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What's wrong with EU biodiesel antidumping act?
EU argued that the Indonesian government made it impossible for EU industries to import CPO and produce biodiesel themselves from the CPO.
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Valuable commodity: A worker loads oil palm fruits onto a truck during harvest season at an oil palm plantation owned by PT Wanasawit Subur Lestari in Pangkalan Bun, Central Kalimantan, in December 2015. (JP/Dhoni Setiawan)
T
he European Union through its commission has enacted an antidumping policy and said Indonesian and Argentinean biodiesel producers have been dumping in the EU. The policy levies extra duties on Indonesian biodiesel by margins of between 8 percent and 23 percent.
The EU has put forward several reasons for the move, stressing two in particular. The first is the claim that the Indonesian domestic market is distorted. The other is that the export tax system treats biodiesel and CPO differently.
The EU claimed that Indonesia’s biodiesel market was heavily regulated by the government, because Pertamina (a state-owned enterprise) bought most of the biodiesel produced by the sampled companies at the export reference price (HPE) of biodiesel, which is released by the Trade Ministry. This prompted the EU to conclude that the market was distorted and not in line with the “ordinary course of trade.”
The CPO (and its derived product) HPE is determined based on prices registered on the international market, which stem from actual conditions of supply and demand, and are not only based on unilateral policies of the Indonesian government. It is wrong for the EU to conclude — without seeing what is actually going on — that the market is distorted just because there are regulations that influence the market.
As for the other aspect mentioned, the different tax treatment for CPO and biodiesel, with a higher export tax rate imposed on CPO than on biodiesel, that system is created to promote exports of value-added goods.
However, the EU argued that the Indonesian government made it impossible for EU industries to import CPO and produce biodiesel themselves from the CPO.
The EU’s biodiesel industry mainly uses rapeseed as its source, so it is not likely to have processing facilities to produce biodiesel from CPO. It would not be economically rational for EU industries to produce biodiesel from CPO, because they have to buy the CPO and transport it in special containers to preserve it.
