Indonesia to sue the European Union

Wandrik Panca Adiguna | 09 Desember 2010 00:40 WIB

BOGOR: Indonesia and Malaysia agree to file lawsuits against the European Union at the World Trade Organization (WTO) over the application of the European Union (EU) Directive, which is considered discriminative against CPO products.

Deputy Minister of Agriculture Bayu Krisnamurthi stated the representatives of Indonesia and Malaysia had expressed their stances toward the EU Directive at their meeting with the European Commission in Brussels in mid-October 2010. At the time, the representatives of the two countries met with Jane Potocnik of the European Union (EU) Environmental Commission, Connie Hedegaar of the Climate Action Committee, Guntter Oettinger of the Energy Commission, Nirj Deva of the Development Committee, and Paolo de Castro of the Plant Development Committee. "We [Indonesia-Malaysia] will wait and see regarding the application of the EU Directive on December 5. The government's position is to question the application and bring the case to the WTO if the regulation is proven as a form of new protection implemented by European countries against bio-fuel products outside CPO," Bayu Krisnamurthi said in Bogor yesterday. The EU Directive is a regulation that requires 27 countries in the EU to have their bio-fuel utilization represent 10% of the total fuel consumption by 2020. For 2010, the target is fixed at 5.57%. The EU Directive excludes CPO as bio-fuel raw material on ground that the commodity is made of the deforestation process. Bayu denied that CPO damaged environment. On the contrary, CPO production was the highest compared to other bio-fuel products. According to him, CPO productivity reached 3.74 tons per hectare, higher than other bio-fuel products, such as soybean oil productivity that only hit 0.38 ton per hectare. In terms of global land utilization, CPO only used 11 million hectares, far lower than 92.62 million hectares used by soybean. Chairperson of the Indonesia Palm Oil Commission (KMSI) Rosediana Suharto disclosed Indonesia and Malaysia had agreed to bring the EU Directive matter to the WTO. However, they were still waiting for the directive to be applied in Europe. "The leader of the protest made to the WTO is the Ministry of Trade." Rosediana explained the EU Directive policy was issued when Holland, Germany, and England issue new regulations on bio-fuel exports. The EU policy, Rosediana added, was related to the change in the edible oil trade in Europe. At the moment, soybean and sesame oils are used to produce bio-diesel, making them worth of being subsidized. In the meantime, the raw material to produce edible oil is CPO. Rosediana explained since the CPO that entered Europe was used as edible oil, the EU countries didn't provide the commodity with subsidy. "The problem definitely interrupts the free trade system regulated by the WTO. The edible oil trade is supposed to be left to free trade mechanism." Still has doubt Secretary General of the Indonesian Palm Oil Businesses Association (Gapki) Joko Supriyono added the government since two years ago had established the sub working group on palm oil consisting of the Ministry of Agriculture, the Ministry of Trade, and the stakeholders. Since two years ago, he added, the Malaysian government had also endorsed Indonesia and Malaysia to raise protest against the EU Directive to the WTO. "The Ministry of Agriculture has agreed with the stakeholder to object to the EU Directive. However, the Ministry of Trade still has doubts." Therefore, he inserted, the companies grouped under the Gapki asked the government not to have doubt to bring the matter to the WTO. "The government has to speak in unison. If there is any disagreement among ministries, that will reduce bargaining position," said Joko. However, Deputy Minister of Trade Mahendra Siregar disclosed far before the EU Directive was applied, Indonesia had explicitly expressed its position to the EU. If the directive discriminates CPO as the bio-fuel raw material, Indonesia would be strongly against it. "Our position has been clear far prior to the issuance of the policy. Right now, after the policy is issued and may discriminate CPO, we have to protest it." Mahendra added the Ministry of Trade in September 2010, represented by him and Deputy Minister of Agriculture Bayu Krisnamurthi visited the EU and expressed Indonesia's position. "So far, we have been consistent with our stance. Our letter to the World Bank clearly states that we have viewed there has been discrimination. We will express our protest to the WTO." In the meantime, Executive Director of Greenomics Indonesia Elfian Effendi stated the Indonesian government had to address the EU Directive problem. According to him, Indonesia as the largest CPO producer had a strong bargaining position, especially if it worked together with Malaysia. "We need more guts." He opined the Ministry of Trade had been busy dealing with CPO export tax when the price went up. "On the other hand, they don't seem to care about the problems facing the palm oil stakeholders," said Elfian. Elfian added other ministries had to support if the Ministry of Agriculture and the stakeholders agreed to bring the EU Directive problem to the WTO. "The government has to speak in unison." Meanwhile, Vice Chairperson of the Indonesia Crude Palm Oil Board (DMSI) Derom Bangun viewed Indonesia's plan to protest to the WTO if the EU applied non-tariff barriers to CPO products was a commendable stance. "The loss inflicted by the EU Directive must have been reviewed. Therefore, we need to show strict stance, which is a form of government support to the national palm oil sector," he said. (may/wiw)

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