Indonesia has welcomed the ruling of the WTO that favours it against the European Union regarding the restrictions on palm oil-based biodiesel and expects that the EU will follow the regulations in this regard.
The ruling is expected to push the EU to revise its regulations, a move Indonesia hopes will protect the flow of global trade.
The dispute began in 2019 when Indonesia challenged the EU’s decision to exclude palm oil-based diesel from its definition of biofuel. The EU also announced plans to phase out the use of palm oil biodiesel in transport fuels between 2023 and 2030, citing concerns about deforestation. Indonesia countered that these measures were driven by protectionist trade policies disguised as environmental concerns.
Indonesia’s Trade Minister Budi Santoso welcomed the WTO panel’s decision, describing it as a victory for fair trade practices. In his statement, the minister expressed hope that other nations would refrain from implementing similar trade barriers.
The WTO panel acknowledged that the EU’s efforts to limit greenhouse gas emissions were legitimate but found several shortcomings in how the EU implemented its policies. It highlighted issues such as delays in reviewing data to determine the classification of palm oil as high risk, a lack of transparency in policy preparation and administration, and less favourable treatment of Indonesian palm oil biodiesel compared to similar products from the EU or other countries.
Despite these findings, the panel concluded that the EU’s classification of palm oil biodiesel as high-risk had a reasonable basis.
Indonesia’s trade ministry stated that the EU would now be required to adjust its policies to align with the WTO’s recommendations. The ministry also pledged to closely monitor any regulatory changes to ensure they adhere to the ruling.
This decision is regarded as a significant step for Indonesia in defending its palm oil exports, which are a crucial part of its economy.
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