Malaysia vows WTO lawsuit against EU over palm oil

European restrictions were "discriminatory" and risked throwing the livelihoods of three million people into disarray, said Mohamed Khairuddin Aman Razali, the Malaysian minister overseeing the industry. [World Bank Photo Collection / Flickr]

Malaysia will file a lawsuit at the World Trade Organisation over the European Union’s plans to end the use of palm oil-based biofuels, a minister said Wednesday (2 July).

The Southeast Asian country is the world’s second biggest palm oil producer after Indonesia and would be hit hard by the EU’s plan to phase out its use in biofuels by 2030.

European restrictions were “discriminatory” and risked throwing the livelihoods of three million people into disarray, said Mohamed Khairuddin Aman Razali, the Malaysian minister overseeing the industry.

“The policies adopted by the EU in the Delegation Regulation under the European Union Renewable Energy Directive II have created unreasonable restrictions on Malaysia’s sustainability efforts,” he said in a statement.

Palm oil to be phased out in EU by 2030

The use of palm oil as fuel should disappear in Europe by 2030 under a reform of the bloc’s renewable energy laws agreed this morning after all-night negotiations.

The Southeast Asian nation will challenge the EU via the WTO’s dispute settlement mechanism, he added.

Khairuddin did not say when Malaysia would take its action, which follows a similar WTO lawsuit filed by Indonesia last December.

He added that Malaysia would also be involved as a “third party” in Indonesia’s case.

Palm’s biggest producer Indonesia challenged the law at the WTO in December, claiming the bloc’s restrictions were unfair.

Palm oil is the world’s most widely used vegetable oil and a key ingredient in a wide range of products from food to cosmetics. It is also Malaysia’s largest agricultural crop.

Indonesia hits European Union with WTO lawsuit over palm oil

Indonesia on Sunday (15 December) said it has filed a World Trade Organisation lawsuit against the European Union over plans to phase out palm oil-based biofuel for cars, the trade ministry said.

Environmentalists say it drives deforestation, with huge swathes of Southeast Asian rainforest logged in recent decades to make way for palm plantations.

The European Commission concluded last year that palm oil cultivation results in excessive deforestation and passed a law to phase out its use as transport fuel between 2023 and 2030.

EU consumption of palm oil in food has been in steady decline, but its use as a biofuel has increased.

Malaysian minister: 'Palm oil is a deal-breaker for EU-ASEAN trade relations'

Teresa Kok, Malaysia’s Minister of Primary Industries, visited Brussels and other European capitals this week in a last-ditch effort to kill new EU rules that will ban the use of palm oil in biofuels – a measure European adopted because of concerns about deforestation.

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