The World Trade Organisation has permitted the request from Kuala Lumpur to establish a panel examining a European Union law. Malaysia’s government and Geneva-based trade source said that Kuala Lumpur wants to examine the law that restricts the use of palm oil-based biofuels, on Monday.
Under the European Union renewable energy directive, palm oil-based fuels are to be phased out by 2030, since palm oil has been classified by the bloc as resulting in excessive deforestation and can no longer be considered a renewable transport fuel.Palm oil producers say some European Union member states have started to phase it out ahead of the deadline.
Malaysia, the world’s second-largest palm oil producer, and bigger rival Indonesia have in recent years launched separate cases with the World Trade Organisation, saying the European Union measures are discriminatory.Mohd Khairuddin Aman Razali, Malaysia’s Commodities Minister said that Malaysia will remain committed to pursuing legal action against the European Union. Malaysia and Indonesia together produce 85% of the world’s palm oil.
Mohd Khairuddin said the World Trade organisation on Friday acceded to a second request from Malaysia that a panel be set up. The application was made since consultations with the EU on March 17 failed to yield a solution, he said. The trade source confirmed the decision to set up the panel. The source declined to be named because of the sensitivity of the matter.
An European Union representative said that its measures were fully justified and expressed confidence in prevailing during the proceedings, according to the source. World Trade organisation panels typically deliberate for about six months before sending their findings to members. Any decision can be appealed.