Indonesia blocks EU spirits, link seen to palm oil spat

Malaysia's prime minister told Reuters last week that the EU was risking a trade war over palm oil. Pictures show Mahathir during the interview. - Reuters

BRUSSELS: European spirits makers say they are facing difficulties exporting drinks to Indonesia amid tension after Jakarta said it was unhappy with an EU decision that palm oil should not be considered a green fuel.

SpiritsEurope, which represents major European spirits makers and national associations, said on Thursday it had learnt from members with business in Indonesia that they were suffering delays in securing approval to import EU products into the country.

Indonesia regulates imports of alcohol through an annual import and distribution plan.

Spirits makers were finding that non-EU products, such as tequila, were securing approval, but EU-origin products were not, an industry source said.

Diageo, the world's largest spirits company, declined to comment.

An Indonesian trade ministry spokeswoman said she was not aware of any issues.

The European Commission, which oversees trade policy for the 28 EU countries, decided in March that palm oil cultivation in general results in excessive deforestation, setting the bloc on a collision course with major producers Malaysia and Indonesia.

The EU plans to increase its use of renewable energy sources by 2030 and to take into account deforestation when it determines what can be labelled renewable.

Indonesia, which has said it would file a World Trade Organization complaint against the EU over the palm oil issue, has threatened to quit the Paris climate agreement and has said it was examining relations with EU members.

Malaysia's prime minister told Reuters last week that the EU was risking a trade war over palm oil.

The European Commission said it was checking the situation on the ground and looking into possible additional measures applied to imports of alcohol from the EU. - Reuters