Indonesia files WTO palm oil suit as tensions with EU grow

Indonesia has filed a lawsuit at the World Trade
Organization (WTO) against the European Union, claiming
the bloc’s restrictions on palm oil-based biofuel are unfair,
the latest in a series of disputes between the two sides.
The EU launched a complaint at the WTO in late November
over Indonesian curbs on nickel ore exports and hit
Indonesian biodiesel with tariffs last week.
The two are meanwhile seeking to forge a free trade
agreement.
The European Commission concluded this year that palm
oil cultivation results in excessive deforestation and should
not count toward renewable energy targets.
The result is that palm oil-based diesel would not be
considered a biofuel and its use in transport fuel would
effectively be phased out between 2023 and 2030.
Indonesia, the world’s biggest producer of palm oil, has
repeatedly said it will challenge the EU’s renewable energy
directive at the WTO’s dispute settlement body.
The Commission said the directive was part of the EU’s
green policies and was confident the measures were in line
with WTO obligations, adding it had explained this to
Jakarta on a number of occasions.
It added it expected Indonesia to maintain a strong interest
in trade talks. Issues that were subject to WTO disputes, it
added, were not part of the negotiations.
Indonesia sent a request for consultations with the EU on
December 9, 2019, the trade ministry said in statement
said.
The consultation phase lasts 60 days. If no solution is
found, the EU can then request that the WTO set up a panel
to adjudicate.
“The Commission seems to be well-prepared for this,” said
Hosuk Lee-Makiyama, director of Brussels-based think tank
ECIPE.
“It’s a political case and how these fare is not solely to do
with the law.”
EU consumption of palm oil in food has been in steady
decline, but its use as a biofuel has increased. Last year,
the bloc consumed more than 7 million tonnes of palm oil,
with some 65% of it used for energy.
Indonesia trade minister Agus Suparmanto said the decision
to go to the WTO was made after assessing scientific
studies and after meetings with associations and
businesses involved in the palm oil sector.
Indonesia’s Director General of Foreign Trade Indrasari
Wisnu Wardhana said the EU’s policy would not just impact
Indonesia’s palm oil exports to Europe, but would also
tarnish the image of palm oil products globally.
Source: Reuters