A landmark agreement between the EU and Indonesia looks set to be signed off by next year, with key benefits for confectionery and ingredients markets. Ahmad Pathoni, Liz Newmark and Keith Nuthall report.

The confectionery and sweet bakery industries of the European Union (EU) and Indonesia have been digging onto the details of a major trade and investment deal struck between these two key global suppliers and markets.

A Comprehensive Economic Partnership Agreement (CEPA) and Investment Protection Agreement (IPA) struck between Brussels and Jakarta in September (2025) are an important contrast to the protectionism and chaos flowing from the current trade policy of the USA under President Donald Trump. 

European Commission president, Ursula von der Leyen, said: “We have made a commitment to double down on diversification and partnerships, to further support EU jobs and boost growth. Our deal with Indonesia creates new opportunities for businesses and farmers in a major and growing economy.”  

Data from EU statistical agency Eurostat suggests the EU would gain significant value from easier access to palm oil, with Indonesian exports valued at EUR1.521 billion in 2024 and EUR1 billion in 2025. 

And there is a significant trade in EU exports of chocolate, confectionery and sweet bakery products to build on, for example sales of white chocolate, valued at EUR2.47 million in 2024 and EUR2.86 million in 2025; bread, pastries, cakes and other bakers’ wares (EUR6.7 million’s worth in 2024 and EUR6.26 million’s worth in 2025); and certain sweet biscuits, whether or not containing cocoa, (EUR1.6 million in 2024 and EUR2.28 million’s worth in 2025).     

Ratification is anticipated this year, targeting a 2027 enforcement. 

Most of the agreement has new been published although detailed schedules on tariff reductions are still awaited pending legal consultations. 

However, a European Commission briefing note stressed how Indonesian duties would be removed from “the vast majority” of EU food and drink exports to the south-east Asian archipelago, which generated €1 billion in revenue in 2024. That includes EU-made chocolates, confectionery, bakery goods, milk powders and fruits, said the Commission: “The result will be a more level playing field, boosting EU agri-food exports.”  

Indonesian duties on processed foods, currently up to 30%, will be removed when the agreement enters into force, with some phased out over the following five years, said a European Parliament note. Dairy products currently attract 10% duties, which will be scrapped upon enforcement.  

There will also be faster, simpler and more predictable import procedures for sales to Indonesia, whose population exceeds 283 million people, with streamlined import licensing, no volume controls and decisions on import licence applications within 30 days, said the EU executive. 

Indonesian traders will also benefit, notably those selling palm oil between Indonesia and the European Union (EU), an import flow of key importance to EU food manufacturers, with the agreement creating expanding duty-free export quotas for this commodity. Its fractions are critically important in the confectionery and sweet bakery industry, aiding stability, boosting cost efficiency and delivering creamy textures, for example in chocolates (where it is a cocoa butter alternative), biscuits, cake fillings and ice creams. 

Under the agreement, imports of Indonesian crude and refined palm oil (albeit not chemically-refined) shall enter the EU duty free within large quotas rising from 1.9 million tonnes upon entry into force of the agreement; to 2.47 million tonnes on the deal’s ninth year of implementation and subsequent years. 

Another significant set of duty-free EU import quotas in the deal cover Indonesia-sourced crude and refined palm kernel, (useful in confectionery coatings though their sharp melting points and crisp bites); and babassu oil, (which has also been explored as a cocoa butter alternative). Again – chemically-refined lines are not covered. 

Here annual duty-free quotas were set at 140,000 tonnes upon the deal entering into force, rising to 182,668 tonnes for the ninth and subsequent years. 

The two parties also agreed to prevent illicit copies of some traditionally-made goods from being sold locally under geographical indication rules. EU goods protected in Indonesia included Austrian pumpkin oil (Steirisches Kürbiskernöl); Croatian fruit and nuts (Neretvanska mandarina); French Bergamotes de Nancy cakes, Brioche vendéenne, Savoy apples and pears; German Lübecker Marzipan; Greek Masticha Chiou gum; Italian Kiwi Latina fruit, Alto Adige/Südtiroler apples; Portuguese Pêra Rocha do Oeste pears; Spanish Turrón de Alicante nougat, and Valencian orange, lemons and mandarins. And Indonesian goods protected in the EU included Gula Lontar Rote sugar; Madu Sumbawa honey; Purwaceng Dieng, Carica Dieng and Duku Komering fruits plus Salak Pondoh Sleman Jogja and Salak Sibetan Karangasem Bali snake fruits; Jeruk Keprok Gayo-Aceh oranges; Vanili Kep. Alor vanilla; and Pala Siau, Pala Dukono Halmahera Utara and Pala Tomandin Fakfak nutmeg.  

Cautious welcome from EU industry 
The European Association of Chocolate, Biscuit and Confectionery Industries of Europe (CAOBISCO) welcomed the deal.

President Tobias Bachmüller exclusively spoke to our title. He noted: “An agreement that creates new export opportunities and improves market access is generally positive. It is crucial that liberalisation takes effect quickly and that Indonesian tariffs of up to 20% on chocolate, confectionery and bakery products are removed.” 

But he warned at the same time, the competitiveness of EU manufacturers depends on being able to source raw materials at prices comparable to those of international competitors. “A competitive disadvantage arises if sugar is treated as a ‘sensitive product’ and excluded from tariff liberalisation, leaving sugar imports into the EU untouched while export opportunities for Indonesian finished products improve.” 

Mr Bachmüller added that Indonesia was an important growth market for EU confectionery and sugar-using industries, with EU agri-food exports to Indonesia already reaching EUR1 billion annually, including chocolate and sugar confectionery products.  

And although current European food exports to Indonesia are “still modest, they demonstrate clear growth potential in a high-demand market for value-added foods,” he noted, with Indonesia important for EU sugar and sugar-using industries as “a sourcing market for a number of agri-food raw materials, including coconut, cocoa, coffee, and palm oil”. 

At the European Association of Sugar Manufacturers (CEFS – Comité Européen des Fabricants de Sucre) director general Marie-Christine Ribera welcomed that sugar was excluded from the scope of the agreement. While Indonesia was currently a net importer, in the long term it had ambitions to return to its status as a major exporter, she said, and excluding sugar from the agreement would help stop third-country sugar entering the EU market via Indonesia. 

“Simultaneously we welcome the liberalisation for European confectionery exports, as it indirectly benefits our sector,” she told Confectionery Production.  

Indonesia is a minor partner for EU sugar exporters, buying about 2,000 tonnes of EU sugar in 2025. But tariffs are not the only barrier as Indonesia can “easily import cheap, subsidised sugar from Thailand and remains a primary market for Australia, another leading sugar exporter,” she continued. 

The CEFS director added that opening markets to Thai and Australian sugar would be “catastrophic for the European sugar sector,” emphasising: “Sugar must be excluded from any future EU trade deal.” 

These comments follow preliminary reactions of food and drink industry association FoodDrinkEurope (FDE) that the agreement would improve market access conditions and support competitiveness of European exporters in Southeast Asia’s largest economy. 

“Trade is largely complementary,” FDE added, noting Indonesia was a major supplier of non-EU grown agricultural raw materials such as palm oil, cocoa and coffee, “key inputs for EU food and drink manufacturing”. 

European farmers and growers’ association Copa-Cogeca was more cautious. The agreement holds “important opportunities” for certain EU agri-food sectors, with “EU sensitivities” such as sugar fully respected and iconic GIs [including for example Valencian oranges and Savoy pears] strongly protected, it said.  

Also welcoming the sustainable food systems chapter, Copa-Cogeca said the deal’s “real value would depend on the effective removal of non-tariff barriers and delivery of faster, more predictable procedures for exporters”. 

Indonesia – positive response 
Merijanti Punguan Pitaria, director of the beverage, tobacco and refreshing materials industry at Indonesia’s industry ministry, said the agreement would widen access to EU markets for Indonesian confectionery and palm oil manufacturers.  

The ministry “welcomes the agreement as a strategic step to expand export market access and increase the competitiveness of national industry, especially processed cocoa and chocolate products,” she said.  

The official added that the deal is expected to open broader EU market access through tariff reductions or elimination, encourage exports of value-added agro-industrial products and accelerate the shift toward more sustainable industry practices.  

She said Indonesian ratification was also under way, with a targeted implementation for early 2027 “after legal scrubbing and formal signing are completed”, she said, adding that ratification is being pursued as quickly as possible so industry players can benefit.  

For Indonesia’s cocoa processing sector, the ministry sees the agreement as largely positive, particularly in terms of market access and competitiveness.  

“With the reduction or elimination of import tariffs to the European Union, processed cocoa products such as cocoa butter, cocoa powder and cocoa cake will have greater opportunities to compete in the European market,” said Pitaria, noting that the policy supports Indonesia’s push to export higher value products.  

Indonesia’s exports of processed cocoa and chocolate to the EU remain small compared with the bloc’s global imports. In 2024, shipments to the EU were valued by the industry ministry at about USD498.2 million US dollars, or 11.4% of Indonesia’s total processed cocoa exports worldwide.  

Pitaria said strict EU non-tariff requirements would remain a challenge, however: “The benefits are accompanied by strict non-tariff standards such as supply chain traceability and sustainability requirements, including the EU deforestation regulation [EUDR],” she said, adding that Indonesian producers must strengthen product quality, certification and sustainability from upstream to downstream to benefit from the deal.  

Eddy Martono, chairman of the Indonesian Palm Oil Association (GAPKI Gabungan Pengusaha Kelapa Sawit Indonesia), observed the deal could increase palm oil exports to Europe but warned that compliance with EU environmental rules would be decisive.  

“The new agreement will increase Indonesia’s palm oil exports to the EU, but there are still non-tariff barriers, namely the EUDR, whose implementation has been postponed until the end of December 2026,” he said.  

“If the EUDR is implemented while we are not yet compliant, it will hinder Indonesia’s palm oil exports to the EU,” he added, pointing to difficulties among smallholder farmers in meeting the requirements.  

Martono said most large companies can comply, but the main obstacle lies with smallholders whose fresh fruit bunches are processed at company mills.  

“If farmers are not compliant, the companies processing their fruit will not be able to sell their products for export to the EU,” he said of the complex situation surrounding the deal.