Nonetheless, the zero-tariff rate on Indonesian palm oil has drawn criticism in campaigning circles.
Under this agreement, palm oil from Indonesia will qualify for zero tariffs within a specified quota. Although EU tariffs on all palm oil imports can reach up to 12.8%, much of Indonesia’s palm oil shipments already benefit from a 0% tariff.
The EU’s Comprehensive Economic Partnership Agreement (CEPA), announced on 23 September, includes a “protocol” concerning palm oil, designed to enhance the trade of sustainable palm oil.
The EU stated, “It does so by establishing a platform for dialogue, including on regulatory developments relevant to the palm oil sector, and creating a framework for closer collaboration in sustainability-focused areas of palm oil production.”
In response to the agreement, Eddy Martono, chairman of the Indonesian Palm Oil Association (GAPKI), expressed optimism but raised concerns regarding the EU’s planned deforestation regulations, or EUDR.
“The IEU-CEPA is good news but if the EUDR cannot be fulfilled, then zero tariffs are useless. Our exports will still be hampered,” Martono stated.
In a separate announcement that same day, the European Commission indicated it would propose another delay to EUDR implementation.
The regulations, originally scheduled for December implementation, have now faced another postponement.
Under EUDR, companies marketing products like cocoa, coffee, and palm oil, as well as related foods in the EU, must demonstrate that their supply chains are free from deforestation-related impacts.
Initially announced in 2021, EUDR was to take effect on 30 December this year; however, the Commission encountered pressure from segments of the food industry to extend the deadline. As a result, Brussels agreed to a one-year delay last December.
IT issues have prompted the Commission to propose yet another one-year postponement.
Fern, an NGO advocating for forest protection and the rights of forest communities, criticized the deal between the EU and Indonesia, along with the expected EUDR delay.
“The deal reinforces an extractive model which has already caused immense harm to Indonesia’s forests,” stated Fern campaigner Perrine Fournier. “It offers no tangible benefits to those who have historically suffered from trade liberalization – namely, indigenous communities, smallholders, and workers. Instead, it consolidates the grip corporations hold over Indonesia’s forests.”
Fellow Fern campaigner Nicole Polsterer added, “Regardless of any IT issues, over the past year, we’ve seen a persistent effort to derail the EUDR. This reflects a broader conflict: between those advocating for environmental protection and those driven by narrow self-interest to destroy it.”
In July, Cadbury’s parent company, Mondelez International, advocated for a further EUDR delay, asserting that the rules must be “workable” in practice.
Conversely, a letter co-signed by competitors Nestlé and Ferrero urged the Commission to ensure “the full preservation and swift, ambitious implementation” of EUDR.
The EU primarily exports dairy and other animal products to Indonesia, with EU agri-food exports to the country estimated at €1bn ($1.18bn) in 2024. Indonesia, in turn, exports palm oil, cocoa, and coffee to the EU.
Farm Europe, a regional network of farming organizations, including the French farming federation FNSEA and Italian farming body Coldiretti, noted that potential export opportunities in Indonesia are “rather limited.”
“The main expected benefit is from Indonesian palm oil exports which will enjoy tariff-free status under a tariff-rate quota (TRQ) and a 3% tariff outside this quota. This is the primary agricultural export from Indonesia. However, for European exports, the impact remains minimal. Indonesia mainly imports soybeans, beef, dairy, wheat, and rice to address domestic shortfalls,” Farm Europe stated.
“The EU will face intense competition from Brazil, Australia, and the US in beef; New Zealand in dairy; and Russia and the US in wheat. The EU does not export soybeans and cannot compete with Southeast Asia in rice.”
