Indonesia urges EU to remove biodiesel import curbs after WTO ruling

JAKARTA: Indonesia urged the European Union on Monday to immediately scrap countervailing duties on imports of biodiesel, after the World Trade Organization backed several of its key claims in a complaint to the trade body.

AI Brief

The WTO found EU duties on Indonesian palm oil biodiesel violated trade rules and were not justified subsidies.
Despite the ruling, Indonesia and the EU remain at odds over deforestation rules and biodiesel tariffs.
Both sides are nearing a trade pact, but unresolved disputes and past EU actions raise doubts about compliance.

The world's biggest palm oil exporter had contended in its 2023 complaint that the duties levied by the European Union, its third-largest destination for palm oil products, broke the trade body's rules.

"We urge the EU to immediately revoke these countervailing import duties that are not WTO-compliant," Trade Minister Budi Santoso said in a statement after the WTO's ruling last week.

The dispute is the latest squabble between the bloc and Indonesia, following rows over biodiesel tariffs and palm oil's link to deforestation, as they edge nearer to signing a free trade deal, after a political agreement struck in July.

The EU has imposed the duties, ranging from 8% to 18%, since 2019, saying the Southeast Asian nation's biodiesel producers benefit from grants, tax benefits and access to raw materials below market prices.

The trade ministry said the WTO panel held that Indonesia's export duty and export levy on palm oil could not be categorised as a subsidy.

The EU Commission failed to prove a threat of material harm to European biodiesel producers caused by imports of the Indonesian fuel, it added.

Indonesia's exports of palm oil-based biodiesel stood at 27,000 kilolitres (kl) in 2024, after having plunged to 36,000 kl in 2020 from 1.32 million kl in 2019.

The Indonesia Biofuel Producers Association doubts the EU will comply with the request, going by past experience, Catra de Thouars, an official of the association, told Reuters, however.

"We, as an industry, must remain vigilant and ready for any movement by the EU after this ruling," he said, adding that Jakarta was still in dispute with Brussels over the EU's anti-deforestation rules that could affect its palm oil shipments.

The countervailing duties came a year after the European Court of Justice had ordered the EU to do away with anti-dumping duties on imports of Indonesian biodiesel.

However, Jakarta expects the upcoming free trade pact to open the way for greater market access for palm oil, among other products.

The WTO's finding can be appealed.

But no final ruling is possible since its top appeals court ceased functioning in 2019, due to repeated blockages of judicial appointments by the first administration of U.S. President Donald Trump.