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RI victory in CPO case at WTO may mean little in practice

The ruling could still be appealed, but with the WTO’s appellate body being inactive since 2019, it raises concerns about enforcement, potentially rendering the ruling irrelevant for Indonesia.

Ruth Dea Juwita (The Jakarta Post)
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Jakarta
Mon, January 20, 2025

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RI victory in CPO case at WTO may mean little in practice A truck passes through the middle of an oil palm plantation in Muaro Jambi, Jambi, on Nov. 20, 2024. (Antara/Wahdi Septiawan)

I

ndonesia has claimed victory following a ruling by the World Trade Organization (WTO) in a case against the European Union on palm oil-based biodiesel, but experts have said Jakarta may not be out of the woods yet, as the real outcome will still largely depend on the bloc’s next moves.

The WTO panel found the bloc discriminated against Indonesia’s palm oil-based biofuels with its Renewable Energy Directive (RED) II, which limits crop-based biofuels because of their high-risk of causing deforestation and mandates phasing out their use by 2030.

The three-person panel agreed that the EU gave Indonesian palm oil-based biofuels less favorable treatment than EU-made rapeseed and sunflower oil counterparts, as well as imports such as soybean oil, which violates global trade rules under the 1994 General Agreement on Tariffs and Trade (GATT).

The panel’s report, also faulted the EU for flaws in transparency and administration, including failing to notify or allow comments on its rules and creating unnecessary trade barriers through its indirect land-use change (ILUC)-risk certification process in RED II. 

“This ruling is a recognition that biodiesel isn’t limited to rapeseed or soybean-based products, it also includes crude palm oil, which they [the EU] have made difficult for us to export,” Coordinating Economic Minister Airlangga Hartarto told reporters on Friday.

Read also: WTO favours EU over Indonesia on palm oil restrictions

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Indonesia, the world's leading producer of palm oil, requested an expert panel review the EU restrictions in 2019, accusing the EU of using the policy as a pretext to implement protectionist trade measures targeting Indonesia’s exports under the guise of climate action.

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