Indonesia Claims Victory in WTO Ruling on EU Palm Oil Classification

On January 10, the World Trade Organization (WTO) announced a decision that has been regarded as a partial victory for Indonesia in its ongoing battle against the European Union's (EU) classification of palm oil-based biofuel as "high risk." The WTO upheld the EU's classification but criticized the bloc's procedures, faulting it for inadequate transparency and insufficient review of data. Indonesia's chief economic affairs minister, Airlangga Hartarto, hailed the decision as a win, asserting that it validated palm oil's place alongside other biofuels such as rapeseed and soybean.

Indonesia filed a complaint against the EU in 2019, accusing the bloc of using environmental concerns as a pretext for protectionism. The WTO panel found that the EU treated Indonesian products less favorably than similar biofuels from within the bloc, pointing out that the procedures used by the EU did not align with WTO rules. The "high risk" designation by the EU was linked to concerns about deforestation.

The decision came after a protracted dispute over climate policy, trade, and market access. The WTO panel's findings emphasized that the EU had not sufficiently reviewed data to justify its "high risk" classification for palm oil-based biofuel. Consequently, this decision is being seen as a boost for Indonesia's aspirations in trade and climate policy.

"This victory proves that Indonesia can fight and win against discriminatory practices." – Airlangga Hartarto

The ruling has also brought attention to Malaysia, which shares hopes with Indonesia for progress in trade and climate policy. Although Malaysia was not directly involved in this WTO decision, it is closely observing the developments as they may impact its own trade strategies.

The WTO panel's criticism of the EU's lack of transparency and procedural shortcomings underscores the complexities involved in balancing environmental concerns with fair trade practices. While the ruling does not overturn the "high risk" label, it highlights inconsistencies in how the EU applied its classification criteria.