Indonesia reviewing terms of EU trade deal as WTO palm oil spat brews: vice foreign minister

NUSA DUA, Indonesia (Reuters) - Indonesia’s vice foreign minister Mahendra Siregar said Jakarta is reviewing a draft trade deal with the European Union in the run-up to filing a complaint against the trading bloc with the World Trade Organization (WTO) over use of palm oil in biofuels.

Siregar said on Friday the government will take a close look at the proposed text of Indonesia’s comprehensive economic agreement, currently under negotiation with the EU, to make sure palm oil is positioned “fairly” in the planned deal. Indonesia is the world’s biggest producer and exporter of palm oil, used in everything from cookies to soap.

The European Commission concluded earlier this year that the palm oil industry contributed to deforestation, thus its use in renewable transport fuel must be phased out in the EU by 2030. The EU also imposed anti-subsidy tariffs on Indonesian biodiesel exports.

Indonesian government officials have accused EU of launching a “structured and systematic” campaign to block palm oil from the EU in order to remove competition against EU’s homegrown vegetable oils.

Jakarta plans to file its case against the EU and its renewable energy directive sometime this month, Indrasari Wisnu Wardhana, foreign trade director general at the Trade Ministry said last month.

“Filing to WTO is not an option, but it is a must,” Siregar told reporters on the sideline of a palm industry conference on Friday. Siregar, who until mid-year was the executive director of Council of Palm Oil Producing Countries, was appointed to his post last week by President Joko Widodo with a brief to carry out “economic diplomacy” and promote palm oil.

Siregar said the credibility of EU’s environmental concern in its renewable energy directive, known as RED II, must be reassessed and that environmental concern has been “misused as a guise for protectionism”.

Reporting by Fransiska Nangoy; Editing by Kenneth Maxwell