Palm Oil Harvesting/Bloomberg

Economy

Indonesia threatens to ban European goods as palm row escalates

  • share this article

Palm oil has emerged as a flashpoint in a potential trade war between the European Union and top producers Indonesia and Malaysia, which together account for about 85 per cent of global supply.

Wednesday 20, March 2019

Bloomberg) --Indonesia threatened to ban imports of goods from the European Union in retaliation for the bloc’s move to impose stricter limits on how palm oil can be used in green fuels.

Luhut Pandjaitan, Indonesia’s Coordinating Minister for Maritime Affairs, said that world’s largest palm oil producer is considering such a step to protect the interest of almost 20 million people, whose livelihood is tied to the commodity.

 The minister hinted that jets manufactured by European companies could be among the target for boycott, saying the country would require about 2,500 aircraft in the next two decades.

“There are a lot of European products that we need,” Pandjaitan said. “We have 269 million people in Indonesia. We have a big market.”

The European Commission last week restricted the types of biofuels from the vegetable oil that may be counted toward its renewable-energy goals. The proposed EU curbs have weighed on benchmark palm prices, which have fallen for five quarters in a row.

Indonesia is also planning to lodge a formal protest with the World Trade organisation if the European Union ratifies the proposal, Coordinating Minister for Economic Affairs Darmin Nasution said. Palm oil was not just an export earner for Indonesia as it was instrumental in lowering poverty and therefore meeting a key criterion of the sustainable development goals, he said.

The EU argues the new measure and palm-oil sustainability criteria are compatible with WTO rules. The new regulation is now set for a two-month scrutiny period when the bloc’s member states and the European Parliament can express objections. If none is received, the measure will be published in the EU official journal and become a law.

 

TAGS : Palm oil, EU, Malaysia, Indonesia

print this article