Indonesian and European Union (EU) officials will meet to discuss allegations by the EU that Indonesia is illegally subsidizing biodiesel exports to Europe. The Jakarta Post reports says the Indonesians are confident they’ll be cleared of any wrongdoing:
An investigation initiated by the European Commission in November said that Indonesia had illegally subsidized its biodiesel producers.
The EU has accused the Indonesian government of imposing low export taxes on biofuel exports, making local biofuel products cheaper than those produced in the EU.
It was also alleged that the government provided local producers a subsidy of between Rp 2,000 (21 US cents) and Rp 3,000 per liter for domestic biodiesel.[Indonesian Trade Ministry trade safeguard committee director] Ernawati told reporters that there was a big hole in the EU’s argument, claiming that low export taxes for biodiesel were part of a government strategy to boost the downstream industry, which no way aided local biodiesel producers.
“We impose different tariffs on various products. We impose higher export tariffs for raw materials and lower tariffs for processed products. We want to boost downstream products,” Ernawati added.
The government subsidy, according to Ernawati, was actually only Rp 1,000 per liter and was given to boost domestic consumption of the eco-friendly fuel. She claimed that the subsidy did not affect the price of Indonesian biodiesel in the international market and that the subsidy had been given only when biodiesel prices were higher than that of regular diesel fuel.
The EU is also accusing Indonesia and Argentina of dumping biodiesel in the EU market by selling it at lower prices than available locally.