• Ursula von der Leyen and Prabowo Subianto announced a political agreement for a free trade deal.
• The agreement is expected to enhance trade and investment between the EU and Indonesia.
• The trade discussions have been ongoing since 2016, culminating in a significant breakthrough.
• This deal comes amid geopolitical uncertainties driven by US trade policies.
• The agreement aims to open new markets and strengthen economic ties.

On July 13th, European Commission President Ursula von der Leyen and Indonesian President Prabowo Subianto announced a "political agreement" aimed at concluding a long-anticipated free trade deal. This agreement is set to advance during a time of heightened geopolitical uncertainty, largely influenced by US President Donald Trump's trade policies. “We’re living in turbulent times... partners like us must come closer together,” said von der Leyen, emphasizing the importance of this partnership, which has been in negotiation since 2016, according to SCMP, India Times, and Channel News Asia.

The European Commission labeled this agreement as a "decisive milestone" towards finalizing the Comprehensive Economic Partnership Agreement, which is anticipated to significantly increase trade and investment flows between the two regions. The deal is expected to create opportunities in key industries, including automotive, agriculture, and services. The discussions commenced in 2016 with 19 official rounds, as well as numerous intersessional meetings, according to The Jakarta Post and The Jakarta Post.

President Prabowo characterized the agreement as a "breakthrough" and emphasized Indonesia's desire for strong ties with Europe, stating, "we consider Europe still a very important factor." He acknowledged the role of the United States but highlighted the need for diversification in trading partners as a strategic move. This sentiment reflects Indonesia's cautious approach toward regional partnerships amidst potential US trade wars, according to SCMP, India Times, and Channel News Asia.

The agreement also aims to resolve previous tensions caused by an EU import ban on goods related to deforestation, a sensitive issue for Indonesia as a leading palm oil exporter. The anticipated legislation has now been postponed until the end of the year, allowing more time for negotiating the trade deal. Analysts believe that this political agreement could pave the way for more comprehensive trade negotiations, strengthening economic ties between Indonesia and the EU, according to The Jakarta Post, The Jakarta Post, and Channel News Asia.