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In the battle between Indonesia and the European Union (EU) regarding the latter's anti-dumping duties on Indonesian biodiesel exports, Indonesia won six out of seven legal challenges. Indonesia had challenged the EU's duties, set in 2013, on biodiesel imports from Indonesia and Argentina. The World Trade Organization (WTO) ruled, largely, in favor of Indonesia.
For Indonesian biofuel producers and exporters as well as crude palm oil (CPO) producers, the WTO ruling gives rise to optimism as the EU is a big market in terms of biofuels. Indonesian Trade Minister, Enggartiasto Lukita, said - after the WTO ruling - Indonesian biodiesel exports to the EU should now be able to reach USD $386 million in 2019 and surge further to USD $1.7 billion by 2022.
The EU imposed final anti-dumping duties in the range of 8.8 - 20.5 percent on biodiesel shipments from Indonesia in 2013. According to the EU, biodiesel producers in Indonesia have such low production costs that they can "dump" their products at unfairly low prices in the EU. As a result of the duties, shipments from Indonesia contracted from USD $649 million in 2013 to USD $150 million in 2016 (touching a low of USD $68 million in 2015).
Indonesia challenged the EU's anti-dumping duties, on seven points, in 2014. A panel of the WTO has now ruled in favor of Indonesia for six points, the seventh was rejected. Overall, it means the WTO urges the EU to bring its measures into conformity with WTO agreements.
What Are Indonesia's Seven Legal Challenges Brought to the WTO?
- The EU did not use production costs data that were delivered by Indonesian biodiesel exporters,
- The EU did not use production costs data to construct a "normal value" for the biodiesel product,
- The EU calculated a too high profit margin for Indonesian biodiesel producers,
- The EU's method to calculate the export price of one Indonesian biodiesel exporter was not in line with provisions,
- The EU set a tax rate that was higher than the dumping margin,
- The EU could not prove that biodiesel imports from Indonesia have a negative effect on prices of biodiesel that is manufactured in the EU,
- The WTO did not agree with Indonesia on the point that there was a too big difference between the temporary anti-dumping duties (0 - 9.6 percent set on 28 May 2013) and the final duties (8.8 - 20.5 percent set on 19 November 2013).
In short, the ruling is positive for Indonesia. It boost the nation's export prospects, and boosts the overall outlook for Indonesian palm oil companies as well as biodiesel producers and manufacturers.
Based on data from the Association of Indonesian Biofuel Producers, Indonesia produced a total of 3.1 million kiloliters of biodiesel in the first 11 months of 2017. Meanwhile, domestic consumption of biodiesel in Indonesia only stood at 2.3 million kiloliters over the same period.
Indonesia's Biodiesel Data - Production, Export & Domestic Consumption:
in 1,000 kiloliters
Source: Ministry of Energy and Mineral Resources