Impact of Relaxed Halal Certification for US Products on Indonesian SMEs

The Dean of the Faculty of Animal Science at Gadjah Mada University (UGM), Budi Guntoro, has said that the halal certification controversy arising from the agreement on reciprocal trade (ART) between Indonesia and the United States is not simply a matter of removing halal obligations. Budi highlighted the impact of the reciprocal trade agreement on micro, small and medium enterprises (SMEs), as well as national food sovereignty.

“What is at stake here is not merely a label, but fair competition for halal SMEs, the sovereignty of the food system — particularly animal-derived food — and the consistency of ethical production standards,” Budi said, as quoted from UGM’s official website on Tuesday, 24 February 2026.

According to Budi, the substance of the ART does not abolish the national halal regime. He explained that products which do not claim to be halal are not required to hold halal certification, whilst products bearing a halal claim must still comply with Halal Product Assurance (JPH) provisions.

However, he cautioned about the potential for competitive imbalance. Domestic businesses, particularly SMEs, must still bear the cost and time required for halal certification. Meanwhile, imported products that do not carry a halal claim could be freed from similar administrative burdens.

“This asymmetry in compliance costs has the potential to create an uneven playing field. SMEs could lose on price not because of quality, but because of regulation,” said Budi, who also serves as Director of the Institute for the Assessment of Food, Drugs and Cosmetics (LPPOM) under the Indonesian Ulema Council for the Yogyakarta Special Region.

Budi argued that the issue becomes more sensitive when it touches upon animal-derived food products. This sector, he said, is directly linked to public health, biosecurity, the welfare of smallholder farmers, and national food sovereignty. The entry of cheaper imported products is feared to compress margins for livestock farmers and downstream businesses such as abattoirs, meat processors and dairy producers.

Budi urged the adoption of four strategic measures. First, affirmative action and subsidies for halal SMEs so they do not bear the burden of compliance alone. Second, enforcement of label transparency, including non-halal labelling to prevent implied claims that could mislead consumers.

Third, protection of strategic animal-derived food commodities through rigorous audits and traceability. Fourth, honest public communication that halal certification constitutes an infrastructure of trust and food ethics. “Trade is important, but fairness, public trust and food ethics must not be negotiated away,” Budi said.

Indonesian President Prabowo Subianto and US President Donald Trump officially signed the reciprocal trade agreement in Washington D.C., United States, on Thursday, 19 February 2026, local time. The provisions on halal certification for American products are set out in Article 2.9 on Halal Provisions for Manufactured Goods and Article 2.22 on Halal Provisions for Food and Agricultural Products, under Annex III Specific Commitments, Section 2 Non-Tariff Barriers and Related Matters.