On August 22, 2025, the WTO Dispute Settlement Panel issued its final report in case DS618R, in which Indonesia challenged the European Union (EU) over the imposition of countervailing duties (CVD) on imports of Indonesian biodiesel, deemed to contain subsidies. The ruling marks a significant milestone: the WTO panel upheld Indonesia’s claims on several key points and recommended that the EU bring its measures into conformity with the WTO Agreement on Subsidies and Countervailing Measures.

What Does this Mean? 
Indonesia argued that the EU wrongly applied CVD, undermining agreed trade principles. The panel found merit in several of Indonesia’s arguments, concluding that the EU must revise its policies and halt the application of CVD on Indonesian biodiesel. It is important to stress, however, that this ruling does not amount to the WTO taking a position on Indonesia’s biodiesel policies per se. What the panel assessed was strictly whether the EU’s countervailing measures complied with WTO law. Nothing more, nothing less.

Indonesia’s long biodiesel journey at the WTO: The DS618 dispute is not the first chapter. Since 2013, Indonesian biodiesel has faced anti-dumping and countervailing duty measures in Europe. In November 2013, the EU imposed anti-dumping duties of 8.8-23.3 percent, severely hitting Indonesia’s biodiesel exports between 2015 and 2017. Indonesia later took the case to the European Court of Justice and won on appeal, enabling exports to rebound in 2018–2019.

But in December 2019, the EU struck again, this time with CVD, claiming unilaterally that Indonesian biodiesel benefited from subsidies in violation of WTO rules. This became the heart of DS618. The recent victory, therefore, is not an instant windfall but the result of Indonesia’s consistent use of multilateral legal avenues to challenge trade discrimination.

Why Does the EU Market Matter? 
For Indonesia, the EU is a strategic market. Between 2019 and 2024, exports of coconut methyl ester–based biodiesel reached hundreds of millions of dollars before plummeting due to the pandemic and the imposition of CVD. According to the Ministry of Trade’s Directorate of Trade Defense, the EU still absorbs around 40 percent of Indonesia’s biodiesel exports, followed by China (29 percent), the United States (11 percent), Malaysia (9 percent), and Singapore (6 percent).

Yet Europe is also the toughest battleground: the Renewable Energy Directive II (RED II), which restricts biofuels linked to deforestation risks; the EU Deforestation Regulation (EUDR); negative campaigns against palm oil; and other non-tariff barriers all pose a great challenge to exporters of Indonesia’s biodiesel. In short, the EU is both a golden market and the most complex testing ground for Indonesian biodiesel.

But then, the DS618 ruling is far more than a legal formality. For industry players, it breathes new life into biodiesel producers and millions of palm oil farmers upstream in the supply chain. For developing countries, it demonstrates that the WTO still matters as a guardian of the global rule of law -- even when the opponent is an economic powerhouse like the EU. But challenges remain.

Since 2019, the WTO Appellate Body has been paralyzed due to the United States blocking new appointments. If the EU decides to appeal, the case would fall into a legal limbo -- appeal into the void -- prolonging uncertainty. Indonesia may have won, but enforcement still hinges on the EU’s political will. The ongoing Indonesia-EU CEPA negotiations, targeted for conclusion by the end of this year, provide a timely platform to press the EU to comply with the panel’s recommendations and refrain from appealing.

The significance of DS618 should be read more broadly. As the world’s largest palm oil producer, Indonesia views biodiesel as central to its energy transition and its 2060 Net Zero Emissions target. The WTO ruling strengthens Indonesia’s hand in “green diplomacy” across forums such as the WTO, the G20, and the UN Climate Change Conferences (COP). The key message must be clear: Indonesian biodiesel is not a threat, but a clean, efficient, competitive, and equitable energy solution. This legal victory can thus serve as a catalyst for green diplomacy, positioning Indonesia as a leader among developing countries in the global energy transition.

Still, the global legitimacy of palm oil-based biodiesel cannot endure without stronger sustainability pillars at home. Criticisms from Greenpeace, Walhi, Amnesty International, Sawit Watch, the Indonesian Center for Environmental Law (ICEL), and the Asian Indigenous Peoples Pact (AIPP) about deforestation, land conflicts, and indigenous rights should not be dismissed as mere “smear campaigns.” There is truth in these claims, however biased we may perceive them to be.

Instead of treating NGOs as adversaries, government and industry must engage them as partners to strengthen the Indonesia Sustainable Palm Oil (ISPO) standard and align it with the Roundtable on Sustainable Palm Oil (RSPO). Harmonizing these standards is not a “nice to have” but a strategic necessity to comply with global due diligence regulations, including the EUDR.

Turning a Ruling into Momentum 
The August 22 WTO panel decision is not only a win for biodiesel but also for the trade rights and equality of developing nations. It shows that the multilateral system can still deliver, even in its weakened state. But this win should be treated as a springboard, not a trophy. Indonesia must ensure EU compliance, push for WTO dispute settlement reform, and leverage biodiesel as a tool of green diplomacy.

Ultimately, the ruling is not just about biodiesel exports. It is about how Indonesia positions itself in the global energy map and reaffirms the principle that free trade is only fair when it serves all nations-- not just the powerful. DS618R underscores that Indonesia successfully proved the EU wrong in its application of CVD. It is proof that the WTO’s rule of law still matters and that developing countries can stand up against discrimination from advanced economies.

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Iman Pambagyo is the Trade Ministry’s Director General of International Trade Negotiations (2012-2014, 2016-2020) and Indonesia’s Ambassador to the WTO (2014-2015).

The views expressed in this article are those of the author.

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