The EU law reflects the Food and Agriculture Organization’s (FAO) definition of deforestation: the conversion of forest to agricultural use, whether human-induced or not. Forest degradation is defined as structural changes to forest cover, taking the form of conversion of primary forests into plantation forests and planted forests or other wooded land.

The deforestation-free law, the first of its kind in the world, will indeed pose stronger challenges for such developing and emerging countries as Indonesia, which owns vast forest resources but also is still burdened with a high incidence of poverty. The country is the world’s largest producer of palm oil and a major producer of rubber, wood and cocoa. But categorically, opposing the law will make the government lose sight of the opportunities the law also will create for Indonesia to improve its forest management and sustainability.

First the challenges. Eight agricultural commodities and their derivatives: palm oil, cattle, cocoa, coffee, soya, wood, rubber, charcoal and printed paper, will only be allowed to enter the EU markets if the suppliers of the products have issued a “due diligence statement” confirming that the products do not come from deforested land. Suppliers or importers also will have to verify that the products comply with the relevant laws of the country of origin (production), including human rights and the rights of affected indigenous peoples are respected.

But the law was applied only for deforestation and forest degradation after Dec. 31, 2020 and the compulsory due diligence was implemented within 18 months for companies and 24 months for small, micro enterprises and smallholders.

Now the opportunity. Indonesia should aggressively engage the EU in constructive negotiations for making the best use of the Forest Partnership program the EU Commission has established to help partner countries improve their forest governance and create socio-economic opportunities for the populations through sustainable value chains. The Commission has pledged 1 billion euros (US$1.1 billion) to facilitate protection, restoration and sustainable management of forests in the partner countries. The beauty of the program is that the partnership program will be tailor-made for partner country needs.

Constructive engagement with the EU is also needed, especially during the transition period before the law comes into full enforcement, to discuss with the Commission the technical details of the deforestation-free law’s Corporate Due Diligence Directives, which will determine the bureaucratic complexity of the assessment under the due diligence process.

Such consultations are also necessary because the Commission will use its unilaterally-set benchmarking system to classify countries, or parts thereof, as low-, standard- or high-risk based through an objective and transparent assessment. Products from low-risk countries will be subject to a simplified due diligence procedure. The proportion of checks is performed on operators according to the country’s risk level: 9 percent for high-risk countries, 3 percent for standard-risk and 1 percent for low-risk.  

We should magnanimously admit that despite the remarkable improvement already made in forest management, the astronomical growth of oil palm plantations has internationally been perceived to be a major cause of deforestation in Indonesia, thereby making it vulnerable to be classified as a high-risk country.

As the law also unilaterally will impose an obligation of origin-tracing by using geolocation of where the products are farmed, this issue could also be negotiated under the partnership program on how to help smallholders use smartphones and geotag their farms. The program could help smallholders in Indonesia to strengthen their institutions, their cooperatives and improve their skills, such as via training to manage traceability data, because there will be a lot of data gathering during the due diligence process.