Indonesia has secured approval for zero tariffs on crude palm oil exports to the European Union under the upcoming Indonesia-EU Comprehensive Economic Partnership Agreement (IEU CEPA), officials said on Tuesday.
Coordinating Minister for Economic Affairs Airlangga Hartarto called the deal “a flash point across the last negotiation rounds.” The arrangement removes barriers for Indonesia’s palm oil industry, one of the country’s top export sectors.
Under the agreement, crude palm oil and palm kernel oil will enter the EU at a zero tariff within a quota. Refined palm oil will carry tariffs of 3% inside the quota and 4.5% above it. Officials noted the terms are far more favorable than current U.S. rates, where Indonesian refined palm oil faces a 19% tariff.
EU importers must verify palm oil does not come from deforested land. Indonesian exporters will be required to obtain Indonesia Sustainable Palm Oil (ISPO) certification, and Jakarta said transparency issues over plantation geo-tagging had been resolved.
Talks on the IEU CEPA began in 2016 but were slowed by disputes over environmental rules and nickel exports. Legal texts are expected to be finalized by late 2025, with ratification before 2026 and full implementation in 2027.
Officials project Indonesian exports to the EU could rise by half in the coming years, not only in palm oil but also in seafood, footwear and textiles. Trade between the two sides totaled €27.3 billion last year, making the EU Indonesia’s fifth-largest trading partner.
Industry groups welcomed the tariff reduction but warned EU environmental standards remain a challenge. Indonesian officials said exporters can comply through certification and geo-location tools.
They also expressed hope the EU breakthrough could revive stalled trade talks with the U.S. and support Indonesia’s push in clean energy and minerals.
