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BRICS: Opens Chance to Get More Fair Palm Oil Trade

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BRICS: Opens Chance to Get More Fair Palm Oil Trade

InfoSAWIT, JAKARTA - "Sandyakalaning Majapahit" or Senja Majapahit is a classical drama from Indonesia. It is about deceit of the elite that caused Majapahit come to an end. Majapahit was a superpower kingdom in agrarian affairs and marine in the 15th century. Senja Majapahit also tells about the hope of new dawn of a new kingdom.

Can we hope the same thing from member expansion of Brazil, Russia, India, China, and South Africa (BRICS) with the dawn of more powerful third world?

Since European Union (EU) was established in 1993 when Maastricht Agreement started running on 1 November 1993, EU has developed to be 27 countries. Within its big economic power, EU delivered impacts that the economy and security need globally. Its influence in resources enables the countries in the continent to establish issues, perceptions, and agenda in global scale which often deviate from the reality.

But both EU and United States of America (USA) are in irrelevant and exclusive verge in multi-polar world new order.

In economic power, EU just contributed 15 percent of the gross domestic product (GDP) globally or decreased from 25 percent in 1990, while BRICS, after new six members would join in January 2023, would contribute hardly 30 percent of GDP globally, according to International Monetary Fund (IMF).

The new members that would join in BRICS in January 2024 are: Saudi Arabia, Iran, Ethiopia, Egypt, Argentina, and United Arab Emirates. BRICS within 11 members (countries) would represent 46,5% of the population in the world.

The members of BRICS claimed that the economic and demography power and influence would not be represented by institutions in the world, namely IMF and World Bank.

A survey by Institute of Southeast Asian Studies (ISEAS) Singapore last year showed a shocking fact that Association of Southeast Asian Nations (ASEAN) and Indonesia saw that EU had no more strategic economic and political influences. In 2021 2,3 percent of the people of Indonesia thought that EU still had the main economic influences in ASEAN but the numbers decreased to be zero in the same year.

As the host of the 15th BRICS Conference on 12 - 14 August 2023, President of South Africa, Cyril Ramaphosa told that BRICS would be consistent with solidarity and progressive values. BRICS would consistently have fair and equal order and inclusive aspiration and BRICS is a sustainable development.

Economy would always be the main thing in this organization. BRICS is basically a group of developing countries that want to defend and escalate economic cooperation. The reformation claims happen for non-proportional representation of BRICS members in financial institutions in the globe.

Though many analysts in developed countries considered that BRICS expansion as one thing that walks on un-mapped road within new actors that have many interests, more members of BRICS would escalate their projected roles as geopolitical alternative to the global institutions that western world mostly dominates.

Indonesia, other developing countries, and members of BRICS are disappointed and get frustrated with the ambition of EU in regulating (many) industries and significant commodity trade with their norms where Indonesia and members of BRICS produced, such as, palm oil. EU also published non-tariff barrier and protectionism that directly have something to do with exports to EU countries.

At least, there are five trade barriers among Indonesia and some members of BRICS with EU.

The first, additional tariff for steel. It is assumed to have something to do with nickel ore exports. Until now the appeal of Indonesia on what World Trade Organization (WTO) sentenced is being examined by WTO Appeal Institution.

The second, additional tariff for biodiesel exports which the case is in dispute complaint in WTO.

The third, non-tariff barrier for palm oil within health issues. This happens because other vegetable oils also have contaminant.

The fourth, tariff and non-tariff barrier in Carbon Border Adjustment Mechanism (CBAM) for cement, iron, steel, aluminum, fertilizer, electricity, and hydrogen.

The last, non-tariff barrier in European Union Deforestation Regulation (EUDR) for soyoil, meat, palm oil, wood, cocoa, coffee, and rubber.

The trade cases for EU are against to what WTO regulates that forbids additional, tariff and non-tarif regulations though WTO opens the chance to get exception.

EU itself has failed to adopt and implement ethical trade system in its every international trade agreement. BRICS has the better position to implement more fair - trade system namely every commodity that members and southern countries produced. That is why BRICS should be the correction and revision to every free trade – principle that the western campaigned.

More inclusive and win-win principles in BRICS by respecting social - political uniqueness from many developing countries, would make it develop more as one most influencing forum in the globe.

The development of BRICS would touch up social – economic development in Indonesia, namely in palm oil and mineral sectors for renewable energy. The two important commodities are the sources of income for Indonesia and other countries in Africa and Latin America.

It is hoped BRICS would develop a new platform of trade for palm oil and other commodities to be fair and should base on full obedience on national law, environmental conservation, and social principles responsibly to help many producers in realizing their fair and sustainable trade relationship.

The establishment of BRICS and cases that Indonesia is facing against EU in WTO would not be taken as trade war but Indonesia is searching for a much fair - trade system that respects the rights of developing countries and respects the concern of EU to social, environmental principles, and good governance in every supply chain.

When BRICS gets more developing and relevant, EU gets the contrary. It started losing its prestige.

Would EU realize that the dusk of existence as dominant economic power in the world has arrived? Would it adapt to change its arrogant mentality of the first world before south world?

Majapahit reigned for about 250 years. No one thought that the big kingdom that defeated Kubilai Khan came to an end when new power raised in Java and in Archipelago. (*)

By: Agam Fathurochman and Edi Suhardi/Sustainability Analysts