Indonesia has filed a WTO lawsuit against the EU over plans to phase out palm oil-based biofuel for vehicles, the Indonesian Ministry of Trade said on Sunday.
The action could escalate a trade dispute between Indonesia — the world’s top palm oil producer — and the EU, which plans to end its use of biofuels by 2030, citing concerns over widespread deforestation caused by the sector.
The EU earlier imposed duties on imports of subsidized biodiesel from Indonesia, saying that it was needed to level the playing field for its producers.
In response to what it called “discriminative” policies against its key palm oil exports, Indonesia said it last week filed a complaint with the WTO.
“Indonesia officially sent a request for consultation on Dec. 9, 2019, to the EU as the initial step for the lawsuit,” Indonesian Minister of Trade Agus Suparmanto said in a statement.
Neighboring Malaysia, the world’s second-biggest palm oil producer, has also threatened WTO action against the EU.
Malaysian Minister of Primary Industries Teresa Kok (郭素沁) yesterday told reporters that she would head to Europe in March, and a challenge would not be filed until after then.
She said she wanted to try to convince European officials to change course on her trip.
“I want to give my trip a chance and see whether I can avoid filing the case at the WTO,” she added.
Palm oil is the world’s most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics.
However, environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in the past few decades to make way for palm plantations.
Iman Pambagyo, Indonesia’s director general for international trade negotiations, said Jakarta had previously tried other bilateral avenues to reach an agreement, without success.
“We need to assert Indonesia’s stance on EU policy,” Pambagyo said, referring to the WTO complaint, adding that he hoped for the “best solution.”
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