RI threatens to report France to WTO over palm oil tax
Indonesia, the world’s largest producer of palm oil, will report France to the World Trade Organization (WTO) should the European country approve a plan to progressively raise import taxes on palm oil products by up to nine times.
The government expressed great concern after the French senate adopted on Jan. 21 a proposed amendment to a biodiversity bill that will allow the imposition of progressive taxes on palm oil, palm kernel and food containing such oils.
According to France’s senate, the amendment has been proposed to address several environmental concerns: to help tackle deforestation caused by oil palm plantations, to stop the use of the unhealthy pesticide paraquat and to diminish health risks, such as heart attack and Alzheimer’s, that stem from palm oil consumption.
If the bill is passed into law, France will raise the import tax on palm oil from ¤100 (US$110) per ton to ¤300 in 2017, to ¤500 in 2018, ¤700 in 2019 and ¤900 in 2020, while leaving taxes on other vegetable oils such as olive, corn and peanut oil practically untouched, ranging between ¤113.24 and ¤170.13 per ton.
In comparison, the selling price of palm oil is only 550 euro per ton.
The Indonesian government said the implementation of such a policy would violate the WTO principles of national treatment and non-discrimination.
“[We will] take this to the court and see how it goes. Otherwise, someone will become the judge and set the agenda and standards for themselves,” assistant coordinating maritime affairs minister Arif Havas Oegroseno said Wednesday during the International Conference on Oil Palm and Environment (ICOPE) in Bali.
“We need to go to a real judge. We’ve done that on the dumping by taking that to the European Court of Justice and the WTO.”
Likewise, the deputy for food and agriculture at the Office of the Coordinating Economic Minister, Musdhalifah Machmud, said that there was a plan for the government to report France to the WTO should the latter proceeded with its plan.
“That’s the plan but it’s not me [who will decide on that]. There are people who analyze whether we need to go to the WTO or not,” she said.
Coordinating Economic Minister Darmin Nasution, however, said that the Indonesian government was still waiting for the negotiation process before deciding whether to report France to the WTO.
“Just wait and see. There’s still time. The law deliberation process there is still ongoing,” he told reporters on the sidelines of the ICOPE conference.
Furthermore, Darmin said that President Joko “Jokowi” Widodo might also negotiate with France directly on the matter during the President’s visit to Europe next month.
According to a study conducted by Pierre Garello from the Université Aix-Marseille, the current tax levels for vegetable oils in France are: olive oil (4.9 percent), rapeseed oil (11.69 percent), sunflower oil (15.79 percent), palm oil (21.67 percent) and soybean oil (23.64 percent).
Indonesia exported 4.6 million tons of crude and processed palm oil last year to Europe, including what it sent to France.
While the annual palm oil exports from Indonesia to France usually only amounted to between 50,000 tons and 150,000 tons, Musdhalifah said that the implications of the planned palm oil tax might be too costly.
“It can have a ripple effect as other countries might follow suit,” she said.
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