EU to allow Indonesia to supply palm oil at zero rate

The European Union and Indonesia, within the framework of the concluded trade agreements, have agreed on palm oil supplies with a customs rate of 0%, reports the Jakarta Globe.

The parties recently concluded a political Comprehensive Economic Partnership Agreement (CEP), but the EU was forced to restrict palm oil imports in accordance with the requirements of the EU Deforestation Regulation (EUDR), which comes into force at the end of the year for medium and large companies.

Initially, the EU refused to include palm oil in the agreement at all, but it turned out that Europe really needs it.

The CEPA agreement will set quotas for the volume of Indonesian palm oil that will be shipped to the EU at zero duty, but all shipments above the specified limits will be subject to a 3% duty.

“Such quotas will be introduced for crude palm oil and palm kernel oil. And the 3% duty is significantly lower than the 19% imposed against us by the US,” the Indonesian Ministry of Economy reported.

Duty-free supplies of palm oil to the EU will increase competition in the market and pressure on the prices of rapeseed and sunflower oil.

Under the CEPA, 80% of Indonesian exports to the EU will be subject to a 0% tariff. According to EU data, trade between Indonesia and the EU in 2024 amounted to 27.3 billion euros ($31.9 billion).

The latest progress on the agreement comes as welcome news amid the trade wars launched by President Trump. European Commission President Ursula von der Leyen acknowledged that the EU is trying to diversify its markets following the US president’s latest trade decisions.

However, Indonesia will remain the largest supplier of palm oil to the US. The rate for Indonesian products was reduced from 32% to 19%, while the rate for its main competitor, Malaysia, was left at 25%. Recall that Indonesia provides 85% of palm oil imports to the US.

Tags: Indonesia, EU, palm oil, duties