Individual report
PRESIDENT UNIVERSITY
Reyhan Alexei Wongso
Globalization and International Political Economy
Conflict with interdependence: Europe Union & Indonesia
Individual report
Contents
Introduction ............................................................................................................................................................. 3
Actor and their roles ................................................................................................................................................ 4
Indonesia .............................................................................................................................................................. 4
Europe Union ....................................................................................................................................................... 4
Environment organization .................................................................................................................................... 4
Palm oil company & Businessman ...................................................................................................................... 4
Conflict .................................................................................................................................................................... 5
Analysis & Process .................................................................................................................................................. 6
Result & Conclusion................................................................................................................................................ 9
References ............................................................................................................................................................ 10
Individual report
Introduction
Every country has its competitive advantage to create/ produce something with econom ic value,
to maximize their potential and efficiency usually country will focus to produce a massive number of
commodities to lower the production cost. As the higher the n umber of production, the cheaper the
cost. On the other hand, the development of technology creates a situation where one commodity can
be used as a substitute. Then, with the self-interest between each actor, conflict can’t be avoided.
Commodity travels and trade between each nation and cross borders in many different countries as
the result of the effects from globalization, palm oil known as crude palm oil (CPO) has a wide range
of uses and spans several industries as the raw material that greatly impact the global market. Supply
and demand from palm oil impact the product itself in food, consumer items, animal feed , and biofuels
that have the potential to substitute oil. It becomes valuable in the world because of the specific
requirement for the plant to grow, such as sunlight and much water. Befor e it is used in lubricants
industrial, candle making but today used in everything from food products, detergent to cosmetics.
The cheap price and variative form of palm oil make its high demand and use in many different
countries leading to interdependence since it needs specific requirements. In our group presentations,
we focused on the conflict between the European Union and Indonesia
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Actor and their roles
Indonesia
As the country that produced a massive amount of palm oil commodity, Indonesia exported it to Europe
as raw material. The policy or any action regulation about palm oil from Europe an Union will impact
Indonesia. Proposition demand on Europe reaches 5,74 million ton for palm oil product, Policy from
European Union that disadvantage Indonesia as the exported country will push Indonesia to take
countermeasures.
Europe Union
Europe Union is an International organization with 27 European countr ies, with the main purpose to
create economic and political integration. Europe Union as an actor creates a campaign and policy that
impact palm oil. The campaign about “free palm oil” and Red ii to support the environment. (the overall
EU target for Renewable Energy Sources consumption by 2030 has been raised to 32%.) – EU science
hub
Environment organization
The main purpose of the environmental organization to protect and actively promoting campaigns about
environmental issues. This condition leads to this non-government organization to support the policy of
the European Union since the data from the EU shows Absolut ILUC factor palm oil as 231 gCO2e per MJ
consider as high risk and there is also another factor such as deforestation issue due to palm oil.
Palm oil company & Businessman
The main purpose of the company is stable profit and revenue, action from EU challenge
palm oil company & businessman that used palm oil. The government in Indonesia support and also
take priority of the issue because palm oil help reduce the poverty number and participate in the GDP
growth
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Conflict
Conflict starts when the action takes by the European Union to reduce the use of palm oil in Europe
is a challenge to Indonesia. Deforestation issues are stated as the main concern of the free palm oil
campaign. The RED II also start to be effective in 2021 create a significant and challenging outcome
in the palm oil industry, the main agenda item for the EU greens is climate change. Palm oil is not
banned right a moment but Indonesia as one of the export countries feel unfair for the action, and
try to find a solution. Indirect Land Use Change (ILUC) classifies palm oil as high-risk vegetable oil.
Then with the data collected, it will be discussed more at analysis
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Analysis & Process
In the Analysis, I will show how it connects between each other with the specific
information and data. The linkages with examples help to reach an understanding of the
issues. By divided into 3 part of the discussion. First, connection deforestation problem that
leads to global emission and damages the environment from forest and land fires.to protect
the environment, the government in Indonesia create a system about good corporate
governance (GCG) as well as company social responsibility (CSR). A company with a global
business with good GCG and active with CSR will be a good player to support the government
to achieve welfare for the citizen. Deforestation is not only responsible for the palm oil
business, there is some factor need to be considered. Therefore, we need to take a look at the
causes of forest and land Fires that is the source of negative impact on the endangered animal
and contribute to global emission. Second, the campaign of palm oil-free and EU market. The
last is how global agreement connected to a domestic affair in Indonesia.
Forest and Land Fires
In every cased of forest and land fires, almost of it happened during the dry season. The
percentage and likelihood increase significantly when a long dry season (El Nino) happened in
Indonesia, lack of technology and human resource also contribute to this effect. Since Europe
people have better technology and high awareness about the environment. The demand in a
land not only comes from palm oil and by the data shows that place with developing a plan of
palm oil have a lower area in the forest and land fires.
The effect of deforestation in
Indonesia also is not fully
responsible by CPO, based on data of
kebakaran hutan it’s also influenced
by the demand of land since the
Jakarta at 6 positions and the place is
not necessary at Borneo or Sumatera
but also in another region. It is true
that the cheapest cost to deforestation
is to burn the forest but, in this case,
not all deforestation is caused by
CPO business.
http://sipongi.menlhk.go.id/pdf/luas_kebakaran
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Campaign to support “palm oil-free”
Deforestation indeed happens, and high awareness of the environment is a good thing
for our Earth, but the exaggerated campaign to protect the environment and Orangutan is really
strange. The Deforestation issues aim most at Borneo while other locations in Europe also
doing the same deforestation with a more high number. It is a kind of political strategy to
protect the global market with EU commodities, there are rapeseed oil, sunflower oil, and
soybean oil. This argument also supports by the RSPO label or the certification needed to
ensure the product comes with handle the environment well. It is like the cover to give a bad
perspective to a consumer about palm oil. EU threat for Indonesia CPO with a step, creating
barriers of import of CPO in the biodiesel program in Europe with a deforestation reason. The
recommendation about this step is to announce in pleno parlement of Europe and start to create
a tax for deforestation and have to create a certification when CPO enter to EU market. Gapki
(Gabungan pengusaha Kelapa sawit Indonesia) also feel to be discriminative due to the
deforestation not only happened in one specific region, Indonesia but also in many places due
to the demand for land and the increasing number of populations. This action from the EU leads
to the reason that to protect rso,sfo Market, and the oil market. If we see the embodied
deforestation EU reach to 54% while Indonesia not pass than 2%.
The campaign of this “free palm oil” also get support from animal and nature lovers and got
the attention of WWF, produce a question is it really to protect the environment or there is
personal interest?
Palm oil impact to Europe Union
The increasing demand for Nabati oil in Europe shows that there is a competition between oil
commodities. 3 main nabati oil are crude palm oil (CPO), rapeseed oil (RSO), and sunflower
oil (sfo). Higher competition, between commodity, lead to EU action to create anti-palm oil
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However, the EU cant fully eradicated palm oil in the European market due to the
interdependence of this cheap and useful commodity. The data shows that palm oil still
contributes to the EU economy such as increasing job opportunities and government revenue.
It can be seen that’s the reason the EU can't fully ban palm oil from Europe. Another reason
the supply of oil from Europe can’t fulfill the demand and lead to food insecurity since the
rapeseed oil, not enough. (Rapeseed oil tend to use as cooking oil)
Another name of palm oil such as Vegetable Oil, Vegetable Fat, Palm Kernel, Palm
Kernel Oil, Palm Fruit Oil, Palmate, Palmitate, Palmolein, Glyceryl, Stearate, Stearic
Acid, Elaeis Guineensis, Palmitic Acid, Palm Stearine, Palmitoyl Oxostearamide,
Palmitoyl Tetrapeptide-3, Sodium Laureth Sulfate, Sodium Lauryl Sulfate, Sodium
Kernelate, Sodium Palm Kernelate, Sodium Lauryl Lactylate/Sulphate, Hydrated Palm
Glycerides, Ethyl Palmitate, Octyl Palmitate, Palmitoyl Alcohol
EU with their policy success winning the heart and mind of environment al activists
and international organizations. With intellectual, they have data about the
disadvantage of palm oil and include palm oil to high risk to the environment. One of
the European parliament, Bas Eickhout stated that palm oil isn’t sustainable. With
means, cant is used to comply as renewable energy but still can be imported for other
purposes.
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Result & Conclusion
Indonesia response
Indonesia can’t accept the policy from the EU. Steps that Indonesia will do to take grievances
to the World Trade Organization. 3P policy (People, planet, and profit) in Indonesia to create
a sustainable environment also to collaborate in the environment campaign. Next step, omnibus
law one of indirect solution. With omnibus law, the foreign direct investment will come with
knowledge. The government hopes with technology palm oil can be more efficient, lower
emission, and can be accepted. Since palm oil contributes to GDP and developing areas in
Indonesia. The bad scenario will be a trade war with the product from the EU such as airbus.
Palm oil participates in global emission and deforestation in Indonesia. However, the number
and high deforestation can’t be fully assuming as the increasing demand for palm oil due to the
palm oil area less to the happened forest and land fires than another area without palm oil
plantation. Campaign of palm oil-free is not fully for environmental, by the data shows that
Europe also does the deforestation because of increasing population, even take 54% embodied
deforestation while Indonesia takes around 2. The action starts to show that environmental
issues are used as a guide to protecting the market of the EU. As a form of the environment,
Indonesia also has a 3P principle (People, Planet, Profit) about palm oil. The EU uses red2
policies to protect their markets, which makes it difficult for Indonesia to export and
influence palm oil prices to fall, Lead to potentially a trade war. Now actors are using
more creative ways to protect domestic power. Because there is interdependence, an
actor cannot perform direct action that makes a loss for another country because it has
the potential to cause loss- lose situation.
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References
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