The European Union and Indonesia recently reached a political understanding. The agreement aims to finalise a major trade deal. For a bloc that prides itself on setting global green standards, a question comes to mind.
What does this deal with a nation holding one of the world’s highest deforestation rates mean? It suggests a new world order is taking shape. One where pragmatism and sovereignty are the name of the game.
A Long and Winding Road to Agreement
Talks for a Comprehensive Economic Partnership Agreement (CEPA) started way back in 2016. For years, they stumbled along. The EU had worries about Indonesian deforestation whilst Indonesia had its own protectionist streaks.
Yet, in a world rocked by geopolitical winds, both sides found compelling reasons to move forward. The deal is not yet final, however, the political will, spurred by global uncertainty, is now there.
The final signing is expected in the third quarter of 2025.
The EU’s push for green rules has been a major sticking point. A new European Union Deforestation Regulation (EUDR) has caused particular friction. The regulation mandates that firms prove their goods are not from deforested land. For many small farmers in Indonesia, this is a heavy load to bear. It puts them at a great drawback.
An Indonesian diplomat made it clear that other nations, like Brazil, also find the law unfair. This is not just an Indonesian complaint. It is a shared feeling across the Global South.
Sovereignty Clashes With Environmental Rules
At the heart of the matter, there is a deep disagreement.
Indonesia’s former Coordinating Minister for Economic Affairs, Airlangga Hartarto, called the EUDR "regulatory imperialism". That feeling is widespread. Jakarta wishes to use its natural wealth for its own people. A ban on nickel ore exports is a case in point.
Indonesia wants to build its own processing industry. This policy of hilirisasi, or downstreaming, aims to add value at home.
The EU saw the nickel ban as an unfair trade practice. Brussels took the case to the World Trade Organisation and won. But Indonesia appealed, effectively blocking the final ruling.
Yet, lately, there has been a change in tune. Luhut Binsar Pandjaitan, a senior Indonesian minister, stated that the EU now seems to recognise Indonesia's rights. This softening hints at the EU's bigger goals.
In the words of European Commission President Ursula von der Leyen, "when economic uncertainty meets geopolitical volatility, partners like us must come closer together."
Faced with the threat of US tariffs and a desire to de-risk from China, securing partnerships has become a top lookout for Brussels. This is the core of the new pragmatism. It is about building a network of reliable partners.
The High Ground Can Be a Lonely Place
Of course, some will say the EU should not lower its standards. They would hold that trade deals must be a tool to spread green values. The European Green Deal itself aims to make the EU a leader in worldwide climate action.
Lowering these standards for a trade deal could be seen as a step back. It could weaken the EU’s own green credentials. Some civil society groups worry the deal could harm forests and community rights.
Yet this view misses the wood for the trees. To insist on a moral high ground can be self-defeating. It can push away potential partners and may even send them towards others with fewer demands.
A senior Indonesian official once noted that dealing with China is easier because of the EU's conditionality.
Pragmatism does not mean throwing away all principles. It means finding common ground. The world is no longer a place where one bloc can dictate all the terms.
A Partnership That Is Built on Respectful Realism
The way forward lies in a partnership of mutual respect. The EU should step back from setting all the rules. Brussels must work with Indonesia to meet green goals together. This means offering more than just demands. It means giving help with technology and money.
This help can make supply chains greener. Indonesian President Prabowo Subianto has called for more European investment and tech cooperation.
The EU and Indonesia can work hand in hand. Jointly, they could set up schemes to check where goods come from. This would help small farmers meet new standards without being shut out. The final deal must also be clear. It cannot have vague clauses used to unfairly block trade.
This is a real worry for Jakarta. An Indonesian official has pointed out how past deals were not always applied fairly by all EU member states.
This agreement is more than just about trade, but about how the world will handle big problems like climate change. Will it be through top-down rules from wealthy blocs or will it be through partnerships that honour each nation’s right to grow?
The EU-Indonesia deal points to the second path. It is a path of realism, not of preaching from a pedestal. In our unstable world, it may be the only way to build a lasting and fair global order.
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