Indonesia officially filed a lawsuit at the World Trade Organization (WTO) against the European Union (EU) over bloc's stricter limits on how palm oil can be used in green fuels - Photo: Special.

JAKARTA (TheInsiderStories) – The European Commission imposed countervailing duties at between 8 percent to 18 percent on imports of subsidized biodiesel from Indonesia on Monday (12/09), saying the move aimed to restore a level playing field for European Union (EU) producers.

The duties were based on the results of an EU investigation into claims by the European biodiesel industry which said the Indonesian government provided subsidies to companies such as PT Ciliandra Perkasa, PT Wilmar Bioenergi Indonesia, and PT Musim Mas, the Commission said.

In conclusion to a case that has lasted seven years, the duties, which normally remain in place for five years, was the same level as the provisional rates proposed by the EU in August. The EU biodiesel market is worth an estimated 9 billion euros (US$10 billion) a year, with imports from Indonesia worth about 400 million euros, the Commission noted.

Indonesian producers sold at unfairly low prices. Our investigation found they benefit from grants, tax benefits and access to raw materials below market prices. This was driving EU producers into losses, the Commission said.

The tariff enactment is a further step to protect bloc’s biodiesel companies such as Verbio Vereinigte BioEnergie A. The fresh move is also a form of retaliation for Indonesia’s successful challenges against anti-dumping duties, which were introduced in 2013, in the World Trade Organization (WTO) and in EU courts.

The EU tariffs vary depending on Indonesian producers. The levels are 8 percent for Ciliandra Perkasa, 15.7 percent for the Wilmar Group, 16.3 percent for the Musim Mas Group and 18 percent for the Permata Group and all other Indonesian biodiesel exporters.

The trade dispute between Europe and Indonesia has also increased as a result of an EU decision which separately stated that it restricted the type of biofuel from palm oil. In Indonesia, palm oil is the main raw material for making biodiesel.

Moreover, the two parties also debated the issue of steel trade. The EU has complained to the WTO about restrictions on Indonesian exports of raw materials including nickel which is a stainless steel raw material and threatened to impose tariffs for Indonesian flat-rolled stainless steel products to counter alleged subsidies and below-market sales.

The EU and China are Indonesia’s biggest markets for its biodiesel exports and the Indonesian government has threatened to impose its own tariffs on EU dairy products amid fraught relations with the bloc.

The EU said in March that Indonesian palm plantations were contributing to deforestation and said palm oil should no longer be used in renewable fuels. It has also imposed anti-subsidy duties on Argentine biodiesel producers, although they have tariff-free access for about 1.2 million tonnes as long as they sell no lower than a set minimum price.

The EU began looking into biodiesel from both major producers in 2012 and imposed anti-dumping duties on companies in 2013. However, the firms subsequently won challenges at the European Court of Justice and the WTO. This prompted the EU to remove duties on most biodiesel imports from the two countries, but the Commission also started an investigation into possible unfair subsidies.

€1=US$1.11

Written by Lexy Nantu, Email: lexy@theinsiderstories.com