Indonesia, the world’s largest producer of palm oil, has strongly condemned the EU’s decision to categorise the palm as a deforestation crop that must be phased out of transport fuels by 2030 according to the EU’s Renewable Energy Directive (RED II).
The EU is the second-largest marketplace for Indonesian palm after India, which accounted for about 12 percent of the country’s exports in 2017, in response to government data.
In recent weeks, Indonesia also pledged to challenge the EU through the World Trade Organization (WTO) and said the federal government was “exploring bilateral relations with member states which can be most supportive” of European rules.
“We continue to pursue a diplomatic approach, but we are also taking steps in judicial proceedings,” Oke Nurwan, director general of international trade at Indonesia’s Ministry of Commerce, told reporters on Monday.
“The government (will file a complaint with) the WTO, and we also encourage companies or industry associations to bring cases to the courts,” he said.
Indonesian palm oil producers who’re members of the Indonesian Palm Oil Association (GAPKI) “would take note of the federal government’s advice and proceed to debate further steps to be taken,” said Togar Sitanggang, vice-chairman of GAPKI.
GAPKI can also be considering whether it could take legal motion against retailers using the “palm oil-free” label, Sitanggang said. The EU has no regulations on the labeling of palm oil.
The EU concluded that palm oil is a high-risk crop after finding that 45% of palm expansion between 2008 and 2015 took place in carbon-rich areas, significantly more in comparison with competing crops soybean and rapeseed.
“As defenders of the rules-based order, we respect WTO rules and respect its rulings,” EU representatives in Indonesia wrote in a press release posted last week on the web site of the EU delegations to Indonesia and Brunei.
According to the Indonesian government, unlike many markets, Europe uses many of the palm oil it buys as a feedstock for biofuel, slightly than for cooking or cleansing products.
EU governments and the European Parliament have two months to make your mind up whether to adopt or veto the brand new EU regulation.
