TIP clears Indonesian palm oil, criticises Italy and Norway

The US State Department Trafficking in Persons (TIP) report for 2021 makes for sobering reading – for critics of palm oil.

There have been multiple efforts by different groups over the past year that have attempted to link the Indonesian palm oil sector with forced labour and slavery, but the TIP report does not give credibility to any of those allegations. The only mention of palm oil in the Indonesia section is of pro-active actions by the Indonesian government on the treatment of palm oil workers in other territories, specifically in relation to its actions to send 94 teachers to other countries “to educate the children of Indonesian migrant palm oil laborers.”

What the report lays bare in no uncertain terms is the conditions that Indonesian labourers face when they are part of the forced labour chain in any number of other countries, including Syria, China and Thailand.

Indonesia is currently on the TIP’s ‘Tier 2’ list, which it has been since its inception. But it’s also worth noting other countries at the Tier 2 level: Italy, Germany and Norway.

On Italy, the report notes:

Experts estimated that in 2020, as many as 180,000 agricultural workers, especially seasonal workers, were at risk of labor trafficking in Italy. Employers in the agricultural sector sometimes submitted falsified forms pertaining to their workers, which impeded labor inspections and the potential identification of trafficking victims. Although illegal, employers or labor recruiters sometimes charged a placement fee to employees, which increased their risk of trafficking. 

Similarly, German agriculture is mentioned:

There were also reports from NGOs that German agricultural companies were withholding identification documents from migrant workers and not complying with regulations regarding minimum wage, working hours, and hygiene conditions. 

Norway, the self-appointed moral compass for Northern Europe is also criticised:

Traffickers exploit women and girls in sex trafficking and men and women in labor trafficking, specifically in domestic service and construction. Traffickers subject children to forced criminal activities and other forms of forced labor, including illegal employment in car washes and private housekeeping. Authorities reported a slight increase in labor trafficking cases in 2020.

The key difference between a country like Indonesia and its European counterparts is that Indonesians are the ones being exploited in migrant situations; Indonesia, on the whole, is not a destination for trafficked labour, and certainly not in the palm oil sector. 

Although Brussels and Oslo might take pride in their international human rights outreach and certainly like to spend donor monies criticising other nations on labor and human rights issues, what the TIP report highlights is that these European governments should pay more attention to their own backyard.

Oslo Takes on Jakarta, Again

Norway’s aid agency Norad has once again thrown its support behind a report that effectively lobbies lawmakers in Brussels to put greater regulatory curbs on palm oil and palm oil investments. The report appears aimed at forthcoming EU regulations that will impact global commodity investment and supply chains, such as the climate taxonomy, human rights due diligence and the deforestation regulation.

The report, authored by the Netherlands-based Forest Peoples Programme (FPP) argues for:

  • Requirements on corporations to identify, address and remedy impacts in their supply chains and portfolios;
  • Establishment of robust monitoring, verification and enforcement mechanisms to support compliance;
  • Strong sanctions for companies in violation of applicable due diligence laws and supply chain regulations;
  • Access to judicial remedy in the courts of the country where companies are domiciled for rights holders and communities negatively affected by their operations, business relations and investments.

In other words, Norway appears to be lobbying Brussels to introduce tougher measures for European companies that choose to invest or trade in Indonesian palm oil, the country’s largest agricultural export. Those measures of course would also mean negative impacts on Indonesian farmers, suppliers, traders and others in the palm oil supply community.

Further, the report takes aim at Indonesia’s certification system, ISPO. It states:

“Local certification schemes such as the Indonesian Sustainable Palm Oil (ISPO) standard introduced in 2011 by the Government of Indonesia do not uphold international standards on human rights and have been denounced by indigenous peoples and NGOs for failing to require genuine sustainable production benchmarks.”

However, the source for this claim is based on incorrect information. The ISPO revision, which took place through 2017, engaged with a large number of NGOs and civil society organisations, including AMAN, Indonesia’s largest indigenous peoples’ alliance. ISPO still has significant support from Kehati, one of Indonesia’s most prominent environmental NGOs.

The idea that this report might represent a consensus view of human rights and palm in Indonesia – as opposed to a narrow set of examples – is therefore not credible.

Further, the report – rather boldly – takes on historical claims against PTPN XIII, one of Indonesia’s state-owned enterprises, and its establishment of plantations in the early 1980s. The report states PTPN “did not obtain a legitimate land use change license.” However, anyone familiar with Indonesian land titling would be aware it’s never that simple.

As Norad’s external review of its climate and forest (NICFI) programs has pointed out, one of the least effective approaches it has utilised has been the drive for legislative change. The review stated: “There are opportunities to support implementation of legislation and to develop further legislation, but efforts to drive legislation by the private sector have not been effective.”

Funding approvals for the next phase of NICFI are well overdue. Let’s see if Oslo has learned its lesson.

TFA’s Big Brussels Mistake

The Tropical Forest Alliance (TFA) has published a letter from around 28 of its 170-plus supporters and membership to the European Commission. The letter follows up on a position paper released last year, which was broadly supportive of the EU incorporating a broad range of measures into its legislation on human rights and deforestation, but called for a ‘Smart Mix’ of measures, including international dialogues and due diligence for deforestation.

The TFA approach, however, moved well beyond seeking legality certification and bilateral agreement as an appropriate form of due diligence. This prompted the Indonesian industry to reject the TFA approach.

But it also seems that the TFA approach has seriously misunderstood the mood in Brussels.

TFA’s emphasis (which looks like pleading) on producer country dialogues, using existing certification frameworks, improving governance in developing countries and, importantly, not using a ‘carding’ system that grades countries by risk level indicates that Brussels is moving in the opposite direction.

For astute observers of the EU war on commodities from a number of developing countries, whether beef from Latin America or palm oil from Southeast Asia, this means one thing: trade restrictions.

TFA points out in its letter that the VPA-FLEGT agreements, which have largely been a success in terms of reducing illegal deforestation in countries such as Indonesia, have been ignored by Brussels in crafting future regulation. Rather than following this model, Brussels is doubling down.

This underlines TFA’s mistake. TFA made the assumption that the imperative in Brussels was to actually produce sustainability results in exporting countries, rather than just seeking a political result within Europe. It also assumed that Brussels would pay attention to any additional regulatory burdens borne by EU companies.

This should be a lesson for TFA and its members. Yes, they clearly understand that sustainability approaches, certification systems and improving environmental management yield positive results on the ground. What they don’t understand is the cold, hard indifference of the EU when it comes to both the politics of trade, and the unintended consequences of their regulations.