Indonesia to Challenge EU’s Palm Oil Derivative Anti-Dumping Measures

Indonesia and Malaysia are the world’s largest players regarding the production and export of palm oil and palm kernel.

The government of Indonesia is now expected to request the forming of a new panel at the WTO’s Dispute Settlement Body (DSB) to investigate the anti-dumping case. The former DSB panel, which had been set up on 25 June 2013, was dissolved as Indonesia agreed to engage in bilateral talks instead of letting the panel deal with the dispute settlement. Therefore, a new panel needs to be established. Apart from the price-issue, the Indonesian government also says that the EU demanded requirements that are impossible to meet and restrictions that Indonesia is not willing to make.

Earlier in 2014, Indonesia filed a formal complaint at the WTO over the EU’s anti-dumping duty on biodiesel. A dispute panel to investigate this case will be set up soon.

In July 2014, Indonesian palm oil exports grew to 1.84 million metric tons (from 1.79 million tons in the previous month), the highest level in seven months, after India and African countries increased purchases amid a decline in global palm oil prices. Palm oil prices fell as favourable weather conditions in the US boosted prospects for soybean production. Soybean oil and palm oil dominate the global market and account for approximately 60 percent of the total world production of edible oils. Both commodities can substitute one another and therefore food processors tend to switch between both commodities as prices fluctuate.

India is the largest buyer of Indonesian palm oil. In 2013, India imported about 6.1 million metric tons of Indonesian palm oil (comprising crude palm oil and refined oils), a 5.17 percentage point growth from the previous year.

The Indonesian Palm Oil Association (Gapki) targets a production figure of 33 million tons in 2015, two-thirds of which will be exported abroad.

Indonesian Palm Oil Production and Export:

	2007	2008	2009	2010	2011	2012	2013	2014¹
Production (million metric tons)	16.8	19.2	19.4	21.8	23.5	26.5	27.0	25.0
Export (million metric tons)	n.a	14.2	15.5	15.6	16.5	18.1	21.2	21.1
Export (in USD billion)	n.a	15.6	10.0	16.4	20.2	21.6	19.0	18.9

^{¹ indicates forecast
Sources: Food and Agriculture Organization of the United Nations, Indonesian Palm Oil Producers Association (Gapki) and Indonesian Ministry of Agriculture}

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