Malaysia to sue EU over palm oil ban

Malaysia to take legal action with the World Trade Organization (WTO) against the European Union’s restrictions on palm oil-based biofuels.

The world’s second largest palm oil producer called the European Union’s “anti-palm oil campaign” a discriminatory policy and will challenge it via the WTO’s dispute settlement mechanism.

Last year the European Commission passed a law to phase out its use as transport fuel between 2023 and 2030 after concluding that palm oil cultivation results in excessive deforestation.

“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,” Malaysian Plantation Industries and Commodities Minister Mohd Khairuddin Aman Razali said in a statement.

Mohd Khairuddin added that the delegated regulation made numerous presumptions to present an incorrect image of the sustainability of Malaysia’s oil palm industry and also has a host of problems in terms of transparency and scientific credibility.

More than three million Malaysians involved in the palm oil industry, as well as over half a million oil palm smallholders will be negatively impacted due to the EU regulation.

Palm’s biggest producer Indonesia challenged the law at the WTO in December, claiming the bloc’s restrictions as unfair and restricting free trade practices.

Malaysia will also act as a third party in Indonesia’ WTO case against the EU as a sign of solidarity. Neighbours Indonesia and Malaysia together produce 85% of the world’s palm oil.

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