Indonesia Disputes EU Fatty Acid Duties


Indonesia Disputes EU Fatty Acid Duties
Farmers haul palm fruit to process it into palm oil at a plantation in Sumatera, Indonesia. Fatty acids such as oleic acid and stearic acid can be derived from vegetable raw materials, such as palm oil. © Sekan.Karan

Indonesia requested World Trade Organization dispute consultations with the European Union over its imposition of anti-dumping duties on imports of fatty acids from Indonesia.

The EU has imposed the duties since January 2023 after concluding that cheap fatty acid imports dumped from Indonesia were harming European suppliers. But an Indonesian delegation contends that the EU’s action violates accepted fair trade principles.

“Indonesia claims the measures at issue appear to be inconsistent with a number of provisions of the WTO’s Anti-Dumping Agreement and the General Agreement on Tariffs and Trade 1994,” summarized a Feb. 12 news item at WTO’s website.

On Feb. 12 the request was circulated to WTO members. The request for consultations formally initiates a dispute in the WTO. Consultations provide the parties an opportunity to discuss the matter and to find a satisfactory solution with proceeding further with litigation. After 60 days, if consultants fail to resolve the dispute, the complainant may request adjudication by a panel.

The dispute traces to October 2021 when the Coalition against Unfair Trade in Fatty Acid lodged a complaint asking the EU to initiate an anti-dumping investigation. The complaint alleged that imports of fatty acid originating in Indonesia were sold in the European Union at dumped prices and caused material injury to the European Union Industry.

The EU investigated and on Jan. 18, 2023 imposed anti-dumping duties of 15.2%-46.4% on imports of fatty acid originating in Indonesia. The duties are scheduled to expire in 2028.

Fatty acids are used in a variety of applications ranging from cosmetics to lubricants. Examples of fatty acids used in lubricants include oleic acid and stearic acid, and these are commonly produced using palm kernel oil. Indonesia is by far the world’s largest producer of oil palm and palm oil.

If a company exports a product at a price lower than the price it normally charges in its own home market, it is said to be “dumping” the product. The World Trade Organization agreement does not regulate the actions of companies engaged in dumping. The organization said its focus is on how governments can or cannot react to dumping – it disciplines anti-dumping actions, and it is often called the “anti-dumping agreement.” The Committee on Anti-dumping oversees the implementation of the Agreement on Anti-dumping and provides a forum for members to raise and address related questions and concerns.

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