The World Trade Organization (WTO) has upheld the European Union (EU)’s palm oil measures under the Renewable Energy Directive (RED II) while ruling that some aspects were inconsistent with its rules, the EU’s Policy Trade website reported.
Published on 5 March, the WTO panel’s ruling followed a dispute brought by Malaysia against measures taken by the EU under RED II concerning palm oil and oil palm crop-based biofuels, as well as certain related French measures.
Malaysian Plantations and Commodities Minister Johari Abdul Ghani said “this ruling from the WTO demonstrates that Malaysia’s claims of discrimination are indeed justified”, adding that the government would continue to defend the interests of palm oil biofuels industry players against trade barriers.
He said Malaysia would closely monitor how the EU responded to the WTO ruling, Reuters reported on 6 March.
Ghani said the WTO report had found fault with the EU’s rules on indirect land use change (ILUC) to ban palm oil biofuels and with the bloc’s approach to notifying and consulting with other economies when introducing new trade measures.
Malaysia had challenged the classification of palm oil and oil palm crop-based biofuels as being at high ILUC risk and claimed that the measures were discriminatory.
Its challenge was launched in January 2021 following consultations with the WTO, which had failed to resolve the dispute.
The WTO panel upheld the EU’s ability to take environmental and climate-based action under the RED II but noted that certain aspects of the implementation and design of an EU Delegated Act under the directive were inconsistent with WTO rules, the 5 March Policy Trade said.
The Delegated Act establishes the criteria to determine which food and feed-crop based biofuels have a high risk of increasing greenhouse gas emissions due to the changes in the use of land – such as deforestation – and allows for such crops to be certified as low risk in certain circumstances.
Unless the EU appealed against the WTO panel report, the ruling should be adopted by the WTO Dispute Settlement Body within the next two months, the report said. If adopted, the report would become binding between Malaysia and the EU.
The EU would then take the necessary steps to respect its WTO obligations, the Policy Trade report said.
Meanwhile, a parallel WTO dispute brought by Indonesia and heard by the same panel was suspended for two months at the request of Indonesia, with effect from 5 March.
