After nearly a decade of negotiations between Jakarta and Brussels, a new free trade pact will let Indonesia sell its palm oil in the EU with zero tariffs. But other obstacles are looming.
The agreement, which was finalized after years of diplomatic efforts, is expected to significantly boost Indonesia’s palm oil exports to the European Union. The EU’s current import tariffs on palm oil are set to be eliminated, allowing Indonesian producers to sell their product at more competitive prices. This could lead to increased market share for Indonesian palm oil in the EU, which is one of the world’s largest markets for the commodity.
However, industry leaders are now looking at potential regulatory and environmental hurdles that could limit the benefits of the trade deal. Environmental groups in the EU have raised concerns about the sustainability of palm oil production in Indonesia, which could lead to additional restrictions or requirements for exporters. This may require Indonesian producers to invest in more sustainable practices, which could increase production costs and affect their competitiveness in the European market.
Industry representatives have called for greater transparency and clarity from EU regulators on how these non-tariff barriers will be implemented. They argue that without clear guidelines, the potential benefits of the free trade pact may be undermined by unexpected regulatory challenges. The Indonesian government has also expressed its commitment to addressing these concerns and working with the EU to ensure that the agreement delivers the intended economic benefits to the country’s palm oil industry.