According to Ursula von der Leyen, President of the European Commission, the deal ensures “a stable and predictable supply of critical raw materials” while creating new opportunities for European companies and farmers. With a market of 280 million people and $30.1 billion in bilateral trade in 2024, Indonesia represents a strategic prospect for the EU, particularly in electronics, electric vehicles, and pharmaceuticals. European exporters are expected to save nearly €600 million per year in tariffs, thereby strengthening their competitiveness in the Indonesian market.

Nevertheless, environmental concerns remain. The EU and Indonesia had to reach a compromise on European legislation concerning deforestation. A cooperation and dialogue platform will be set up to address climate and environmental issues linked to trade, but NGOs fear that increased demand for palm oil could accelerate deforestation. Ratification by all 27 European parliaments and the Indonesian parliament is planned, with the agreement expected to enter into force in 2027.

This agreement perfectly illustrates how trade geopolitics shapes states’ economic strategies. In the face of rising global tariffs, the EU and Indonesia demonstrate that balanced and regulated cooperation can unlock new growth opportunities, while also raising sustainability challenges. For international trade professionals, this deal sends a strong signal: anticipating, diversifying, and integrating both economic and environmental dimensions is becoming essential to remain competitive.

On Tuesday, September 23, in Bali, Indonesia and the European Union (EU) concluded a historic free trade agreement, marking a major step in economic relations between Southeast Asia and Europe. Signed in a context of high global trade instability, exacerbated by rising U.S. tariffs, the deal sends a clear message in favor of open international trade governed by transparent rules.

The agreement stipulates that 80% of Indonesian exports to the EU will benefit from zero tariffs, covering key sectors such as textiles, footwear, fisheries, and palm oil. For Indonesia, this opening represents a strategic diversification of its markets—essential after Washington imposed 19% tariffs on many Indonesian products. On the European side, the partnership reflects a similar ambition: reducing dependency on the United States while expanding opportunities for European businesses and raw materials.