The Malaysian Reserve (12/01/2021) - MALAYSIA will file its lawsuit against the European Union (EU) on the trade bloc’s policy of phasing out palm oil-based biofuel imports to the World Trade Organisation (WTO) on Jan 15.
Plantation Industries and Commodities Minister Datuk Dr Mohd Khairuddin Aman Razali said Malaysia will continue to fight against any discriminatory actions which pose a threat to the country’s economy and the livelihood of its people.
“The legal action is in the process. We have brought a memorandum to the Cabinet and it has agreed to take action against the EU for the latter’s plan to limit and phase out palm oil imports which we see as discriminatory.
“We will be submitting the legal action later this week on Jan 15,” he told a press conference at the Palm Oil Economic Review and Outlook Virtual Conference 2021 yesterday.
The EU has adopted a delegated act proposal that implements the Renewable Energy Directive II (REDII), the trade bloc’s main RE policy legislation.
Through REDII, the trade bloc and its member states are expected to raise the share of the renewable sources in their energy consumption mix to 32% of the total energy consumption by 2030, which indicates phasing out the usage of biofuels.
The directive suggests that oil palm cultivation contributes to greenhouse emission, deforestation and indirect land-use change, which then classifies it as a “high-risk” activity.
In the legal action, Malaysia is seeking an unbiased judgment over the EU’s delegated act, which excludes palm oil as part of its biofuel mix.
Malaysia is also calling the trade bloc to redefine oil palm cultivation activities, which have been classified as high-risk.
In December 2019, Indonesia, the world’s biggest producer of palm oil, filed its lawsuit against the trade bloc to the WTO on the basis that the restrictions on palm oil-based biofuel are unfair and requested for consultations with the trade bloc.
Malaysia is also currently observing as a third party in Indonesia’s case against the EU, along with other palm oil-producing countries such as Colombia, Ecuador, Guatemala, Thailand, Australia, Brazil, the US, Costa Rica and India, as well as non-producers such as China, Canada, Singapore, Korea, Turkey, Norway, Russia, Argentina and Japan.
The consultations, held on Feb 19, 2020, failed to settle the dispute, which led to the establishment of a panel to further scrutinise the matter.
Malaysia and Indonesia are the world’s top producers of palm oil, supplying about 85% of the demand worldwide.
EU countries are the second-largest buyers for both countries after India, as Europe currently consumes 7.5 million tonnes of palm oil a year — about 10% to 15% of the global palm oil demand.