Assessing the impact of limiting Indonesian palm oil exports to the European Union (original) (raw)

Journal of Economic Structures

Indonesian exports reached US$ 168.8 billion in 2017, an increase of 16.8% compared to the previous year (UN Comtrade 2018). One of the largest contributors to these exports is palm oil, amounting to 13.6% in 2017. Indonesian palm oil exports in 2017 reached US$ 22.97 billion, an increase of 26% compared to the value in 2016 (UN Comtrade 2018). In 2017, Indonesia exported approximately 29 million tons of palm oil, with the largest destination countries including India, with a market share of 25.37%; followed by the European Union, with 14.35%; and China, with 12.39% (UN Comtrade 2018). Different from India and China, which directly consumed its palm oil, European market besides consumed directly it also serve as a trade hub for other countries in the region (Rifin 2013). For a long time, countries of the European Union, particularly the Netherlands, have been the major market destination for Indonesian palm oil as well as being countries that connect Indonesia and other European countries. However, there have been many instances in the last several years where oil imports, mainly from Indonesia, have been hindered from entering European countries. Several issues, including health, environment, and animal protection, have been considered to hamper the entrance of Indonesian palm oil to Europe. This is confirmed by the Report on Palm Oil and Deforestation on Rainforests, which stated that palm oil is a very large problem related to the issue of corruption, child labor, violation of human rights, omission of the rights of indigenous people, and a trigger to deforestation and habitat