The EU is a huge and growing market for Indonesian palm oil. Much of the food, cosmetics and many other products consumed by Europeans have a little bit of Indonesia in them in the form of palm oil produced here. The EU is Indonesia’s second largest export market for palm oil after India.
Yet, some media stories here in recent days have given a very different impression. Articles have highlighted supposed EU campaigns against Indonesian palm oil and biodiesel imports.
Some refer to EU anti-dumping measures while others talk about new laws on labeling or discrimination under renewable energy support plans. This is such an important export for Indonesia that I thought it important to put the record straight.
Over half the EU’s imports of palm oil come from Indonesia. About 46 percent of the imports of palm oil from Indonesia enter duty free with no tariff whatsoever.
There is no ban and no discrimination and the EU does not sponsor anti-palm oil campaigns. That is why EU imports from Indonesia of palm oil have increased by 70 percent in the last few years amounting to ¤2.3 billion (US$2.76 billion) in 2013.
In short, the figures show that the EU is an open and welcoming market for Indonesia’s palm oil.
So what about anti-dumping measures on biodiesel? Dumping occurs when a product is sold on an export market at a lower price than on the domestic market or at less than its cost of production.
Late 2012, the EU launched an anti-dumping investigation that found that biodiesel from Indonesia (and Argentina) was dumped on the EU market and was causing injury to the EU industry.
So, in accordance with EU procedures and the World Trade Organization (WTO) law and based on the results of the investigation, the EU decided to impose anti-dumping duties on imports of biodiesel from Indonesia and Argentina from the end of May 2013.
Anti-dumping investigations are based on strict legal requirements and there is no room for arbitrary decisions. The duties are imposed to remove the damage inflicted to the EU industry and restore a level-playing field in trade.
They have brought down the spike in exports of biodiesel (although the current levels of exports are similar to the levels prior to the investigation).
However, Indonesian imports maintain the lion’s share in EU imports of all palm oil, accounting for 51.4 percent in 2013. WTO members, including Indonesia, use the WTO procedures to ensure an equal playing field in trade.
On food labeling — again — there is no discrimination. Currently, labels on food in the EU just say
“vegetable oil”. European consumers are demanding more information across the board on what they are eating.
From Dec. 13, the label therefore defines which oil was used — no more, no less. Consumers in Europe, as in Indonesia, have the right to choose and make their choices based on factual information.
Some organizations have raised concerns about palm oil. These are primarily about environmental sustainability. There is an increasing demand worldwide from consumers for more environmentally sustainable products.
But in fact, growing demand among European consumers for sustainable products is very good news for Indonesia. Indonesia is the world’s largest producer of palm oil. It already produces more certified sustainable palm oil (CSPO) than any other country.
Thanks to consumers worldwide, demand for CSPO is growing — and where EU consumers lead today, consumers in the US, Australia, Japan and elsewhere are likely to follow. Indonesia has the ideal conditions to supply CSPO to meet this demand and become the world leader in sustainability. Good for Indonesian farmers and good for Indonesian forests.
Indonesia has all the conditions needed to prosper from this growing market — fertile soil, a good climate, hard-working abundant labor and economies of scale. But to draw full benefits from this opportunity, it will be important to address the issues raised by the NGOs.
The signing by some of the major producers of the Indonesian sustainable palm oil pledge at September’s UN Climate Summit in New York was a very positive initiative.
Build a consensus with the industry and civil society in Indonesia about the way forward and it could provide the foundation of a sustainable and even more lucrative trade with Europe.
EU and Indonesia trade and investment relations are becoming stronger and stronger. The EU has overtaken China this year to become Indonesia’s number one export market.
The EU is furthermore Indonesia’s largest trading partner with which it enjoys a trade surplus.
The EU has also overtaken Japan to become the second largest provider of foreign direct investment into Indonesia after Singapore.
President Joko “Jokowi” Widodo’s plans for upgrading Indonesia’s infrastructure, for improving the business climate and for cutting red tape are exactly the messages EU businesses want to hear. More streamlined and transparent procedures will certainly bring more European investment to Indonesia.
Let us therefore also work on deepening further our important economic relationship.
This will contribute to the development of a diversified sustainable and higher value added economy, as well as help develop Indonesia as a production hub in ASEAN and one that is truly plugged into global supply chains.
The writer is the ambassador of the EU to Indonesia, Brunei Darussalam and ASEAN.
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