Indonesia is expected to challenge the anti-dumping measures on fatty alcohol - set by the European Union (EU) - at the World Trade Organization (WTO) as bilateral meetings have not led to the desired outcome.
Recently, two Indonesian companies (Musim Mas and Ecogreen Oleochemicals) were forced by the EU to pay anti-dumping duties as these companies sold fatty alcohol at prices that were lower than those in the EU. Fatty Alcohol is made from palm kernel oil (a palm oil derivative) and are used in a wide variety of personal care products.
Indonesia and Malaysia are the world’s largest players regarding the production and export of palm oil and palm kernel.
The government of Indonesia is now expected to request the forming of a new panel at the WTO’s Dispute Settlement Body (DSB) to investigate the anti-dumping case. The former DSB panel, which had been set up on 25 June 2013, was dissolved as Indonesia agreed to engage in bilateral talks instead of letting the panel deal with the dispute settlement. Therefore, a new panel needs to be established. Apart from the price-issue, the Indonesian government also says that the EU demanded requirements that are impossible to meet and restrictions that Indonesia is not willing to make.
Earlier in 2014, Indonesia filed a formal complaint at the WTO over the EU’s anti-dumping duty on biodiesel. A dispute panel to investigate this case will be set up soon.
In July 2014, Indonesian palm oil exports grew to 1.84 million metric tons (from 1.79 million tons in the previous month), the highest level in seven months, after India and African countries increased purchases amid a decline in global palm oil prices. Palm oil prices fell as favourable weather conditions in the US boosted prospects for soybean production. Soybean oil and palm oil dominate the global market and account for approximately 60 percent of the total world production of edible oils. Both commodities can substitute one another and therefore food processors tend to switch between both commodities as prices fluctuate.
India is the largest buyer of Indonesian palm oil. In 2013, India imported about 6.1 million metric tons of Indonesian palm oil (comprising crude palm oil and refined oils), a 5.17 percentage point growth from the previous year.
The Indonesian Palm Oil Association (Gapki) targets a production figure of 33 million tons in 2015, two-thirds of which will be exported abroad.
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