Indonesia is the EU’s 30th largest trading partner for goods globally and the EU’s fifth trading partner in the Association of Southeast Asian Nations (ASEAN) in 2025, while the EU is Indonesia’s fourth largest trading partner, accounting for 6% of its total trade. Bilateral trade between the two partners amounted to EUR 28.9 billion in 2025, with EU exports worth EUR 10.2 billion and EU imports worth EUR 18.7 billion. Indonesian exports to the EU include mainly agricultural products, base metals, chemicals, machinery and appliances, fats and oils, as well as footwear. The EU’s exports to Indonesia are largely dominated by industrial products, including machinery and appliances, transport equipment and chemical products. Bilateral trade in services between the EU and Indonesia amounted to EUR 9.3 billion in 2024, with EU exports amounting to EUR 5.8 billion and imports amounting to EUR 3.5 billion. In 2024, the EU’s foreign direct investment (FDI) stock in Indonesia amounted to EUR 24.7 billion, while Indonesia’s FDI stock in the EU was EUR 1.3 billion.

Indonesia, a WTO member since 1995, currently enjoys trade preferences with the EU under the Generalised Scheme of Preferences (“GSP”), of which it is the second largest beneficiary. In 2024, 44% of its exports to the EU were eligible for reduced tariffs under the GSP. Indonesia will however graduate from the GSP scheme on 1 January 2027, due to its upper-middle income status over the last 3 years.

The legally revised texts of the IPA have been made public and can be found at the following link: 

Text of the agreements - Trade and Economic Security - European Commission

The Commission is putting forward the following proposals for Council decisions: 

The attached proposal for a Council Decision constitutes the legal instrument for the conclusion of the IPA between the European Union and Indonesia. 

Prior to concluding the negotiations for the IPA, the EU and Indonesia had negotiated a Partnership Cooperation Agreement (PCA), which was signed in Jakarta on 9 November 2009 and entered into force on 1 May 2014. The Agreement provides the basis for cooperating across a wide spectrum of policy fields, including human rights and trade, and for holding regular political dialogue and sectoral cooperation. 

Once the IPA enters into force, it will coexist with the PCA as a specific agreement and an integral part of the overall bilateral relations between the EU and Indonesia. The two agreements have no conflicting provisions.

The IPA is fully consistent with Union policies and will not require the EU to amend its rules, regulations or standards in any regulated area. Furthermore, the CEPA fully safeguards the EU’s and Indonesia’s right to regulate within their territories to achieve legitimate policy objectives, such as the protection of public morals, social or consumer protection, privacy and data protection, sustainable development or promotion and protection of cultural diversity. 

Article 207 of the Treaty on the Functioning of the European Union (TFEU) provides for the negotiation and conclusion of trade agreements as part of the Union’s common commercial policy, which covers foreign direct investments.

Given that the main objective of the IPA is to create a better climate for the development of foreign direct investments between the EU and Indonesia, and to lay down the necessary arrangements for the protection of such investments, the substantive legal basis is Article 207 TFEU. 

Given the subject matter of the envisaged agreement, it is appropriate for the Commission to submit the proposal to the Council. 

Therefore, the procedural legal basis for the proposed decision on concluding the agreement is Article 218(6), second subparagraph, point (a) TFEU.

In accordance with Opinion 2/15 on the EU-Singapore FTA of the Court of Justice of 16 May 2017, all the areas covered by the IPA would fall within the exclusive competence of the EU and, more particularly, within the scope of Article 207 TFEU. The Court confirmed the EU’s exclusive competence under the Common Commercial Policy pursuant to Article 207(1) TFEU and Article 3(2) TFEU. 

As a result, the IPA is to be concluded by the Union pursuant to a decision of the Council based on Article 218(6) TFEU, following the European Parliament’s consent.

The IPA as presented to the Council does not cover any matters that fall outside the EU’s exclusive competence. 

Investment protection agreements are the appropriate means to create a better climate for the development of foreign direct investments and to lay down the necessary arrangements for the protection of such investments between the EU and a third country. No alternative exists to render such protection efforts legally binding. 

This initiative pursues directly the Union's objective in external action and contributes to the political priority of the ‘EU as a stronger global actor’. It is in line with the EU Global Strategy’s orientations to engage with others and revamp its external partnerships in a responsible way, in order to attain the EU’s external priorities. It contributes to the EU’s trade and development objectives.

This proposal is in accordance with Article 218(6) TFEU, which envisages the adoption by the Council of decisions on the conclusion of international agreements. No other legal instrument exists that could be used in order to achieve the objective expressed in this proposal. This proposal for a Council decision is submitted in accordance with Article 218(6) TFEU, which envisages the adoption by the Council of a decision concluding the agreement. There exists no other legal instrument that could be used in order to achieve the objective expressed in this proposal. 

Prior to and during the negotiations, the EU Member States were regularly informed and consulted orally and in writing on the different aspects of the negotiation via the Council’s Trade Policy Committee, including in its subgroup for services and investments. The European Parliament was also regularly informed and consulted via its Committee on International Trade (“INTA”). The texts progressively resulting from the negotiations were circulated throughout the process to both institutions.

In parallel to the negotiations, the Commission commissioned a  Sustainability Impact Assessment  (“SIA”) of the CEPA between the EU and Indonesia.

The SIA, which was completed in September 2019 to support the negotiations for a free trade and investment protection agreement, examined how the trade and investment provisions of the CEPA under negotiation could affect economic, social, human rights and environmental issues in the EU and in Indonesia. It built on the analysis presented in the SIA carried out in 2009 in support of the region-to-region negotiations for an EU-ASEAN trade agreement, providing more up-to-date information and a clear focus on the specific features and potential impacts of bilateral negotiations with Indonesia only.

Overall, the SIA concluded that the agreement was expected to have positive impacts for both Parties and their societies, across all the key economic indicators (GDP, welfare, global and bilateral trade), with their comparative magnitude being larger in Indonesia than in the EU, due to the differences in the relative sizes of the two economies.

In the context of the SIA and throughout the negotiations, the Commission provided the possibility for civil society organisations to have their voice heard, ask questions, and contribute to a sound, evidence-based and transparent societal debate, including through dedicated civil society dialogues, a workshop with local stakeholders in Indonesia, bilateral meetings, interviews and web-based surveys.

Furthermore, during the negotiations and in line with its transparency policy, the Commission has published on its website and regularly updated reports of the negotiating rounds, the text proposals, press releases, facts sheets and background information materials.

The SIA of the CEPA was carried out by a consortium of independent consultancy companies led by Development Solutions and commissioned by the Commission’s Directorate-General for Trade. 

The negotiations for bilateral free trade agreements between the EU and Southeast Asian countries were covered by the impact assessment carried out at the time of the Commission proposal for a negotiating mandate for and EU-ASEAN free trade agreement. 

The IPA is not subject to REFIT procedures.

The proposal does not affect the protection of fundamental rights in the Union. 

The IPA will not have a financial impact on the EU’s budget.

The IPA includes institutional provisions that lay down the structure for the implementing bodies to continuously monitor the implementation, operation and impact of the IPA.

The institutional chapter of the IPA establishes a Committee that has as its main task to supervise and facilitate the implementation and application of the IPA.

The Committee will exchange views on topics linked to the implementation of the agreement with civil society representatives participating in a civil society dialogue.

The IPA also establishes domestic advisory groups comprising a balanced representation of independent civil society organisations, based on a multi-stakeholder approach which includes relevant interest groups in economic, social and environmental matters. The domestic advisory groups may submit views and recommendations concerning the functioning and implementation of the IPA and shall meet at least once a year. 

Not applicable.