The EU will impose five-year tariffs on Indonesian biodiesel ranging from 8-18% to counter subsidies given to producers in the country, Bloomberg reports.

Subsidised exports of Indonesian biodiesel to the EU were causing “a threat of material injury to the union’s industry”, the European Commission (EC) said in the bloc’s Official Journal.
The duties came into effect on 10 December and were the definitive outcome of an EC inquiry opened in December 2018 following a request by the European Biodiesel Board (EBB), Bloomberg said.

The rates are 8% for Ciliandra Perkasa, 15.7% for the Wilmar Group, 16.3% for the Musim Mas Group and 18% for the Permata Group and all other Indonesian biodiesel exporters.

“The five-year import taxes are the latest twist in a long-running EU trade dispute with Indonesia over biodiesel and mirror a fight the bloc has had with Argentina,” Bloomberg said.

The EU imposed anti-dumping duties on Argentine and Indonesian biodiesel in 2013 but had to remove most of them in 2017 after losing challenges at the World Trade Organization (WTO) and the European Court of Justice. Following the EBB request for an enquiry, the EC proposed anti-subsidy duties of 25-33.4% on Argentine biodiesel but then reached an agreement with eight of the country’s biodiesel producers in January 2019 to allow up to 1.2M tonnes/year of tariff-free Argentine biodiesel imports at a set minimum price. It also proposed preliminary duties on Indonesian biodiesel in July.

Indonesian Deputy Foreign Minister Mahendra Siregar said the EU decision was “flawed” and undermined international trade rules.

“I think there is no other choice than to bring this to the WTO,” Bloomberg reported him as saying.

The EU biodiesel market was worth US$10bn/year and the Indonesian share of this market rose to 3.3% or 516,088 tonnes in the 12 months through September 2018 from 0.2% in 2017 and 0.3% in 2016, Bloomberg wrote.

Trade tensions between the EU and Indonesia and Malaysia are already under strain due to the EU’s announcement earlier this year that it is phasing out palm oil-based biofuels.

Indonesia and Malaysia are the world’s two largest producers of palm oil and the EU Delegated Regulation Act has classified palm oil as a high-risk indirect land use (ILUC) biofuel feedstock, the use of which will be capped at 2019 levels until 2023, and phased out to zero by 2030.