Enviro News Asia, Jakarta – Indonesia’s Deputy Foreign Minister Arif Havas Oegroseno has stated that the European Union Deforestation Regulation (EUDR) directly affects smallholder farmers of export commodities such as cocoa, rubber, coffee, and palm oil.
These small-scale farmers will face significant difficulties exporting their products to European markets.
The EUDR requires companies to ensure that the products they sell in the European Union do not originate from land that was deforested after December 31, 2020.
It also emphasizes the importance of transparency and product traceability. Companies must prove the origin of their products and verify that they are not sourced from deforested land.
This means they must use digital tracking and geolocation systems to comply with the regulation.
“As a result, smallholder farmers—particularly those producing cocoa, rubber, coffee, and palm oil—will be severely affected,” Deputy Foreign Minister Arif Havas Oegroseno said during a stakeholder forum held in Jakarta on Thursday (July 3, 2025).
Havas also highlighted a new proposal that grants exemptions for European farmers under the label of “negligible risk” of deforestation—exemptions that do not apply to farmers outside Europe. “Besides harming smallholder farmers, this draft provision is highly discriminatory,” Havas stated.
Indonesia is expected to raise this issue with a coalition of 18 other producer countries. Additionally, the European Union is being urged to provide a written explanation regarding the legal basis and methodology of its risk classification, its consistency with World Trade Organization (WTO) rules, and recognition of national legality systems.
Although no final decision has been made, Havas stressed that a legal challenge at the WTO could be strongly pursued by non-European countries if the discriminatory exemption is upheld.
The Indonesian government has formally conveyed its concerns during a bilateral dialogue with the European Union in Brussels on June 4, 2025, and is currently awaiting a written response from the EU.
The possibility of a new WTO dispute between Indonesia and the EU coincides with a ruling by the European Union General Court that upholds anti-dumping tariffs on Indonesian-origin fatty acids.
This adds to a growing list of WTO trade disputes between the two parties related to Indonesia’s palm oil exports.
The EU’s anti-dumping duties on palm-based fatty acids from Indonesia—up to 46.4%—were upheld by the EU court earlier this week. These measures are currently being reviewed by a WTO panel.
The case is considered unusual because, even though the European industry withdrew its request for the tariffs, the European Commission proceeded with their imposition.
At the same time, the EU’s countervailing duties on Indonesian biodiesel (ranging from 8 to 18%) remain in place and are undergoing a separate WTO review to assess their compliance with WTO subsidy rules.
Previously, in 2018, the WTO ruled that the EU’s anti-dumping tariffs on Indonesian biodiesel violated its rules.
However, the reimposition of such duties continues to strain trade relations and keeps palm oil a central issue in discussions between the two parties.
These tariff measures—alongside environmentally driven initiatives like the EUDR—have increased commercial uncertainty for Indonesia’s palm oil value chains.
The Indonesian government views both the tariffs and the proposed “negligible risk” exemption scheme as part of a pattern of discriminatory treatment.
The government continues to assert that both legal action and diplomatic resolution remain open avenues. (*)
