Unraveling disputes between Indonesia and the European Union on Indonesian palm oil: from environmental issues to national dignity

Indonesia has been the largest palm-oil producer in the world since 2006. The country’s palm-oil products are exported globally, including to member states of the European Union. In recent years, European countries have implemented increasingly stringent regulations on palm-oil imports, including from Indonesia, through policies such as the Renewable Energy Directive (RED) II. This study qualitatively analyzes Indonesia’s responses to these policies. We collected data using in-depth interviews and focus-group discussions with government policymakers, activists from nongovernmental organizations, and oil-palm smallholders and entrepreneurs in Indonesia. We demonstrate that the European Union policy has experienced a shift in recent years which has made it more difficult for Indonesian palm-oil products to enter European markets. The Indonesian government views these policies as an environmental issue, a form of trade war, and a challenge to the sovereignty and dignity of the nation. The government’s responses have included improvements to cultivation and business practices, demands for broader and more inclusive policies, and “resistance,” for example, by referring the case to the World Trade Organization.