Indonesia on March 18 accused the European Commission of adopting a draft decree to phase out the use of palm oil in renewable transport fuels and warned that this move could damage relations with EU members supporting this proposal.

Last week, the European Commission in its draft regulation concluded that palm oil cultivation causes excessive deforestation, and its use in biofuels will be reduced to zero by 2030.

Indonesia, the world's largest palm oil producer, argues that instead of promoting sustainability in the vegetable oil sector, European regulation is more concerned with protecting and promoting vegetable oils in the European Union. The European Parliament and the governments of the EU member states have two to allow or prohibit this regulation of the use of palm oil.

Indonesian Ministry of Commerce Director General Iman Pambaggio said Indonesia and the EU are currently negotiating a comprehensive economic partnership agreement and EU regulation on palm oil could have an impact on the negotiations. Indonesia's Chief Economy Minister Darmin Nasutsion said the government will file a complaint to the EU at the World Trade Organization (WTO) as soon as the rules enter into force. Last year, the EU was the second largest market for palm oil in Indonesia, and a significant Part of the export to the block was used for biofuel production.