Business Indonesia

BRUSSELS – The Government of Indonesia regrets and rejects the discrimination of the European Parliament Report proposing the elimination of palm oil-based biofuels by 2021.
The decision is contradictory to the principle of free and fair trade especially related to timely removal of palm oil a decade earlier than other biofuels by 2030. “The Indonesian government will continue its efforts to work together in a sustainable, constructive and parallel dialogue with three of the European Union institutions, namely The European Parliament, the European Commission and the European Council. It will be conducted before and during triangle negotiations,” said Anthoni Nicolas T, from KADIN Indonesia – Business Support Desk (KADIN BSD), in a press release.

Earlier in the voting on renewable energy during the European Parliament (EU) plenary session on January 17, 2018, the Parliament agreed to eliminate the first generation of biofuel (from food and food crops) by 2030, while the elimination of biofuels from palm oil by 2021. The EU Parliament also agreed on a proposal with a target of 35% use of renewable energy in EU energy mix and 12% for transport by 2030. The above resolution is supported by 492 votes, refused by 88, 107 abstain votes and 64 did not vote.
Along with the ratification process of the report, the European Parliament mandates to carry out triangular negotiations with the European Commission and the European Council which will be held one to two months after the vote. In other words, the report has not reached a final agreement in the EU. The final decision will be determined by the result of a series of discussions of the triangle.

To maximize political pressure in the European Parliament, the Indonesian Embassy in Brussels has built alliances with Brazil, Ecuador, Guatemala, Honduras, Colombia, Ghana, Nigeria, Kenya, Thailand and Malaysia. “As a joint step, the alliances will send a joint letter from the head of representatives of the oil palm producing countries to the European Parliament as a form of protest,” said Anthoni.

In addition, Indonesia and other countries will make a direct collective demarcation to the President of European Parliament Antonio Tajani who leads the triangle dialogue between the European Parliament, the European Commission and the European Council in February.
There are several impacts as the result of the voting in the European Parliament towards the EU-Indonesia Comprehensive Economic Partnership Agreement (I-EU CEPA). One of which, Indonesia and the EU will immediately conduct the next phase of the I – EU CEPA negotiations, the fourth round, on 19-23 February 2018 in Indonesia. One of the most important parts of the negotiation is the chapter on Trade and Sustainable Development (TSD) which reflects the strong commitment of both parties to promote the aspect of trade sustainability. ”If EU then decides to eliminate palm oil from renewable energy, it will certainly disrupt bilateral relations as a whole, including I – EU CEPA.”
The European Parliament proposal to eliminate palm oil biofuels is feared to damage the image of Indonesian palm oil in the EU market and other international markets. The elimination will also reduce the value of Indonesian exports to the EU as a whole. In fact, palm oil is Indonesia’s main export commodity to the EU with a value reaching USD2, 5 billion in 2017.

Data shows that the value of Indonesia’s crude palm oil (CPO) export to EU in the period 2013-2016 showed a declining trend of 4%. However, the value of Indonesia’s CPO exports to the EU increased from USD1.8 billion (January-September 2016) to USD2.5 billion (January-September 2017). In the same period, Indonesia’s CPO exports in biodiesel type were recorded at USD19.3 million (January-September 2016) to USD20.2 million (in January – September 2017).

In this regard, Indonesia continues to emphasize the importance of palm oil as one of the main elements of national interest, particularly concerning the welfare of 17 million Indonesians, including small and medium entrepreneurs, who depend on the palm oil industry either directly or indirectly. Indonesia also reaffirmed its commitment to fight for palm oil to be sustainably applied in fair trade in the EU.
At the ASEAN-EU Summit in Manila, November 2017, President Joko Widodo asserted to stop the discrimination and black campaigns on palm oil, especially in Europe. Foreign Minister Retno LP Marsudi also emphasized the close ties between palm oil and poverty eradication in Indonesia. Furthermore, Trade Minister Enggartiasto Lukita revealed that eliminating palm oil products will not be goo not a good base for future EU-Indonesia relationship.



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