Indonesia is set to meet the EU in a consultation meeting at the end of this month to discuss the latter’s biofuel import duties, Trade Deputy Minister Jerry Sambuaga said during a press conference in Jakarta on Tuesday.

The two parties have sued each other at the World Trade Organisation (WTO) as trade relations between the two jurisdictions simmer.

The eurozone filed a lawsuit with the WTO on November 22 to challenge Indonesia’s nickel ore export ban. Indonesia followed suit by disputing the EU’s import duties on palm oil and biofuel on December 8.

“We will have a consultation forum that will kick off on Jan. 30,” Jerry said. The deputy minister is scheduled to meet with the EU delegation in Geneva, Switzerland, from January 28 to 31.

Currently, the government was strengthening coordination across ministries to explore and prepare its case prior to the meeting, he said.

Jerry emphasised that Indonesia’s lawsuit against the EU was not a form of retaliation and that it was only a response to the bloc’s “discriminatory regulation”.

“We reject any forms of discrimination,” Jerry said. “This is against the free trade principles of openness, impartiality and consistency.”

He went on to say that the import duties were not in line with provisions in the Indonesia-EU Comprehensive Economic Partnership Agreement, which is still in discussions.

The EU duties, which will remain in place for five years, range from eight to 18 per cent for Indonesian exporters of biofuel made from vegetable oils and animal fats.

The new measure follows the European Commission’s findings that Indonesian producers sold biodiesel at unfairly low prices due to government grants, tax exemptions and access to raw materials below market prices.

Previously, the European Commission, the EU’s executive arm, adopted Renewable Energy Directive II which categorises palm oil and biofuel from palm oil as an unsustainable product and lays out plans to phase out its use in biofuels by 2030.

The ministry’s director for trade security, Pradnyawati, said Indonesia had hired a Brussels-based law firm as well as Indonesian lawyers to defend its case at the WTO dispute settlement body.

“Hopefully we can reach a mutually agreed solution during the consultation meeting, so we won’t need adjudication by the WTO panel,” she said. If within 60 days no agreement is reached, the process should continue with two trials that would be three months apart, she added.

The proceedings are expected to last for one-and-a-half years.

According to Statistics Indonesia, Indonesia’s export value of palm oil and biofuel to the EU has declined by 6.93 per cent from 2013 to 2018.

From January to October last year, the value of the export was recorded at $957 million, down 8.63 per cent compared to the $1.07 billion over the same period in 2018.

Over the period, Indonesia’s overall export value of palm oil and biofuel also decreased by 9.33 per cent year-on-year to $3.36 billion.

THE JAKARTA POST/ASIA NEWS NETWORK