JAKARTA – Indonesia’s palm oil industries have been recently facing mounting pressures at the global market. The Indonesian Palm Oil Association (GAPKI) urged the government to strengthen palm oil trade diplomacy to resolve the trade problems caused by rising tariff and non-tariff barriers imposed by a number of countries.

Increasing trade diplomacy is seen necessary to maintain the stability of Indonesia’s top commodities amid rising trend of global protectionism.

Tariff and Non-Tariff barriers threaten palm exports

GAPKI Chairman Eddy Martono has stated that the Indonesian government should make trade diplomacy as a strategic priority. “It’s because the facts that there is a tendency of many countries’ international trade policies toward limiting access to foreign products, including the palm oil from Indonesia,” Eddy said.

The barriers are not only tariff barriers, but also non-tariff regulations, such as:

• Sustainability standard based on environment
• Deforestation regulations
• Additional requirements of certifications
• Technical stipulations that tighten the market access

Such condition, if not anticipated with strong economic diplomacy, is potential to reduce the export market share of Indonesia at the global market.

Sustainability Issue becomes strategic challenge

Besides protectionism, sustainability issues are also a major challenge in the global palm oil trade. But actually, the Indonesian palm oil industry has adopted various sustainable practices to increase its competitiveness in the international market.

Therefore, palm oil trade diplomacy should not only focus on tariff negotiations, but also on building a more objective and fair global narrative for the national palm oil industry.

As a concrete step, GAPKI has signed a number of memorandums of understanding with several associations in major importing countries. This collaboration aims to:

• Ensure long-term demand security
• Reduce potential regulatory barriers
• Increase business-to-business (B2B) collaboration
• Align perceptions regarding sustainability standards

This strategy is part of strengthening trade diplomacy based on long-term partnerships.

In line with national economic diplomacy

The GAPKI’s steps are in line with the strategy of economic diplomacy strengthened by President Prabowo Subianto’s administration.

The government continues to open export market access for various leading Indonesian commodities, including palm oil, cocoa, coffee, tropical fruits, and spices.

Collaboration between the government and businesses is considered key to successful trade diplomacy. This synergy enables industry interests to be accommodated in every international trade negotiation.

RI–USA agreement strengthens export competitiveness

One concrete example of the results of trade diplomacy is the reciprocal agreement between Indonesia and the United States of America (USA).

Economic Coordinating Minister Airlangga Hartarto announced that 173 tariff lines from 53 groups of Indonesian agricultural commodities now enjoy zero percent import duty facilities in the USA market.

Overall, 1,819 Indonesian tariff lines, covering agricultural and industrial products, enjoy duty-free access.

The commodities benefiting from the agreement include:

• Palm oil and its derivatives
• Palm kernel oil
• Cocoa and its processed products
• Coffee and tea
• Spices such as pepper, nutmeg, cloves, cinnamon, cardamom, ginger, and turmeric
• Tropical fruits such as bananas, mangoes, pineapples, durian, and papaya
• Cassava- and sago-based products, and potassium mineral fertilizers

This agreement strengthens Indonesia’s export position amidst increasingly competitive global trade.

Palm trade diplomacy supports economic stability

As one of Indonesia’s biggest contributors of foreign exchange, the palm oil plays a strategic role in supporting the national economy and the welfare of millions of farmers.

Therefore, strengthening palm oil trade diplomacy is not merely an effort to maintain market share, but also a strategic step to maintain the sustainability of the country’s economic growth.

With a targeted diplomatic approach, Indonesia is expected to be able to address global challenges while strengthening its bargaining position in the international market. (*)