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Delayed deforestation rule unlikely to break IEU-CEPA deadlock
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Union of unions: President Joko “Jokowi” Widodo (center) shakes hands with European Commission president Ursula von der Leyen (right) as European Council president Charles Michel looks on at the EU-ASEAN summit at the European Council headquarters in Brussels on Dec. 14, 2022. (AFP/Kenzo Tribouillard)
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elaying the implementation of the European Union’s deforestation-free rule for imported products may provide more time for negotiations between Indonesia and the EU on a free trade agreement but will do little to bridge the remaining divides between the two parties, analysts say.
The proposed Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA) has yet to be agreed upon, despite commitments from President Joko “Jokowi” Widodo and European Commission President Ursula von der Leyen to finish negotiations.
“Delaying the regulation would definitely solve one issue, but there’s still much more to talk about,” Chris Humphrey, executive director of the EU-ASEAN Business Council (EU-ABC), told The Jakarta Post on Oct. 8.
“Indonesia’s key demand is getting palm oil market access to the EU, so the delay eases some of their concerns, but it’s by no means certain that will be enough to seal the deal,” he continued.
The European Commission announced on Oct. 2 that it had proposed a one-year delay for the introduction of the EU Deforestation-Free Products Regulation (EUDR), following calls from industries and governments, including Indonesia’s.
Indonesia, the world’s largest palm oil producer, had voiced serious concerns over the law banning the import of commodities linked to deforestation after 2020, as well as requiring traceability and geolocation coordinates of commodities subject to the regulation.
Four major points of the EU-Indonesia free trade agreement, meanwhile, remain unresolved, according to Humphrey: palm oil market access, total foreign ownership of Indonesian banks, Indonesia’s local content requirements (TKDN) and the World Trade Organization (WTO) moratorium on customs duties for electronic transmissions.
