Indonesia to Take Palm Oil Dispute to WTO, Considers Boycott

KOMPAS/NIKSON SINAGA

Workers weigh oil palm fresh fruit bunches in Kuala Air Hitam village, Selesai district, Langkat regency, North Sumatra, Thursday (14/2/2019). The prices of oil palm fresh fruit bunches at the farm level rise to Rp 1,050, but production fell by 50 percent as the plants fail to produce fruits during dry season.

JAKARTA, KOMPAS — The government is preparing to take its crude palm oil (CPO) dispute with the European Union (EU) to the World Trade Organization (WTO). The government is also considering a boycott on EU products, including cars and airplanes.

“You’ve manipulated the palm oil [trade] with unfair schemes, so we will do everything we can to fight them,” Coordinating Economic Minister Darmin Nasution said in Jakarta on Wednesday (20/3/2019).

On Wednesday, under the Foreign Ministry’s coordination, the government held a press conference on the EU’s discrimination against Indonesian CPO. Darmin was accompanied by Coordinating Maritime Affairs Minister Luhut Pandjaitan and Deputy Foreign Minister AM Fachir. The government also invited representatives of EU companies with operations in Indonesia.

The government said that it was disappointed with the EU’s excessive protection on its vegetable oils, namely rapeseed and sunflower. On March 13, the European Commission – EU’s executive body – issued its Delegated Act of the Renewable Energy Directive (RED) II. The document contains, among other things, the non-recommendation of CPO being used as vegetable oil in EU regions. The RED II document may potentially categorize CPO as a high-risk crop in the aspect of indirect land use change (ILUC) that may lead to limitation of its use. This may threaten Indonesia’s CPO export.

KOMPAS/IRMA TAMBUNAN

The Forest and Land Fire Disaster Preparedness Team of Muaro Jambi regency, Jambi province, check the condition on an oil palm plantation belonging to a company from the monitoring tower in the Kumpeh Ulu region on Thursday (14/3/2019). Supervision and information dissemination have been improved to prevent fires that have the potential to cause haze.

Unfair

Luhut said the EU had acted discriminatively against palm-oil-producing countries, such as Indonesia. He said this was completely unfair for Indonesia and at least 20 million of its citizens who depended either directly or indirectly on the palm oil industry, which contributes up to 3.5 percent to Indonesia’s gross domestic product. Luhut affirmed that the government would take action to protect the country’s palm oil industry.

“We will take this palm oil discrimination issue to the WTO. We also plan to boycott EU products. We know their products here include cars, airplanes and potentially trains,” Luhut said.

Contacted from Jakarta, Indonesia’s Ambassador Extraordinary and Plenipotentiary/Permanent Representative to the UN, WTO and Other International Organizations in Geneva, Switzerland, Hasan Kleib, said Indonesia had taken the palm oil issue to the WTO under the Technical Barrier to Trade (TBT) committee in the agenda of Specific Trade Concern (STC). A country may deliver an STC on other countries’ trade policies. However, Indonesia has yet to deliver the palm oil issue to the Dispute Settlement Body (DSB). Within the WTO, the DSB is tasked with resolving trade policy disputes between member countries.

EU’s Ambassador to Indonesia, Vincent Guerend, said the best way to go whenever trade disputes arose would be to take them to the WTO. “I believe Indonesia has made the right move of bringing the RED II document to the WTO in order to resolve the trade dispute,” Guerend said. (E05/JUD/BEN)