Indonesia says it wants to speed up trade talks with the European Union and within a month complete a review of trade with the United States.
“I have set a target for the vice minister to finish negotiations with 14 to 15 countries with whom we need trade deals, especially with the European Union,” President Joko “Jokowi” Widodo said beside his newly appointed vice foreign minister, Mahendra Siregar, who will be in charge of “economic diplomacy”.
Indonesia has been in talks over a free trade and investment agreement with the EU since 2016. Since then talks have been complicated by the European Commission’s decision to phase out palm oil from transport fuel by 2030 and the imposition of anti-subsidy duties on Indonesia’s biodiesel exports after concluding that palm cultivation led to excessive deforestation.
Indonesia is now the world’s third-highest greenhouse gas emitter because cleared vegetation is often burned.
The wider palm oil sector contributes around 3.5 per cent to Indonesian GDP and sustains an estimated 6 per cent of the population.
The Indonesian government in 2018 earned US$17.8 billion from exports of the oil.
Malaysia, the second-largest producer and exporter of palm oil after Indonesia, warned this week against new EU rules that could hurt its US$60-billion palm oil industry.
The EU was examining new limits on food contaminants in refined fats and oils, including palm oil, said the Malaysian industry minister, Teresa Kok.
“Our industry must be ready to anticipate any challenges to these trade impediments and, most importantly, address the issues, especially on food safety,” Kok told a palm oil conference.
The EU has imposed a limit for glycidyl esters and is due to impose a limit for 3-MCPD esters “that may have an impact on palm oil consumption in food”, Kok said.
The European Food Safety Authority has said the two contaminants raise potential health concerns.
Kok said Indonesia and Malaysia at the World Trade Organisation would challenge the EU law limiting palm oil’s use in biofuels.
Back in Jakarta, Siregar, who this year was named as Indonesia’s ambassador to the US, said it was key to retain Indonesia’s privileged trade status with the US, under the Generalised System of Preferences (GSP), which gives Indonesia reduced tariffs on about US$2 billion of exports.
The US Trade Representative’s Office said it was reviewing the GSP for Indonesia, India and Kazakhstan amid questions about compliance with services and investment criteria. The GSP with India was axed in June.
A GSP eligibility extension “could have a massive impact which could double the size of our trade with the US”, said Siregar.
The orangutan is being driven to extinction by palm oil production. Picture credit: Wikimedia