EU Declares Trade War: Why Not to Worry

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Memet Hakim, ETCAS Consultant, Senior Agronomist. Photo by: Special

PALMOILMAGAZINE, JAKARTA – The European Union (EU) officially announced a trade war with Indonesia and Malaysia by publishing the European Union Deforestation Regulation (EUDR) on December 6, 2022.

This policy is set to be implemented in early 2025. It requires all operators and traders dealing with products and their derivatives from seven commodities—including livestock, cocoa, coffee, palm oil, soybean oil, and wood—to conduct extensive due diligence on their supply chains.

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The primary goals of the EUDR are to protect forests and prevent global deforestation. Similar policies are already in place in countries such as the United Kingdom and the United States.

However, the EU has a history of targeting palm oil specifically with negative campaigns. In the 1900s, they accused palm oil of being water-intensive and unhealthy. In 2004, the EU established the Roundtable on Sustainable Palm Oil (RSPO), which was seen as a means to delay palm oil exports to the EU under the guise of environmental concerns. With the EUDR, the EU is openly renewing efforts to impose obstacles on Indonesia and Malaysia’s palm oil exports.

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From the history, what EU has done may be taken as the righteous and most powerful act. It is no doubt that EU, such as, United Kingdom, Netherland, France, and Portuguese, known as colonials, needs materials from their colonial countries.

Europe and America always consider that Indonesia is in lower class. This opinion must be fought. EU countries are actually poor in natural resource and should get materials to Africa, Asia, even Australia and America. They may think that Indonesia and Malaysia could be pressed as what they like. Nevertheless, barriers, such as, the policy published by EU, are actually fragile and easily broken down.

Indonesia dan Malaysia master about 80% of palm oil production in the world. Indonesia produced 46,9 million tons and Malaysia produced 18,7 million tons of palm oil. It is used for biodiesel production and in this very short, it would be used to produce palm oil gasoline. It means without selling it to Europe, there is no issue for Indonesia and Malaysia (at all).

Indonesia is the pioneer to produce biodiesel and palm oil gasoline. Europe would get the loss if the mining exports, such as, nickel, and coal would stop being exported. This could stop many industries to operate in the continent. There could be massively unemployed. Europe should seriously think if the continent wants to have war trade with Indonesia.

Indonesia should get offended for EU wants to regulate the forests in Indonesia. Forests and environment in one country are the rights of one country itself, in this case, Indonesia and Malaysia. EU has no rights on the two. Indonesia is the independent country, not European’s colonial country. Indonesia should be brave and firmly rejected other country’s business in Indonesia’s domestic businesses.

It is the best time to re-manage the exports without dealing with Singapore because it depends on Indonesia and Malaysia. Singapore may always protect corruptor from Indonesia and the allay of Israel in Southeast Asia. Ministry of Trade and Ministry of Transportation should prepare something to support direct exports, minimize dependence on Singapore, and reinforce economic sovereignty of Indonesia.

By having strategic things, Indonesia and Malaysia could avoid the challenges from EUDR and would reinforce their position in the markets globally. (*)

By: Memet Hakim /ETCAS Consultant, Senior Agronomist

Disclaimer: This article is a personal opinion.

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