Indonesia files WTO lawsuit against EU

Indonesia has filed a lawsuit at the World Trade Organization (WTO) against the EU, claiming the bloc’s restrictions on palm oil-based biofuel are unfair, the country’s trade ministry said in a statement on 15 December.

The European Commission (EC) concluded last year that palm oil cultivation resulted in excessive deforestation and should not count towards renewable energy targets, Reuters wrote.

The world’s largest palm oil producer had repeatedly said it would challenge the EU’s renewable energy directive (REDII) at the WTO’s dispute settlement body.

Indonesia sent a request for consultations with the EU on 9 December as the initial stage in the lawsuit, the trade ministry said.

The consultation phase lasted for 60 days and if no solution was found, the EU could then request that the WTO set up a panel to adjudicate on the issue, Reuters wrote.

Indonesian trade minister Agus Suparmanto said the decision to take the issue to the WTO was made after looking at scientific studies and meetings with associations and businesses involved in the palm oil sector.

“With this lawsuit, Indonesia hopes the EU can change its REDII and delegated regulation policies,” he said.

The EU Delegated Regulation 2019/807 (delegated act) has defined palm oil as a high-risk indirect land use change (ILUC) biofuel feedstock, the use of which must be capped at 2019 levels until 2023, and then phased out by 2030.

According to the European Commission, the EU biodiesel market is worth an estimated US$10bn/year, with imports from Indonesia worth about US$448M. In 2018, the bloc consumed more than 7M tonnes of palm oil, with some 65% of it used for energy.