Indonesia, the world’s largest palm oil producer, will meet with the European Union (EU) to seek clarification from the latter on its Renewable Energy Directive II (RED II) policy and the subsequent Delegated Regulation (DR) and also to explain the fundamentals behind Indonesia’s lawsuit against them filed to the World Trade Organization (WTO).
“It is very important for Indonesia to explain the principal matters and potential claims on the WTO Agreement which we deem have been violated by the European Union. If no agreement is reached, then, Indonesia can enter the next stage, that is requesting the formation of a panel,” Director General for International Trade, Indrasari Wisnu Wardhana said in a press release received by the Palm Scribe on Wednesday (8/1).
In December, Indonesia filed a lawsuit at the WTO following the plan of the European Union to gradually phase out the use of palm oil-based biofuels. The Indonesian government deems that the policy is discriminative and would negatively impact Indonesian exports of palm oil and biofuel to the regional grouping but also would tarnish the image of palm oil and its derivative products in the eyes of global trade.
The press release said that the European Union has accepted a formal request moved by Indonesia to meet to hold a consultation regarding the lawsuit at the WTO, Indonesia is proposing that the consultation meeting be held in Geneva, Switzerland, at the end of January 2020.
The consultation meeting is the initial step in a dispute settlement through the WTO, The aims of the consultation is to seek clarifications on the issues under dispute and to seek a solution acceptable to both sides that would prevent the dispute to undergo a litigation process at the WTO. It is hoped that the consultation would be able to find the best solution for both sides.
Under the RED II, the European Union would enforce that all fuels in its transportation sector must come from renewable energy, starting from 2020 and 2030. The DR which is the implementing regulation for the RED II, puts palm oil under the category of commodities which carry a high risks of Indirect Land Use Change (ILUC) and therefore biofuel based on palm oil should not be included in the EU renewable energy targets.
Deputy Trade Minister Jerry Sambuaga was quoted in the same press release as saying that the Indonesian government objected to the gradual elimination of palm oil-based biofuel from the EU renewable energy targets. “This is not in line with the principles of the European Union that prioritize fair trade, freedom and openness. Besides that, it also runs against the spirit of the Indonesia-EU Comprehensive Economic Partnership Agreement currently being negotiated by the two countries,” he said.
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