Recent bilateral meetings between the European Union and Indonesia have highlighted significant obstacles in finalizing the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA), with non-tariff measures around palm oil and other commodities remaining as the key sticking point.
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Despite progress in negotiations, Indonesian officials and industry leaders have expressed growing frustration with the EU’s failure to honor international trade commitments and its unilateral approach to environmental regulations.
Eddy Martono, Chairman of GAPKI (Indonesian Palm Oil Association), pointed to a critical unresolved issue regarding the EU’s renewable energy policy during recent discussions:
“After Indonesia won a trade dispute related to palm oil-based biodiesel with the EU at the WTO, the WTO asked the EU to adjust RED II and its implementing regulations (delegated regulations). Indeed, the EU has adopted the ruling. However, until now, the EU has not announced the adjustment of the regulation.”
This delay in implementing WTO rulings has become a significant trust issue in the bilateral negotiations, undermining confidence in the EU’s commitment to rules-based international trade.
The EU Deforestation Regulation (EUDR) remains the most contentious issue in the IEUCEPA negotiations. Deputy Minister of Trade Dyah Roro Esti Widya Putri acknowledged progress while highlighting fundamental concerns in a statement:
“We appreciate the significant progress in the negotiations and encourage Indonesia and the EU to reach a substantial agreement this year. A number of issues related to non-tariff provisions have in principle been resolved. The negotiating team is focused on reaching a common point through the drafting of the law.”
However, she added a crucial point:
“We really appreciate the postponement of the EUDR. However, it does not answer our main concern, which is the potential adverse impact, especially for our smallholders. Indonesia views this policy as discriminatory and counterproductive to joint global efforts to address climate issues.”
The Indonesian Ministry of Forestry has been particularly vocal about the EU’s approach to environmental regulations:
“The Government of Indonesia conveys its official view that the EUDR was established unilaterally without prior consultation with the producing countries, and its extraterritorial implications. This policy is considered to harm more than 8 million smallholders in Indonesia, disrupt supply chains, and create new barriers in global trade.”
The Ministry also raised concerns about the implementation process:
“Indonesia also voiced its concern about the lack of transparency and scientific accuracy in the country benchmarking process.”
While acknowledging some positive steps by the EU, Martono emphasized that fundamental issues remain unaddressed:
“We also appreciate the EU Commission for relaxing the due diligence requirements that must be met for every commodity shipment to be sufficient once a year. However, we still request that the EU accept ISPO as a substitute condition equivalent to the EUDR due diligence document.”
He warned that without substantive changes, the trade agreement’s benefits would be limited:
“The Government of the Republic of Indonesia needs to fight for the articles in the draft IEU CEPA related to the equality of Indonesian and EU product standards to be truly agreed. As long as it has not been agreed, zero percent import duty will not necessarily be able to boost Indonesia’s palm oil exports to the EU.”
These bilateral meetings have laid bare the fundamental tension between the EU’s environmental ambitions and Indonesia’s development priorities. While both sides express commitment to reaching an agreement, the Indonesian position is clear: any partnership must be based on mutual respect, consultation, and recognition of Indonesia’s own sustainability standards.