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Indonesia Prepares for Battle Against EU Deforestation Law Impacting Palm Oil Exports

Indonesia Prepares to Challenge EU's Deforestation Law

Indonesia is preparing to file a lawsuit against the World Trade Organization (WTO) regarding the new deforestation law passed by the European Union (EU) which bans imports of certain commodities linked to deforestation. The EU's new law, which went into effect on January 1, 2023, requires companies to provide a due diligence statement to show that their supply chain is not contributing to forest destruction or face hefty fines.

Under the new regulations, companies are obliged to prove when and where the commodity is produced and is not grown from land deforested after 2020. This policy applies to soy, beef, palm oil, wood, cocoa, coffee, and several derivative products including leather, chocolate, and furniture. Rubber, charcoal, and some palm oil derivatives are included at the request of EU parliament members.

Photo by Pok Rie

Indonesia, Brazil, and Colombia are among the countries that will be affected by the new regulation. The Indonesian government's plan to challenge the regulation to the WTO is supported by the Indonesian Oil Palm Farmers Association (Apkasindo). Head of Apkasindo, Gulat Manurung, said that the policy also has a major impact on oil palm farmers and that the government must immediately file a lawsuit.

"It must be sued and it is mandatory. If the government doesn't sue, we will sue," said Gulat.

According to data from the Indonesian Ministry of Environment and Forestry, the country lost more than 1.6 million hectares of forest in 2019, with much of it cleared for agriculture, including palm oil plantations. However, the Indonesian government is taking steps to address deforestation, including establishing a moratorium on new palm oil plantations in 2018.

The government is also developing big data on plantations and blockchain to tackle export barriers. Director General of Plantations, Andi Nur Alamsyah, said that the data will be used to monitor the supply chain and ensure that Indonesian products meet international standards.

"We are working hard to ensure that our products meet the requirements of the EU and other international markets. We are committed to sustainable practices and protecting our forests," said Andi.

In addition, the government has implemented a number of policies and initiatives to promote sustainable palm oil production, including the Indonesian Sustainable Palm Oil (ISPO) certification system. The ISPO requires palm oil companies to adhere to certain environmental, social, and economic criteria in order to be certified.

Indonesia is the largest exporter of palm oil in the world, with palm oil accounting for nearly 10% of the country's total exports in 2020. The EU is one of the largest importers of Indonesian palm oil, with imports totaling 3.3 million tons in 2020. The Indonesian government and the palm oil industry are concerned that the EU's deforestation law could have a significant impact on the country's economy.

Copyright @ Artha Asia Agriculture 2023

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