European Union Fails to Meet Obligations, Indonesia Urges WTO to Reduce Sanctions

Jakarta — Indonesia’s government will file a request for the suspension of concessions or other obligations owed to the European Union with the World Trade Organization’s Dispute Settlement Body (DSB). The request follows the EU’s failure to meet deadlines to adjust its policies or to fully comply with the WTO Panel on Palm Oil’s findings and recommendations in case DS593: EU-Palm Oil.

Trade Minister Budi Santoso said in an official statement that suspending concessions is necessary and aligned with Article 22.2 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU WTO) after the EU failed to adjust its palm oil policies in line with the Panel’s ruling and DS593.

Furthermore, the EU has not been able to provide balanced compensation to Indonesia for not meeting WTO obligations.

According to him, the action has been coordinated across government agencies and supported by business actors, including the Indonesian Palm Oil Association (GAPKI) and the Indonesian Biofuels Producers Association (APROBI).

“Concessions suspension will be focused on goods, but remains open to other sectors. We will ensure losses are calculated precisely and that case handling is effective while maintaining bilateral relations with the EU,” Budi said on Saturday, 7 March 2026.

“The move taken by Indonesia is in line with the commitments agreed in WTO dispute settlement rules. Indonesia may exercise the concession suspension authority at the DSB to protect its rights in the future if the EU cannot comply with the WTO Panel’s decision,” he added.

In the same statement, APROBI’s Deputy Chairman Catra De Thouars expressed appreciation for the government’s move. “The losses estimated are substantial for businesses each year due to the loss of export potential. We highly appreciate the government’s efforts and support further legal steps to provide certainty for the national palm oil industry,” De Thouars said.

As a note, the dispute relates to the EU’s RED II Directive on Renewable Energy (2018).

A concession suspension is a mechanism allowed by the WTO for member states that violate WTO rules. In this case, it would be used by the winning country against the country found to have violated the WTO rules. One mechanism is to suspend all trade obligations, such as tariffs, by requesting the WTO’s Dispute Settlement Body to impose such sanctions.