ON 16 May 2023 the European Union (EU) officially adopted new rules that will help the trading bloc reduce its contribution to global deforestation. According to the official website of the EU Parliament as published in the European Council news on Friday (19 May 2023) it is stated that “the new regulation aims to ensure that the EU’s consumption and trade of these products does not contribute to forest destruction or deforestation”.
The definition of deforestation in the EU’s deforestation law is in line with the definition of the Food and Agriculture Organization (FAO), the conversion of forest to agricultural use, whether human-induced or not. Forest degradation is defined as structural changes to forest cover, taking the form of conversion of primary forests into plantation forests and planted forests or other wooded land.
Meanwhile, forest degradation is defined as a change in the structure of forest cover, in the form of changes in plantations in primary forest into artificial forests that are deliberately planted with something, or forests with trees for timber production that are managed by humans.
The EU’s policy conflicts with multilateral rules
EUDR regulations are clearly not in line with the principles and rules of the World Trade Organization (WTO). It is also contrary to the spirit of cooperation between world countries to address the issue of climate change both within the framework of sustainable development (SDGs), the Paris Agreement and COP.
The EU’s due diligence policy is unbalanced and not based on commitments that have been agreed globally (especially the Paris Agreement on Climate Change). We have seen that these policies tend to be restrictive and potentially inconsistent with international trade rules.
While the deforestation conflict is heating up, Indonesia and the European Union have just entered the 14th round of negotiations for a trade agreement or the Indonesia-European Union Comprehensive Economic Partnership Agreement (IEU CEPA). Throughout 2022, the total trade between Indonesia and the European Union was recorded at US$33.2 billion.
What is our attitude towards the EU law? To be honest, opposing the law will only make the Indonesian government lose opportunities to improve forest management and sustainability, which are currently received positive attention from its partners including the EU.
The risk of rejecting the law
First, let’s look at it from a challenge standpoint. Eight agricultural commodities and their derivatives, namely palm oil, beef, cocoa, coffee, soy, wood, rubber, charcoal, and printing paper, will only be allowed into the EU market if the product supplier succeeds in issuing ”a due diligence statement”.
The statement confirms the origin of the product, which may not be from forest cleared land. The supplier or importer must also verify that the product complies with relevant laws in the country of origin, including respecting human rights, and safeguarding the rights of indigenous peoples affected by the production of the goods, if any.
What advantages might we be able to take with the new law? Indonesia could involve the European Union in constructive negotiations regarding the utilization of the Forest Partnership program that has been established by the EU Commission team.
The Forest Partnership Program was established to help partner countries strengthen their forest governance and create socio-economic opportunities for people through sustainable value chains. The EU Commission has pledged 1 billion Euros (US$1.1 billion) to facilitate the protection, restoration and sustainable management of forests in partner countries.
On the positive side, this cooperation program will be designed according to the needs of each European partner country. Active, constructive engagement with the EU is crucial, especially during the transitional period before the law is fully enforced.
The EU Commission will use a benchmarking system in which determines the classification of countries, in the low risk, standard risk, or high-risk categories. This categorization was obtained based on an objective and transparent assessment. Products from low-risk countries will go through simplified due diligence procedures.
There is a way out
EU deforestation laws will also impose mandatory traceability of an item using geolocation identification technology, which will reveal the location where the product was grown.
This could be negotiated with the EU in a partnership program, by discussing how best to assist smallholder farmers using smartphones and providing geotags, or data positioning information, on their farms. This program can help small farmers in Indonesia become stronger organizationally, in addition to building partnerships while enhancing their skills.
Empowerment can be obtained through training which they certainly need. For example, training in managing data so that its source can be traced. However, there will be an enormous amount of data that must be collected in order to pass the due diligence process.
As is well known, blockchain technology and traceability have started to be used in Indonesia with several coffee companies and cooperatives. However, not many Indonesian entrepreneurs and decision makers understand blockchain technology and traceability.
“With the application of blockchain, it is hoped that it will gain consumer trust from all walks of life and farmers who grow coffee,” said Suryono B. Tani, founder of the Korintji Alam Farmers Cooperative (ALKO), stating that his party always maintains the quality of the beans he produces with the farmers. This statement was delivered when I was interviewed virtually, Tuesday (23 May 2023).
This traceability can improve education for farmers, provide quality to coffee and maintain the authenticity of coffee plants. So, the hope is that with this traceability coffee connoisseurs and farmers alike will benefit directly from the price of coffee. The next hope is that with better prices the farmers themselves will be better prepared to protect nature.
Is Indonesia ready?
Regardless of whether we are ready or not ready, Indonesian coffee products need to be improved in quality and quantity because the EU market has high standard requirements. Standards that apply in the EU also adjust consumer perceptions, including environmentally friendly products, organic agricultural products, and trade in products following a fair trade system.
Hopefully, blockchain technology can reduce concerns about export barriers being imposed by other countries, including the EU. Before exporting our coffee abroad, we can check both its quality and authenticity using blockchain technology, as opposed to having “due diligence” conducted by said countries.
Therefore, the price of coffee for export will not only be competitive, but also of good quality product-wise, because its authenticity has been verified.
Written by Bagas Hapsoro, coffee diplomacy activist. Indonesian Ambassador to Sweden (2016-2020), Deputy Secretary-General of ASEAN (2009-2012), Indonesian Ambassador to Lebanon (2007-2009). [photo special]