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February 26, 2025 | 01:04 pm
TEMPO.CO, Jakarta - Indonesia has secured a favorable ruling in its trade dispute with the European Union (EU) over palm oil and biofuel policies. The World Trade Organization (WTO) Dispute Settlement Body (DSB) has officially adopted the final report on the case (DS593: Indonesia – Palm Oil), which was made public on January 20, 2025.
In its report, the WTO Panel ruled that the EU had engaged in discriminatory trade practices by implementing policies that harmed palm oil-based biofuels from Indonesia compared to similar products produced in the EU, such as rapeseed and sunflower-based biofuels.
The Panel also determined that the EU failed to adequately review the data used to classify palm oil biofuels as high ILUC risk (Indirect Land Use Change risk). Furthermore, deficiencies were identified in the criteria and certification procedures for low ILUC-risk biofuels under the Renewable Energy Directive (RED) II. Consequently, the EU is required to amend its Delegated Regulation, which the Panel deemed inconsistent with WTO rules.
"Based on the Panel’s recommendations, the European Union must align its policies with WTO agreements. Predictability and fair-trade practices in the multilateral trading system have been upheld. Therefore, Indonesia has proposed to the DSB that the Panel Report be adopted," said Ambassador Nur Rachman Setyoko, Deputy Permanent Representative of Indonesia to the UN, WTO, and Other International Organizations.
In a statement on February 25, 2025, the Indonesian Permanent Mission to the UN in Geneva (PTRI Geneva) emphasized that Indonesia had presented strong evidence throughout the panel process, demonstrating that the EU’s measures were inconsistent with WTO agreements. Indonesia successfully argued that the EU’s justification—citing climate change, biodiversity, and moral concerns—was not directly linked to the policies imposed on palm oil and palm oil-based biodiesel. In fact, these assumptions remained unproven and conflicted with the EU's own arguments in the case.
"Indonesia is ready to engage in constructive dialogue with the EU to ensure a positive resolution to this dispute through a mutually agreed implementation process. Indonesia will closely monitor the EU’s compliance and push for timely adjustments," Ambassador Setyoko added.
Russia, Brazil, and St. Vincent and the Grenadines (representing the African, Caribbean, and Pacific groups) also expressed support for Indonesia. They voiced concerns over trade restrictions and market access limitations specifically targeting commodities produced by developing and least-developed countries under the pretext of environmental protection.
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