16/03/2011 (The Jakarta Post) - Chairman of the European Union (EU) Delegation for Relations with the countries of Southeast Asia and ASEAN, Dr. Werner Langen, was visiting Indonesia from Feb. 21-25, 2011.

A separate meeting on regional integration was also held recently by the EU ambassador to Indonesia and Brunei Darussalam, Julian Wilson, on March 2.

Visits by individual EU Member States’ offi cials since the start of 2011 — including the Swedish Minister of Trade, the French Minister of Economic Affairs, Finance, and Industry, and the Spanish State Secretary of Foreign Trade — also mark the tight relations between Indonesia and the EU.

Yet, this bilateral relationship seems to be on the “conservative” and “cautious” side that demands shifts of focus and more regular open public discussion forums between not only EU delegations and Indonesian officials, but also EU delegations and Indonesian stakeholders.

The visit by the EU delegation put an emphasis on a few areas of bilateral cooperation: Education (with a focus on primary basic education), governance, health, transfers of (green) technology for Small and Medium Enterprises (SMEs), reconstruction of disaster-stricken areas and trade-related technical assistance.

The EU’s focus on development is a manifestation of the EU’s ambitious support of the Millennium Development Goal to devote 0.7 percent of its Gross National Income to Offi cial Development Assistance by 2015 and the Partnership and Cooperation Agreement signed in 2009 by EU offi cials and Indonesian Foreign Minister Marty Natalegawa.

Indonesia also expects new investment in mostly high technology, including the nickel manufacturing industry in Halmahera, airplanes to Lion Air, and an electric train project in Bandung.

Meanwhile, the Swedish minister of trade visit focused on proenvironment investment in green technology, green infrastructure, green urban living and green energy.

Heavily forested Sweden (about 78 percent of the land is forest and woodland), which was the first country to adopt forest governance laws in 1886, can indeed be a model for Indonesian forestry. The Spaniards were also attracted to invest in Indonesia’s energy, electricity, transportation, telecommunication, infrastructure and manufacturing sectors.

Later this year, Indonesia will sign the Voluntary Partnership Agreement (VPA) with the EU. This means that the only timber and timber products from Indonesia that can enter the EU countries are those that are licensed by the Timber Legal Verifi cation Assurance (or Sertifi kat Verifi kasi Legalitas Kayu).

The EU is drafting Illegal Timber Regulation to take effect in March 2013. By this regulation, FLEGT licensed timber from VPA countries will automatically get a “green light” entering the EU market.

Despite its potential benefit to improve forest governance, it may also face local resistance, especially by timber companies, with respect to additional costs of requiring certifi cates.

Since the trade in timber products from non-VPA partner countries (currently only Cameroon, Central African Republic, Ghana and Republic of the Congo are VPA partner countries) will be unaffected, it might mean a loss to the exporting VPA countries if EU consumers will prefer cheaper non-FLEGT licensed timber, or it might mean a gain to them if EU consumers will prefer more expensive environmentally friendly FLEGT licensed timbers or if EU purchasers will increasingly adopt policies favoring procurement of FLEGT licensed timber.

Another problem is on the supply side. Firms in exporting VPA countries which are exporting to EU before the VPA takes effect might re-route their timber exports to non-EU countries to avoid having to be verifi ed for legality. In some ways, the effects of this regulation on trade can be similar to the effect of the US Lacey Act in 2007.

While both Indonesia-EU and Indonesia-EU Member States cooperations are potentially mutually benefi cial, there are some important elements that are worth some considerations. First, the EU’s development plan on education seems to be on the conservative side. “The net enrollment rate for primary education has almost reached 100 percent and the literacy rate of the population reached 99.47 percent in 2009” (Report on the Achievement of the Millennium Development Goals Indonesia 2010). Educational reform should shift its focus to tertiary education.

None of the Indonesian universities rank highly in either Asia as a whole, nor in Southeast Asia. At this stage of development, we need to encourage the creations of working professionals, in which China and India are having the comparative advantages. Professionals are also needed to operate the investment in heavy technologies.

Second, the EU approach to cooperation has been cautious. It is somewhat evident from the reluctance of EU to have an ASEAN-EU free trade agreement.

Some speculated that human rights issues in Myanmar might hamstring the idea. Bilateral FTAs between EU and only some ASEAN countries might result in a severe disadvantage to those ASEAN countries without the FTAs. If noneconomic reasons were the issues behind this, the EU would need to openly discuss them.

EU has also been cautious with respect to environmental issues, including the environmentally cautious demand-driven regulations and directives.

More open public discussions between EU and Indonesian stakeholders is encouraged on the following issues: (1) Indonesian palm oil market that has been facing a lot of pressure concerning the environment from the Amsterdam-based Greenpeace, (2) EU directives that under its current term will make Indonesian palm oil not environmentally qualifi ed to be converted into biofuel in Europe, (3) Indonesia-EU FLEGT VPA that will be signed later this year that has the potential to increase costs of acquiring certifi cates. Indonesians will eventually question how these EU regulations and directives as well as partnerships will benefi t not only the EU but also Indonesia.