Rule on Malaysia-EU palm oil spat

World Trade Organisation (WTO) agreed on Friday to establish an expert panel to resolve a row between Malaysia and the European Union over rules affecting the consumption of palm oil-based biofuels in the bloc.

Malaysia had requested a WTO arbitration panel back in January, charging that the EU, and in particular member states France and Lithuania, had imposed restrictive measures on the use of palm oil that violate international trade agreements.

Brussels blocked the initial demand for a panel, but the second request was granted Friday during a meeting of the organisation’s Dispute Settlement Board, according to a Geneva-based trade official.

Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.

Malaysia, the world’s second-largest producer of palm oil, initially filed a complaint with the WTO last July, balking at EU efforts to phase out its use as a biofuel.

The EU has embarked on a major plan committing member states to build a carbon-neutral economy by 2050, including by promoting the use of biofuels.

But it has deemed that palm oil production is not sustainable, and palm oil-based biofuels cannot be counted towards EU renewable targets.


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