Such a strategy on trade in CPO must include not only negotiations, but also the establishment of political relations, legal approaches and industry partnerships in countries that have banned the importation of Indonesian CPO.
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Kompas/Priyombodo
Palm oil fruits are displayed on Thursday (8/3) during the fourth Jakarta Food Security Summit at the Jakarta Convention Center. The event, which was organized by the Indonesian Chamber of Commerce and Industry (Kadin), was opened by Vice President Jusuf Kalla.
JAKARTA, KOMPAS – The government is urged to deploy a layered diplomatic strategy on trade in crude palm oil (CPO) and its derivatives. Such a strategy must include not only negotiations, but also the establishment of political relations, legal approaches and industry partnerships in countries that have banned the importation of Indonesian CPO.
Indonesia’s victory against the European Union in the antidumping case was an example of an effective diplomacy strategy. Indonesia’s defense against EU’s antidumping import duty imposition targeted the root of the problem, namely trade discrimination.
On Mar. 16, 2018, the EU annulled the antidumping import duty (BMAD) for Indonesian biodiesel fuel of between 8.8 percent and 23.3 percent. The annulment was done on the heels of the World Trade Organization’s Dispute Settlement Body ruling in favor of Indonesia in all six of its lawsuits against the EU.
Deputy Trade Minister Bayu Krisnamurthi told Kompas on Tuesday (20/3) that Indonesia’s defense and response through the WTO was the appropriate strategy. Indonesia mentioned trade discrimination in its defense.
Indonesia should use the wider context of the sustainable management of all plant-based oils, not just CPO. “Other plant-based oils also affect the environment. Why do they question only palm oil? This is trade discrimination, which is a strong argument for Indonesia,” said Bayu.
Indonesia is also cooperating with industries in the EU that use CPO and its derivative products. The imposition of the antidumping import duty had harmed industrial users of biodiesel, as the duty forced prices to rise. Deforestation has always been cited as a core issue in prohibiting the export of CPO and its derivative products.
Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan said the CPO productivity of independent plantations could still be increased. The average CPO production at independent plantations was only 2 tons per hectare per year. Productivity at large commercial plantations was 4.5-5 tons per hectare per year, and 4-4.5 tons per hectare per year at state-run plantations.
Kompas/Irma Tambunan
Palm oil farmers in Jambi Tulo village of Maro Sebo district, Muaro Jambi regency, transport palm oil fruits on a truck to the nearest processing plant in this Aug. 8, 2017 file photograph.
Sustainability certificate
Sawit Watch Indonesia deputy director Achmad Surambo said the government was highly reactive with respect to the CPO export ban. “It looks like we’re at war. There are no advantages in taking this attitude. It is better simply to focus on improving what’s lacking in our palm oil management and then show the proof,” he said.
According to Ahmad, it was a fact that deforestation was still common as a result of expanding oil palm plantations. Prime examples could be found in Tesso Nilo National Park and the Giam Siak Kecil Biosphere Reserve. Tesso Nilo National Park, which was originally 80,000 hectares and a habitat of Sumatran elephants, only had 20,000 hectares of forest left, as the rest had been converted into oil palm plantations.
Senior researcher Arya Hadi Dharmawan, of the Bogor Agriculture Institute’s village and agriculture development research center, said the government should be transparent about the deforestation that occurred in establishing oil palm plantations. On the other hand, the government should continue to promote its Indonesia Sustainable Palm Oil (ISPO) certificate. “We are against converting forests into oil palm plantations. However, we are not against oil palm plantations being established on the proper land. Farmers need to be trained to ensure their businesses are sustainable,” Arya said.
Indonesian Biodiversity Foundation (Kehati) executive director MS Sembiring said that he believed that the ISPO was important in advancing Indonesia’s palm oil industry and nature conservation. The ISPO policy could intervene in managing Indonesia’s palm oil and land.
Several countries remained fair amid the trade ban on CPO. Foreign Minister Retno LP Marsudi said Russia was among these fair countries. “I express my appreciation [for Russia]. We are trying to establish a free trade agreement with the Eurasian Economic Union that comprises several countries with a total population of 180 million people,” she said.
According to Retno, CPO comprised more than 50 percent of all Indonesian exports to Russia, while Indonesia contributed 80 percent of Russia’s CPO imports.
