Concluded in September 2025, the Comprehensive Economic Partnership Agreement (CEPA) promises to reshape the EU’s economic engagement with Indonesia, Southeast Asia’s largest economy, creating new openings for trade, investment, and cooperation on sustainability. It eliminates tariffs on 95% of goods, opens Indonesian public procurement to EU firms, improves intellectual property protection, and includes modern dispute-settlement and investment provisions. Moreover, it also comes at a pivotal time for both partners. For Brussels, CEPA is a key pillar of its de-risking and diversification agenda. For Jakarta, it offers a pathway to secure investment, technology transfer, and industrial upgrading in an increasingly uncertain global economy. Yet, the conclusion of CEPA is not the end of the story, but it is merely the beginning of a complex ratification and implementation process. As European Commission President von der Leyen put it, CEPA represents ‘a path of openness and partnership,’ not a resolution in itself. Over the coming months, the agreement will undergo legal scrubbing, translation, and formal approval by the Council and the European Parliament. Should it be classified as a ‘mixed agreement,’ it will also require ratification by all 27 EU Member States, a process that could stretch for years.
The significance of CEPA, however, extends far beyond institutional timelines. Politically, the agreement may reaffirm the EU’s relevance and engagement in the Indo-Pacific, following deals with Singapore and Vietnam. Economically, it unlocks more opportunities, as Indonesia accounts for a large share of ASEAN’s GDP and possesses substantial amounts of nickel, copper, and palm oil. Strategically, it may anchor Europe’s quest for resilient, rules-based supply chains at a time when tariffs, climate policies, and the weaponisation of interdependence are redrawing global trade. Still, questions loom over what comes next. Can CEPA reconcile the EU’s environmental and labour standards with Indonesia’s developmental ambitions? Will this agreement stand as a symbol of Europe’s strategic pragmatism or expose the limits of its normative power in a world defined by competition and constraint?
1. Rocky road ahead?
The conclusion of negotiations marks not the end, but the start of a carefully choreographed institutional journey for CEPA. Under Article 218 TFEU, every EU trade deal passes through a five-stage consent process combining legal rigour with democratic accountability. Once the political agreement is reached, the text undergoes legal-linguistic revision to ensure consistency across all 24 EU languages and alignment with Union law. The European Commission then submits a proposal to the Council, which is reviewed by the Trade Policy Committee (TPC), representing all 27 Member States. When satisfied, the Council adopts a Decision on Signature under Article 218(5), authorising the Commission to sign the deal.
The act of signature signals political endorsement but not legal conclusion, as it opens the door to Parliamentary consent. Under Article 218(6)(a) TFEU, the Parliament cannot amend the text but must approve or reject it in full. The Committee on International Trade (INTA) will examine CEPA’s economic, legal, and sustainability implications before recommending a vote in plenary. MEPs will focus on issues such as palm oil sustainability, labour rights, and compliance with the EU Deforestation Regulation (EUDR). Politically, the outlook is favourable but not assured. CEPA fits the Parliament’s priorities (supply-chain diversification and a stronger EU role in the Indo-Pacific), reflected in recent resolutions on economic security and de-risking. The EPP, Renew Europe, and much of the S&D group have historically supported trade agreements with enforceable sustainability clauses. The European Parliament’s consent to the EU-Vietnam FTA (401 votes for, 192 against, 40 abstentions) showed that majorities are achievable when market access is balanced with labour and environmental standards.
The Commission’s own summary confirms that CEPA includes a Palm Oil Protocol, traceability cooperation, and strengthened Trade and Sustainable Development (TSD) provisions as a direct answer to earlier criticisms. Moreover, the opposition persists, as the Greens/EFA, The Left, and parts of S&D will likely demand stricter guarantees on EUDR enforcement and smallholder protection, echoing NGO warnings that without binding safeguards, CEPA could worsen deforestation. Such concerns carry weight in the newly elected 2024–2029 Parliament. Overall, the probability of consent appears high but conditional on credible assurances from the Commission and Council. If Brussels can prove that CEPA’s environmental and social provisions are enforceable and backed by technical support for Indonesia, a majority similar to the Vietnam vote is once again plausible. If the deal is seen as weakening EU standards, dissent could delay ratification.
2. Remaining sticky points
While the legal machinery of ratification turns slowly, the politics around CEPA will move much faster. Even as the deal awaits scrutiny in Brussels and national capitals, two contentious issues—palm oil and nickel—threaten to shape the tone of debate and determine how easily the agreement can pass through the European Parliament
2.1 Palm oil and nickel
Few issues capture the tension between Europe’s regulatory power and Southeast Asia’s development priorities as sharply as palm oil. Indonesia, the world’s largest producer, sees the EUDR as an unfair trade barrier mainly affecting smallholders and imposing costly certification demands, while Brussels views it as a cornerstone of the European Green Deal and proof that open trade need not harm the planet. During CEPA’s consent process, the European Parliament is likely to demand tangible safeguards, such as capacity-building for smallholders, satellite traceability systems, and a phased transition aligned with EU sustainability goals. Properly managed, CEPA’s TSD chapter could transform confrontation into cooperation, showing that Europe’s de-risking agenda is less about disengagement than about empowering partners to meet shared environmental standards.
The second point of contention arises from Indonesia’s nickel downstreaming policy. Since 2020, Jakarta has banned exports of unprocessed nickel ore to compel foreign investors to build smelters locally, capturing more value from its critical-mineral endowment. The EU challenged this export ban at the World Trade Organisation (WTO), arguing that it distorts global supply chains and undermines open markets.
Yet the case remains politically sensitive. Europe’s own Critical Raw Materials Act (CRM Act) seeks to secure battery metals for the green transition, often from Indonesia itself. CEPA’s energy-and-raw-materials chapter attempts a delicate balance. It reaffirms the principle of free trade in raw materials while acknowledging each side’s right to pursue industrial and environmental objectives. Much will depend on interpretation. If the EU insists on strict non-discrimination clauses, Jakarta may see it as constraining its development strategy. If the provisions remain flexible, European industries may question whether CEPA truly delivers on ‘level-playing-field’ promises.
2.2 A political test for Europe’s trade credibility
Both issues will loom large in the European Parliament’s International Trade (INTA) Committee, the arena where technical scrutiny meets political theatre. Palm oil will test the credibility of Europe’s sustainability diplomacy, and nickel will test the realism of its economic security strategy. Together, they capture the central tension of EU external trade policy: how to reconcile the Union’s normative identity with its pursuit of strategic autonomy. If the EU manages to bridge regulatory ambition with developmental pragmatism, it could demonstrate that ‘de-risking’ does not mean retreating behind walls, but building resilient partnerships grounded in trust. If it fails, the risk is not merely a delayed ratification, but the erosion of Europe’s credibility as a reliable, principled actor in the Indo-Pacific.
3. The strategic layer of CEPA
Beyond its technical provisions and legal complexity, the EU-Indonesia CEPA is ultimately a test of how Europe translates its de-risking strategy into credible external partnerships. Since the European Commission’s 2023 Economic Security Strategy, the EU has sought to diversify supply chains, secure access to CRM, and reduce strategic dependencies, without resorting to protectionism or decoupling. CEPA is therefore not merely a trade deal, but also an instrument in the EU’s broader pursuit of open strategic autonomy. Indonesia fits perfectly into this calculus. As one of the world’s important nickel producers and a key source of cobalt, copper, and rare earths, it occupies a central position in the clean-tech and battery value chains that Europe needs for its green transition. At the same time, Jakarta’s geopolitical posture, non-aligned but pragmatic, makes it a valuable partner in a region where the EU competes for influence with China, the United States, and Japan. For Europe, building trust with Indonesia is about securing resources, but also about anchoring itself in the Indo-Pacific’s fast-evolving economic architecture.
Moreover, from Brussels’ perspective, CEPA complements the CRM Act and its Global Gateway strategy, both designed to reduce dependence on single suppliers and to promote sustainable infrastructure partnerships. For Jakarta, the deal signals a willingness to engage with the EU despite recent tensions at the WTO and lingering scepticism over ‘green conditionality.’ That the two sides reached an agreement despite those disputes underscores a shared recognition that in an era of fragmented globalisation, economic resilience requires cooperation, not isolation. Yet the success of this partnership will depend less on its clauses than on its implementation. The EU must ensure that the instruments it deploys, like the EUDR, the Carbon Border Adjustment Mechanism (CBAM), and the Corporate Sustainability Due Diligence Directive (CSDDD), do not unintentionally alienate key partners. If navigated deftly, CEPA could emerge as the defining example of Europe’s ‘de-risking without disengagement’ deal, which transforms trade policy into a tool of strategic partnership.
4. What next?
As the negotiations have been concluded and the EU-Indonesia CEPA moves toward ratification, the real test begins with the legal scrubbing, Council authorisation, the European Parliament’s consent vote, and, if the agreement is classified as ‘mixed,’ national ratifications across all 27 Member States. But beyond these procedural milestones lies a broader question: can the EU align its economic-security ambitions with its sustainability promises? Each stage will carry political risks. In Brussels, the European Parliament is expected to demand robust guarantees on the EUDR, labour rights, and environmental safeguards before granting consent. Across the EU Member States, ratification could meet resistance where trade scepticism and environmental activism remain potent. And in Jakarta, sensitivities over sovereignty and industrial policy may resurface if CEPA is seen as limiting Indonesia’s control over strategic resources. Yet the opportunities are equally clear.
Early technical cooperation on sustainability verification could help reconcile the EU’s regulatory expectations with Indonesia’s development priorities. Joint implementation under the TSD chapter offers a pathway toward shared accountability and credible climate action. If handled wisely, CEPA could become a model for future EU-ASEAN partnerships as a practical expression of ‘de-risking without disengagement.’ Ultimately, CEPA’s success will hinge less on the speed of ratification than on the quality of its execution. If ratified and implemented with care, it could mark a turning point in Europe’s external trade posture. In that sense, CEPA is not just a trade deal. It is a litmus test for the EU’s capacity to turn principle into partnership in an uncertain world, guaranteeing a strong foundation for future cooperation and EU engagement in Southeast Asia and the Indo-Pacific.
Author: Antonin Nenutil, EIAS Junior Researcher
Photo Credits: WikiMedia Commons
