WTO Panel Finds Discrimination in EU Palm Biofuel Rules

Jakarta — A World Trade Organization (WTO) panel circulated its report on 10 January 2025 in Indonesia's DS593 dispute with the European Union over palm oil and palm-based biofuels. It found discrimination in aspects of the EU's administration of indirect land-use change (ILUC) risk measures and low-risk certification. The ruling does not, however, invalidate the entire EU climate policy or immediately remove restrictions affecting palm-based biofuel.

The WTO confirmed the circulation date, and the panel's published conclusions set out a more qualified outcome than an outright victory for either side. In a statement on the same day, the European Commission acknowledged inconsistencies in the implementation and design of a delegated measure, while defending its ability to pursue environmental and climate objectives.

Where the panel found problems

According to the panel's conclusions, the EU failed to review in a timely manner the data used to classify biofuels as high ILUC risk. Deficiencies in the criteria and procedure for certifying low-risk fuel also caused arbitrary or unjustifiable discrimination between countries where the same conditions prevail. The panel identified breaches of provisions in the Technical Barriers to Trade (TBT) Agreement and GATT governing the treatment of Indonesian palm-based biofuel.

The findings also address procedural shortcomings, including the notification of proposed measures and opportunities for comment on certification rules. In respect of a related French tax measure, the panel found unequal treatment of palm-based biofuel compared with other relevant products. These are findings about specific designs and applications of rules; they do not mean environmental protection itself is prohibited under trade law.

Other Indonesian claims were not established. For example, the panel did not accept that Indonesia had proved the 7% maximum share and the high-ILUC-risk cap and phase-out were more trade-restrictive than necessary under the TBT provision at issue. It also recognised that conserving natural resources and protecting health can justify measures under GATT, while concluding that the way these measures were administered failed the non-discrimination requirements of that exception.

EU response and the procedural next step

The European Commission said the broader Renewable Energy Directive II (RED II) framework remained defensible under the report, but that shortcomings in its delegated act would need to be addressed. It linked limits on food- and feed-crop biofuels counting towards transport renewable-energy targets to concern about indirect land-use change: shifting production can put pressure on forests elsewhere and raise emissions.

Indonesia launched the WTO case in 2019 under the designation DS593. As of 10 January 2025, the development is circulation of a panel report, not a completed change to EU market rules. The Commission says that, unless appealed, the report should be adopted by the WTO dispute settlement body within roughly two months. The announcement alone therefore does not demonstrate that market access has already been restored.

What it means for Indonesia

For Indonesian palm-biofuel exporters, the findings offer a legal basis to press for changes to ILUC-risk classification and the low-risk certification pathway. Actual commercial access will depend on the EU's response and the dispute process. This is an analysis of the panel's findings and the Commission's statement, not a forecast of export volumes or fresh fruit bunch prices.

The rules for counting biofuel towards EU transport-energy targets must also be distinguished from a blanket ban on Indonesian palm oil. The panel did not say all palm oil exports were prohibited or that every restriction had been struck down. Readers can consult the biodiesel regulation data and CPO price page; later developments require reporting from sources published after the date of this archive story.