Kaoem Telapak, an Indonesian NGO has warned that the EU’s recently adopted restrictions on the import of commodities linked to deforestation, such as palm oil from Indonesia, have a noble intention but could have unintended impacts.
Writing in newspaper Mongobay, a spokesperson for the NGO notes that “one of the biggest importers of Indonesian palm oil is the EU”, adding that it is impacted by the EU’s new EU Deforestation-Free Regulation (EUDR). The new regulation requires companies trading in certain commodities, including palm oil, to ensure the goods do not result from recent deforestation or forest degradation.
The NGO further warns:
“Indonesia’s oil palm smallholders often manage just a couple of hectares. While their individual holdings may be small, their collective impact is substantial. It is estimated that smallholders account for approximately 40% of Indonesia’s total palm oil production. This makes them indispensable to the industry’s overall performance and output.”
It adds that inequalities in South East Asia are bound to worsen, as a result:
“The cost of compliance exacerbates existing inequalities within the industry. Large plantation companies with greater financial resources can more easily afford the expenses associated with certification. This creates a divide between smallholders and larger players, making it difficult for smallholders to compete on a level playing field. At the same time, certified sustainable palm oil often commands higher prices in premium markets, which means uncertified smallholders will be excluded from markets or forced to sell at lower prices, further widening the income gap between certified and non-certified producers.”
Progress on slowing deforestation could boost climate efforts, say experts https://t.co/ELkHYrGkz3
— Guardian news (@guardiannews) August 7, 2023
Together with Malaysia, Indonesia has made progress when it comes to deforestation. In the case of Malaysia specifically, this was helped as a result of a domestic certification scheme, the Sustainable Palm Oil (MSPO) arrangement.
While the UK recognises the MSPO, and managed to use its liberal attitude towards palm oil imports to get access to the CPTPP trade arrangement, the EU refuses to recognise Malaysia’s local scheme, instead imposing its own bureaucratic requirements.
Both South East Asian nations decided to freeze trade talks with the EU in June 2023 in response. Pamela Coke-Hamilton, executive director of the ITC, a joint agency of the UN and World Trade Organization, thereby even has warned that the new EU deforestation rules threaten to cause a ‘catastrophic’ impact on global trade. This because the smaller suppliers in particular risk to be “cut off” from trade flows, as also discussed by the Indonesian NGO.
Indonesia’s oil palm smallholders need both state and EU support
— Environmental Investigation Agency (@EIA_News) October 25, 2023