Indonesia suspends imports of EU alcohol and dairy products in 2019.  

Context

In September 2019 then EU trade commissioner, Cecilia Malmstrom, wrote to the Indonesian government, complaining about a de facto ban on Indonesia’s imports of European spirits and other alcohol that year. Additionally, from August 2019 Indonesia also imposed new measures to block imports of EU dairy. An Indonesian official claimed that delays on EU alcohol imports were not politically motivated, but rather were driven by “market preferences”, adding that “[i]t seems like the market wants spirits from America.” And in January 2020 Indonesia’s Deputy Minister of Trade, Jerry Sambuaga, similarly denied any political link, saying “[t]here are parties who link [a dispute with the EU] but we are not in a position to discriminate.” However, the crucial political context here is Indonesia’s negative reaction to a March 2019 declaration by the EU that it would phase out use of palm oil – a major Indonesian export industry – between 2023-2030, citing the industry’s harmful environmental consequences. Notably, prior to this announcement, in 2017 Indonesia’s Trade Minister Enggartiasto Lukita threatened to limit diary and wine imports from the EU if Brussels were to “continue to disrupt our palm oil (industry)”.

Responses  

i) EU government and industry responses.

An EU beverage industry group, SpiritsEurope, acknowledged the issue with exporting spirits to Indonesia in April 2019, and was cited by press as saying that “it had learnt from members with business in Indonesia that they were suffering delays in securing approval to import EU products into the country.” Meanwhile, an Indonesian food industry official spoke to press anonymously in December 2019, saying that “[t]here have been problems getting import permits for alcoholic drinks and dairy products from Europe.” And hospitality workers confirmed to press that there had been difficulties sourcing products from the EU, with one saying that “new world” (e.g. Australian) wines were being sold as an alternative.

As noted above, in September 2019 then EU trade commissioner, Cecilia Malmstrom, wrote to the Indonesian government, complaining about a de facto ban on Indonesia’s imports of European spirits and other alcohol. However, most government attention has focused on the higher-level disagreement around palm oil.  

ii) Other states’ government and industry responses.

Australian businesses may have taken advantage of this instance of Weaponised Trade, particularly as an alternative source of wine imports to Indonesia. One January 2020 article in the Australian Financial Review claimed that the “(EU-Indonesia) palm oil row is good for Australian winemakers”, and quoted one sommelier at a Jakarta restaurant/bar as saying that “old world wines are just about gone” and that “Australian wines are already very popular here so it’s a good opportunity for them.”

Status

This case is still ongoing without conclusion. The higher-level dispute between the EU and Indonesia over pam oil continues to escalate, with Indonesia and Malaysia taking the EU to the WTO.

Reference list

Blenkinsop, P. 2019. “Indonesia blocks EU spirits, link seen to palm oil spat: industry.” Reuters. April 5. Available at: https://www.reuters.com/article/idUSKCN1RG217/

Connors, E. 2020. “Why palm oil row is good for Australian winemakers.” Australian Financial Review. January 20. Available at: https://www.afr.com/world/asia/why-a-row-over-indonesian-palm-oil-is-good-for-australian-winemakers-20200107-p53pml

Davies, E. and P. Blenkinsop. 2019. “Indonesia files WTO palm oil suit as tensions with EU grow.” Reuters. December 17. Available at: https://www.reuters.com/article/ business/indonesia-files-wto-palm-oil-suit-as-tensions-with-eu-grow-idUSKBN1YJ0DF/

Davies, E. and P. Blenkinsop. 2019. “European liquor off the menu in Indonesia as trade row escalates.” Reuters. December 22. Available at: https://www.reuters.com/article/ business/european-liquor-off-the-menu-in-indonesia-as-trade-row-escalates-idUSKBN1YQ038/

Hutt, D. 2024. “EU palm oil ban: Malaysia, Indonesia seek trade justice.” DW. Available at: https://www.dw.com/en/eu-palm-oil-ban-malaysia-indonesia-seek-trade-justice/a-68606071

Millar, R. 2020. “EU alcohol imports blocked in Indonesia.” The Drinks Business. January 13. Available at: https://www.thedrinksbusiness.com/2020/01/eu-alcohol-imports-blocked-in-indonesia/