EU and Indonesia signed a trade agreement, removing 98% of trade barriers.

The European Union and Indonesia signed a trade agreement on Tuesday after more than nine years of negotiations, The Wall Street Journal reports.

The document was signed during a visit by European Trade Commissioner Maroš Šefčovič to Indonesia.

“This agreement eliminates more than 98% of tariffs, removing almost all trade barriers and opening new avenues for investment,” Šefčovič said.

The deal will benefit labor-intensive sectors such as textiles, footwear, palm oil, electric vehicles, fisheries, and renewable energy, said Harjo Limanseto, a spokesman for the Indonesian Ministry of Economy.

According to Šefčovič, the agreement is designed to ensure a balanced outcome. Specifically, Indonesia will gradually reduce tariffs on automobile imports, paving the way for European automobile exports and investment in electric vehicles.

The EU, for its part, previously promised zero tariffs on Indonesian palm oil and special treatment for Indonesian products.

Indonesia is a leading producer of nickel and copper. The EU is its fifth-largest trading partner. Last year, trade between them exceeded €27 billion. Jakarta expects the new agreement to double trade within five years and also calls on the EU to open its market to Indonesian palm oil biofuels after WTO requirements are approved.

Tags: Indonesia, EU, palm oil