The World Trade Organization (WTO) has agreed to set up an expert panel to review complaints around the European Union (EU)’s decision to ban palm oil-based biofuels, AgriCensus reported on 1 June.

The move had initially been delayed as the EU had blocked complaints from Malaysia but, under WTO rules, any request to investigate trade restraints could only be turned down once, according to the report.

Palm oil remained competitive as a feedstock in some EU countries but a number of countries, such as Germany, Belgium and Austria, had moved to ban palm oil in biodiesel ahead of the EU’s mandated 2030 phase-out date, AgriCensus wrote.

Malaysia had first requested a WTO arbitration panel in January claiming that the EU, and in particular France and Lithuania, had imposed restrictive measures on the use of palm oil in violation of international trade agreements, according to the report.

The EU had blocked this initial demand for the formation of a panel, claiming that its curbs on palm oil were environmental laws permitted under trade rules, AgriCensus said.

This year’s Malaysia’s palm oil exports were expected to be at their lowest in four years due to the EU's curbs, which would start to cap the volume of palm oil from 2023, the report said.

Meanwhile, Malaysian palm oil-based biodiesel exports to Europe had dropped substantially this year, to around half the total shipped at this stage last year, according to AgriCensus.