Malaysia files WTO lawsuit against EU over palm oil stance

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The Malaysian government has filed a lawsuit against the EU and member states Lithuania and France for their stance against palm oil production.

Malaysia is currently the world's second-largest palm oil producer after Indonesia, who filed a similar lawsuit against the EU back in 2019 following an announcement the bloc would be phasing out palm oil for use as a biofuel.

Read more: Indonesia files WTO lawsuit against "discriminatory" EU over palm oil

Concerns have been raised over the heavy deforestation and environmental damage required for the production of palm oil, resulting in the EU vowing to ban its use by 2030.

Kuala Lumpur has filed a request for consultations under the WTO's dispute settlement mechanism against the EU for implementing the Renewable Energy Directive (RED) II without considering their commitment to sustainable palm oil.

RED II categorises palm oil as having a high indirect land cost and causes unacceptable levels of greenhouse emissions, resulting in palm oil being regarded as a "high-risk" activity.

France outright banned palm oil for use as a biofuel in 2020.

Datuk Dr. Mohd Khairuddin Aman Razali, Plantation Industries and Commodities Minister said at a press conference that Malaysia will continue to fight against any actions which pose a threat to the country’s economy and the livelihood of its people.

He added Malaysia is seeking an unbiased judgement over the EU act, and that a memorandum has been brought to Cabinet. He described the situation has "discriminatory."

Malaysian minister of plantation industries and commodities Mohd Khairuddin Aman Razali said the ruling brings an unreasonable trade barrier against Malaysia and is the opposite of the free-trade agreement under the WTO.

Malaysia has reportedly taken a number of steps to bring palm oil within RED II guidelines, which officials claim have not been acknowledged.

Read more: Industry deforestation targets "unlikely to be met", says CDP

It will remain a third-party observer as Indonesia has been in their 2019 lawsuit, which is still ongoing.

Under WTO guidelines, there will now be a 60-day consultation period where Malaysia and the EU will discuss the complaint, after which a panel under the dispute settlement body may be requested if no agreement is reached.

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