-- Indonesia and the European Union are on track to launch their Comprehensive Economic Partnership Agreement (CEPA) in 2027, The Jakarta Globe reported Friday.
The trade pact is currently undergoing a legal review expected to be completed this month, following which it will formally be approved in the second half.
However, despite zero tariffs on most exports, Indonesian exporters will have to adhere to stringent environmental compliance rules, the report said, citing Indonesian Employers Association (Apindo) chair Shinta Kamdani.
Carbon-intensive imports will be subject to levies under the Carbon Border Adjustment Mechanism, while exports of palm oil and other commodities must ensure no link to deforested land, according to the report.
The majority of small palm oil exporters may reportedly fail to comply, while exporters of iron and steel, a major export from Indonesia to the EU, may also face financial troubles switching to a low-carbon production mode.
Shinta believes industry-specific incentives will be needed to help exporters comply with the new standards.
(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)