PALMOILMAGAZINE, JAKARTA – Indonesia has secured a significant victory in its trade dispute with the European Union (EU) over the imposition of countervailing duties on Indonesian biodiesel imports. On Friday (Aug 22), a World Trade Organization (WTO) panel ruled that the EU’s measures were inconsistent with key provisions of the WTO Agreement on Subsidies and Countervailing Measures (ASCM).
Indonesia’s Minister of Trade, Budi Santoso, welcomed the decision, calling it proof of the country’s consistency in upholding international trade rules.
“This ruling demonstrates that Indonesia has complied with WTO regulations without adopting distortive trade policies, as the EU had alleged. We urge the EU to promptly revoke the countervailing duties that have been deemed incompatible with WTO rules,” Minister Budi said, as quoted by Palmoilmagazine.com from the Ministry of Trade’s official release.
In its findings on case DS618, the WTO panel determined that the European Commission’s decision to impose countervailing duties on Indonesian biodiesel violated the WTO’s Subsidies and Countervailing Measures Agreement. The EU had previously argued that Indonesia provided subsidies to biodiesel producers through policies such as raw material allocation, export taxes and levies, and benchmark pricing in the palm oil sector—policies which, according to the EU, distorted market prices.
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The DS618 panel comprised representatives from South Africa, Mexico, and Belgium. This ruling is expected to strengthen Indonesia’s market access for biodiesel in Europe while underscoring the government’s determination to defend national trade interests through international legal mechanisms.
Three Key Aspects of the WTO Ruling
Minister Budi outlined three main aspects of Indonesia’s victory in DS618:
- Rejection of EU’s subsidy claims. The panel dismissed the EU’s argument that the Indonesian government directed palm oil companies to sell raw materials at below-market prices to domestic biodiesel producers. The EU had contended this constituted a form of subsidy.
- Export tax measures not subsidies. The panel found that Indonesia’s export taxes and levies on palm oil cannot be classified as subsidies under WTO rules.
- No evidence of material injury. The panel concluded that the EU failed to prove that European biodiesel producers faced a threat of material injury due to Indonesian biodiesel exports. It further noted that the European Commission had overlooked other factors influencing the biodiesel market in the region.
“Therefore, the panel determined that the EU’s countervailing duties on Indonesian biodiesel were not based on objective evidence,” Minister Budi stated.
He emphasized that the victory was the result of close cooperation between the government, private sector, and international trade law experts in Indonesia. “This outcome shows that Indonesia can compete fairly in global markets while defending its national interests through the WTO’s legal mechanisms,” he added.
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Budi also stressed that the ruling reinforces the WTO’s role as a credible forum for resolving trade disputes. “This case proves that the WTO remains relevant in today’s uncertain global environment. Indonesia urges the strengthening of the WTO Dispute Settlement Body and calls on all members to uphold the rules-based multilateral trading system,” he said.
Meanwhile, Ministry of Trade Secretary General Isy Karim reaffirmed Indonesia’s commitment to ensuring fair and balanced trade. “We expect the EU to respect the WTO’s decision and take immediate steps to align its policies, enabling Indonesia to restore its biodiesel export performance in the EU market,” Isy said.
He further emphasized that Indonesia will continue to use all available diplomatic and legal tools to ensure the WTO ruling is properly implemented. “We remain committed to supporting the national biodiesel industry and securing fair market access for Indonesian products globally,” Isy concluded. (P3)
