EU launches investigation on Indonesian biodiesel exports

The European Union on Aug. 17 opened an investigation into whether Indonesia has circumvented EU countervailing duties on imports of biodiesel originating in the country by routing the fuel through China and the U.K. The request was triggered by a request made by the European Biodiesel Board on July 4.

The EU said the EBB’s request “contains sufficient evidence that the existing countervailing measures on imports of the product concerned are being circumvented by imports of the products under investigation.”

According to the EU, that evidence shows a change in the pattern of trade involving exports from Indonesia, China and the U.K. to the EU has taken place following the implementation of existing countervailing measures.

The EBB has issued a statement welcoming the investigation. “Since the imposition of countervailing duties on biodiesel imports from Indonesia in December 2019, the EBB has had strong indications that subsidized Indonesian palm-oil based biodiesel continues to enter the [EU] market via third countries,” the group said.

According to the EBB, growing volumes of Indonesian palm oil-based biodiesel appear to be exported to China and then re-exported towards Europe. The EBB points out that the Chinese island of Hainan seems to be a green fuel hot-spot for evaders, noting the island has no sizable biodiesel production capacity but declared nearly one-third of the 2.3 million metric tons of Chinese biodiesel declared for exports to Europe last year. Some of those exports are routed through the U.K., which the EBB said appears to be a means to further elude the 6.5 percent customs duty applicable to biodiesel imports from non-preferential origins. The EBB notes that U.K. biodiesel imports into the EU in both 2021 and 2022 amounted to twice the U.K.’s biodiesel production capacity.

Earlier this week, on Aug. 15, Indonesia requested World Trade Organization dispute consultations with the EU regarding its imposition of countervailing duties on imports of biodiesel from Indonesia. According to information posted to the WTO website, Indonesia claims that the EU countervailing measures and the underlying investigation that led to the imposition of the measures are inconsistent with a number of provisions of the WTO’s Agreement on Subsidies and Countervailing Measures and The General Agreement on Tariffs and Trade 1994.