Indonesia appeals to WTO against the European Union's 'discriminative' palm oil restrictions

Indonesia has filed a lawsuit at the World Trade Organization against the European Union, claiming the bloc’s restrictions on palm oil-based biofuel are unfair.

The European Commission concluded earlier this year that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out by 2030.

The action could escalate a trade dispute between Indonesia as the country is the world’s biggest producer of palm oil and has repeatedly said it will challenge the EU’s renewable energy directive known as RED II, at the WTO’s dispute settlement body.

Indonesia sent a request for consultation to the EU on 9th December 2019 as the initial initiation stage in the lawsuit.

Indonesia's trade minister has said that the decision was made after assessing scientific studies and after meetings with associations and businesses involved in the palm oil sector.

"Indonesia officially sent a request for consultation on December 9, 2019, to the EU as the initial step for the lawsuit," Trade Minister Agus Suparmanto said in a statement Sunday.

Neighbouring country Malaysia, the world's second-biggest palm oil producer, has also threatened the EU with similar lawsuits.  

Indonesia’s Director General of Foreign Trade Wisnu Wardhana said the EU’s policy would not just impact Indonesia’s palm oil exports to Europe, but would also tarnish the image of palm oil products globally.

Palm oil is the world's most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics but according to environmentalists, it drives deforestation, with huge parts of Southeast Asian rainforest logged in recent decades to make way for palm plantations.

Iman Pambagyo, Indonesia's director-general for international trade negotiations, said Jakarta had previously tried other bilateral avenues to reach an agreement, without success.

"We need to assert Indonesia's stance on EU policy," Pambagyo said, referring to the WTO complaint, and adding that he hoped for a "best solution".