The Court of International Trade has ordered the US Department of Commerce to revisit its countervailing duties on Indonesian biodiesel.
The US has had duties on Indonesian biodiesel since late 2017, but Indonesian exports to the US effectively ended in 2016. The countervailing duties ranged between roughly 35 and 65 per cent. In 2018, The Department of Commerce also slapped antidumping duties of up to 341 per cent on Indonesian biodiesel.
The new Court of International Trade (CIT) ruling states that Commerce effectively overstepped the mark with its additional countervailing duty in response to Indonesia’s 1994 export levy. The problem is that the export levy only applies when prices reach a certain level, and there was no evidence that the levy was a subsidy.
The ruling states: “the subsidy determination is not supported by substantial evidence, nor is it in accordance with law.”
Although the ruling does not deal with the additional steep duties placed on Indonesian biodiesel as a response to a separate 2015 export tax, it does highlight the flimsy nature of the US approach. The CIT ruling only came after the Indonesian government appealed the original decision.
It also highlights the aggressively protectionist nature of US policy towards the US soybean industry. Both the countervailing and antidumping duties were placed on Indonesian and Argentine exports at the same time in response to petitions from the National Biodiesel Board (NBB) in early 2017 following the election of the Trump Administration. The Trump Administration has prioritized US soybean farmers in all its trade dealings.
After the EPA ruled in 2015 that some imported biodiesel could qualify for US renewables progams, imports increased significantly. This prompted the aggressive response from the NBB.
Producers have noted that prior to the introduction of the duties and effective blocking of imports, imported biodiesel could be purchased at around 30 per cent cheaper than US product. There are clear echoes of the European campaign in the US, and the problem seems to be the same: a cheap, efficient and competitive import that undermines subsidies aimed at propping up less-efficient domestic producers.
SIIA: Moderate Risk from Haze Season
The Singapore Institute of International Affairs (SIIA) has released its haze outlook for 2020, and its assessment for the upcoming haze season is that the risk can be considered moderate. This is largely due to average rainfall. There will be increased pressure on any government response in Singapore and Putrajaya this year, as respirators, PPE and hospitals are already under pressure from the COVID-19 crisis.
The SIIA makes one thing clear from the outset, however: “69 per cent of hotspots in Indonesia were outside known company concessions, according to data from GFW Fires. 17 per cent of hotspots were in palm oil concessions, 11 per cent were in pulpwood concessions, and 3 per cent were in logging areas. Zooming in on the palm oil sector, only about 4 per cent of hotspots were on concessions linked to major business groups.”
Although these data are presented with some caveats, the underlying premise lines up with research POM presented last year at the end of the haze season: the majority of fires were outside of palm oil concessions. GFW has since removed its analyses of concession data, but we used that data to point out early this year that: “The number of fire alerts on oil palm areas (10%) was considerably lower than those on moratorium areas (32%), pulp plantation areas (13%), and on par with those in protected areas (10%).”
In addition, the SIIA paper notes that the burned area in Indonesia was significantly lower than other fire events in Brazil, Australia and Russia. However, there appears to be some question marks over their emissions data sourced from Mongabay, which states that Indonesia’s emissions were significantly higher than fire events in other countries. This is at odds with other data sources such as the Global Fire Emissions Database and Bloomberg, which state that Australian and Brazilian fire events had emissions greater than the Indonesian events.
SIIA also agrees with the points we made last week: there is some risk that the COVID crisis and associated economic downturn may place greater pressure on smallholders to expand existing plantations. This is something that needs to be carefully monitored and analysed; no amount of boycotting will solve any of the problems thrown up by the pandemic.
Undermining of Certification Continues Ahead of EU Regulation
European academics appear to be joining the campaign to undermine palm oil certification. A new paper argues that sustainability certification for palm oil should be disregarded because of forest conversion to plantations going back to the 1980s, and because these plantations previously occupied biodiverse areas.
The paper has been authored by Roberto Gatti, who has previously argued that there is no difference between certified and non-certified palm oil when it comes to environmental management.
There are some clear flaws in the paper.
First, using an arbitrary date to support this logic would mean that just about every cropland or agricultural area in the world could be excluded from any sustainability schemes.
Second, the paper in its current form states oil palm concessions in South East Asia cover 18 billion ha. The entire area of the European Union is less than 0.5 billion ha. This may be an honest mistake, but it does underline the poor state of scholarship on palm oil certification that has gained traction in the West.
Third, there is a clear intent to completely undermine certification. The authors have in this paper – and in past research – systematically attempted to undermine palm oil certification by arguing that it does not achieve conservation goals within plantation concession areas. But sustainable agricultural production is not solely supposed to pursue conservation; it is supposed to balance environmental, social and economic objectives. They have gone so far as to argue that certification is part of a “myth of sustainable development.”
This is not surprising; the authors are adherents to James Lovelock’s Gaia hypothesis, accepting it as an observed phenomenon, as opposed to an occasionally useful metaphor. The most recent example of this is arguing that the COVID-19 pandemic is a ‘symptom of Gaia’s sickness’. Similarly, they effectively argue elsewhere that an apparently enlightened, elite part of the world’s population – mostly in Europe – should “confront” the world’s most populous countries (India, China, Indonesia and Brazil) with measures such as population control. To state that these views are, shall we say, far outside of the mainstream would be a significant understatement.
Some more mainstream ecologists have pushed back on the more extreme elements of the study, such as Douglas Shiel, who responded to the study as follows: “[RSPO] never promised to stop clearing all forests … So why is sustainability here based on total forest cover from 1984?”
As we pointed out two weeks ago, there appears to be a narrow campaign underway to undermine certification schemes ahead of proposed regulations in the UK and EU on the importation of commodities associated with deforestation. This paper neatly fits into the attempt to build a narrative that no existing certification system can meet UK and EU objectives on palm oil and so more blunt policy tools are needed, such as outright bans or Western-led imposed regulatory barriers. Ultimately, this is what lies behind such papers and publications: the desire to control the developing world.
DfID-funded EIA Responds to POM
The UK-based Environmental Investigation Agency has taken issue with our reporting of their position on a number of key issues, not least, whether the EU’s RED policy is an indirect ban on palm oil-based biofuels, the integrity of Indonesia’s ISPO certification scheme and whether or not EIA are running an anti-palm oil campaign at the behest of DfID. We believe in free speech, and the right of all voices to be heard, especially in today’s world where alternative views and debate are suppressed by political elites. You can read their response here. Be on the lookout for our point-by-point rebuttal in the near future.