Indonesia has raised strong concerns over the European Union’s Deforestation Regulation (EUDR), warning that its stringent due diligence requirements disproportionately harm smallholder farmers and threaten key national export sectors.

“The EUDR places a heavy administrative burden on Indonesia’s smallholder farmers and cooperatives who export directly to Europe,” Deputy Foreign Minister, Arif Havas Oegroseno, told a hearing with foreign affairs Commission I of the House of Representatives (DPR) on Tuesday, July 8, 2025. “It’s unrealistic to expect them to fulfill the EU’s traceability and compliance mechanisms without significant support.”

Under the EUDR, products such as palm oil, cocoa, rubber, and coffee must be proven free from deforestation after December 31, 2020. Failure to comply could result in exclusion from the EU market − a scenario that would severely affect Indonesia’s rural economies.

Havas noted that some of Indonesia’s top export commodities, like cocoa and palm oil, are already deeply embedded in global supply chains. “For cocoa, 60 percent of our supply comes from imports due to crop disease in West Africa. If EU rules require full traceability of this mixed-origin input, it’s nearly impossible for exporters to comply,” he said.

He emphasized that the regulation undermines progress made by local cooperatives and small businesses in building sustainable supply chains. “We’re not against sustainability − but these rules were crafted without input from the producers most affected.”

Indonesia has responded diplomatically. During the recent BRICS Summit, the country managed to insert language into the Leaders’ Declaration opposing the EUDR.

“In paragraph 88, BRICS explicitly rejected EU’s deforestation regulation. In paragraph 68, we also pushed for a global standard for sustainable vegetable oils based on our own terms,” Havas said.

He argued that EUDR is just one example of a broader trend where developing countries are subjected to shifting, one-sided standards that disrupt trade. “We need to move beyond always listening to what Europe dictates. As a major market force, we have the right to shape sustainability standards ourselves.”

His remarks reflect growing frustration among Global South exporters who view the EUDR as a non-tariff trade barrier disguised as an environmental policy.

Beyond policy objections, Indonesia is also exploring structural trade alternatives.

“We must stop relying solely on traditional markets. In North Africa, for example, we’re investing in fertilizer factories to leverage their EU and intra-African trade agreements. That’s a smarter way to access larger markets at zero percent tariffs,” he said.

He added that lessons from Germany also revealed weaknesses in Indonesia’s export strategy.

“We rank fifth among Asian exporters in Germany, the EU, and even the U.S. Why? Because we only export 2 out of 10 key products demanded in those markets. Countries like Vietnam and Malaysia export 7 or 8. That has to change.”

Havas stressed that Indonesia must claim its place in shaping global standards. “We can’t just follow EU rules that don’t reflect our realities. As a major producer and emerging market power, Indonesia has every right to define its own sustainability benchmarks.”