Press Release – EU delays to Indonesian timber agreement imperil 18 million livelihoods

JAKARTA – Free trade NGO World Growth says that delays by the EU to finalise a bilateral illegal logging agreement with Indonesia is putting more than 18 million livelihoods at stake.  In a new report published today the group says Indonesia is entitled to consider economic retaliation.

“Indonesia entered an agreement with the EU to demonstrate its timber exports to the EU are legal as part of its action against illegal logging,” said World Growth chairman Ambassador Alan Oxley. “Under this ‘Voluntary Partnership Agreement’ (VPA) Indonesia has complied with EU requirements at great expense. However, the EU has stalled the VPA at the final stage and Indonesian forestry officials are now wondering why.”

Ambassador Oxley said the EU appears to be holding up the agreement until a more restrictive EU Timber Regulation comes into effect in March 2013.   This new law will restrict timber imports from countries without a VPA agreement.  The new law will require Indonesian exports to meet another set of rules in addition to the VPA requirements.

“The EU’s requirements for the VPA impose significant costs on businesses,” said Ambassador Oxley. “The EU’s own research says that Indonesia’s timber sector will lose more than 12 per cent in value-added. The EU has also stated that getting Indonesia’s many small timber enterprises ready is difficult. The new rules and delays to the VPA will raise costs for these businesses and put exports in limbo.”

“Much is at stake. Indonesia’s timber and paper product exports to the EU earned nearly USD 1.3 billion in 2011.  More than 18 million people work in small, family-run timber businesses in Indonesia.”

Ambassador Oxley said that the EU’s formal justification for the measures is environmental protection.  He also said it is clear that the measures protect European businesses that cannot compete with imports from more efficient Indonesian producers.

“EU companies have campaigned to block imports of Indonesian timber and paper. They have allied with NGOs like WWF and Greenpeace, which are pressuring Western companies to boycott Indonesian products.  Last week’s announcement by Disney to stop buying Indonesian paper is a case in point.”

Ambassador Oxley said the European attitude appears to ignore Indonesia’s action on illegal logging, which has fallen by as much as 75 per cent according to one estimate.

Ambassador Oxley said that the new policies may breach global trade laws, and that Indonesia would be entitled to consider economic retaliation against imports from Europe if its concerns are ignored.

“EU President Barroso cancelled a visit to Indonesia last week due to the EU’s has fiscal problems.  But many European businesses are benefitting from Indonesia’s strong growth, and the EU should make trade with Indonesia a priority — it should not be leaving one of Indonesia’s major export industries in limbo.”

Read the report at: http://worldgrowth.org/site/wp-content/uploads/2012/11/WG_FLEGT_2012_final.pdf

Contact World Growth at media@worldgrowth.org or +61 9614 8022

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