European Union – Certain Measures Concerning
Palm Oil and Oil Palm Crop-based Biofuels

Request for Consultations by Indonesia

The following communication, dated 9 December 2019, from the delegation of Indonesia to the delegation of the European Union, is circulated to the Dispute Settlement Body in accordance with Article 4.4 of the DSU.

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My authorities have instructed me to request consultations with the European Union, pursuant to Article 4 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), Article XXII of the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), Article 14 of the Agreement on Technical Barriers to Trade ("TBT Agreement") and Article 30 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement") regarding certain measures imposed by the European Union and the Member States affecting palm oil and oil palm crop-based biofuels from Indonesia.

Indonesia considers that these measures appear to violate the TBT Agreement, the GATT 1994 and the SCM Agreement.

A.     Background

1.    Indonesia is the largest producer of palm oil in the world. Palm oil is derived from pressing the mesocarp of the fruit of oil palms. The European Union grows a number of food and feed crops and produces certain food and feed crop-based biofuels. However, it does not produce palm oil.^[1] One usage of palm oil imported into the European Union is for producing oil palm crop-based biofuel or Fatty Acid Methyl Ester ("FAME"). Palm oil can also be processed in Indonesia before being exported as oil palm crop-based biofuel (that is, as FAME) to the European Union.

2.    International standards and certification schemes aimed at ensuring that palm oil is produced in a sustainable manner are available. Such standards and schemes include those developed by the Roundtable on Sustainable Palm Oil ("RSPO"), International Sustainability and Carbon Certification ("ISCC"), Roundtable on Sustainable Biomaterials ("RSB RED EU"), Indonesian Sustainable Palm Oil ("ISPO") and Malaysian Sustainable Palm Oil ("MSPO").

3.    The European Union has adopted certain measures affecting palm oil and oil palm crop-based biofuels which appear to be contrary to its World Trade Organization ("WTO") obligations. For the purpose of meeting European Union ("EU") targets for the share of renewable energy in the gross final consumption of energy (including in the transport sector), the European Union requires that biofuels meet certain sustainability and greenhouse gas ("GHG") emissions saving criteria. In this context, the European Union has considered whether biofuels produced from food or feed crops that result in land use change may be counted towards those targets. Initially, the European Union focused on the emissions caused by direct land use.