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In G20, RI fights opposition to palm oil

Indonesia has tried to flex its muscles in the international arena to fight for palm oil by lobbying the major world powers during the G20 Summit to overcome their aversion to its key export commodity

Fedina S. Sundaryani (The Jakarta Post)
Hamburg, Germany
Mon, July 10, 2017

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In G20, RI fights opposition to palm oil

I

ndonesia has tried to flex its muscles in the international arena to fight for palm oil by lobbying the major world powers during the G20 Summit to overcome their aversion to its key export commodity.

Indonesia, as the world’s top producer of palm oil, has struggled against persistent and strongly supported accusations that the industry triggers deforestation, receives improper subsidies and sells its product at unfair prices in its main markets, the European Union and the United States.

In early April, the European Parliament, for example, issued a resolution that by 2020 the 27-member bloc would phase out the use of palm oil because of the massive deforestation the cultivation of oil palms has caused.

In the hope of turning things around, President Joko “Jokowi” Widodo spent two days trying to convince the US and some EU countries to change their stance on palm oil.

In separate bilateral meetings, Jokowi told both Dutch Prime Minister Mark Rutte and Spanish Prime Minister Mariano Rajoy Brey that while the European Parliament resolution was not an executive order, it could still severely hurt Indonesia’s palm oil industry.

“The European Parliament recently issued a resolution on palm oil and deforestation without taking into consideration Indonesia’s own stance prior to the resolution,” he told Rutte during Saturday’s meeting, according to a press release.

The President appealed to both leaders for the European countries to instead apply the sustainability standards contained in the EU’s Forest Law Enforcement, Governance and Trade (FLEGT) Action Plan to palm oil products.

Indonesian timber products, certified under a locally developed sustainability certification scheme called the Timber Legality Verification System (SVLK), can now enter EU member countries without undergoing a due diligence process as they have been acknowledged to be complying with the group’s trade laws.

Prior to the issuance of the resolution, the EU repeatedly levied anti-dumping duties on Indonesian palm oil products, particularly oleochemicals and biodiesel.

Accumulative biodiesel exports plunged by 96.5 percent to US$14.7 million in 2015 due to anti-dumping duties charged since 2013 before climbing to $29.8 million in 2016, data from the Trade Ministry show.

Indonesian biodiesel exporters faced a similar accusation in the US.

Earlier this year, a US commercial trade association, the National Biodiesel Board (NBB), along with dozens of biodiesel producers, filed a petition with the US Department of Commerce and the US International Trade Commission to impose anti-dumping and countervailing duties on Indonesian palm oil.

Indonesia’s annual biodiesel exports to the world’s largest economy has followed an upward trend in recent years, surging by 117 percent on average annually from 2014 to 2016 to 350,176 tons a year, representing 93.75 percent of the country’s total biodiesel exports last year.

In his first-ever bilateral meeting with US President Donald Trump, Jokowi requested his counterpart lift the US’ punitive measures on Indonesian palm oil.

Foreign Minister Retno LP Marsudi claimed that Trump was extremely receptive to Jokowi’s appeal and called for a solution that would benefit both countries.

“[The US] wishes to impose anti-dumping and countervailing measures on exports to the US. We have shared our concerns about almost $300 million in [biodiesel exports] and President Trump acknowledged the issue positively and asked to find a good solution,” she said in a press conference on Saturday.

Separately, Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan praised President Jokowi’s moves, expressing hope that his efforts would push those countries to implement fairer and freer measures on Indonesia’s palm oil products.

Currently, he said, the accusations that palm oil was the cause of deforestation and agrarian conflict could potentially hamper the commodity’s trade in Europe.

“So, I think Jokowi’s statements can open [ways] to stop them from imposing [commodity] tariffs [on Indonesia’s palm oil],” he told The Jakarta Post by phone on Sunday.

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Prima Wirayani contributes to this story

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