Palm Oil Production -Photo by Sawit Sumbermas Sarana

JAKARTA (THeInsiderStories) – Indonesia will negotiate a palm oil dispute with European Union (EU) which plans to provide a proposal to impose import duties on biodiesel from Indonesia by 8-18 percent. The policy will be applied provisionally as of Sept. 6, 2019, and is determined definitively as of Jan. 4, 2020 with a validity period of five years.

Coordinating Minister for Economic Affairs, Darmin Nasution estimated that the dispute will culminate in the resolution of disputes at World Trade Organization (WTO).

“We will certainly hear what they accuse. We will respond, discuss and negotiate it to make it clear,” he explained at his Office on Sunday (07/28).

He added that this step was taken because Indonesia respected relations multilaterally. EU has accused Indonesia of being unfair in biodiesel trade but then there will be discussion and negotiations.

In addition, he said Indonesian palm oil is quite difficult to make palm oil farmers in European countries because Indonesia can produce palm oil on a large and cheap scale.

“To protect their palm oil products domestically, they will hamper Indonesian biodiesel. This subsidies accusation has been made and that has been proven.” he said. “That is a levy from CPO producers and exporters themselves, government does not spend any money.”

According to him, until now despite getting a black campaign in Europe by dumping, Government will fix domestic agriculture and oil palm land. So that palm oil production can be optimized to support B20 energy use.

“Indonesian palm oil develop is  late from Malaysia, so there is room to accuse the market. But we have implemented these improvements for several years. There are a number of things that are just starting to be implemented,” he said.

Is known, Indonesian Biodiesel is subject to import duties because EU accuses Indonesia of implementing a subsidy practice for crude palm oil (CPO) based biofuel products. The imposition of import tariffs is the aftermath of a biodiesel dispute between Indonesia and the EU for the past 7 years.

Meanwhile, the import duty will be applied to biodiesel produced by Ciliandra Perkasa by 8 percent, Wilmar Group 15.7 percent, Musim Mas Group 16.3 percent, and Permata Group by 18 percent.

Previously, The European Commission has proposed to Set import duties for Indonesia’s Biodiesel ranging from 8% to 18%. EU’s plan is to fight unfair subsidies after being a problem for seven years what it says are dumping efforts.

European Union decided to stop and revoke Indonesian biodiesel because it contradicted the green campaign in March. Eu also recommends that Indonesian Biodiesel be phased out of renewable transportation fuel. According to EU, It does not meet the standards because it is dangerous for the environment when palm oil production continues to increase.

The Commission, which coordinates trade policy for the 28-member European Union, launched an anti-subsidy investigation in December following a complaint by the European Biodiesel Board.

As reported by Reuters, The EU Executive said that Indonesia was benefited from subsidies in the form of export financing, the tax breaks and provisions of palm oil, the key raw material, at artificially low prices.

Indonesian senior trade official told that, Indonesian authorities along with Indonesian biodiesel companies and associations would oppose European union accusations for dishonest subsidies for the Biodiesel trade.

“Indonesian companies will oppose EU plans to impose import duties on Indonesian biodiesel with a time limit on this Friday,” said Pradnyawati, director of trade security at Indonesia’s Trade Ministry.

Chairman of the Indonesian biofuel association, Master Parulian Tumanggor, denied the EU accusations. According to him the Indonesian palm oil company never received subsidies from the government.

“The loans we receive are based on commercial schemes and we pay taxes according to regulations,” he said.

European Biodiesel Board (EBB) chairwoman Kristell Guizouarn said this step restore fair competition like the Argentine Biodiesel company.

The EU began looking into biodiesel from Argentina and Indonesia in 2012 and imposed anti-dumping duties on companies from both major producers in 2013. However, the firms subsequently won challenges at the European Court of Justice and the World Trade Organization.

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.

It set duties of 25.0-33.4 percent for Argentine producers in February, but also simultaneously offered them tariff-free access for about 1.2 million tons as long as they sold at a certain minimum price.

Written by Willy Matrona, Email: theinsiderstories@gmail.com

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