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Indonesia wants progress on EU trade deal

Steven Beardsley with material from Daniel Winter
April 25, 2024

The Southeast Asian nation accuses Brussels of "regulatory imperialism" following recent disputes over deforestation and nickel. But it's still hoping for an agreement.

Lieferkettengesetz l Malaysia, Palmöl-Bauern
Indonesia has taken issue with a new EU law targeting palm oil exports over environmental concernsImage: Wahyudi/AFP via Getty Images

Indonesia wants progress on a free trade agreement with the EU despite ongoing disputes over deforestation and nickel mining, the country's ambassador to Germany said in an interview on the fringes of the world's most important industrial fair in Hanover, Germany.

"Fifteen, twenty years of negotiation I think is too long," Arif Havas Oegroseno told DW.

The two economies opened trade talks in 2016, with Brussels aiming to build on recent agreements with Singapore and Vietnam.

Yet more than a dozen rounds of negotiations have failed to produce an agreement with Indonesia. One stumbling block is the language surrounding sustainable development, an area that includes biodiversity and deforestation.

This aerial photo shows a palm oil plantation in a protected area of the Rawa Singkil wildlife reserve in Trumon, Indonesia
Deforestation for palm oil production in Indonesia is a major stumbling block in trade talks Image: JANUAR/AFP/Getty Images

'Fair treatment is the key'

Indonesia has taken issue with a new EU law requiring countries to certify their forest products against deforestation, a measure that covers the country's considerable palm oil exports. Jakarta says the law puts a burden on smaller landowners, in particular, some of whom lack the paper titles to their land.

"You're actually killing the smallholders who have nothing to do with deforestation," Oegroseno said.

The ambassador complained that European cooking oils don't require such certifications, and he repeated his country's complaint that Brussels was engaged in "regulatory imperialism."

"Fair treatment, that's the key," he said.

A joint task force between the EU and Southeast Asian countries is now working to implement the new law.

Palm oil in high demand, but unsustainable

Indonesia is also fighting EU efforts to force continued exports of nickel, an essential component for electric car batteries. The World Trade Organization (WTO) ruled in favor of Brussels in 2022, saying Jakarta was wrong to ban exports of the metal two years prior to prioritize direct investment in extraction.

Indonesia's efforts to appeal the ruling have been hampered by the political crisis surrounding the WTO's appellate body, which ceased functioning in 2019.

Oegroseno said the EU could join other countries that have announced investment in Indonesia and even help clean up the smelting process. "Brussels should help us instead of attacking us," he said.

Trade disputes

Bernd Lange, the head of the European Parliament's committee for trade defended the new deforestation law in an interview, saying the EU wasn't trying to lecture other countries. "These are not European values or European legislation or European vision of society," Lange told DW. "It's a universal perspective for people and the environment."

He also said the EU was also working with nations to monitor deforestation.

The disagreement with Indonesia is part of the broader complications surrounding EU trade deals in recent years.

A picture showing French farmers with tractors blocking roads in southern France during protests in January 2024.
European farmers protesting against liberalizing EU agriculture are a force to reckon with in the bloc's trade talksImage: Olivier Chassignole/AFP/dpa/picture alliance/dpa

An agreed deal with leading South American economies known as Mercosur has run into opposition from EU member states, including France. Opponents point both to concerns over new competition and worries over deforestation in the Amazon Basin.

European concerns over market competition in agriculture also helped kill a free trade agreement with Australia last year.

European capitals are still responding to a spate of farmer protests in the winter, which were sparked by concerns over rising costs, growing bureaucracy and changing environmental standards. At the same time, Brussels is under pressure to seal new trade deals given uncertainties with traditional partners China and the US.

A new study from the German Economic Insitute in Cologne, Germany, recommended the EU diversify its trade to buffer against possible disruptions, in particular from the US. 

Edited by: Uwe Hessler