The European Commission has proposed duties ranging from 8% to 18% on imports of biodiesel from Indonesia to counter what it says are unfair subsidies, the latest twist in a case that has lasted seven years.
The subsidies would be a double blow for Indonesian biodiesel after the European Union decided in March that palm oil should no longer be considered as green and so should be phased out of renewable transportation fuel.
The Commission, which coordinates trade policy for the 28-member European Union, launched an anti-subsidy investigation in December following a complaint by the European Biodiesel Board.
The EU executive said there was evidence that producers in Indonesia benefited from subsidies in the form of export financing, tax breaks and provision of palm oil, the key raw material, at artificially low prices.
Indonesian authorities plan to challenge the duties and will coordinate their response with the companies and the Indonesian biodiesel association, a senior Indonesian trade official told Reuters.
‘The companies are now working to rebut the proposed calculations of the EU for which the deadline is this Friday,’ said Pradnyawati, director of trade security at Indonesia’s Trade Ministry.
The chairman of the Indonesian producers’ biofuel association, Master Parulian Tumanggor, said the EU’s allegations were ‘totally untrue.’
‘We Indonesian palm oil companies believe that we have never received any subsidies from the government,’ he told Reuters. ‘The loans we received were based on a commercial scheme and we pay tax according to the regulation.’
The proposed import duty rates are 8% for Ciliandra Perkasa , 15.7% for Wilmar Group, 16.3% for Musim Mas Group and 18% for Permata Group, according to a document supplied to interested parties.
The measures would be provisional, pending the conclusion of the EU investigation, and be put in place by Sept. 6. Definitive duties, typically applied for five years at the end of an investigation, would need to be set by Jan. 4, 2020.
Measures can be blocked by EU member countries.
European biodiesel producers welcomed the move.
‘It is an excellent thing for the biodiesel industry in Europe in order to regain fair and market competition as it had been the case with Argentina,’ European Biodiesel Board (EBB)chairwoman Kristell Guizouarn told Reuters.
‘It is legitimate to have provisional duties since there is a subsidy for Indonesian biodiesel.’
The EU began looking into biodiesel from Argentina and Indonesia in 2012 and imposed anti-dumping duties on companies from both major producers in 2013. However, the firms subsequently won challenges at the European Court of Justice and the World Trade Organization.
This prompted the EU to remove duties on most biodiesel imports from the two countries, but the Commission also started an investigation into possible unfair subsidies.
It set duties of 25.0-33.4% for Argentine producers in February, but also simultaneously offered them tariff-free access for about 1.2 million tonnes as long as they sold at a certain minimum price.