The European Commission (EC) has hit Indonesia for the second time on its export to the 28 bloc European Union (EU) nations within six months. After announcing that palm oil’s usage as renewable transportation fuels should be ended, the European Commission has now imposed higher tariffs on the Indonesian biodiesel to level the playfield for the European biodiesel producers.
The EU’s executive arm, European Commission has imposed tariffs ranging from 8 to 18 percent on the biodiesel. Although, the tariffs imposed are temporary as of now, the commission has notified that it will enforce permanent measures by the end of 2019.
In a statement, the EU executive said, “The new import duties are imposed on a provisional basis and the investigation will continue with a possibility to impose definitive measures by mid-December 2019.”
The tariffs were imposed after the anti-subsidy investigation of the EC following the complaint of the European Biodiesel Board. The EC said that from the investigation, it came into light that the Indonesian biodiesel producers gain advantage from grants, tax benefits and have access to the raw materials below market prices.
The commission further added that while the total worth of the biodiesel market of the EU is 9 billion Euros a year, the imports from Indonesia is worth about 400 million Euros.
Earlier this month, Indonesian trade minister Enggartiasto Lukita said that if the EU imposes tariffs ranging from of 8 to 18 percent on the biodiesel products, Indonesia would retaliate by imposing tariffs ranging from 20 to 25 percent on the EU dairy products.
Post tariff announcement, Indonesia Biofuels Producers Association Chairperson M.P. Tumanggor said that the companies will be forced to renegotiate their contracts with the EU buyers due to the tariffs imposed and this might be the prime reason for the downfall in exports of the Indonesian biodiesel.
He further added, “We initially targeted 1.4 million tonnes exports this year to Europe that will not be reached.”
The tariff rates vary from producers to producers. While a tariff of eight percent is imposed on Ciliandra Perkasa, Wilmar Group, Musim Mas Group and Permata Group, all other Indonesian biodiesel exporters will be paying a tariff of 15.7 percent, 16.3 percent and 18 percent respectively.
The tariffs even though are temporary as of now will further deepen the wedge between the EU and Indonesia. The move can also be considered a well though step by the EC as palm oil is main raw material required to produce Indonesian biodiesel and the EC has prohibited the same in March citing deforestation as the prime reason.