New guide to the EU-Indonesia trade agreement
The planned trade agreement between the European Union and Indonesia (CEPA) is more than just a customs agreement: It touches on key issues such as raw materials, deforestation, climate, labour and human rights, and political room for manoeuvre. Our new guide ‘Between Nickel Boom and Palm Oil Curse’ sets out the key provisions – fact-based and with a view to global justice. Download the travel guide as PDF now.
Brief overview CEPA: What you need to know in 3 minutes
- CEPA aims to expand trade, including by reducing tariffs on: More than 98 % tariff lines.
- The trade structure is asymmetrical: Raw materials/agricultural goods to the EU, high value added industrial goods to Indonesia.
- Indonesia is a key partner for Nickel, bauxite and palm oil – with significant risks to forests, biodiversity and human rights.
- Although the sustainability chapter contains levers (including Paris/ILO as ‘essential elements’), it remains weak and difficult to enforce on key points.
- In the ratification process, this European Parliament In the end, only one Yes/No – Changes to the text are then no longer possible.
- Our position: No ratification in its current form – as long as minimum human rights, social and environmental requirements are not bindingly secured.
What is CEPA and why now?
Negotiations on the Comprehensive Economic Partnership Agreement (CEPA) have been concluded. Follow now translation in all official EU languages; and Legal scrubbing – thereafter The formal political decision-making process begins.
On the one hand, the EU member states must vote on the agreement in the Council. After that, the European Parliament votes.
EU-Indonesia trade: Structure and planned liberalisation
The EU mainly imports raw materials and agricultural goods from Indonesia, while it exports processed industrial goods. This structure is not ‘neutral’ – it shapes value creation, working conditions and environmental burdens along global supply chains.
With CEPA, tariffs on More than 98 % customs tariff lines are abolished and further barriers to trade are removed.
Raw materials & Industrial policy: Nickel, bauxite – and political leeway
Raw materials are at the heart of CEPA. Indonesia is a global leader in nickel (via 50 % worldwide promotion; 2023 approx. 1.8 million tonnes).
At the same time, Indonesia is pursuing a strategy to strengthen raw materials Processed in the country. These include export restrictions, such as export bans on unprocessed nickel (since 2020) and bauxite (since 2023).
A central conflict: The EU is pushing for ‘free’ trade in raw materials, with Indonesia, among others, facing the WTO sued; a WTO panel assessed Indonesia’s 2022 nickel export ban as WTO-infringing (appeal pending due to blocked Appellate Body).
CEPA threatens to further reduce industrial policy space without binding safeguards against environmental degradation or human rights violations.
Deforestation & Biodiversity: CEPA does not protect forests
CEPA aims to increase trade in products closely linked to deforestation, in particular nickel and palm oil (plus, among others, wood, paper, rubber, coffee, cocoa).
According to Global Forest Watch Since 1950, more than 740,000 km2 Indonesian rainforest deforested, burned or degraded.
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Nickel mining: According to Indonesian data doubled deforestation in areas where nickel is mined; In addition, rivers are polluted and mangroves are damaged.
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Palm oil: Indonesia is the world's largest producer and exporter; Three years after the entry into force of an agreement with the EU, the government expects an Increase in exports by 50 %.
The travel guide shows: Without clear, binding mechanisms, CEPA threatens to exacerbate – rather than stop – deforestation dynamics.
Human rights & labour rights: Risks of CEPA along supply chains
loud Walk Free Foundation are around in Indonesia 1.8 million people affected by forced labour – especially in mining, plantation and manufacturing industries.
On palm oil plantations, labour and human rights violations are systematically documented (e.g. forced and child labour, wage fraud, restriction of freedom of association).
According to the guidebook, groups that already bear the brunt of extractivist models are particularly at risk: Women, indigenous communities, workersinside, small farmersinside and fishermen.
Climate effects of CEPA: “Full gas into the climate crisis”
According to the travel guide, global trade flows cause about a quarter global greenhouse gas emissions.
CEPA would further aggravate this trend by increasing trade in deforestation-related agricultural goods (particularly palm oil), increasing trade in critical raw materials (particularly nickel, including carbon-intensive processing), increasing greenhouse gas-intensive goods and increasing freight traffic.
Sustainability chapter: Why "good on paper" is not enough
Like all recent EU agreements, CEPA contains a chapter on sustainable development (‘trade and sustainable growth and development’). On the positive side, Paris/ILO core labour standards are anchored as an ‘essential element’ and can theoretically trigger sanctions mechanisms, but not initiated by those affected, but only by governments.
At the same time, forests, biodiversity, gender, human rights remain in the mode of dialogue and volunteering.
EU Deforestation Regulation: Important step – but with gaps
The EU adopted a regulation on deforestation-free supply chains in 2023. However, the travel guide makes central boundaries visible: Mineral raw materials are not included and the entry into force has been postponed several times under lobbying pressure, with the risk of further weakening.
In addition, the agreement does not refer to the deforestation regulation at all, but to the Indonesian ISPO, which is strongly criticized (for lack of transparency, weak instruments for enforcement, insufficient protection of indigenous groups and workers, among other things).
Intellectual property: Seed & Medication as a matter of justice
The IPR chapter is one of the most competitive parts of CEPA.
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Seed: The EU successfully pushed for the recognition of strict plant variety rights regimes based on the model of UPOV (1991). This prohibits the reproduction, exchange or reuse of seeds and endangers smallholder structures as well as food sovereignty.
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Medications: The guide warns against TRIPS-plus effects: Patent protection and possible ‘backdoors’ could delay/restrict generics, increase prices and worsen access to medicine, especially for poor and rural populations.
Ratification: Who decides – and what are the levers?
After legal scrubbing and translation, CEPA is expected to be EU-only treated (not as a ‘mixed agreement’). The process: Vote in Council of the European Union, then the consent of the European Parliament. Parliament can only Agree or Reject – Amendments to the text are no longer possible.
In addition, the guide refers to a ‘review’ clause as a possible back door to anchor corporate rights in retrospect, in the investment protection part of the agreement that has been put on hold.
Our demands: Really fair trade instead of access to raw materials
The guide outlines key elements for a just deal: Climate justice (including reduction targets, reducing resource consumption, fossil phase-out, energy democracy/transition transition), human rights/indigenous rights/labour rights with effective sanctions (including FPIC), fair trade in raw materials (participation of affected communities, environmental impact assessment and human rights impact assessment, local added value), food sovereignty (seed safeguarding), health (access to affordable generics) – as well as democratic negotiations with civil society and trade unions.
And explicitly: No special rights for corporations against environmental, social or health policies; Dispute resolution through transparent, democratic procedures based on national/international courts.
Need for action: As long as these requirements are not met, the EU and Indonesia will not be allowed to ratify the agreement.
Find out more
More on the risks of trade and investment policy.
Compass Global Economy – the PowerShift Podcast.
Current PowerShift publications on the topic.
Press & Background
For interviews, audio and data please contact:
Adrian Bornmann
Speaker for press and public relations
Download the travel guide as PDF now.
Printed copies can be ordered here: shop
