- Indonesian Minister Hartarto calls out ‘regulatory imperialism’; Timmermans refutes claims smallholders will be harmed;
- Indonesian Ambassador invokes Europe’s colonial past in the EUDR;
- Jokowi seeks more joint cooperation, but nations must stay the course.
Late last week, Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto accused the European Union of ‘regulatory imperialism’ following his visit to Brussels to meet with officials regarding the EU Deforestation Regulation. He noted: “We are discussing facilitating trade. But along with that, they built walls.”
The comments while initially pointed at palm oil, moved into other commodity areas, notably steel products, which Indonesia is concerned will be penalised under the EU’s Carbon Border Adjustment Mechanism.
Just a few days later Frans Timmermans, the EU Commission Vice President was reported to have “refuted” Indonesia’s claims that the EUDR could harm smallholders.
Rather, the Commission asserted that the regulation had the potential to “empower smallholders” and ”does not provide any obligation to comply with any certification which could be costly for smallholders”.
A spokesperson said that “The core of EUDR obligations are not on farmers but on the operators placing products in the scope of the regulation on the EU market” and that the requirements could be met using “a simple smartphone”.
The response from Indonesia’s diplomatic service has been scathing. Arif Havas, Indonesia’s ambassador to Germany stated:
“Arrogantly, the EU bureaucracy says it’s an easy matter: farmers just buy smartphones and geo-tag themselves. For those who are not familiar with the traceability certification process, this idea may seem modern, but it is actually ludicrous.”
“Traceability certification is not only geo-tagging, but also preparing complete documents, including the legal relationship between farmers and land, which will be a burden on farmers’ costs. These documentation costs will accumulate from the collector level and the initial process of the farmer.
“The result: the big palm oil industry will only use palm oil in its own plantations and reject palm oil from smallholders, or force smallholders to reduce the price. Instead of helping smallholders, EUDR is a very anti-smallholder, pro big growers, pro-multinational, pro-conglomerate regulation.”
The image of a Dutch official telling an Indonesian leader that their farmers won’t suffer is, of course, not lost on Indonesia. Havas notes:
“Europe is more familiar with fundamental violations of human rights in its history. Even when European countries signed the Universal Declaration of Human Rights in 1945, they still had colonies around the world, and the Dutch still refused to leave Indonesia.
A key feature of EUDR regulation forcing other people and countries to submit to internal EU mechanisms—with or without financial assistance and with or without the use of overseas collaborator agents, both media and NGOs—is the regulatory imperialism that the Global South must now confront.”
As we’d noted previously, the joint mission from Indonesia and Malaysia was one of the most successful cooperative efforts on palm oil that the two countries had managed.
So much so that President Jokowi and Prime Minister Anwar are seeking to continue further cooperation. A statement from President Jokowi said that he will “encourage collaboration to fight discrimination against palm oil and other commodities to continue to be strengthened. Do not let commodities produced by Malaysia, by Indonesia, be discriminated against in other countries.”
There is something of a risk here – but also an opportunity.
Indonesia has significant political heft across the world, and its export interests with the EU go well beyond palm oil, extending significantly to timber as well as the critical minerals that the EU is craving for its ambitions on renewables.
It can throw its weight around, just as it did by declaring its EU negotiations would be put in the freeze, and it has no hesitation in using the WTO.
Malaysia’s export-oriented economy and smaller market size means it is unable to do the same. However, it does have the technical and institutional capability to meet many regulatory demands if pressed. And, significantly, it simply doesn’t have the vast smallholder population of Indonesia.
The two countries have occasionally found themselves at odds on issues such as deforestation (with Indonesia having a weaker case), and labour issues (where Malaysia has a weaker case).
But the combination of political heft and technical prowess across both countries means that they are both better off when working collaboratively.
What both countries need to remember also is that the EU may dangle short-term gains in front of them, in the form of capacity building programs and other development assistance. But both must remember that it won’t be long before the EU finds a way to erect another trade barrier.