- Countries slam EU’s “standard risk” labels as unjustified;
- Brussels needs trade deals – will they blink on EUDR to seal Indonesia?
- Bilateral talks this month could break impasse, ISPO might be key
Malaysia and Argentina Hit Out at Brussels
Malaysia and Argentina have over the EU’s EUDR country risk classifications. Malaysia – hit with “standard risk” instead of “low risk” – blasted the designation as outdated, noting Brussels used 2015 to 2020 data while ignoring recent no-deforestation policies.
Argentina’s response was equally sharp. Buenos Aires formally objected to its standard-risk tag, calling it “unilateral and unjustified” and warning it could unnecessarily harm soy and beef exports. Argentina is now framing the benchmarking as an “unjustified trade barrier” – and is seeking a bilateral solution.
How Will Jakarta Respond?
The bigger question is how Indonesia will respond. Also lumped into “standard risk,” Jakarta has been more measured – but that’s not guaranteed. Coordinating Minister Airlangga Hartarto has previously lambasted the EU’s approach, insisting Brussels “has no right to be a rating agency” for deforestation compliance.
At the WTO, Indonesia – backed by Brazil, India, and the US – has pressed the EU to resolve “potential discrepancies in deforestation data.”
As has been the case for the past , Indonesia’s big fear is that the EUDR’s additional traceability rules could exclude millions of smallholder farmers who lack technology for monitoring.
The additional concern is that Indonesian palm oil will be – more broadly – cut off from expanding its market presence across Europe.
But underlying this is that Jakarta wants its own sustainability schemes like ISPO recognized, not Brussels’ unilateral definitions.
Trump has changed everything
The Trump administration’s approach on tariffs has left many countries reeling, but particularly the EU. The tariffs are putting particular pressure on manufacturing and manufacturing exports from Germany. The EU is seeking new markets, and there’s a broad acknowledgment that Indonesia – as the 4th-most populous country in the world – represents its largest untapped opportunity.
The EU’s current concerns around the agreement are the country’s requirements for import licenses, as well as export tariffs and local content requirements.
Alongside the EUDR and other Green Deal measures existing tariffs on refined palm oil products remain – arguably – a bigger concern.
There have been credible reports that the EU is softening its approach on both trade and non-trade issues in its FTAs. A case in point in the EU-India FTA, which may be agreed in phases.
The Mercosur Precedent: A Blueprint for Indonesia?
Brussels just clinched Mercosur after two decades and is desperate to wrap up the Indonesia-EU CEPA by mid-2025.
The EU-Mercosur deal included a crucial concession: Brussels agreed to use Mercosur governments’ data and certification systems when checking for deforestation compliance. If Brazil’s satellite monitoring counts, why not Indonesia’s ISPO certification?
This is Indonesia’s opening. Jakarta’s systems – ISPO for palm oil, SVLK for timber (which the EU previously recognized) – are credible. A logical CEPA outcome would be mutual recognition: Indonesian certification partly satisfies EUDR requirements.
The Bottom Line
The CEPA talks are close to complete, but palm oil remains the elephant in the room. Indonesia knows Brussels wants this deal badly – creating leverage Jakarta could use to soften EUDR’s bite.
Indonesia faces a strategic choice: join Malaysia and Argentina in open confrontation, or use CEPA negotiations to extract concessions? With Brussels desperate for deals and having already shown flexibility with Mercosur, Jakarta might just get what it wants through quiet negotiation rather than loud protest.
The clock’s ticking – EUDR enforcement kicks in end-2025, and there are clear plans for bilaterals on the EUDR, CEPA and broader political cooperation as soon as this month.