- Indonesia-EU trade deal nears completion with palm oil included, but Jakarta’s anger over EUDR remains palpable;
- A meeting in Brussels on the EUDR saw Indonesia blast the EU’s “unilateral” deforestation rules threatening 8 million smallholders;
- While celebrating trade breakthroughs, Indonesia continues to challenge EU’s “outdated” data and demands answers on EUDR’s legitimacy
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Palm Oil In, But EUDR Anger Persists
In a tale of two meetings in Brussels in the first week of June, the EU’s contradictory approach to Indonesia was on full display. While one set of negotiators celebrated progress on the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU CEPA), another Indonesian delegation was busy lambasting EU officials over the deforestation regulation in a separate EUDR dialogue.
The IEU CEPA ministerial meeting took stock of negotiations to this point, noting that negotiations have reached their final stage, with over 90% of the agreement settled. Refined palm oil products appear to be heading for major tariff reductions going into the EU.
But in a parallel universe just across Brussels, the EUDR dialogue saw Indonesian officials refusing to pull any punches. Ambassador Umar Hadi led a delegation that delivered what amounts to a diplomatic dressing-down of EU officials over the regulation’s impacts.
8 Million Reasons to Be Angry
Indonesia’s core EUDR message remains unchanged: the regulation was imposed unilaterally without consulting producer countries and threatens more than 8 million Indonesian smallholder farmers. In a statement following the meeting, Jakarta stated:
“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.”
Indonesia submitted pointed written questions to the EU demanding clarification on:
- The legal basis for risk classification
- Recognition of national systems like ISPO
- Potential WTO violations
- Administrative burdens on smallholders
The EU’s Sarah Nelen (Acting Director for Green Diplomacy) and EEAS’s Taneli Lahti promised written responses “soon”.
So, while the IEU CEPA promises elimination of 80% of tariffs within 1-2 years across commodities including coffee, cocoa, and rubber these gains ring hollow when the EUDR threatens to exclude millions of farmers from EU supply chains – not because they’ve deforested, but because they can’t afford the compliance costs.
Data Wars Heat Up
Perhaps most telling is Indonesia’s direct assault on the EU’s data credibility. Jakarta slammed the EU’s reliance on “outdated” FAO Forest Resources Assessment data for country risk benchmarking, instead promoting its own SIMONTANA (National Forest Monitoring System).
This isn’t just technical quibbling. Indonesia is essentially asking: why should we accept your colonial-style assessment of our forests when our own validated system shows two decades of deforestation reduction?
The agreement to explore integration between SIMONTANA and the EU Forest Observatory (EUFO) sounds cooperative on paper. However, technical workshops will need to bridge differences on land-use planning and forest governance. They won’t help smallholders afford geolocation tracking. And they certainly won’t address what Indonesia clearly sees as extraterritorial overreach.
What’s the Endgame?
According to a recent event. yhe CEPA may be signed by President Prabowo and the European Commission President in September 2025, with implementation targeted for late 2026 or early 2027. But without addressing EUDR, trade benefits risk being undermined by regulatory barriers.
Just as important is that both sides are well-practiced in holding up trade negotiations. The EU-Mercosur agreement remains in limbo because of objections by the French beef lobby. The Australia-Indonesia agreement was held up by Jakarta until an issue with paper exports was solved.
Indonesia remains the ‘prize’ in Southeast Asia, as the region’s largest economy – the question is how badly Brussels wants it.