Deni Ghifari, Jakarta – The Trade Ministry has derided as "colonialist" an EU investigation into allegations that Indonesian biodiesel is finding its way into the EU market, evading import duties.
Disputes between the two parties have developed into a World Trade Organization (WTO) tit for tat involving several of Indonesia's main commodities, such as biodiesel, steel and nickel.
"It's colonialism. [The EU] keeps on making regulations based on their very subjective arguments that are of benefit to them and harmful to other countries," Deputy Trade Minister Jerry Sambuaga told reporters on Friday on the sidelines of the ASEAN Economic Ministers' Meeting in Semarang, Central Java.
Following a request from the European Biodiesel Board (EBB), the European Commission opened an anti-circumvention probe on Thursday to investigate whether Indonesian biodiesel is evading EU countervailing duties via third countries.
The EU imposed 6.5 percent countervailing duties, or anti-subsidy duties, on biodiesel imports from Indonesia in December 2019.
The EBB says biodiesel shipments from China to the UK surged in 2022 and claims that growing volumes of Indonesian biodiesel "appear to be exported" to China before getting re-exported to the UK and eventually ending up in EU member countries.
"A series of fraudulent and unfair practices have severely disrupted the entire EU biodiesel market," reads EBB president Dickon Posnett's press statement released on Thursday.
"The EBB and the European biodiesel industry [are] very satisfied with the decision and fast action taken by the commission to defend us against unfair and illegal trade practices. We cannot, and will not, allow fraudulent trading, such as circumvention, to go unchallenged," he added.
Data from Statistics Indonesia (BPS) show that Indonesia shipped US$260 million worth of biodiesel to China in 2022.
Meanwhile, data gathered by China's General Administration of Customs revealed that Beijing exported $32.5 million worth of the biofuel to the UK in the same year.
The EU imported biodiesel worth $679.7 million from the UK during the same window of time, according to the European Commission's Access2Markets database.
In terms of mass, China exported 604,104 tonnes of biodiesel to EU member countries last year, while the EBB wrote in the statement that Beijing had exported as much as 2.3 million tonnes to Europe.
Jerry responded to these accusations by saying that in trade, "legal or illegal is relative", and a sovereign country should be allowed to decide which commodities it chooses to export or not to export.
He went on to say that the EU had imposed discriminative measures against Indonesian crude palm oil (CPO) and its derivatives under the pretext of environmental arguments, while the true purpose was to protect the EU's own interests.
"At the end of the day, do you know what it's all about? It's about prices. Why? Because rapeseed, sunflower [oil], which are their products, are five times more expensive than our CPO. They are protecting their products," said Jerry.
When asked how the government would respond, Jerry said the ministry needed to wait for the strategic assessment.
Another ongoing CPO-related dispute revolved around the EU's regulation on deforestation-free products (EUDR), which might erect new barriers for Indonesian palm oil exporters, but the two sides are currently discussing it and considering possible changes.
Brussels has also launched a WTO case against Jakarta's nickel ore export ban. It won a ruling in the case late last year, but Indonesia appealed the ruling.
In July, the EU announced "countermeasures" in response to Jakarta's decision to take the nickel dispute ruling to the WTO's largely paralyzed Appellate Body.
The said body has been dysfunctional for years due to what effectively is a boycott by the United States.
Jakarta insists it has gone through the proper legal process, and therefore the ruling needs to be frozen until the Appellate Body has its say on the matter.
How the body has been paralyzed is not Indonesia's fault, the government argued.
Jakarta intended to "fight at all costs", since it was "a matter of equality", said Jerry.
He vowed, however, that the two sides had agreed not to let these tensions affect negotiations on the Indonesia-EU Comprehensive Economic Partnership Agreement (IEU-CEPA).