Indonesia has stepped up pressure on the European Union to immediately remove countervailing duties on biodiesel imports, following a World Trade Organization (WTO) ruling that sided with Jakarta on several key claims. The world’s largest palm oil exporter argued in its 2023 complaint that the EU’s tariffs, in place since 2019 at rates of 8% to 18%, violated global trade rules.

Last week, a WTO panel concluded that Indonesia’s export levies on palm oil could not be classified as subsidies and that the EU had failed to prove Indonesian biodiesel imports caused material harm to European producers. In response, Trade Minister Budi Santoso urged Brussels to withdraw the “non-compliant” measures without delay.

The dispute highlights years of tension between the two sides, ranging from duties on biodiesel to EU concerns about palm oil’s link to deforestation. Indonesia’s biodiesel exports to Europe have plummeted from 1.32 million kiloliters in 2019 to an expected 270,000 kiloliters in 2024. While Jakarta views the WTO decision as a victory, industry representatives remain cautious. Catra de Thouars of the Indonesian Biofuel Producers Association warned that the EU may resist full compliance, noting ongoing disputes over anti-deforestation rules.

The case comes as the EU and Indonesia move closer to finalizing a free trade agreement, which Jakarta hopes will secure wider market access for palm-based products. Although the WTO ruling can technically be appealed, the organization’s top appeals body has been paralyzed since 2019, making enforcement uncertain. For now, the spotlight is on whether Brussels will act—or prolong one of the most contentious trade battles in the biofuels sector.