Enviro News Asia, Jakarta — The Indonesian government has warmly welcomed the WTO Panel’s decision on the palm oil trade dispute with the European Union (EU), which was linked to climate change issues. The ruling is seen as a basis to ensure that the EU does not arbitrarily impose discriminatory policies.
“We hope that, in the future, other trading partner countries will not implement similar policies that could potentially hinder global trade flows,” said Trade Minister Budi Santoso in a press statement on Friday (January 17, 2025). He was responding to the WTO Dispute Settlement Body’s (DSB WTO) decision in the palm oil trade dispute.
In the WTO Panel Report published on January 10, 2025, the panel broadly concluded that the EU discriminated by providing less favorable treatment to palm-based biofuels from Indonesia compared to similar products from the EU, such as rapeseed and sunflower oil. The EU also differentiated its treatment and provided greater benefits to similar products imported from other countries, such as soybeans.
Since challenging the Renewable Energy Directive (RED) II in 2019, Indonesia has demonstrated that the EU’s policy categorizing palm oil as a “high ILUC-risk” product is a protectionist measure disguised as an environmental concern.
Indirect Land Use Change (ILUC) is an EU concept related to land use. In this context, palm oil is classified as a high-risk crop.
The palm oil issue is not merely an environmental matter but also a fierce battleground in trade. Through the Delegated Regulation under RED II and ILUC, the EU granted preferential treatment to biofuels made from rapeseed and sunflower compared to palm oil. France, in particular, has limited palm-based biofuel consumption to just 7%.
The WTO Panel found that the EU failed to provide scientific evidence for this policy and did not ensure fair certification procedures. Furthermore, the panel noted that the EU failed to review the data used to categorize palm-based biofuels as high ILUC-risk.
