The European Commission on Tuesday imposed countervailing duties of 8.0 per cent to 18 percent on imports of subsidised biodiesel from Indonesia.
The move aimed to restore a level playing field for European Union producers, said the commission.
“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 EU executive said in a statement.
Last week Indonesia’s trade minister said he would recommend to an inter-ministerial team a 20 per cent to 25 per cent tariff on EU dairy products in response to the EU targeting the country’s biodiesel, adding that he had asked dairy product importers to find sources of supply outside the 28-nation bloc.
The EU duties are another blow to Indonesian biodiesel producers after the bloc said in March that palm oil should be phased out of renewable transportation fuels due to palm plantations’ contribution to deforestation.
The European Commission, which coordinates trade policy for the EU, launched an anti-subsidy investigation in December following a complaint by the European Biodiesel Board.
It said its investigation showed that Indonesian biodiesel producers benefit from grants, tax benefits and access to raw materials below market prices.
The EU biodiesel market is worth an estimated 9 billion euros (£8 billion) a year, with imports from Indonesia worth about 400 million euros, it said.
Indonesia Biofuels Producers Association (APROBI) Chairman M.P. Tumanggor told Reuters that companies impacted by the anti-subsidy duties will likely be forced to renegotiate their contracts with buyers in the EU and it may reduce 2019’s biodiesel exports.
“We initially targeted 1.4 million tonnes exports this year to Europe, that will not be reached,” Tumanggor said, adding that exports may only reach around 1.0 million tonnes.
He said the group is in consultation with the government to response to the duties decision by the EU.
Indonesian officials did not respond to requests for comment from Reuters on the countervailing duties decision.