Indonesia marks a key win after the World Trade Organization ruled in favor of its case against the European Union (EU) over palm oil-based biodiesel. This has emerged as a significant victory for Indonesia, as it means the EU will have to review its controversial regulations targeting Indonesian palm oil based biodiesel. Indonesia hopes this decision will trigger a policy adjustment by the EU towards compliance with WTO recommendations.
Background of the Dispute
This case started when, in 2019, the EU voted on phasing out palm oil based biodiesel from 2030. It used deforestation problems linked with its production as its ground for imposing restrictions. Since the world’s biggest palm oil producer was Indonesia, they fought against the proposition, which would allegedly unfairly deprive it of this form of business. Indonesian representatives argued that this is a climate based issue camouflage since it hampers the protectionist approach against unrestricted international trade.
Also read: Indonesia to Enter International Carbon Trading Market in January 2025
The matter was taken to the WTO, with Indonesia attempting to contest the EU’s strict policies. As a result, the WTO’s decision is making the EU reconsider how they implement such policies, particularly about palm oil biodiesel treatment.
WTO’s Ruling on the EU’s Measures
The WTO panel found that the EU’s focus on reducing greenhouse gas emissions was legitimate. However, it also identified several flaws in how the EU implemented its policies. One of the key issues was that the EU failed to review data in a timely manner. Additionally, the EU did not meet transparency obligations, making its decision making process unclear.
The panel also noted that the EU’s measures discriminated against palm oil biodiesel from Indonesia. They were found to treat Indonesian biodiesel less favorably than similar products from the EU or other third countries.
Indonesia’s Response to the Ruling
Indonesia’s Trade Minister, Budi Santoso, expressed satisfaction with the WTO’s decision. He indicated that the ruling was a positive step for global trade. The Indonesian government hopes this will set a precedent, preventing other countries from implementing similar protectionist policies.
Indonesia also emphasized that it will monitor the EU’s regulatory changes closely. The country expects the EU to revise its regulations to comply with the WTO’s recommendations and ensure fair trade practices moving forward.
