On 28 November 2022, a joint letter from Indonesia and Brazil, addressed to the chairs of the EU Council, the Commission, and the Presidency, was sent to the WTO Committee on Agriculture. It expressed “serious concerns” regarding the EU's legislative proposal on deforestation. The joint letter states: “While we agree that the fight against climate change and the preservation and sustainable management of forests are urgent tasks, we regret that the EU has chosen to develop unilateral legislation rather than international engagement to address these shared objectives, which are reflected in the Paris Agreement and the Sustainable Development Goals that we have all signed up to.”
In the letter, Indonesia and Brazil jointly urge the EU to “consider further consultations with third countries, particularly developing timber-producing countries, before the final approval of the proposed legislation.” Indonesia and Brazil also argue that “some of the concerns of developing countries, which they raised during formal public consultations on the proposed legislation, have unfortunately not been given sufficient attention.”
Indonesia and Brazil express particular concern about the country-benchmarking criteria and the benchmarking system, which they claim is “inherently discriminatory and punitive.” They point out that “it is likely to create trade distortions and diplomatic tensions without delivering benefits for the environment” and that “it imposes additional control measures, creates reputation risks for companies, and is likely to penalise producers in developing countries, especially smallholders and small and medium-sized enterprises.”
Indonesia argues that the EU is “moving the goalposts” with new requirements for timber
An article published on 10 November by the independent environmental news service Mongabay cites Indonesian government sources expressing concerns about how the new EU regulation on deforestation prevention will affect timber licensing procedures established under existing FLEGT rules. Under FLEGT rules, timber certified by the Indonesian national forest certification system, SVLK, is recognised as fully compliant with legally harvested timber standards under EUTR rules, and therefore EU operators are not required to conduct additional due diligence.
This “green lane” advantage under EUTR is one of the elements of the EU’s commitments under Article 13 of the Voluntary Partnership Agreement (VPA) signed between the EU and Indonesia in 2014, whereby the EU “promotes a favourable position in the Union market” for FLEGT (Forest Law Enforcement, Governance and Trade) licensed timber from Indonesia. Mongabay cites the Indonesian Ambassador to Germany, Arif Havas Oegroseno, saying that the process for Indonesian timber exporters to meet SVLK requirements has been difficult and that critics of the system may now feel justified in opposing it. “There are some people who didn’t agree with it, [they] will say: ‘Look, the government has been tricked by the EU, so now they have a new standard. Why do we have to comply with SVLK if there are new due diligence standards?’”
According to Mongabay, Arif Oegroseno called the EU’s policy shift a “classic case of moving the goalposts” and a “violation of [FLEGT VPA] commitments.” Arif Oegroseno indicated that the European Union “claims it adopts and recognises the FLEGT VPA, but at the same time introduces a new standard.” The Indonesian Ambassador to Germany suggested that if the European Union now claims that FLEGT-licensed timber harvesting from Indonesia is legal but not sustainable, then the EU should “sit down with us again to renegotiate the agreement.”
Mongabay also quotes the ambassador saying that “the EU’s failure to sufficiently engage with Indonesia could undermine its credibility.” The Mongabay article also quotes Adrianus Eryan, Head of the Forestry and Land Division at the Jakarta-based Indonesian Center for Environmental Law (ICEL), who believes the Deforestation Regulation creates “a new trade barrier.” “It has the potential to hinder VPA implementation,” Adrianus Eryan stated to Mongabay.
“The FLEGT VPA is like a toll road through which Indonesian timber products can enter the EU market. If the EU’s deforestation bill is implemented, there will be a new checkpoint on the toll road. As a result, the process will be longer.” A. Eryan spoke with Mongabay about the possibility of Indonesia filing a WTO complaint regarding the new Deforestation Regulation, noting that this “would be a last resort, given that under the agreement on timber legality, Indonesia and the EU must first resolve any dispute bilaterally.”
A. Eryan suggested to Mongabay that this matter should be submitted to the Joint Implementation Committee, which oversees the VPA. “If that also fails after two months, then the parties may request the mediation of third parties, including the WTO,” the Indonesian Center for Environmental Law division head emphasised.
In an article from 14 November 2022, Mongabay suggested a potential roadmap for bridging the gap between Indonesia’s market aspirations for FLEGT-licensed timber and the EU’s new requirements for deforestation-free products.
Mongabay notes that in 2021, the Indonesian government had already begun the process of transforming SVLK into a mechanism for supplying sustainable timber rather than just a legality verification system. Last year, the Indonesian Minister of Environment and Forestry issued a decree changing the name of the system from the “Indonesian Timber Legality Verification System” to the “Indonesian Sustainability and Legality Verification System,” while still using the acronym SVLK.
Mongabay cites the Ministry of Forestry’s Director General for Sustainable Forest Management, Agus Justianto, saying that since the new regulation was issued, the ministry has prepared new guidelines to ensure that SVLK covers both legality and sustainability aspects.
According to Agus Justianto, as quoted by Mongabay, “The rebranding of SVLK reaffirms Indonesia’s commitment to striving for sustainable forest management and supplying the market with legally harvested and sustainable timber and forest products.”
Mongabay also cites the Head of the Indonesian Ministry’s Directorate of Forest Product Export-Import, Sigit Pramono, who said that the new SVLK was created not only to develop the national timber industry but also to strengthen sustainability components to better align with the EU regulation on preventing deforestation. “We will not issue SVLK certificates if they [timber producers] carry out deforestation,” S. Pramono informed Mongabay.
Sigit Pramono told Mongabay that the European Union’s requirement for timber producers to provide geographical coordinates for their land plots would be included in the new SVLK guidelines. He added that the new SVLK would also verify the sustainability aspect of a producer’s operations. In the old version of SVLK, which included a requirement for producers to harvest timber sustainably, there was no verification process. Timber producers only had to submit their sustainable operation plans to the government, directorate head Sigit Pramono told Mongabay.
The new SVLK includes a verification process to ensure that sustainability plans are actually implemented, according to what S. Pramono said, as reported by Mongabay. By strengthening the sustainability aspects of SVLK, the Indonesian government hopes that Indonesian timber will not have to undergo a lengthy due diligence process before it can be placed on the European market, noted Sigit Pramono.
Mongabay indicates that as a result of the new SVLK, Indonesia could be classified as a low-risk country regarding deforestation under the benchmarking system to be established by the EU. This would mean that EU operators could apply “simplified due diligence” when placing Indonesian timber on the EU market, and EU competent authorities would perform fewer checks on Indonesian timber.