WTO rules EU must change duties on Indonesia biodiesel

BRUSSELS (Reuters) - The World Trade Organization (WTO) has ruled in favor of several challenges by Indonesia to anti-dumping duties imposed on its biodiesel exports to the European Union, saying the measures needed to be changed.

The ruling is the latest in a series of legal challenges to duties the EU set in 2013 on biodiesel imports from Indonesia and Argentina.

A WTO panel on the case, brought by Indonesia in 2014, said in a ruling made public on Thursday that the EU needed to bring its measures into conformity with WTO agreements.

Argentina has already secured a WTO ruling criticizing the way the EU set anti-dumping duties. This prompted the EU to cut duties to between 4.5 and 8.1 percent from initial rates of 22 to 25.7 percent.

The rates for Indonesia remain those set in 2013 - between 8.8 and 20.5 percent.

The General Court of the European Union, the second-highest EU court, also delivered a series of rulings in September 2016 to annul each set of duties in their present form.

The EU decided earlier this week to withdraw a planned appeal, although the actual withdrawal could take some time, allowing the EU to determine how to proceed.

Both countries impose an export duty on the raw material - soybeans for Argentina and palm oil for Indonesia - which the EU said means biodiesel producers in the two countries have lower costs than elsewhere, allowing them to “dump” product at unfairly low prices.

The EU had argued that the biodiesel markets in both countries were heavily regulated, so it needed to construct a “normal value” for the product, including a higher reference price for soybeans or palm oil and a reasonable profit margin.

Argentina and Indonesia called the resultant five-year anti-dumping measures protectionist.

Indonesia’s Trade Minister Enggartiasto Lukita, in a statement on Friday, said the WTO ruling is a “landslide victory” for Indonesia and it should boost the value of the country’s biodiesel exports, which had fallen to $150 million in 2016 from $649 million in 2013.

He estimated exports to the EU to reach $1.7 billion in 2020.

The WTO panel found, in line with the ruling for Argentina, that the EU should have used the prices recorded by the producers. It also found that the EU failed to calculate correctly a normal profit margin.

Oke Nurwan, Indonesia’s foreign trade director general, said in Jakarta, the government will continue securing markets for Indonesian products.

“For other country’s investigation authorities, this case could be used as evaluation material to be careful when accusing Indonesia of dumping practice,” Nurwan said.

Indonesia had wanted the panel to suggest how the EU should adapt its measures, arguing they should be withdrawn. However, the panel did not make specific recommendations.

The parties have 60 days to decide whether to appeal.

Reporting by Philip Blenkinsop; Additional reporting by Bernadette Christina Munthe; Editing by Robert-Jan Bartunek and Mark Potter