France – Amendment 367 on Biodiversity Law

statement by Indonesia to THE COMMITTEE ON TECHNICAL BARRIERS TO TRADE
9-10 MARCH 2016

The following communication, dated 21 March 2016, is being circulated at the request of the delegation of Indonesia.

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1.  Indonesia regards its trade relations with France as very important. Despite having generally good economic relations with France, Indonesia has a concern on the recent adoption by the French Senate of Amendment No.367 to the proposed Law on Biodiversity which intends to apply a tax of €300 per ton on palm oil and palm kernel oil (as well as coconut oil) beginning in 2017, and increase to a staggering €900 per ton by 2020, after which date the tax would increase further on an annual basis.

2.  By specifically targeting palm oil, palm kernel oil and food products containing such oils, the amendment appears to create significant price discrimination in favour of other, especially European-grown, vegetable oils. The tax would make palm oil and palm kernel uncompetitive and lead to its substitution with other vegetable oils by the food industry. Such a measure in fact would not only lead to disruption in Indonesia's palm oil sector but also create unnecessary disturbance in food production and consumption in France and other EU Member countries.

3.  In Indonesia's view, the amendment would potentially breach the WTO principles of national treatment and non-discrimination. GATT Article III:2 provides that imported products shall not be subject, directly or indirectly, to internal taxes or other internal charges in excess of those applied, directly or indirectly, to like domestic products. The amendment would also potentially infringe the spirit of the TBT Agreement which emphasizes that measures taken for the protection of animal or plant life or health, of the environment, are not applied in a manner which would constitute a means of arbitrary or unjustifiable discrimination or a disguised restriction on international trade.

4.  Indonesia has adopted the Indonesian Sustainable Palm Oil (ISPO) initiative to ensure that palm oil is produced in an environmentally friendly manner and does not contribute to unsustainable deforestation and climate change which could adversely affect bioversity. Indonesia's palm oil industry also participates in the Roundtable on Sustainable Palm Oil (RSPO) initiative pursued by the industry stakeholders including government bodies to ensure our palm oil is produced in compliance with standards for sustainability.

5.  Against this backdrop, Indonesia suggests France to reconsider the adoption of this amendment. Indonesia is also willing to further discuss this issue bilaterally with the French or EU delegates.

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