Indonesia files lawsuit against EU over palm oil limits

(FMT) – Indonesia has taken legal action against the European Union over stricter limits on how palm oil can be used in green fuels, marking a further deepening in trade tensions.

The nation filed a lawsuit with the World Trade Organisation on Dec 9 alleging discrimination against Indonesian palm-oil exports, the trade ministry said Sunday.

Indonesia, the world’s biggest producer of the oil, warned earlier this year it would retaliate after the European Commission restricted the types of biofuels from it that may be counted toward the EU’s renewable-energy goals.

“The Indonesian government objected to the elimination of the use of biofuel from palm oil by the EU,” Indonesia’s Director General of Foreign Trade Indrasari Wisnu Wardhana said in a statement.

“In addition to having a negative impact on exports of Indonesian palm oil to the EU, it will also create a bad image for oil palm products in global trade.”

The EU has said the restrictions were required by a broader law agreed by the 28-nation bloc last year, when the European Parliament pushed for curbs on the use of palm oil on concerns its production caused deforestation and aggravated climate change.

The lawsuit underscores a worsening in relations between Indonesia and the EU, after the bloc last week imposed five-year tariffs on biodiesel from the Southeast Asian nation to counter alleged subsidies to producers in the country.