The WTO agreed Friday to establish an expert panel to resolve a row between Malaysia and the European Union over rules affecting the consumption of palm oil-based biofuels in the bloc.
Brussels blocked the initial demand for a panel, but the second request was granted Friday during a meeting of the organisation’s Dispute Settlement Board, according to a Geneva-based trade official.
Under WTO regulations, parties in a dispute can block a first request for the creation of an arbitration panel, but if the parties make a second request, it is all but guaranteed to go through.
Malaysia, the world’s second-largest producer of palm oil, initially filed a complaint with the WTO last July, balking at EU efforts to phase out its use as a biofuel.
The EU has embarked on a major plan committing member states to build a carbon-neutral economy by 2050, including by promoting the use of biofuels.
By doing so, the bloc and its member states “confer unfair benefits to EU domestic producers of certain biofuel feedstocks, such as rapeseed oil and soy, and the biofuels produced therefrom, at the expense of palm oil and oil palm crop-based biofuels from Malaysia,” according to Kuala Lumpur’s complaint last year.
Palm oil is a key ingredient in a wide range of products from food to cosmetics but it has long been controversial.
Environmentalists say it drives deforestation, with huge swathes of rainforest logged in recent decades to make way for plantations.
Its use in food and cosmetics has already dropped in Europe, partly due to pressure from green groups on major corporations, but has been increasing in biofuels.
Malaysia is the second country to take the EU to task over palm oil use restrictions, after Indonesia, the world’s largest producer, filed a complaint in December 2019.
The WTO’s panels of independent trade and legal experts usually take several months to announce their decisions.
They can authorise retaliatory trade measures if they rule in the plaintiff’s favour. – AFP
