Agreement reached between the European Union and Indonesia. After years of negotiations, for some time, the third Asian country by population and the EU have signed a new free trade in goods, which breaks down the customs duties of most of the goods to zero. The situation unlocked after the imposition of the duties by the USA, both to the EU and the Indonesia.
In this way, the blockade and the Asian country respond to Trump’s hostility and protectionism. For European exporters, the agreement is worth 600 million euros in savings and opens a market of 280 million people. The treaty is also particularly interesting for Italy, which with Indonesia has a highly negative commercial balance.
The details of the agreement between the EU and Indonesia
The agreement signed between the EU and Indonesia reflects the greatest economic force of the blockade with respect to the Asian country. The commercial treaty, in fact, provides that:
- Indonesia abolishes duties on 98.5% of European goods;
- The EU abolishes the duties on 80% of Indonesian goods.
The areas in which this agreement will have the greatest effects regarding European markets are two: clothing and technologies for the ecological transition. Indonesia in fact exports an important quantity of textiles and leather goods in Europe, but above all, it is the first producer in the world of Nichel.
The Indonesian government is investing a lot on the extraction and processing of this metal, fundamental for the construction of electrical batteries and in the creation of some steel. In 2024 the country provided 61% of the world nickel and aims to reach 80% in the coming years. Reset the duties on this raw material is important for Europe, to be able to develop an advanced manufacture linked to the ecological transition, as the president of the European Commission Ursula von der Leyen also pointed out:
THEour agreement with Indonesia It also guarantees us a stable and predictable supply of essential raw materials, essential for the European industry of clean technologies and steel.
The negotiations unlocked by Trump’s duties
Reaching an agreement was not easy. The negotiations between Indonesia and the EU have been ahead since 2016. In almost 10 years, the two parts had never been able to find common land to get to the signing of the treaty. However, Donald Trump’s protectionist policy has changed things.
Both the EU and Indonesia have in fact suffered very high customs rates by the United States on some of their most important exports. Suddenly, therefore, both needed a new commercial partner who at the same time allowed to obtain goods at lower prices and opened markets from high potential.
The impact of the agreement on Italy
As for Italy, the agreement between the EU and Indonesia is potentially important for an increase in exports to the Asian country, which has more than 280 million inhabitants. However, Italy has a negative commercial balance with Indonesia:
- It matters assets for 2.1 billion euros;
- Export assets for 1.2 billion euros.
From Indonesia, Italy mainly imports food, metallurgical and chemical products, while our country exports many machinery. Of the 1.2 billion euros of Italian exports in Indonesia, 545 million, almost half, derives from the mechanical sector alone. It will therefore be the Italian manufacture to be able to take advantage of the new agreement more, while agriculture could suffer from it.
