WTO Admits European Union Discrimination Of Indonesian Palm Oil

Minister of Trade Budi Santoso (Photo: Antara)

JAKARTA - Indonesia has succeeded in proving the discrimination of the European Union (EU) in the palm oil trade dispute at the Dispute Settlement Agency of the World Trade Organization or Dispute Settlement Body World Trade Organization (DSB WTO).

This decision is contained in the WTO Panel Decision Result Report or report panel which is circulated on January 10, 2025.

Indonesian Trade Minister Budi Santoso said the Indonesian government welcomed the WTO Panel Decision on the trade dispute related to palm oil.

The reason, continued Budi, so far trade disputes with the European Union have often been linked to the issue of climate change, as a basis and pretext so that the European Union is not arbitrary in imposing discriminatory policies.

"We hope that in the future, other trading partner countries will not impose similar policies that have the potential to hinder global trade flows," he said in an official statement, Friday, January 17.

In general, Budi said, the WTO Panel stated that the EU discriminated by providing unfavorable treatment for biofuels made from palm oil from Indonesia compared to similar products derived from the EU such as rapeseed and sunflower.

"The EU also distinguishes treatment and provides more benefits to similar products imported from other countries such as soybeans," he said.

In addition, continued Budi, the WTO Panel assessed that the EU failed to review the data used to determine biofuels with categories of conversion of high-risk palm oil (high ILUC-risk) land and there were shortcomings in the preparation and application of criteria and low-ILUC-risk certification procedures in Renewable Energy Directive (RED) II.

Therefore, the EU is required to adjust policies within the Delegated Regulation which Panel sees as violating the WTO rules.

"Indonesia sees this policy as a form of protectionism on the pretext of using environmental sustainability issues that are often echoed by the European Union," he said.

Budi said the Indonesian government would closely monitor changes to EU regulations in accordance with the decisions and recommendations of the WTO DSB, especially regarding the elements of discrimination won by Indonesia.

If needed, he continued, the Indonesian government will also assess compliance panels on this matter. In parallel, the Government of Indonesia continues to strive to open market access for Indonesian palm oil products in the EU market through various negotiation forums.

"Indonesia's success in winning trade disputes at WTO is the result of intensive proactive and coordination steps by domestic stakeholders such as relevant ministries and institutions, industry players, Indonesian palm oil associations, expert teams, and the Indonesian government's legal team," he said.

For your information, Indonesia sued the EU for the first time at WTO with case number DS593: European Union-Certain Measures Concerning Palm Oil and Oil Palmrup-Based Biofuels in December 2019.

The lawsuits include the policy of the RED II and Delegated Regulation of the EU, as well as the French policy which is an obstacle to accessing the palm oil market as the raw material for biofuels.