In a report sent to the various members of the World Trade Organization (WTO) on Friday 22 August, a WTO panel ruled that the EU’s countervailing duty on Indonesian biodiesel did not fully comply with WTO rules. In 2023, Indonesia requested the establishment of an panel to determine whether the measure imposed by the European Commission in 2019 was legal. Jakarta denied that it was using subsidies to favour its biodiesel producers over international competitors.
The WTO judges concluded that the European Commission had not carried out an objective examination to conclude that subsidised Indonesian imports were endangering European producers.
In particular, the Commission misjudged the fall in prices caused by imports. It also ignored certain economic factors that had a negative impact on the situation of the EU industry, according to the panel.
Consequently, the WTO considers that the EU has not provided sufficient evidence to conclude that the fragile economic situation of the EU industry was likely to be aggravated by imports of Indonesian biodiesel.
On the other hand, the European Commission did prove the existence of the Indonesian subsidies and had not made any errors regarding the amounts received, the judges state in the report.
The EU also correctly determined that Indonesia was encouraging local palm oil producers to sell their product to biodiesel producers at low prices. In so doing, the Indonesian government has regulated prices, and this effectively constitutes a subsidy.
In conclusion to these various analyses, the WTO judges ask the EU to bring its measure - the countervailing duty - into line with WTO rules. The Commission will therefore have to resume its anti-subsidy investigation and consolidate it, if it wishes to maintain its countervailing duty - or abolish it.
See the arbitration report: https://aeur.eu/f/i4s (Original version in French by Léa Marchal)