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Indonesia Wins at WTO Panel: EU Biodiesel Policy Deemed Discriminatory



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Indonesia Wins at WTO Panel: EU Biodiesel Policy Deemed Discriminatory

InfoSAWIT, JAKARTA – The World Trade Organization (WTO) Dispute Panel has stated that the European Union (EU) violated the Technical Barriers to Trade Agreement (TBT Agreement) in implementing restrictions and the gradual phase-out of biofuels at risk of indirect land use change (ILUC). This decision was outlined in the panel's report responding to Indonesia's complaint about discriminatory treatment towards palm oil.

In the panel's conclusion report, which InfoSAWIT reviewed on Friday (January 17, 2025), the EU was found to have failed to comply with Article 2.1 of the TBT Agreement by not conducting timely reviews of the data used to determine high ILUC-risk biofuels. Additionally, the criteria for low ILUC-risk biofuels were deemed to have design and implementation flaws, leading to unfair discrimination between countries with similar conditions.

According to the report, the EU did not provide sufficient justification for establishing restrictions and the gradual phase-out of high ILUC-risk biofuels. This policy is seen to have a significant impact on the trade of palm oil and palm oil-based biofuels from WTO member countries, including Indonesia.

The EU has rejected claims that its policy significantly affects trade and has stated that it has provided explanations regarding the justification of the policy in various forums. However, the WTO panel found that the EU's responses did not meet the standards set out in Article 2.5 of the TBT Agreement.

The Indonesian government welcomed the WTO panel's decision. "This decision shows that our efforts to defend palm oil as a strategic commodity have received international recognition," said an official from the Ministry of Trade.

Indonesia previously lodged a complaint against the EU's policy that classified palm oil as a high ILUC-risk biofuel, which affected market access restrictions and the gradual phase-out of its use. This lawsuit is part of Indonesia's trade diplomacy efforts to combat discrimination against palm oil.

Although Indonesia won this dispute, the panel's decision is not the end of the conflict. The EU may appeal, although the WTO Appellate Body mechanism is currently not fully operational. Meanwhile, Indonesia needs to continue strengthening its sustainability commitments in the palm oil industry to bolster its position in the global market.

With this outcome, Indonesia hopes to encourage a fairer dialogue with the EU regarding palm oil trade and ensure that national strategic products remain competitive in international markets. (T2)


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