Malaysia has requested World Trade Organization (WTO) dispute consultations with the European Union (EU) regarding measures adopted by the bloc and its member states France and Lithuania affecting palm oil-based biofuels, Argus Media reported on 18 January.

Malaysia has claimed that measures of the EU and France and Lithuania were inconsistent with the WTO's Agreement on Technical Barriers to Trade, the General Agreement on Tariffs and Trade 1994, and the Agreement on Subsidies and Countervailing Measures, according to a statement on the WTO website.

The EU’s failure to take into account Malaysia’s views or commitment to sustainable palm oil measures when implementing its Renewable Energy Directive (RED II) was instrumental to the complaint, according to Argus Media.

RED II classifies palm oil as a high indirect land use change product that raises its greenhouse gas emissions to unacceptable levels, and will phase out its use in the EU’s renewable energy mix by 2030.

Meanwhile, France had banned the use of palm oil as a biofuel feedstock from 1 January 2020, Argus Media reported.

Malaysian minister of plantation industries and commodities Mohd Khairuddin Aman Razali was quoted by Argus Media as saying that this created an unreasonable trade barrier against Malaysia and was against the WTO’s principle of free-trade.

The latest dispute complaint follows an earlier one by Indonesia, initiated in December 2019, which also targeted the EU’s palm-oil related measures. That dispute is ongoing.

Malaysia would remain a third-party observer in the Indonesian case, according to Khairuddin, who was quoted as saying that the country’s involvement was crucial as a sign of support and for solidarity with palm oil-producing countries.

A request for consultations formally initiates a dispute in the WTO. Consultations give the parties an opportunity to discuss the matter and to find a satisfactory solution without proceeding further with litigation. After 60 days, if consultations have failed to resolve the dispute, the complainant may request adjudication by a panel.