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Overcoming the EU-Indonesia Palm Oil Challenge
Image Credit: Wikimedia Commons

Overcoming the EU-Indonesia Palm Oil Challenge

 
 

Some of the media headlines over the past few months may suggest an exclusively adversarial or retaliatory dynamic at work between European states and countries like Indonesia on the issue of palm oil and sustainability. While differences certainly persist, such a view also misses the potential collaboration that both the European Union and Indonesia can undertake not just on palm oil, but on sustainability issues more generally within the prism of the broader bilateral relationship.

There certainly are differences that remain between the EU and Indonesia as well as a range of top producer countries on palm oil, and they are not entirely without reason. Indonesia is the world’s biggest palm oil producer and tropical oil is the country’s second-largest export, and from Jakarta’s perspective, it continues to try to balance those economic considerations with environmental ones as it is home to the world’s third-largest expanse of tropical forests. From the perspective of some other states including the EU, there are still lingering concerns over concerns ranging from the environment to issues of competitiveness.

While specifics will continue to be worked out by both sides, a focus on the bigger picture in EU-Indonesia relations can help shed light on areas of cooperation for the two countries, rather than an excessive focus on issues of disagreement. That requires zooming out to take stock of both the opportunities and challenges for ties, and then zooming in on potential areas of collaboration around sustainability issues more generally, including palm oil.

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Strengthening EU-Indonesia Ties: The Bigger Picture  

Specifically, there are at least three major modalities for strengthening an already solid bilateral partnership between Indonesia and the European Union on the basis of broad common interests rather than specific divergences.

First, Indonesia and EU are already on the right track and well on their way to finalizing the long-awaited Indonesia–EU Comprehensive Partnership Agreement (I-EU CEPA). This year alone, both sides have conducted both its fourth and fifth round of negotiations and aim to meet again October for its sixth round (in Palembang). This reflects the high political will to boost the economic partnership to new heights for the benefit of both sides.

Second, both are major parties to the Paris Agreement that have strong commitments on the environment in various common aspirations such as the fight against marine plastic debris as well as the FLEGT scheme (Forest Law Enforcement, Governance, and Trade) for sustainable timber.

Third, and more relevant to the matter at hand, throughout the Renewable Energy Directive II (RED II) trialogue negotiation process earlier this year, Indonesia and the EU have ramped up their bilateral engagement and dialogue through various stakeholders, even at the highest level. This is despite the fact that Indonesia continues to maintain a series of concerns, including the fact that though there is no direct mention of palm oil in the final text of the RED II, the EU’s proposed criteria using the Indirect Land Use Change (ILUC) methodology, which distinguishes low-risk and high-risk biofuels, is still highly contested at the international level.

For instance, on the Indonesian side, signaling Jakarta’s deep concerns over the RED II trialogue in the EU, President Joko “Jokowi” Widodo conveyed a letter to the presidents of both the European Commission and the European Council in February 2018. Indonesia’s seriousness was also reflected by appointing a special envoy for sustainable palm oil, Luhut Pandjaitan, who is also Indonesian coordinating minister for maritime affairs.

This is in addition to continuing work within Indonesia’s foreign ministry. Foreign Minister Retno Marsudi previously conveyed two official letters to EU High Representative/Vice President (HRVP), Federica Mogherini and her foreign minister counterparts in the EU. And in the European capital of Brussels, the Indonesian Embassy has also led a collective effort with other palm-oil producing countries – including Malaysia, Colombia, Nigeria, Thailand, Guatemala, Ecuador, and Honduras – to express concerns to the EU leadership. Such efforts are set to continue. On September 4, for instance, Indonesia’s ambassador in Brussels, Yuri Thamrin, along with other colleagues, is set to meet with EU Commissioner for Energy and Climate Action, H.E. Miguel Arias Cañete.

The EU has also shown its willingness to facilitate meaningful dialogue with Indonesia on its end as well. Two high-level delegations visited Indonesia in early May 2018, and Dr. Werner Langen, the chair of the delegation for relations with the countries of Southeast Asia and the Association of Southeast Asian Nations/ASEAN (DASE) has stated that the said visit helped in obtaining a more comprehensive understanding regarding the realities on the ground in Indonesia. That spirit reflects the importance of a broader consideration: especially during times of disagreement, building an open and constructive dialogue truly goes a long way for the benefit of mutual understanding.

Charting a Path Forward

Equally important in addition to managing existing differences is charting a path forward that can include forms of concrete joint cooperation.

To be sure, doing so will not be easy. It will require being open to compromise on specifics for the advancement of mutual interests. One area in which this is clear is with respect to EU criteria on this front. In the joint demarche of the ambassadors of the palm oil producing countries in Brussels, a common aspiration was a joint plea to the EU to be open to further consultations with the respective countries in the development of the EU criteria. While the EU has yet to formally respond to this joint concern, the countries have suggested some starting points for the criteria, including that it should be non-discriminative, include traceability, be WTO compliant, and ensure the promotion of a rules-based multilateral trade system.

While the EU has its own rationale for its criteria, the specifics need to acknowledge the underlying complexity of palm oil for the producing countries. The complexity cannot be ignored as the commodity itself is undeniably linked to different and, to some extent, complicated realities. To take just one example, in some Latin American countries, palm oil plantations are spread across post conflict areas and serve as a main source of employment for smallholders, especially in remote areas or on the fringes of its territory. Hence, it becomes highly complex for these smallholders to just “switch” their top source of employment.

Forging a path ahead can also be made easier if issues such as palm oil can be viewed within the broader frame of sustainability. In that regard, the EU criteria should take into account principles enshrined in the Sustainability Development Goals (SDGs) – principles that balance economic development and social and environmental development, rather than just focusing on the former or the latter.

That broader frame of sustainability can also open up avenues for collaboration in other areas. Promoting sustainability is unquestionably a joint top priority for both Indonesia and the EU. Indonesia’s commitment is illustrated by a wide range of initiatives, be it specific steps on palm oil like the replanting program and a moratorium on new palm oil plantations, as well as more general steps such as developing a roadmap for sustainability for vegetable oils for 2030. EU officials have indicated some receptivity to that framing while ensuring palm oil is addressed, as evidenced by recent comments and responses offered by Mogherini and Cañete in this respect.

To be sure, on the issue of palm oil challenges remain for the EU and Indonesia, and differences persist. But amid wider concerns about rising protectionism and ongoing trade wars, if the EU and Indonesia also keep in mind the bigger picture of ties and areas of collaboration, they can help forge a path that will bring mutual benefits for both sides as well as the broader world for years to come.

Andi Sparringa is a diplomat at the Embassy of Indonesia for Belgium, Luxembourg, and the European Union.

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