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Indonesia to challenge EU biofuel anti-dumping tariffs

Publication Date : 08-05-2014

 

Indonesia will soon lodge a formal complaint with the World Trade Organisation (WTO) over the European Union’s anti-dumping duty, which hampers its biodiesel exports.

Indonesia decided to advance to the global trade governing body to seek a fair ruling in the dispute, as the tariffs charged by the grouping created barriers to its palm-oil-based biodiesel, Deputy Trade Minister Bayu Krisnamurthi said Wednesday.

“We consider the imposition of the tariffs does not comply with WTO rules, and for that reason we’ll challenge it,” Bayu said.

Since the end of November last year, the 28-member bloc has applied considerable five-year tariffs on biodiesel from both Indonesia and Argentina of up to 245.67 euro (US$342.32) per ton, or equal to 25.7 per cent of the selling price.

The anti-dumping duty was issued following an EU investigation that found Indonesia’s biofuel being sold below normal value in its market. Imports from Indonesia jumped between 2008 and 2011, allowing its market share to rise steeply from 1.4 per cent to 9.7 per cent, thereby threatening the industry across the bloc.

The levies have affected several Indonesian biodiesel producers, including PT Musim Mas and PT Pelita Agung Agrindustri.

Soon after the EU introduced the steep tariffs, the government and industry players complained directly to the grouping for allegedly making discriminatory calculations on biodiesel prices and production costs, causing a loss in competitive edge.

Indonesian Biofuel Producers Association (Aprobi) secretary-general Paulus Tjakrawan said several Indonesian biofuel producers affected by the measures had recently filed separate appeals to the European Court of Justice.

“The decision was made as the anti-dumping duties really hurt their businesses,” he told The Jakarta Post.

Meanwhile, the government’s formal complaint to the WTO will be preceded by a series of consultations over the measures. If the talks fail to resolve the trade quarrel within 60 days, Indonesia will be granted the right to step up its fight through a new request for the establishment of a dispute settlement panel.

Indonesia’s move follows on the heels of Argentina, whose biofuel exports are also subject to the punitive duties. Argentina is a step ahead in the dispute resolution, as it recently asked the WTO’s Dispute Settlement Body (DSB) to create a panel in order to resolve the issue.

The Trade Ministry’s trade defense director, Nurlaila, said the government had prepared a lawyer to tackle the case.

“Principally, we cannot accept the imposition of the duty, particularly due to the calculations. For that substantial reason, we will advance,” she told the Post in a telephone interview.

Indonesia, the world’s largest producer of palm oil, the raw material used for biodiesel, has attracted recurring accusations from its trading partners, including the EU, about its palm oil derivatives.

The price of its biofuel, for instance, is highly competitive compared to biofuel made from other feedstock. Palm oil-based biofuel is sold at $200 per tonne less than biofuel made from other types of vegetable oil.

Before the EU applied the stringent duty, it had alleged that Indonesia’s biofuel producers had obtained unfair subsidies from the government, but later retracted the accusation.

 

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