Addressing the special EU-ASEAN summit meeting in Brussels on Dec.15, the President asserted, “There must be no coercion, no more parties who always dictate and assume that my standards are better than yours.”

In our view the regulation on the deforestation label, which will be enforced on palm oil and its derivatives and several other farm commodities in 2023, confirms the EU is finally turning its back on any trade policy that considers itself to be fair and that the bloc simply cannot make its trade policy and its broader external goals coherent.

The EU is not interested at all in the welfare of small farmers in Indonesia and other developing countries, or bringing them into global supply chains by making global trade more inclusive. The introduction of strict traceability requirements for oil palm small farmers has in the past resulted in the exclusion of those farmers from those supply chains.

The question then is how will be the attitude of other ASEAN countries likely be, notably Malaysia and Thailand, which together account for about 95 percent of the world’s palm oil output?

Analysts said Malaysia was likely to support Indonesia’s stance and this could cause an erosion of trade and cooperation between the two regional groups, if the EU moves ahead with the Deforestation Regulation and its unilaterally set sustainability standards for farm products, notably palm oil, entering the EU 27 countries.

The rising opposition to the regulation could put future EU market access to the 10 ASEAN countries at risk. Indonesia, the chair of ASEAN in 2023, has also hinted at its intention to negotiate a new free trade agreement with the Eurasian Economic Union (EAEU), opening strategic access to new markets for both parties. Indonesia is also building deeper economic and strategic ties with the United States.