. President Prabowo Subianto has mandated palm oil producers, including those involved in the industrial processing and bioenergy production, to secure the Indonesia Sustainable Palm Oil (ISPO) certificates to ensure good agricultural practices and environmental management.

Some Indonesian producers also have the Roundtable on Sustainable Palm Oil (RSPO) certificates --  a similar but global-level certification scheme, but it is voluntary.

According to Airlangga, the EU has agreed to eliminate the tariffs for approximately 80 percent of Indonesia’s exports to Europe.

Government estimates revealed that Indonesia’s Europe-bound exports could jump 50 percent within a few years since the CEPA’s entry into force. Official data showed that bilateral trade amounted to $30.1 billion in 2024, with Indonesia enjoying a $4.5 billion surplus.

Indonesian goods entering the EU markets are currently subject to tariffs of between 10 and 20 percent. Fellow ASEAN member Vietnam, on the other hand, enjoys a 0 percent tariff as Hanoi already has a trade pact with the EU starting in 2020.

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