April 4, 2019 / 3:35 PM / 16 days ago

Indonesia blocks EU spirits, link seen to palm oil spat: industry

BRUSSELS (Reuters) - European spirits makers say they are facing difficulties exporting drinks to Indonesia amid tension after Jakarta said it was unhappy with an EU decision that palm oil should not be considered a green fuel.

A server passes a wine rack at the Cork & Screw restaurant in Jakarta, Indonesia, October 20, 2018. REUTERS/Willy Kurniawan

SpiritsEurope, which represents major European spirits makers and national associations, said on Thursday it had learnt from members with business in Indonesia that they were suffering delays in securing approval to import EU products into the country.

Indonesia regulates imports of alcohol through an annual import and distribution plan.

Spirits makers were finding that non-EU products, such as tequila, were securing approval, but EU-origin products were not, an industry source said.

Diageo, the world’s largest spirits company, declined to comment.

The European Commission, which oversees trade policy for the 28 EU countries, decided in March that palm oil cultivation in general results in excessive deforestation, setting the bloc on a collision course with major producers Malaysia and Indonesia.

The EU plans to increase its use of renewable energy sources by 2030 and to take into account deforestation when it determines what can be labeled renewable.

In Jakarta, a trade ministry official confirmed there were some delays in granting import licenses for spirits from Europe.

But Karyanto Suprih, the ministry’s secretary general, denied that it was in retaliation for the EU plan to phase out palm oil use in renewable fuels.

“This is just about market preference. It seems like the market wants spirits from America,” Suprih said on Friday.

Indonesia, which has said it would file a World Trade Organization complaint against the EU over the palm oil issue, has threatened to quit the Paris climate accord and said it was examining relations with EU members.

Malaysia’s prime minister told Reuters last week that the EU was risking a trade war over palm oil.

The European Commission said it was checking the situation on the ground and looking into possible additional measures applied to imports of alcohol from the EU.

Reporting by Philip Blenkinsop; additional reporting by Bernadette Christina Munthe, Gayatri Suroyo in Jakarta; Editing by Susan Fenton and Darren Schuettler

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