The EU's top trade court upheld steep anti-dumping duties of up to 46.4% on Indonesian palm oil imports, rejecting all legal challenges from major producers.

02/07/2025 (Courtshouse News Service), Brussels - Indonesian palm oil companies suffered a comprehensive legal defeat Wednesday as the European Union's General Court rejected all challenges to punishing anti-dumping duties, delivering a major victory for EU trade enforcement and maintaining penalties of up to 46.4% on fatty acid imports.

In two related rulings issued Wednesday, the Luxembourg-based court upheld the European Commission's decision to impose steep tariffs on Indonesian fatty acid imports. The judgments dismissed challenges from three Indonesian companies that had argued the trade penalties were improperly calculated and unjustified.

A three-judge panel dismissed every legal argument raised by Musim Mas, the Indonesian subsidiary of the Singapore-headquartered Musim Mas Group, with operations in 13 countries and 37,000 workers worldwide. The company, one of Indonesia's largest palm oil producers, faced a 46.4% penalty on its products.

Two other Indonesian companies, Permata Hijau Palm Oleo and Nubika Jaya, also lost their separate challenge and face 26.6% duties.

The Musim Mas case raised broader legal challenges to EU trade enforcement, while the companion case focused mainly on procedural issues about individual company treatment.

Commission wins on all counts

In August 2022, the Coalition Against Unfair Trade in Fatty Acid — the EU industry group that filed the original complaint with the commission — withdrew its complaint. But the EU executive decided to continue the investigation anyway, a move Musim Mas challenged as improper, though the court disagreed.

A significant part of the ruling clarified the commission's authority to continue trade investigations. "Where a complaint is withdrawn, the institutions have the option — but not the obligation — to terminate the proceeding," the court ruled, confirming that the European Commission can pursue trade enforcement even when European industry withdraws support.

Anti-dumping measures typically arise when domestic producers claim foreign competitors are selling products below cost, potentially harming local industry.

"The imposition of anti-dumping measures was 'clearly' in the interest of the Union industry," the court found, rejecting Musim Mas arguments that the commission failed to prove imposing duties served EU interests. The company had pointed to the complaint withdrawal and opposition from some European producers who argued the duties would disrupt supply chains.

The court said the commission must give special consideration to eliminating unfair trade practices and restoring fair competition. The judges found the commission properly concluded the duties would not harm users and other stakeholders too much.

Musim Mas also challenged how the commission calculated "normal value" — the benchmark price used to determine dumping margins. The company claimed officials used unreasonably high profit margins of 35.32% and 91.24% for certain product types.

"The use of actual margins to construct the normal value for the product types cannot give rise to an infringement," the court ruled. The judges found the high profit margins resulted from the company's own pricing policy in Indonesia and were legitimate since the sales were made in normal business conditions.

"The applicant was barred from alleging such an error of fact for the first time in the action," the court ruled in dismissing Musim Mas's exchange rate arguments. The company had alleged the commission used incorrect exchange rates, leading to a dumping margin that was 0.31% too high, but failed to raise this issue during the proceedings.

"Consequently, the action must be dismissed in its entirety," the court concluded, ordering all Indonesian companies to pay the commission's legal costs.

Industry impact

The ruling allowing investigations to continue after complaint withdrawal significantly strengthens the EU executive's enforcement powers and could encourage more aggressive trade action even when European industry support wavers. The decisions maintain current trade restrictions on Indonesian fatty acid imports and reflect ongoing tensions between the EU and Southeast Asian palm oil producers over environmental and trade concerns.

European officials have increasingly scrutinized palm oil imports over deforestation worries, while Indonesia and Malaysia have pushed back against what they view as unfair barriers. Indonesia has filed broader disputes against the EU at the World Trade Organization over palm oil regulations, with a WTO panel report issued in January 2025 in a related case.

Indonesia is the EU's 33rd-biggest trading partner and the EU's fifth-biggest ASEAN trading partner in 2024, as per EU data. Bilateral trade in goods between the EU and Indonesia totaled 27.3 billion euros ($29.5 billion) in 2024, with EU exports worth 9.7 billion euros ($11.4 billion) and EU imports worth 17.5 billion euros ($20.6 billion). Palm oil and its derivatives represent a multibillion-dollar global trade, with Indonesia serving as the world's largest producer.

The European Commission originally imposed the anti-dumping duties in January 2023 following "an investigation which showed that EU industry was being harmed by dumped imports because it could not compete on price, resulting in a market share loss." The duties range from 15.2% to 46.4% to help ensure fair competition between fatty acids imported from Indonesia and locally produced ones.

Fatty acid is widely used in food, cosmetics and medicines. Palm oil is a key raw ingredient of fatty acid, making the trade measures significant for both industrial and consumer product supply chains. Musim Mas markets itself as a sustainability leader, having been the first company in Indonesia to achieve RSPO certification — which sets global standards for sustainable palm oil production — back in 2004.

The Indonesian companies could potentially appeal the decisions to the European Court of Justice within two months. The General Court handles most EU trade disputes as the first court in the Court of Justice of the European Union.

https://www.courthousenews.com/eu-court-deals-blow-to-indonesian-palm-oil-in-anti-dumping-fight/