Abstract
AbstractEU–Biodiesel (Indonesia) is the latest in two lines of cases. On the one hand, the case offers yet another example of the Dispute Settlement Body striking down creative interpretations of antidumping rules by developed countries. Applying the Appellate Body's decision in EU–Biodiesel (Argentina), the panel found that the EU could not use antidumping duties to counteract the effects of Indonesia's export tax on palm oil. On the other hand, the decision is another chapter in the battle over renewable energy markets. Both the EU and Indonesia had intervened in their markets to promote the development of domestic biodiesel industries. The panel's decision prevents the EU from using antidumping duties to preserve market opportunities created by its Renewable Energy Directive for its domestic biodiesel producers. The EU has responded in two ways. First, through regulations that disfavor palm-based biodiesel, but not biodiesel made from from other foodstocks, such as rapeseed oil commonly produced in the EU. Second, the EU has imposed countervailing duties on Indonesian biodiesel, finding that Indonesia's export tax on crude palm oil constitutes a subsidy to Indonesian biodiesel producers. The EU's apparently inelastic demand for protection raises two questions: First, when domestic political bargains rest on both protectionist and non-protectionist motives and policies have both protectionist and non-protectonist effects, what are the welfare consequences of restraining only overt protectionism? Second, under what circumstances may regulatory approaches be even less desirable than duties for addressing combined protectionist and environmental interests, and would the WTO have the right powers to discipline them in an environmentally sound way?
Highlights
The conflict between trade and the environment has been a long simmering one
In 2009, at the same time as the European Union (EU), Indonesia began to phase in its own renewable blend mandate for diesel, requiring conventional diesel sales to incorporate a minimum content of biodiesel, rising from 1% to 10% by 2013
Crowley and Hillman (2018) have already recounted the Appellate Body’s central reasoning in EU–Biodiesel (Argentina), which we briefly summarize below
Summary
The conflict between trade and the environment has been a long simmering one. Critics allege that trade liberalization undermines core environmental values through a variety of different mechanisms. The conventional response to these criticisms is to argue that trade rules do not limit governments’ freedom to pursue other policy objectives, such as environmental protection or domestic. Political coalitions that support environmental (or other) objectives often depend on the support of those seeking economic protection .The resulting regulation rests on mixed motives and often has mixed effects. The EU attempted to counteract this de facto subsidization by Indonesia and Argentina through antidumping duties, effectively meeting a border tax-based distortion with a border tax-based solution that would protect its domestic industries. The application of antidumping rules in the case of mixed-motives, such as the one at issue here, can push governments to choose regulations that are more convoluted as the means of protection. Because that regulatory protection has a plausible basis in environmental policy, a fight over its compatability with WTO law puts greater pressure on the WTO’s legitimacy at a time when the WTO can least afford such a struggle
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
