Lang
Indonesia has welcomed a World Trade Organization (WTO) ruling that found the European Union discriminated against Indonesian palm oil-based biodiesel, giving it unfair and damaging treatment under its biofuel regulations.
Coordinating Minister for Economic Affairs Airlangga Hartarto said in a statement issued on Friday (17 January 2025): "Yesterday, we won the case at the WTO regarding palm oil-based biodiesel. The ruling proves that Europe discriminated against Indonesia on palm oil and biodiesel."
Hartarto described Indonesia's WTO victory as the result of a long fight for justice against the EU's discriminatory practices.
Indonesia, the world's largest palm oil producer, brought the case to the WTO's dispute settlement body in 2019 after the EU decided that palm oil-based diesel fuel would not be classified as a biofuel due to its links to deforestation, and that its use as a transport fuel would be phased out between 2023 and 2030.
The WTO panel issued a report last week stating that certain aspects of the design and implementation of the EU policy were inconsistent with WTO rules.
Hartarto added: "Now, the world has no choice but to accept that biodiesel does not only come from rapeseed or soybean oil — there is also biofuel based on crude palm oil."
The panel's report noted that the EU had failed to properly assess the data used to determine which biofuels result in high-risk indirect land use change (ILUC).
The report also found shortcomings in the design and application of the criteria and procedures for obtaining low ILUC-risk certification under EU climate policy, such as the second Renewable Energy Directive (RED II).
In addition, the panel ruled that tax incentives for biofuels used in France's transport system discriminated against palm oil-based biodiesel, since the EU only provides tax incentives for biofuels based on soybean oil and rapeseed oil.
The ruling is expected to be adopted by the WTO's dispute settlement body within the next 60 days, unless the report is appealed.
If adopted, the report will become binding between Indonesia and the EU.
Hartarto explained that the latest ruling is expected to have implications for the EU's Deforestation Regulation (EUDR), which requires exporters to prove their palm oil is deforestation-free before it can enter the European market.
However, he noted that the EU has postponed implementation of the EUDR for large and medium-sized companies until the end of this year, while smaller and micro companies have been given until 30 June 2026.
The minister said this delay reflects a degree of uncertainty within the EU.
He added that the WTO's biodiesel ruling could help Indonesia strengthen its resistance to the EUDR.
He affirmed that Indonesia would continue to oppose policies that are discriminatory and unfavourable to ordinary people, noting that smallholder farmers account for more than 41% of the country's palm oil plantations.
The recent developments are expected to help accelerate the long-delayed negotiations over the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA).
Hartarto concluded: "With this victory, I hope the issues that have been hindering the IEU-CEPA negotiations can be resolved, and that we will be able to conclude the negotiations soon."