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NEWS UPDATES Asean Affairs    6 June 2012

Indonesian Palm Oil Industry wants EU to be hauled to WTO

06 June 2012

The local palm oil industry has urged the Indonesian government to file a formal complaint with the World Trade Organisation (WTO) against the European Union’s (EU) discriminatory renewable energy policy.

The Indonesian Palm Oil Producers’ Association (Gapki) executive director Fadhil Hasan said on Tuesday that the government should take the EU renewable energy directive (RED) to the Dispute Settlement Body (DSB) because it was a form of unfair trade practice that restricted access for Indonesian palm oil to the world’s largest economic bloc.

Under the directive agreed in 2008, the 27 EU-member countries aim to generate 20 per cent of their total energy from renewable sources, including biofuel, by 2020. However, palm oil-based biofuel is specifically excluded from the policy as it fails to meet the threshold of greenhouse gas emission savings required.

"We have long requested the government to lodge a complaint with the WTO and it actually has conveyed our complaint to the body, but this must be followed up by a more comprehensive challenge sent to the DSB,” he said after a meeting between palm oil stakeholders and government officials in Jakarta.

In addition to the discriminatory nature of the directive, which favored other kinds of edible oil, the calculation of palm oil greenhouse-gas emission default values, which disqualified the oil as a biofuel source in the EU, was not strongly scientifically based, Fadhil added.

"Overall, our current market share in Europe is substantial and the EU’s move could serve as a bad precedent for other importing countries which may make a similar move,” Fadhil explained.

The EU has been the third largest buyer of Indonesian palm oil. During the first quarter of this year, the local industry delivered 1.56 million tonnes of palm oil to the region, up 59.66 per cent on the same period last year.

The EU’s directive is only one of several measures which have been implemented by advanced countries and considered by the local industry as discriminatory.

Last year, the Australian parliament deliberated a bill requiring products containing palm oil to be explicitly labeled as such.

Earlier this year, the US Environmental Protection Agency in its regulatory filing excluded palm oil from the US renewable-fuel programme as it did not meet greenhouse-gas emission standards.

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