The World Trade Organisation (WTO) has accepted a request to review an EU law restricting the use of palm oil-based biofuels. The request comes from Kuala Lumpur, who has asked WTO to establish a panel for the review process.
This is the second dispute to specifically target the EU’s palm oil regulation. Indonesia also levelled a complaint in December 2019, claiming the move is inconsistent with the WTO’s Agreement on Technical Barriers to Trade.
According to Selangor State Executive Councillor Mohd Khairuddin, the latest application was made as initial consultations with the EU on March 17 did not come to any conclusions. The WTO’s review process typically takes around six months.
Currently, the EU has an ambition to phase out palm oil-based fuels by 2030 due to its connection with widespread deforestation. Under this reasoning, the EU says palm oil cannot be considered green fuel. Some palm-oil producing countries have, however, called out EU members (such as France and Lithuania) who have transitioned ahead of the deadline, saying the measure is ‘discriminatory’.
A complaint from Malaysia – the second-largest palm oil producer – states that the bloc and its member states “confer unfair benefits to EU domestic producers of certain biofuel feedstocks, such as rapeseed oil and soy… at the expense of palm oil and oil palm crop-based biofuels.”
Together, Indonesia and Malaysia produce 85% of the world’s palm oil. Cutting off this source of export revenue would have a significant economic ripple effect, a prospect particularly daunting in the pandemic’s wake.
The measure is not the first example of the EU taking a harder line on enforcing sustainable practice, with new due diligence rules to be introduced later this year to reduce deforestation. This will target a number of products based on their impact and consumption levels. Preliminary items include palm oil, cattle, soy, wood, cocoa, and coffee.
