The European Commission (EC) has imposed countervailing duties of 8% to 18% on imports of biodiesel from Indonesia, saying the move aimed to restore a level playing field for EU producers.

“The new import duties are imposed on a provisional basis and the investigation will continue with the possibility to impose definitive measures by mid-December 2019,” the EU executive said in a statement on 13 August.

Euractiv reported that Indonesian trade minister Enggartiasto Lukita said he would recommend a 20% to 25% tariff on EU dairy products in response to the duties and asked dairy importers to find sources outside of the bloc.

The duties are another blow to Indonesian biodiesel producers after the EU said in March that it planned to cut its use of palm oil-based biofuels by 2030 because of deforestation concerns.

The EU’s revised Renewable Energy Directive (REDII) classifies palm oil from large plantations as a high indirect land use change (ILUC) risk feedstock.

The bloc’s biodiesel market is worth an estimated €9bn/year (US$10bn), with Indonesian imports worth about €400M (US$447M), according to Euractiv.

Indonesia Biofuels Producers Association (APROBI) chairman M P Tumanggor told Reuters that companies impacted by the anti-subsidy duties would likely be forced to renegotiate their contracts with buyers in the EU and it may reduce the country’s 2019’s biodiesel exports.

“We initially targeted 1.4M tonnes of exports this year to Europe, that will not be reached,” Euractiv reported Tumanggor as saying, adding that exports might only reach around 1M tonnes.

He said the group was in consultation with the government to respond to the EU’s decision.

The EC proposed anti-subsidy duties against Indonesia on 23 July after it launched an investigation against the country in December following a complaint by the European Biodiesel Board (EBB).

The proposed import duty rates were 8% for Ciliandra Perkasa, 15.7% for Wilmar Group, 16.3% for Musim Mas Group and 18% for Permata Group, according to Reuters.

The EC said there was evidence of Indonesian producers benefitting from subsidies in the form of export financing, tax breaks and provision of palm oil at artificially low prices.