Detail

European Union

Biofuels

Palm oil-based biodiesel

01/01/2021

Trade

Trade differences

Malaysia formally requested WTO dispute consultations with the EU regarding measures adopted by the EU and certain member states affecting palm oil and palm oil-based biofuels. Specifically, the complaint refers to the EU’s classification of palm oil as a biofuel feedstock with ‘high indirect land-use change (ILUC)-risk’, which implies that – from 2030 – palm oil-based biofuels would no longer be counted against the bloc’s renewable energy targets.

Bilateral trade dispute – Malaysia / European Union: Following up on last year’s announcement (see MPPU July’20), on 15 January 2021, Malaysia formally requested WTO dispute consultations with the European Union regarding measures adopted by the EU and certain member states affecting palm oil and palm oil-based biofuels. Specifically, the complaint refers to the EU’s classification of palm oil as a biofuel feedstock with ‘high indirect land use change (ILUC)-risk’, which implies that – from 2030 – palm oil-based biofuels would no longer be counted against the bloc’s renewable energy targets (see MPPU Mar. & May’19). Malaysia claims that the EU’s policy is inconsistent with the WTO Agreement on Technical Barriers to Trade, the GATT 1994, and the Agreement on Subsidies and Countervailing Measures. In case the consultations fail to resolve the dispute within 60 days, the WTO is expected to set up a panel of experts to review the case. Malaysia’s complaint was preceded by a similar action launched by Indonesia in December 2019 (see MPPU Jan.’20). According to market sources, steps by the EU towards eliminating deforestation also from the bloc’s agri-food chains (see MPPU Sep.’19 & Mar.’20) are adding to the concerns of palm oil exporting countries.