© Thomson Reuters Erlang Hartart, Indonesian Liaison Minister for Economic Affairs, speaks to Reuters at his office in Jakarta.Gayatri Suroyo, Stefano Suleiman and Ananda Teresia
JAKARTA (Reuters) - Indonesia believes the European Union is practicing "regulatory imperialism" in its new law on deforestation, but the two sides will continue to negotiate a free trade deal, an Indonesian minister said on Thursday.
Southeast Asia's biggest economy will continue talks with the bloc on the Comprehensive Economic Partnership Agreement (CEPA), with special consultations to resolve disputes over the EU's deforestation law, Indonesia's Economy Minister told Reuters. , Erlango Maps.
Jakarta wants to conclude a VHB after seven years of negotiations, Erlango said, but warned Indonesia "could wait another seven years" if the EU refuses to recognize export standards such as sustainable palm oil and wood products. Deforestation rules.
"We are discussing trade facilitation ... but they are building parallel walls. This is not right," said Erlango, who raised the issue with Malaysia's deputy prime minister in Brussels last week.
Erlango cited longstanding disputes with the EU, including a World Trade Organization complaint against Indonesia's ban on exports of nickel ore and Indonesia's complaint against the EU's ban on palm oil as a biofuel feedstock.
EU carbon tax plans could also hit Indonesia's nickel producers, Erlango said, calling the EU rules "regulatory imperialism".
The EU representative confirmed that the EU is aware of the law on deforestation and that these rules are not discriminatory and are not used as disguised trade restrictions.
The spokesman said the CEPA with Indonesia includes a platform for cooperation on common issues such as deforestation, which he plans to discuss next month.
Malaysia said the dispute over the EU law would not affect the conclusion of free negotiations by the EU.
Big impact
A law approved by the European Parliament in April bans the import of various goods linked to deforestation into the EU. Indonesia has the third largest forest area in the world.
It is the world's largest exporter of palm oil and a major supplier of coffee, cocoa, rubber and wood products. Erlango said the deforestation law would affect about 6 billion euros ($6.44 billion) in annual exports.
Indonesia says the law will harm small-scale palm oil farmers who struggle to comply with the rules of the geographic area, hampering efforts to achieve the Sustainable Development Goals.
It also fears that labeling a country "high risk" could lead to more expensive inspections of its products.
Although the government claims the rate of deforestation is slowing, some farmers and companies say they are still clearing forests for palm oil.
Indonesia is one of the top 10 carbon emitters in the world due to deforestation and soil erosion.
Separately, Irlango said Indonesia proposed to include a major mineral trade deal in the US-led Indo-Pacific Economic Mechanism, under which companies operating in Indonesia would receive tax breaks from the US.
The proposal, which has been accepted by other Southeast Asian countries and Australia, comes after Indonesia said it would propose a limited free trade zone covering US battery materials.
($1 = 0.9319 euros)
(Reporting by Gayatri Suroyo, Stefan Suleiman and Ananda Teresa; Additional reporting by Kate Abnett in Brussels; Editing by Martin Petty)
