THE EUROPEAN UNION REGULATION ON DEFORESTATION-FREE PRODUCTS : CHALLENGES AND OPPORTUNITIES FOR INDONESIA

The European Union Deforestation Regulation (EUDR), which comes into force on June 29, 2023, has significant concern in Indonesia due to its strict requirements affecting essential exports such as palm oil, cocoa, coffee, timber, rubber, soy, and beef. Articles 1,3,9,10, and 11 of the EUDR set strict compliance standards that Indonesia considers excessive, potentially limiting Indonesia’s access to the EU market. This situation poses an economic risk to millions of Indonesians whose livelihoods depend on these sectors, and the implementation deadline was delayed by one year to allow for adjustments, reflecting the difficulty of balancing environmental objectives and economic stability.

This study aims to analyze Indonesia’s opportunities and challenges as an effect of the EUDR. It primarily focuses on three main aspects: the urgency behind the EUDR contrary to the WTO Principles, the impact of the Indonesia EUDR on Indonesia’s economy, and the Indonesian government’s approach to addressing the opportunities and challenges presented by the EUDR.

This research uses a normative legal approach, using library-based research to analyze relevant regulations. It is supported by additional data from interviews with the Ministry of Foreign Affairs of the Republic of Indonesia, the Ministry of Trade of the Republic of Indonesia and the Coordinating Ministry for Economic Affairs of the Republic of Indonesia.

This study found that the EUDR poses challenges for Indonesia, including potential trade restrictions that may conflict with WTO principles and economic risk to key export sectors. However, it also presents opportunities to enhance sustainable forest management. This study recommends action for Indonesia to ensure compliance with the EUDR while minimizing the economic impact.

To address this EUDR, Indonesia should review its export restriction policy under the EUDR for potential WTO violations, encourage export diversification and sustainability in key sectors, and strengthen its monitoring, certification, and traceability systems. Additionally, Indonesia should collaborate with civil society and support smallholders in meeting the EUDR’s sustainability requirements