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The European Union has launched an investigation into the suspected evasion of EU countervailing duties on Indonesian biodiesel imports via China and the UK.
News of the investigation’s official launch comes in response to a request from the European Biodiesel Board (EBB) in July and just days after Indonesia filed a complaint with the World Trade Investigation over the EU’s application of charges on biodiesel imports from the Southeast Asian country.
“Growing volumes of Indonesian palm-oil based biodiesel appear to be exported to China, and then re-exported towards Europe,” the EBB said in a statement on August 17, adding that the Chinese Island of Hainan, located in the South-China Sea, “makes an ideal green-fuel hot spot for evaders.”
In 2022, the EBB said, Hainan, “which has no sizeable biodiesel capacity, surprisingly accounted for nearly a third of the 2.3 million tonnes of Chinese biodiesel declared for export to Europe.”
The trade organization added that it also had evidence that a share of this Chinese volume from Hainan had “further acquired UK origin” before reaching its final European destination, which aims to “further elude the 6.5% customs duty applicable to biodiesel imports from non-preferential origins.”
In its official bulletin published on August 16, the European Commission said that the EBB request “contains sufficient evidence that the existing countervailing measures on imports of the product concerned are being circumvented by imports of the product under investigation.”
The Commission said that the evidence it received had shown a “change in the pattern of trade involving exports from Indonesia and the People’s Republic of China and the UK to the Union has taken place following the imposition of the existing countervailing measures.”
The change “appears to stem from a practice for which there is insufficient due cause or economic justification other than the imposition of the duty, namely the consignment of the product concerned via the People’s Republic of China and the UK” to Europe.
Meanwhile, on August 15, the WTO said that Indonesia had requested a consultation with the European Union over the EU’s application of charges on biodiesel imports.
The Southeast Asian country’s government told the WTO it was “concerned” that the regulations and the investigation leading to the imposition of the countervailing measures were “inconsistent” with WTO rules.
In the published communication to the WTO, the Indonesian government confirmed it was awaiting a response from the EU and is “ready to consider with the European Union a mutually convenient date for consultations.”
According to data from Indonesia’s statistics agency Badan Pusat Statistik (BPS), from January-May this year, palm oil methyl ester (PME) exports out of Indonesia came to 228,036 tons, which is significantly higher than the 42,602 tons recorded in the same period of last year.
Biodiesel exports from China meanwhile reached 1.18 million mt in the first half of 2023 – some 58% higher than exports recorded in the same period of 2022, according to data from the country’s General Administration of Customs (GACC).
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