Indonesia' Trade Minister Enggartiasto Lukita in a Bilateral Meeting Indonesian Bilateral Meeting with EU-ASEAN Business Council in Singapore - Photo by Trade Ministry

JAKARTA (TheInsiderStories) – As the world’s largest palm oil producer, Indonesia intends to challenges the European Union’ (EU) directive regarding renewable energy, which is allegedly unfairly because it curbs the use of plants that cause deforestation in transportation fuels in 2030.

The directive was made after EU environmentalists blamed the rapid expansion of Indonesia’ palm oil plantations for massive forest clearing, which was home to endangered tigers, orangutans and elephants in the country. The Government still insists on lobbying other Southeast Asian (ASEAN) countries to bring their cases to the World Trade Organization (WTO).

Indonesian Foreign Minister Retno Marsudi in her letter dated Jan. 14, told the ASEAN that developments in the EU undermined the interests of ASEAN palm oil producing countries and caused them to delay the increase of ASEAN-EU dialogue relations to strategic levels.

Reuters reported, there was a government document outlining Indonesia’ position on the EU policy. It is said that the method used to assess “Indirect Land Use Change”, which aims to measure the risk of unwanted carbon emissions, is not recognized internationally and does not apply in the tropics.

Indonesia considers that by suppressing palm oil production, it will provide benefits to local EU commodities such as rapeseed oil. But on the other side, Indonesia will continue to increase its efforts to maintain sales to the second largest palm oil market.

Rafael de Bustamante Tello, first advisor at the EU embassy in Jakarta, said that the EU considers RED II in accordance with EU international commitments, including its World Trade Organization (WTO) obligations.

Therefore, the European Commission will ensure “the achievement of EU renewable energy goals in line with a fair international trade regime and based on rules that are strongly maintained.

De Bustamante also said that during the EU-ASEAN ministerial meeting in Brussels last week, the two blocks decided to form a new joint working group to deal with issues relating to palm oil.

In January last year, the WTO decided to support Indonesia over several challenges to the anti-dumping duties imposed by the EU on biodiesel exports. Import duties effectively stop trading, but exporters can continue shipping to Europe around April (2018).

As informed, the biggest palm oil production, mainly produced in Indonesia and Malaysia, which produced worth of 90 percent from world total oil production, is used as a raw material for biofuels and is used in a variety of goods, from food to soap. The EU accounted for around 15 percent of Indonesia’s total palm oil exports of more than US$15 billion last year.

According to data from the Statistics Indonesia, the total area of oil palm plantations in the country around 11.9 million hectare. This figure is expected to increase to 13 million hectares by 2020.

Written by Daniel Deha, Email: theinsiderstories@gmail.com

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