Vulcan View: The latest EU developments 22 September – 26 September

EU and Indonesia seal negotiations on free trade agreement

On Tuesday, 23 September, the EU and Indonesia officialy finalised a landmark trade deal, bringing years of negotiations to an end. Following a political agreement reached in July, EU Trade Commissioner Maroš Šefčovič was in Indonesia on Tuesday to mark the conclusion of the Comprehensive Economic Partnership Agreement (CEPA). The landmark pact is designed to slash tariffs, open up one of the world’s fastest-growing economies to European firms, and secure vital raw materials for Europe’s green transition, creating a free-trade zone of over 700 million consumers.

This agreement promises significant benefits for a wide range of European sectors, from farming to advanced manufacturing. Once in force, the deal will eliminate customs duties on 98.5% of goods, saving EU exporters an estimated €600 million annually. For consumers, this could mean more affordable Indonesian products, while European goods will gain a competitive edge in a market of nearly 300 million people.

Perhaps most impressively, Indonesia has agreed to an unusually fast timeline for removing some of its steepest tariffs. The country’s hefty 50% import tax on cars and 30% tariff on dairy products will both be phased out over just five years—a stark contrast to other trade deals, where such reductions can take decades. For European farmers, who already export €1 billion worth of produce to Indonesia each year, the deal eliminates tariffs on key products like meat, fruits, and vegetables.

As Trade Commissioner Maroš Šefčovič explained, the agreement is a strategic win in an uncertain global climate. He noted, “The EU-Indonesia Comprehensive Economic Partnership Agreement opens new doors for European businesses in a dynamic and growing market. By gradually removing Indonesia’s 50% car import tariff, the agreement creates fresh opportunities for EU automotive exports and electric vehicle investments.

Beyond the economic benefits, the deal places a strong emphasis on sustainability and securing the resources needed for a greener future. It formally makes the Paris Agreement on climate change an essential element of the EU-Indonesia relationship. Crucially for Europe’s tech and clean energy industries, the agreement will improve access to Indonesia’s vast reserves of critical raw materials like nickel and cobalt, which are essential for manufacturing batteries for electric vehicles. While Indonesia has restricted exports of raw ore to develop its own processing industry, the deal ensures EU companies invested in the country will receive the best possible treatment.

Next Steps 

With negotiations now complete, the agreement will undergo a final legal review and be translated into all official EU languages. It must then be signed by the EU Council and Indonesia before being sent to the European Parliament for ratification. If all steps proceed smoothly, the new trade partnership could come into force by the end of next year, marking the beginning of a new chapter in EU-Indonesia relations.

Critical medicines and pharmaceutical tariffs escalate EU-US trade tensions

In a move set to escalate transatlantic trade tensions, U.S. President Trump announced over the weekend a plan to link drug prices to potential tariffs, targeting pharmaceutical companies and countries he believes are preventing lower prices in the United States. President Trump said he wants Americans to pay a “most favoured nation” (MFN) price for branded medicines – in his view, the lowest price charged in comparable countries in the Organisation for Economic Co-operation and Development (OECD).

Additionally, President Trump shared that the Centres for Medicare & Medicaid Services (CMS) will roll out an MFN model “soon” – linking this to possible tariffs or other trade moves against countries or companies he views as preventing lower US prices. Moreover, on Thursday (25 September), President Trump announced that he would impose a 100% tariff on any “branded or patented” drugs starting on 1 October unless a company is building pharmaceutical manufacturing plants in the US.

This follows his previous executive order, issued on 12 May, instructing the United States Department of Health and Human Services (HHS) to pursue MFN pricing, as well as the round of letters sent on 31 July by the White House to major manufacturers outlining expectations and timelines.

In response, the European Commission has shared that it will push for pharma and MedTech products to be exempt from US tariffs. When these tariffs will enter into force is still dependent on the results of Trump’s Section 232 tariff investigation. US President Trump has recently announced that these will come next week, on 1 October.

MEP Sokol (EPP/HR) spoke about the tariffs in a SANT Committee meeting on Wednesday, 24 September, stating: “We know that the US administration is putting strong pressure – I mean, they’re doing it openly, more or less – on the pharma industry to switch their production to the US.”

Mr. Sokol also hosted a private roundtable in the European Parliament, where participants discussed Europe’s pharmaceutical strategy, the balance between innovation and generics, and reducing overdependence in light of US tariffs. Joint procurement was debated, with both Commission-led and Member State-led models proposed.

Stockpiling was the most controversial issue, with calls for data-sharing and a mandatory redistribution mechanism to prevent larger states from hoarding medicines. It was discussed that a common EU system could support smaller countries.

Stakeholders cautioned against overemphasising contingency stocks and supported a coexistence of systems. Overall, there was broad support for EU-level solutions coordinated with Member States.

Conclusions

President Trump’s recent push for “most favoured nation” pricing and potential tariffs on the pharmaceutical industry has amplified transatlantic tensions, with the EU seeking to protect pharma and MedTech. Within the EU, debates continue over how to strengthen resilience – balancing innovation with generics, improving procurement models, and ensuring fair stockpiling rules that support smaller states.

Compliments of Vulcan Consulting – a member of the EACCNY