Indonesia and European Union reach free trade agreement

(AFP) Indonesia and the European Union (E.U.) reached a free trade agreement on Tuesday after more than a decade of negotiations that accelerated in the face of rising U.S. tariffs, officials said.

The Comprehensive Economic Partnership Agreement (CEPA) between the two sides is the third trade pact Brussels has signed with Southeast Asian countries, after Singapore and Vietnam.

The arrangement, signed by E.U. Trade Commissioner Maros Sefcovic and Indonesian Economy Minister Airlangga Hartarto, will open up investment in strategic sectors such as electric cars, electronics and pharmaceuticals.

"European goods will be more affordable..."

"By closing this agreement, the E.U. and Indonesia are sending a powerful message to the world that we are united in our commitment to open international trade," Sefcovic said after the signing.

"E.U. exporters will save some 600 million euros ($708 million) a year in tariffs paid on their products ... and European goods will be more affordable and available to Indonesian consumers," European Commission President Ursula von der Leyen said in a statement.

Indonesia held talks with the E.U. since 2016, but negotiations for a trade agreement initially made little progress.

Issues such as palm oil and deforestation posed obstacles, but President Donald Trump's tariff policy, "created the urgency" to accelerate a deal, explained Deni Friawan, a researcher at the Center for Strategic and International Studies.

Indonesian minister Airlangga said uncertainties caused by the "tariff war and protectionism" pushed both sides to "seek certainty through a stable bilateral agreement."

The pact is expected to "mitigate the risks of the impact of the global tariff war," the official said in a statement sent to AFP.