ICYMI: WTO Moves Ahead With Indonesia’s Palm Oil Complaint Against EU

In today’s Jakarta Post, co-host of the Palm Oil Monitor, Khalil Hegarty, writes on last week’s decision by the WTO to green light Indonesia’s request to form a panel on its complaint against the European Union’s revised Renewable Energy Directive (RED II). 

POM’s Hegarty writes about RED II, “[It] follows a number of trade actions that the EU has taken against Indonesian biodiesel, including the first iteration of RED, its illegal imposition of antidumping duties, and new countervailing duties that were introduced at the end of last year.”

RED II excludes the use of palm oil within the EU’s renewable fuel subsidy scheme. The scheme provides subsidies to fuels such as biodiesel sourced from different feedstocks. This includes biodiesel sourced from soybean, rapeseed and other vegetable oils. Palm-based biodiesel is the only vegetable oil-based fuel that has been excluded by the European Union under RED II. This decision is based on a concept known as Indirect Land Use Change (ILUC).

As Palm Oil Monitor has outlined before, ILUC is bogus. In fact, the EU agrees with its own research stating, ILUC cannot be observed or measured.” Yet, according to European Union logic, palm oil cannot be used in the RED scheme, regardless of whether or not it is certified as sustainable, or whether the oil palm plantations were established a century ago.

Looking ahead, the European Union is in a pickle. They need to protect their domestic vegetable oil producers (for both food and fuel), while ensuring market access for its export driven economies remain open in South East Asia’s largest and fast growing economy. For Indonesia, they should not be afraid to flex some muscle.

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