WTO Supports Indonesia: EU’s ILUC-Based Biofuel Ban Deemed Unfair

Palm Oil Magazine
WTO Supports Indonesia; EU's ILUC-Based Biofuel Ban Deemed Unfair. Photo by: Special

PALMOILMAGAZINE, JAKARTA – The World Trade Organization (WTO) dispute panel has ruled that the European Union (EU) violated provisions of the Technical Barriers to Trade (TBT) Agreement through its restrictive and gradual phase-out policies on biofuels deemed at high risk of indirect land-use change (ILUC). This decision was outlined in a panel report addressing Indonesia’s complaint regarding discriminatory treatment of palm oil.

In the panel’s conclusions, viewed by Palmoilmagazine.com on Friday (17/01/2025), the EU was found to have breached Article 2.1 of the TBT Agreement by failing to conduct a timely review of data used to classify high-risk ILUC biofuels. Additionally, the criteria for low-risk ILUC biofuels were deemed poorly designed and implemented, resulting in unfair discrimination among countries with similar conditions.

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The report highlighted that the EU failed to sufficiently justify its restrictions and phase-out of high-risk ILUC biofuels. These policies were found to have significant trade implications for palm oil and palm-based biofuels from WTO member states, including Indonesia.

Also Read: WTO Agrees to Establish Panel to Evaluate EU-Indonesia Biodiesel Import Duty Dispute

While the EU denied claims that its policies significantly impacted trade and argued that it had provided adequate justification in various forums, the WTO panel found the EU’s responses did not meet the standards set under Article 2.5 of the TBT Agreement.

The Indonesian government welcomed the WTO panel’s decision. “This ruling demonstrates that our efforts to defend palm oil as a strategic commodity have gained international recognition,” said a Ministry of Trade official.

Indonesia had previously challenged the EU’s policy designating palm oil as a high-risk ILUC biofuel, which restricted market access and initiated its gradual phase-out. This complaint was part of Indonesia’s broader trade diplomacy to combat discrimination against palm oil.

However, while Indonesia emerged victorious in this dispute, the panel’s decision does not mark the end of the conflict. The EU retains the right to appeal, though the WTO’s Appellate Body mechanism is currently not fully operational. Meanwhile, Indonesia must continue strengthening its sustainability commitments in the palm oil sector to enhance its position in the global market.

Following this outcome, Indonesia aims to foster fairer dialogue with the EU on palm oil trade and ensure its strategic national product remains competitive internationally. (P2)

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