Malaysia launches WTO palm oil complaint against EU

Market: Agriculture, Biofuels, Fertilizers
18/01/21

Malaysia, the world's second-biggest palm oil producer after Indonesia, has initiated legal action against the EU and its member states France and Lithuania with the World Trade Organization (WTO) for their anti-palm oil biofuel policies.

Kuala Lumpur has filed a request for consultations under the WTO's dispute settlement mechanism against the EU for implementing the Renewable Energy Directive (RED) II without considering its views on and commitment to sustainable palm oil measures.

RED II classifies palm oil as a high indirect land use change product that raises its greenhouse gas emissions to unacceptable levels and so will be gradually phased out of the EU renewable energy mix by 2030.

France has gone further in its stance, having banned palm oil from being used as a biofuel feedstock as of 1 January 2020.

Malaysian minister of plantation industries and commodities Mohd Khairuddin Aman Razali said this creates an unreasonable trade barrier against Malaysia and is against the very principle of free-trade practice outlined by the WTO.

Malaysia has taken various steps, including economic and technical missions to Europe and giving feedback on the implementation of RED II, that have not been taken into account, he said.

It has also expanded coverage of its Malaysian sustainable palm oil certification scheme that aims to improve the country's sustainability practices. But Malaysian producers have come under fire for alleged labour abuses recently, with the US banning palm oil imports from Sime Darby and FGV.

Malaysia will remain a third-party observer in a similar case filed by Indonesia in 2019, which is ongoing.

Khairuddin said the country's involvement is crucial as a sign of support for and solidarity with palm oil-producing countries. Malaysia exported 379,000t of biodiesel last year, according to the Malaysian palm oil board.

Amandeep Parmar

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