RI moves to safeguard timber exports to UK from Brexit

Dian Septiari

THE JAKARTA POST/JAKARTA

Indonesia is set to ink an agreement to keep exporting sustainably sourced and traceable timber to the United Kingdom, mimicking an existing deal with the European Union in anticipation of a worst-case scenario in Brexit.

Environment and Forestry Minister Siti Nurbaya Bakar and UK Ambassador to Indonesia Moazzam Malik are sign the deal, dubbed the Forest Law Enforcement, Governance and Trade Voluntary Partnership Agreement (FLEGT-VPA), on Friday, according to the Foreign Ministry’s director for Europe-I Dino Kusnadi.

With the growing uncertainty that has engulfed Brexit, Dino said the government was taking anticipatory steps to ensure there were no obstacles in the export in Indonesian timber and timber products to the UK.

“When the UK is no longer in compliance with the EU scheme, this agreement will create a legal basis so that continuity will be maintained,” he said at a weekly press briefing on Thursday.

Dino also said striking a bilateral deal with the EU to carry over the FLEGT scheme provided reassurances for trade officers in the field to be able to continue the trading process and recognize certifications in an environment that did not disrupt business.

There is a political dimension too: After Brexit, there would be two separate entities that recognize the FLEGT certification.

“Nowadays in general there are very rigid procedures to ensure that the timber marketed to Europe is registered, traceable and has eco-friendly labeling to show that it does not damage the forest,”

Dino also hinted at the possibility that the scheme could become a precedent for other major Indonesian commodity exports, such as palm oil. He said efforts to bring Indonesian timber to Europe bore similarities to current initiatives to clarify the status of palm oil, which the EU decided to phase out from its biofuels. Just as it was with palm oil, Indonesia faces international pressure over exporting timber as the product is often associated with deforestation.

Indonesian business are already familiar with the FLEGT scheme for sending their timber products to Europe. The EU recognized Indonesia’s timber legality assurance system (SLVK) in 2016, paving the way for Southeast Asia’s largest economy to become the first country to implement the FLEGT licensing scheme. Under it, Indonesian wood products are allowed to enter all 28 EU member countries without the hassle of due diligence processes previously required by EU trade laws.

Valued at US$250 million last year, Indonesia’s timber exports to the UK amount to a quarter of total timber exports to the EU.

So with the increasing likelihood of a no-deal Brexit, Indonesia sprung on the opportunity to replicate the FLEGT scheme to ensure a smooth transition.

“We don’t want that process to be interrupted, because once the UK goes out [of the EU] without an agreement, exports will stop because it must follow a new customs process,” Dino said.

Not everyone was convinced the move was enough.

Global economy expert Beginda Pakpahan from the University of Indonesia said timber trade with the UK would still fall under EU regulations, even with the bilateral agreement. “Everything still remain uncertain, whether we would see a ‘soft’ or a ‘hard’ Brexit, or even no deal at all,” he told The Jakarta Post on Thursday. “The only thing that is certain right now for the applicable regulations on timber export is the Indonesia-EU framework.”

Theresa May’s announcement that she will quit as prime minister has done nothing to move Britain closer to a resolution on Brexit. The UK has two weeks to go to submit a plan to the EU for its next steps or face the prospect of leaving without a deal.

A no-deal Brexit threatens the kind of economic crash that would hit the pound, disrupt trade and trigger a major slump in house prices, according to official analysis cited by Bloomberg.

Source: The Jakarta Post