WTO Establishes DS593 Panel in Indonesia–EU Palm Oil Dispute

Geneva, 29 July 2020 — The World Trade Organization (WTO) Dispute Settlement Body agreed to establish a panel to examine Indonesia's complaint against certain European Union (EU) and member-state measures affecting palm oil and oil palm crop-based biofuels. The step brought dispute DS593 into panel proceedings; it was not a ruling that either side had breached trade rules.

According to the WTO Secretariat's account of the meeting, Indonesia made a second request for a panel after its initial request was blocked at the 29 June meeting. The official agenda for 29 July listed Indonesia's request as item seven, under document WT/DS593/9. WTO members then agreed to establish the panel.

Palm oil and biofuels at the heart of the complaint

The WTO's meeting summary says Indonesia challenged measures adopted by the EU and its member states affecting palm oil and biofuels produced from the oil palm crop. Indonesia argued that the measures unfairly discriminated against palm oil and were inconsistent with WTO provisions concerning trade in goods, subsidies and technical barriers to trade. Those were the complainant's allegations awaiting examination, not findings by a panel.

In an analysis published on the day of the meeting, Palm Oil Monitor linked the complaint to the EU's renewable-energy policy and its treatment of palm-based biodiesel. That article represents the perspective of a publication aligned with palm-oil interests. Its assessments of a ban, economic effects and the dispute's prospects should not be mistaken for WTO findings. The WTO's official description is broader: EU and member-state measures concerning palm oil and oil palm crop-based biofuels.

The EU told the WTO that it was confident of prevailing. It also said it was prepared to discuss reciprocal interim arrangements to preserve the availability of appeal review under Article 25 of the WTO Dispute Settlement Understanding. These were the EU's positions at the meeting, not the outcome of the case.

Malaysia's intervention and third-party rights

Malaysia said it believed the EU measures effectively prohibited palm oil in biofuel production and created unnecessary barriers to trade. That was Malaysia's assessment, not a panel determination. The WTO recorded that Malaysia, along with the United States, Norway, Turkey, Singapore, Thailand, Russia, Japan, Korea, India, Honduras, Guatemala, Costa Rica, Colombia, China, Canada, Brazil and Argentina, reserved third-party rights in the proceedings.

Those rights allow countries to participate within WTO dispute procedures. Their inclusion does not mean that each endorsed Indonesia's case or opposed the EU. Nor did the panel's establishment decide which party was right, quantify any trade loss or order changes to the measures under challenge.

What it means for Indonesia

For Indonesia, establishing the panel opened a route to test its objections to the treatment of palm oil and palm-based biofuels under multilateral trade rules. The issue concerned market access for palm products and derivatives in the EU. But the procedural decision on 29 July alone did not establish any change in export access, farmers' fresh fruit bunch prices or biodiesel sales volumes.

The distinction between a panel being established and a substantive ruling matters for the historical record. Indonesia's, the EU's and Malaysia's statements should be read as each party's position at the time. The WTO documents confirm the procedural step, while the industry commentary illustrates the contemporary debate without replacing the dispute record. As of that meeting, whether the EU measures breached WTO obligations remained an open question.