Indonesia has called on the European Union to remove countervailing duties on biodiesel imports “immediately” after a World Trade Organisation (WTO) panel found in Jakarta’s favour on several points in a dispute over the measures.
The duties, in place since 2019 at rates of 8–18 per cent, were introduced to counter alleged subsidies to Indonesian producers.
Trade Minister Budi Santoso said the ruling showed the measures were not compliant with WTO rules. “We urge the EU to immediately revoke these countervailing import duties that are not WTO-compliant,” he said in a statement. The EU’s representative office in Jakarta did not immediately comment.
In its report on DS618: European Union — Countervailing Duties on Imports of Biodiesel from Indonesia, the WTO panel found that Indonesia’s export duty and export levy on palm oil could not be categorised as a subsidy for the purposes of the EU investigation. The panel also faulted aspects of the EU’s analysis linking Indonesian imports to harm suffered by EU biodiesel producers, and recommended the EU bring its measures into conformity with its obligations under the Subsidies and Countervailing Measures Agreement.
The legal pathway to a swift resolution remains uncertain. While the EU can appeal, the WTO Appellate Body has been inactive since late 2019. Because Indonesia is not a participant in the WTO’s Multi-Party Interim Appeal Arbitration Arrangement, any appeal risks leaving the dispute in limbo.
The case sits within a broader set of EU-Indonesia trade frictions. Brussels introduced the countervailing duties a year after removing anti-dumping duties on Indonesian biodiesel in 2018, following WTO findings and court actions. The 2019 measures were formalised through Commission Implementing Regulation (EU) 2019/2092. In 2024, the Court of Justice of the EU rejected appeals by Indonesian producers seeking to annul those countervailing duties. The WTO panel’s conclusions now add a multilateral dimension that could require the EU to adjust its approach.
Indonesian stakeholders welcomed the WTO outcome. The Indonesia Palm Oil Association (GAPKI) urged the European Commission to ensure that any future instruments, including sustainability rules, do not discriminate against Indonesian palm oil. Jakarta remains engaged in a separate dispute with the EU over the bloc’s deforestation law, which Indonesia argues imposes disproportionate burdens on producers.
The EU Deforestation Regulation (EUDR) has been delayed by one year and will now apply from 30 December 2025 for large and medium-sized operators, and from 30 June 2026 for micro and small enterprises. The EU has launched the associated information system and continues to develop guidance, but questions remain in producer countries over how risk classification and due-diligence obligations will work in practice.
Between 2001 and 2016, more than two million hectares of forest were lost to make way for palm oil plantations in Indonesia (Image: Mighty Earth)
Trade flows reflect the impact of EU measures. Indonesia’s exports of palm oil-based biodiesel to the EU fell from 1.32 million kilolitres in 2019 to 36,000 kilolitres in 2020 and 27,000 kilolitres in 2024. Industry representatives in Jakarta said they doubted the EU would move quickly to lift duties, citing previous experience, and called on producers to remain vigilant as the legal process unfolds.
The dispute comes as the EU and Indonesia seek to finalise a free trade agreement. On 13 July 2025, the two sides announced a political agreement to advance the Comprehensive Economic Partnership Agreement (CEPA), with Brussels describing the deal as opening opportunities in sectors including agriculture and automotive. Jakarta has said an eventual accord should improve EU market access for palm oil and derivative products, including biodiesel.
Image: Wahyudi/China Dialogue
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