(General Equilibrium Model: Theory and Application in Indonesia). To support partner countries in the fight against the COVID-19 pandemic and its consequences, the EU has launched the Team Europe approach. Delegation of the European Union to Indonesia and Brunei Darussalam, Consular protection for EU citizens in Indonesia, Consular protection for EU citizens in Brunei Darussalam, No to child labour protecting childrens present and future, Team Europe response to coronavirus in Indonesia, The Strategic Compass is out: now we have to implement it, ACTION Project: EU and Hivos COVID-19 response programme strengthen community resilience in Indonesia, I-COPE Project: EU and World Vision's COVID-19 response programme enhance resilience and livelihoods of vulnerable communities in Indonesia, European Commissioner Johannes Hahn travels to South-East Asia to promote the EU as a borrower, G20: Speech by High Representative/Vice-President Josep Borrell at the session on addressing food and energy security of the Foreign Ministers meeting, G20: Speech by High Representative/Vice-President Josep Borrell at the session on strengthening multilateralism of the Foreign Ministers meeting, EU and Brunei explore use of construction design standards, Eurocodes, Multistakeholderism: the path to human-centred digital connectivity, EU-Indonesia Cooperation Publication 2022-2023: Stronger Together, EU-funded project: Indonesia COVID-19 Pandemic Emergency Responses (I-COPE), EU Ambassador Lecture "The War in Ukraine: What Does It Mean for Europe and Beyond", Launch of the EU-Indonesia Cooperation Publication 2022-2023, #FieldVision: The View from the Middle East: Improving the safety and security of the Palestinian people and paving the way for a two state solution, one step at a time, "It is easy to break down and destroy. Assessing the impact of limiting Indonesian palm oil exports to the European Union. Problems viewing this page? At a micro-level, Rist et al. Indonesian palm oil exports in 2017 reached US$ 22.97 billion, an increase of 26% compared to the value in 2016 (UN Comtrade 2018). Initially, 3 million were allocated for emergency measures, followed by a further 20 million earmarked for humanitarian assistance, which included temporary shelters, blankets, food, water and medical assistance. This is consistent with research by the Ministry of Industry (2018) and the findings of the previous multiplier analysis. Aquaculture Econ Manag 13:5369, Article Various sources were used to collect data for the analysis. The EU continues to work in the province, primarily in the area of climate change. The EU sees Indonesia as well as ASEAN as major partners in the EUs Strategy for Cooperation in the Indo-Pacific region, based on common interests and like-mindedness in our respective approaches to regional and multilateral questions. Australian National University (ANU), Edwards R (2019) Export agriculture and rural poverty: evidence from Indonesian Palm Oil. EU priorities therefore go in line with this Development Plan. It is the world's third largest democracy and is itself the driver of integration in ASEAN. In 2013, the two sides signed a Voluntary Partnership Agreement (FLEGT VPA) to improve forest governance and promote trade in legal timber and timber products from Indonesia to the EU. By suspending Indonesian palm oil exports to European countries, Indonesia will escape criticism from many parties in Europe and can focus on developing a sustainable palm oil system based on the national law and sustainable development goals (SDGs). [8], The EU also funds other projects that are in line with the national education strategy. Econ Syst Res 15(2):161182, Schiff M, Winters LA (2003) Regional integration and development. [8], Indonesia has committed to cut carbon emissions by 26% by 2020, a goal that has the full economic and political support of the EU and its Member States. Strong emphasis is put on education representing almost 80% of the foreseen funding. The EU focuses on key areas of governance such as justice and security sector reform, law enforcement, and the support of human rights based community policing. This condition also shows that, through the palm oil export stoppage to the European Union, Indonesia has the greatest benefits compared with other palm oil producer countries. GTAP is both a model and software that can be used to analyze many countries. Based on the scenarios and the general equilibrium economic model and software of GTAP version 9, there is a decrease in employment within the palm oil industry in Indonesia.
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. On 26 December 2019, Thailand requested to join the consultations. The objective of this article is to assess the suspension of Indonesias palm exports to the European Union in terms of Indonesias economic conditions. Amzul Rifin. Prohibiting the import of palm oil will impact the resulting rise in demand by the following figures: the EUs GDP of 2.7 billion by 5.8 billion, 1.2 billion in tax revenue by 2.66 billion, and 67,000 jobs by 117,000. [14] The ban has since been lifted.
IEEP 14(4):537552, Maurice S, Alan Winters L (2003) Regional integration as politics. The EU teamed up with UNICEF to combat malnutrition and stunting among children. If palm oil exports are stopped completely, palm oil output, such as palm oil and its derivatives, only decreases by 4.79 and 2.40% for each scenario, respectively. EU development assistance to Indonesia, which amounted to more than 500 million in the past 10 years, has been used to deliver sustainable growth and address global challenges. Susila (2004) specifically analyzed the Indonesian palm oil sector and found that it contributed to economic growth, poverty alleviation, and income distribution within society. EU Delegation Jakarta, 2012. The EUs green growth strategy the Green Deal aims at moving towards a green, competitive, carbon-neutral economy where economic growth is decoupled from resource consumption and where emissions and pollution are eliminated. Oxford University Press and the World Bank, Oxford, Ministry of Industry (2018) Dampak pelarangan CPO di Uni Eropa terhadap Perekonomian Indonesia (The Impact of CPO Banned in European Union on Indonesian Economy). 89 % trained supervisors through EU budget support to education. Lesson learnt from Bungo District, Indonesia. The negotiations for an Indonesia-EU Comprehensive Economic Partnership Agreement (IEU CEPA), which were launched on 18 July 2016, reflect this. It could be seen that the domestic price only decreased by 0.1%; however, based on the focus group discussion (FGD) and discussions, price changes were very sensitive. WTO Discussion Paper no. In Indonesia, projects under this program range from promoting freedom of religion and belief and supporting human rights defenders, to increasing human rights accountability and helping prevent torture. Buletin Ilmiah Litbang Perdagangan 5(2):123147, Kutlina-Dimitrova Z (2017) The economic impact of the Russian import ban: a CGE analysis. The stoppage of Indonesian palm oil products to the European Union will have very little impact on real GDP, welfare level, exports and import value, trade balance and terms of trade. The EU and its member states also support the higher education sector. This summary has been prepared by the Secretariat under its own responsibility. An estimated 1,100 European companies are present in Indonesia, directly employing approximately 1.1 million Indonesians. In the coming years, the EU and Indonesia will increase cooperation in all these areas, including renewable energies, energy efficiency and circular economy. World Dev 95:127140, Hertel TW (ed) (1997) Global trade analysis: modeling and applications. The EU's health support focuses on disease control and improving regulations. The ban resulted in a short-term loss of exports by US$ 25 million and US$ 5 million of long-term costs, while Bangladeshs compliance with the HACCP gained an additional export value of US$ 18 million in the short term and US$ 35 million in the long term annually (Yunus 2009). Indonesia as the main palm oil producer in the world shows that if the palm oil exports stoppage to the European Union is fully implemented, then there will be a relatively small impact on total Indonesian exports, that is, less than 1% (i.e., 0.128% if exports are stopped completely and 0.06% if the export of palm oil for biodiesel is halved). The EU and Indonesia are currently working towards an ambitious Comprehensive Economic Partnership Agreement covering trade, investment and services. Palm oil export stoppage to European Union will have relatively small impact on output, land use, prices and employment. 10. Building on the achievements of previous EU-Indonesia trade support, the ARISE Plus Indonesia Trade Support Facility (15 million) has been launched in 2019. After negotiations on a free trade agreement with ASEAN got increasingly difficult, the EU began pursuing negotiations with individual ASEAN states. Post-Disaster Reconstruction and Disaster Preparedness and Conflict Prevention. This statement is found in the Report on Palm Oil and Deforestation on Rainforest and will implicate sectoral conditions particularly within the palm oil industry in Indonesia. There were no significant impacts found in the suspension of palm oil exports on Indonesias macroconditions. Manage cookies/Do not sell my data we use in the preference centre. The GTAP model is widely used by researchers, academicians, and policymakers to perform empirical analyses on the impact of liberalization and change in trade policy implemented by a country. Command structure on the civilian/military strategic and operational levels (, Minesweeping operation in the Strait of Hormuz, (Operation Cleansweep, 19871988), Police contingent in Mostar, Bosnia and Herzegovina, Multinational Advisory Police Element in Albania, General security surveillance mission in Kosovo, This page was last edited on 7 February 2022, at 17:18.
On 8 June 2021, the Chair of the panel informed the DSB that in accordance with the timetable adopted by the panel, after consultations with the parties, the panel estimated to issue its final report to the parties not before the second quarter of 2022. In this situation, approximately 1720% (5 million ton CPO) of total CPO exports to European Union will be restricted. The EU's bilateral assistance supports Indonesia's reform policies for basic education. Economic cooperation continues to be a priority area for the EU and Indonesia. The task now is to implement it quickly and fully. Susila and Munadi (2008) showed the impact of the development of the CPO-based biofuel industry on poverty. Based on this background, it is important to conduct a study aimed to observe and discuss the impact of palm oil export suspension to European Union on Indonesia. 2016), while other countries, such as those in the EU, the USA, Canada and Australia, suffered only limited losses in aggregate. The indicators used are output from CPO, domestic prices, land use, and labor absorption (skilled and unskilled). This study applied the model of the GTAP version 9 approach, in which 140 regions and 57 sectors are already aggregated. A very small price change can be directly transmitted to the price of palm oil input, such as fresh fruit bunches (FFBs) at the farm level (Susila 2004). Indonesia is the first ASEAN country to have concluded a Partnership and Cooperation Agreement (PCA) with the EU, which governs our overall relation and cooperation. It also provides budget support amounting to 180 million. The study conducted by the Ministry of Industry (2018) focuses on the ban on CPO in the European Union accompanied by investments in the CPO downstream industry. [2], The EU and Indonesia have built robust commercial relations, with bilateral trade amounting to approximately 25 billion in 2012 resulting in a sizeable 5.7 billion trade surplus for Indonesia with the EU. To support partner countries in the fight against the coronavirus and its consequences, the European Union has mobilised a Team Europe package of over 200 million for Indonesia. Scenario 2 (Simulation 2/SIM2): European Union limits the use of palm oil for biodiesel and 4750% of EU CPO import from Indonesia is used for biofuel; therefore, it will halt 50% of the total Indonesian CPO import to the European Union. Informatika Pertanian 17(2):11731194, UN Comtrade (2018) Trade Flow https://comtrade.un.org/data/ Accesed 1 Apr 2018, Wibowo T (2013) The impact of export contraction on labor absorption. Bilateral cooperation was continuously expanded and eventually the EU Delegation to Indonesia was opened in 1988. With the Strategic Compass, agreed now by all member states, we have a plan to go for a real step change in EU security and defence. (2017) showed that contracts between smallholder palm oil farmers and private or state-owned companies significantly contributed to the regional economy especially at the village level in the form of infrastructure built by the companies; these not only benefited contract farmers but also noncontract farmers. Palgrave Macmillan, New York, Book Essentially, trade flows between Indonesia and the EU complement each other. According to the GTAP program, CPO is one of the components in vegetable oil, which thus applies to vegetable oil produced in Indonesia. Home | About WTO | News & events | Trade topics | WTO membership | Documents & resources | External relations, Contact us | Site map | A-Z | Search, espaol The authors declare that they have no competing interests. Since 2004, more than 1 600 Indonesian students have benefitted from the Erasmus+ scholarship programme. Articles 3.1(b) and 5 of the SCM Agreement; and. Second, this CGE-GTAP Model only confirms that intensive driving trade changes are not taken into account (Schiff and Winters 2003). To support partner countries in the fight against the coronavirus and its consequences, the European Union has mobilised a Team Europe package of over 200 million for Indonesia. The structural model of CGE is built upon the basics of economic theory (microeconomic) in which the behavior of economic agents is explained specifically and in detail in the form of behavioral equations. So that EU policies to stop CPO imports from Indonesia have not had a significant impact on macroconditions.
Thus, in this study, the GTAP model was used to analyze the impact of the policies implemented by the European Union on Indonesian palm products. Following almost 30 years of conflict and a devastating tsunami in 2004, today Aceh is considered back on track.
Open Access This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. It is arguably the most democratic country in the region with generally free and fair legislative and executive elections, a powerful and active parliament and vibrant civil society and media operating in open conditions. The last macroeconomic indicator discussed is the terms of trade (TOT) which is a comparison of the relative price of goods between two countries (Oktaviani et al. Indonesia has set up a legality certification system that eases access for timber to the European market. This study only focused on the impact of Indonesian CPO export suspension to the European Union (with its 28 member countries), with vegetable oil focused upon as the product discussed in the aggregation. On the other hand, the data of Indonesian palm oil exports to the European Union showed that the need and demand for Indonesian palm oil continued to increase through the years. Since 2004 the EU has provided Indonesian students with the opportunity to obtain scholarships through the Erasmus Mundus programme. A number of researchers also analyzed the impact of decreasing number of exports on the economy of Indonesia. These projects have different focal points ranging from vocational training, inclusive education to good teaching and learning practices.[8]. [3] [3] However, the development of CPO-based biofuels will also increase the price of cooking oil consumed by poor people, thus increasing their number. To analyze the impact of the import ban, the computable general equilibrium (CGE) method is utilized.
Although Indonesian trade balance has a positive value, the decline in exports and imports indicates the decline in competitiveness of all Indonesian products, especially palm oil. - Mandela, HR/VP Josep Borrell in Montenegro: the EU supports the European future of Montenegro and its people. There is increasing cooperation between the Indonesian Armed Forces (TNI) and specialised Indonesian agencies with their EU counterparts in these areas. Joint Statement of the 22nd EU-ASEAN Ministerial Meeting - January 2019, Multiannual Indicative Programme 2021-2027 for Indonesia annex, This site is managed by the Directorate-General for International Partnerships, Follow the European Commission on social media, 54,729 schools have benefitted from EU support. In this simulation, the ban on CPO exports had positive effects compared to the former since the increase in investment in the downstream industries of palm oil is assumed to eventually have a positive effect on ratio between trade and GDP as well as GDP and export. Mediaagro 9(1):1121, Piermartini R, Teh R (2005) Demystifying modeling methods for trade policy. showUpdateDate(dsNumber); Several other countries, such as Malaysia and Thailand, have increased competitiveness, even though they are very small at less than 0.01% for each scenario. On 23 December 2019, Malaysia requested to join the consultations. Cambridge University Press, New York, Hosny AS (2013) Survey of recent literature on CGE trade models: with special reference to the case of Egypt. Hazard analysis of critical control point, International sustainability and carbon certification, Comtrade United Nations International Trade Statistics Database, Alam SMN, Pokrant B (2009) Re-organizing the shrimp supply chain: aftermath of the 1997 European Union import ban on the Bangladesh Shrimp. The simulation result is used as a reference to observe the impact as well as suggests recommendations toward the policy. Over the years, the EU and Indonesia have successfully worked together to foster inclusive economic development, promote good governance, protect the environment, counter the effects of climatechange, support civil society, promote basiceducation, and prevent diseases. Friday 08:00 to 15:00. Indonesia has tried to undertake various diplomatic approaches to explain this problem, yet issues regarding palm oil continue to appear and develop. Moreover, the framework of the Renewable Energy Directive (RED) regulates renewable energy use in the European Union, where CPO is phased out as the source of biofuel due to its high emission level, although it is yet to be finalized. The authors showed that the palm oil and cooking oil sectors were found to be the largest sectors contributing to economic growth, employment, and income distribution. PubMedGoogle Scholar. In this condition, it is necessary to anticipate unfavorable price changes at the farmer level as the affected party. Rifin (2011), using the social accounting matrix (SAM), analyzed the impact of palm oil exports to the economic sector, production factor and household. Public institutions are supported in improving service delivery, particularly to the most vulnerable groups. This model can accurately measure not only changes in aggregate welfare, but also the welfare consequences of changes in trade policies in certain sectors. It has been theoretically shown that trade restrictions will have a negative impact on countries that implement them (Bowen et al. [8], A new EU-Indonesia Human Rights Dialogue was launched in 2009 to intensify exchanges on questions of mutual interest. Tel +62 21 2554 6200, Fax +62 21 2554 6201 Cookies policy. Team Europe has mobilised over 200 million in grants and loans to support Indonesia.