- Foreign Minister Retno Marsudi called out the EU at the ASEAN Ministerial, calling for a genuine Task Force consultation
- President Jokowi met with Indonesia’s trade minister to discuss potential additional action
- Coordinating Minister Hartarto laid out a path for the EUDR under the Indonesia-EU FTA, highlighting ISPO
Over the last several days, Indonesia’s Foreign Minister, Trade Minister and Coordinating Minister for the Economy have laid out stronger positions on the EUDR.
The most prominent of these was at the recent ASEAN Ministerial last week, where Indonesia continued to stare down Brussels. Despite a positive outlook for cooperation from the EU’s foreign chief Josep Borrell, which highlighted only regional and geopolitical tensions, Indonesia’s foreign minister Retno Marsudi was prepared to call out the EU on its lack of engagement on trade and the regional economy.
Highlighting the trade potential between the two trading blocs, Minister Marsudi said:
“These potentials should not be limited by trade barrier policies such as the European Union Deforestation Regulation (EUDR) … For this reason, the two parties must find a joint solution through ASEAN-EU mechanisms such as the Joint Working Group on Palm Oil. In addition, ASEAN and the European Union must also strengthen a strategic partnership based on the principles of mutual respect and mutual benefit … Indonesia hopes that ASEAN-EU strategic cooperation can be strengthened based on the principles of mutual respect and mutual benefit.”
The comments came a day before Borell published an interview in the Jakarta Post where he stated:
“The Joint Task Force on deforestation between Indonesia, Malaysia and the EU is a good example of such constructive cooperation. When it comes to the implementation of the EU’s Deforestation Regulation, it will provide an additional instrument facilitating our ongoing dialogue. As partners, we respect each other’s concerns and jointly discuss the best way forward. We want to enable producers, especially smallholders, to ensure that their supply chains are deforestation-free. And we will work together to ensure European consumption of the relevant commodities are not a deforestation driver in Indonesia or elsewhere. The EU is a very steady customer of Indonesian palm oil and timber, we have every interest in maintaining the trade.”
It’s been apparent for some time that the European Commission – Borrell included – is aware of the international problems that the EUDR and other regulations are creating.
So, does this mean that the EU is genuine about making the Task Force work? This requires some unpacking.
The key difference between the Task Force and other EU-favoured talk-shops such as the ASEAN Joint Working Group is twofold. First, Indonesian and other countries are well aware of the game the EU is playing with the EUDR. Second, Indonesia is in a much better position to use its leverage as defacto leader of ASEAN and the largest economy in Southeast Asia to gain a favourable outcome.
It’s worth noting that the EU’s exports to ASEAN are now lower than they were in 2018; ASEAN’s exports to the EU have increased by almost 30 per cent. Similarly, the EU’s exports to Indonesia are lower than they were in 2012; Indonesia’s exports have increased almost 40 per cent since 2018. The biggest export category? Vegetable oil. If Brussels doesn’t take the Task Force seriously and simply uses it as a box-ticking exercise, it will have lost a major friend in the Asia Pacific.
Jokowi Meets with Trade Minister On Further Action
POM readers will be well aware that President Jokowi has taken on the EUDR personally, calling out directly the need for EU authorities to recognise both Indonesia’s development path and its national certification systems (see below).
Unsurprisingly, Jokowi last week held a meeting with Trade Minister Zulkifli Hasan (aka Zulhas) to discuss potential legal action or other multilateral action that Indonesia could pursue.
“Therefore we will fight, later negotiate, fight, [and] of course invite countries that have similarities such as Malaysia … that’s what was just now a meeting related to the Ministry of Trade [and the EUDR],“ he told media.
Zulhas also noted that the Indonesian Government will continue to pursue a path forward for Indonesian palm oil and EUDR in the Indonesia-EU FTA (IEU-CEPA):
“Yes we can go through the IEU-CEPA – this agreement is exempt or we sue … But now we are suing regarding palm oil at the WTO … after this, [the EUDR] will take effect at the end of 2024, that we can see products related to it are valued at almost US $ 6 billion, so we can lose [economically]. We have the right to sue after [the EUDR is introduced].”
Hartarto Lays ISPO Path for IEU-CEPA
So, what would the IEU-CEPA path look like? Indonesia’s Coordinating Minister for the Economy Airlangga Hartarto also laid it for the FTA, which has hit an impasse since the EU introduced its various ‘Green Deal’ measures.
Just to remind, Hartarto recently told international and European media that the talks were effectively on hold until the matter of the EUDR was resolved.
These are: government procurement, state-owned enterprises, export duties (think of Indonesia’s export restrictions on nickel, which prompted a WTO dispute with the EU), and independent dispute resolution.
But the key outstanding issue is trade and sustainable development. Airlangga said:
“We ask for access to trade and sustainable development of environmentally sound products. Indonesia emphasizes the importance of standardization, such as for SVLK furniture, for ISPO palm oil, or RSPO.”