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EU’s Trade Policy Review – Indonesia Responds

Last week, the Indonesian palm oil association has made a submission to the EU’s ongoing Trade Policy Review Consultation. Trade in palm oil is essential for the wellbeing of the Indonesian economy and for the welfare of millions of people across Indonesia. Indonesia’s commitment as the #1 Sustainable Choice for palm oil will support the deepening of Indonesia-EU trade relations, and will help the EU’s broader trade goals of “greener, fairer and more responsible economy at home and abroad.”
 
The EU Commission as part of the EU’s Green Deal regulatory package is undertaking this Trade Policy Review.
 
Too often overlooked, trade is a key part of the EU policy-making, with lots of pressure in Brussels and across Member States to use trade as a vehicle to introduce sustainability, climate and environmental regulations.
 
In almost every single case, environmental and climate protection is pretext to protect domestic EU oilseeds and agriculture interests. 
 
In this regard, Brussels has not been kind to Indonesian palm oil in recent years, let alone any palm oil for that matter. EU institutions have taken a number of measures against Indonesia’s largest agricultural export:

  • Palm oil was singled out in the review of the impact of EU consumption on deforestation, despite palm oil having a much lower deforestation footprint than other commodities;
  • Palm oil was singled out in the same document, for a review of certification policies, with zero acknowledgment that palm oil is the most certified agricultural commodity in the global market. No other oilseeds were treated in the same way in the EU document;
  • EU leaders regularly ask for greater levels of certified sustainable palm oil in the market, but Indonesia Sustainable Palm Oil (ISPO), the national standard for palm oil certification (and the world’s largest sustainability scheme) has yet to be recognized by the EU;
  • Palm oil was singled out in the EU’s Renewable Energy Directive (RED II) revision, despite the EU’s own research showing that other commodities are much bigger drivers of deforestation compared with palm oil.
  • There have been four trade defence investigations by the EU against palm oil and palm oil-based products over the past decade; the use of antidumping tariffs in one case was unjustifiable under WTO rules.

Now the European Commission is considering a raft of new regulations, which we believe undermine the advances Indonesia has made in sustainability, and disproportionately affect our 2.3m small farmers. These include:

The EU is undertaking a consultation on the EU’s international ‘deforestation footprint’. This process will feed into new EU regulations in 2021 that will target Indonesian palm oil imports for food. This will lead to the EU potentially introducing a Due Diligence regulation,  similar to what the UK is currently considering.

The EU is also undertaking a revision of RED (RED II Revision and RED Delegated Act) – both to be completed in 2021. The EU’s RED II is highly discriminatory against Indonesian palm oil, and as a result, the Indonesian Government has challenged the RED II at the WTO.

If the EU is intending for these regulations to make the world ‘greener and fairer’, it should start by making life better for our farmers, and not more difficult. Around 93 per cent of Indonesian farms are small farms of less than 5 hectares. These represent more than 20 million households, and close to 100 million people, of which many millions choose to plant oil palm as a valuable and reliable cash crop.

Moreover, our commitment to sustainability and combating deforestation is most evident in our steadfast support for the moratorium, which was recently extended. In fact, Norway has stated that “Indonesia has implemented a number of policy reforms to improve its forest and land use practices” and is delivering results in “reducing deforestation…”

Indonesia believes EU Trade Policy should advance:

  1. Non-Discrimination against Indonesian Palm Oil: There should not be discrimination targeted at palm oil when compared with ‘like’ products such as soy, rapeseed, sunflower and others.
  2. A Level Playing Field for Certification: All existing and recognized standards for palm oil (including Indonesia’s government standard, ISPO) should be included and recognised without prejudice by the EU.
  3. Level Playing Field for Countries: All producers of palm oil should be treated equally, without loopholes of exemptions for specific producers or exporters. Indonesia should not be prejudiced in relation to other countries.
  4. Support for Palm Oil, SDGs and Economic Recovery post-COVID: Palm oil production supports Indonesia’s SDG targets and has been a contributor to the economy during COVID. The EU should support this broader approach during a critical period for economic stability; not undermine it with discriminatory regulations.

Finally, human development indicators are low in agricultural and rural areas in Indonesia. Given that palm oil is Indonesia’s agricultural export, many in the palm oil community know how crucial is palm oil to meeting the UN SDGs.
 
Moreover, the UN SDGs, are encapsulated in what is described as the sustainability framework for Indonesian palm oil: the ISPO standard.
 
The EU has an opportunity here to make a positive step towards supporting Indonesian palm oil.
 
In the view of the Indonesian palm oil community, EU support for ISPO will be beneficial for Indonesian farmers but it will also achieve the EU’s goal of “greener, fairer and more responsible economy at home and abroad.” This move would support Indonesia’s delivery of the UN SDGs at the same time.
 
This could be a step for the EU to undertake greater levels of cooperation and good faith negotiation with the palm oil community: it would show the EU is really serious about helping development and supporting the UN SDGs.
 
It was reported last week that 86 per cent of palm oil that is exported to the European Union is certified sustainable. This is likely a greater level of sustainability certification than any other major commodity going into the EU.
 
Despite this achievement, some in Brussels wish to punish palm oil, while allowing imports of other commodities that have greater deforestation footprints than palm oil. This is not green, nor fair, nor responsible.
 
Indonesia will continue supporting an open trading system for palm oil that lifts communities out of poverty and adopts more certification requirements than any other commodity. This is a positive, hopeful vision for the future of the sustainable palm oil trade. Our hope is that the EU will join in this positive vision and support Indonesia’s development of ISPO and other measures. This Trade Policy Review is an opportunity to turn the page on past conflicts and look to a brighter future of cooperation and sustainable development.
 
Read the full submission here.

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