BRUSSELS (Reuters) - The European Commission on Tuesday imposed countervailing duties of 8% to 18% on imports of subsidised biodiesel from Indonesia, saying the move aimed to restore a level playing field for European Union producers.
"The new import duties are imposed on a provisional basis and the investigation will continue with a possibility to impose definitive measures by mid-December 2019," the EU executive said in a statement.
Last week Indonesia's trade minister said he would recommend to an inter-ministerial team a 20% to 25% tariff on EU dairy products in response to the EU targeting the country's biodiesel, adding that he had asked dairy product importers to find sources of supply outside the 28-nation bloc.
The EU duties are another blow to Indonesian biodiesel producers after the bloc said in March that palm oil should be phased out of renewable transportation fuels due to palm plantations' contribution to deforestation.
The European Commission, which coordinates trade policy for the EU, launched an anti-subsidy investigation in December 2018 following a complaint by the European Biodiesel Board.
It said its investigation showed that Indonesian biodiesel producers benefit from grants, tax benefits and access to raw materials below market prices.
The EU biodiesel market is worth an estimated 9 billion euros ($10 billion) a year, with imports from Indonesia worth about 400 million euros, the commission said.
Indonesia Biofuels Producers Association (APROBI) Chairman M.P. Tumanggor told Reuters that companies affected by the anti-subsidy duties will likely be forced to renegotiate their contracts with buyers in the EU and it may reduce the country's 2019 biodiesel exports.
"We initially targeted 1.4 million tonnes in export this year to Europe. That will not be reached," Tumanggor said. The exports would likely reach around 1 million tonnes, he said.
He said the association is in consultation with the government on a response to the EU duties.
Indonesian Trade Minister Enggartiasto Lukita told reporters the government will file an official objection within five days.
He also reiterated that the government is encouraging dairy product importers to start looking for new sources of supply outside the EU.
The ministry will start a programme for Indonesian dairy importers to help them find replacements for dairy products they usually import from the EU with products from the United States or other countries, he said.
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(Reporting by John Chalmers; Additional reporting by Bernadette Christina Munthe in JAKARTA; Editing by David Evans and Tom Hogue)