PALMOILMAGAZINE, JAKARTA – Indonesia’s recent victory at the World Trade Organization (WTO) regarding the European Union’s discriminatory biodiesel policy has provided a breath of fresh air for the country’s palm oil industry. If unchallenged, the ruling will become final—marking not just a legal win, but a valuable moment to reinforce Indonesia’s commitment to sustainable palm oil practices.
The Indonesian government, through the Ministry of Trade, officially announced the favorable outcome in its case against the EU at the WTO. According to WTO dispute settlement procedures, if no objections or appeals are filed within 20 to 60 days after the panel’s report is circulated among WTO members, the ruling will become binding.
In its official statement, the Ministry welcomed the WTO panel report issued on January 10, 2025, and expressed hope that the EU would cease implementing discriminatory trade measures that could hinder global trade flows.
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Indonesia filed the complaint through its Permanent Mission to the WTO in Geneva in December 2019. The dispute, handled by the WTO’s Dispute Settlement Body, concerns the EU’s Renewable Energy Directive (RED) II and its Delegated Regulation, which Indonesia claims unfairly restrict market access for palm oil and palm-based biofuels by labeling them as high-risk due to Indirect Land Use Change (ILUC) factors.
As a result of these policies, palm oil-based biofuels are excluded from the EU’s renewable energy category, effectively blocking imports from Indonesia. The Indonesian government strongly objected to this exclusion, highlighting its negative impact on export performance and the reputation of palm oil products in global trade.
Falling Exports and Market Impact
Data from Indonesia’s Central Statistics Agency (BPS) shows that since the EU policy came into effect, exports of palm oil and Fatty Acid Methyl Ester (FAME) to the EU have declined. In 2018, Indonesia’s FAME exports were valued at US$934 million, falling to US$882 million in 2019—a 5.58% drop. Meanwhile, combined global exports of palm oil and FAME also declined by 6.96%, from US$3.27 billion in 2018 to US$3.04 billion in 2019.
A Broader Context: Global Vegetable Oil Competition
The WTO panel found that the EU had discriminated against palm-based biofuels, offering preferential treatment to similar biofuels made from other vegetable oils such as soybean, rapeseed (canola), and sunflower oil—mostly produced within or favored by the EU.
This conclusion reflects broader concerns over global vegetable oil competition, where palm oil is often positioned as a rival to oils produced by other countries. Strengthening Indonesia’s sustainable palm oil standards now becomes crucial—not only to counter negative perceptions but also to enhance the industry’s resilience and global acceptance. (*)
Author: Ahmad Zazali, SH., MH – Head of the Center for Legal and Conflict Resolution (PURAKA) / Managing Partner at AZ Law Office & Conflict Resolution Center.
Read the full article in InfoSAWIT Magazine, March 2025 edition.
