The EU said it has now begun an investigation into whether biodiesel from Indonesia is circumventing EU tariffs through China and the UK.
The EU is the third largest destination for Indonesian palm oil products and an important market for Indonesian biodiesel made from palm oil. Indonesia is the world's largest producer of palm oil.
The EU investigation followed an initial request from the European Biodiesel Board (European Producers Association).
The European Commission stated in the Official Journal of the European Union: "The request contains sufficient evidence that imports of the investigated products are circumventing existing countervailing measures against imports of the products concerned. Following the application of the existing countervailing measures, there has been a change in the pattern of trade involving exports from Indonesia, China and the United Kingdom to the EU".
Djatmiko Bris Witjaksono, Director of International Trade Negotiations at Indonesia's Ministry of Trade, has publicly stated that the Indonesian government will oversee the investigation and take measures if things are not in line with World Trade Organization (WTO) rules. Indonesia had requested the WTO to consult with the EU on a dispute over the EU's countervailing duty on biodiesel imports from Indonesia.
"The EU is confident that its responsibilities towards Indonesia are fully in line with WTO rules and the EU is prepared to discuss the matter with Indonesia," a spokesman for the European Commission said. Trade relations between the EU and Indonesia have been strained by EU restrictions on imports of goods linked to deforestation. This is expected to curb EU imports of palm oil from key suppliers Indonesia and Malaysia.
The European Biodiesel Board has voiced support for the European Commission's investigation, saying it estimates that imports that circumvented tariffs last year may have cost the EU about 221 million euros ($240.34 million). The association is working with EU authorities to address allegations of fraudulent biodiesel imports from China, it added in a statement.
