The European Union (EU) rejected on Wednesday the establishment of a panel on imports of palm oil and certain biofuels within the framework of the World Trade Organization (WTO).
Initially, Malaysia submitted a first request for a panel to examine certain measures imposed by the EU and EU member states – France and Lithuania – in relation to palm oil and biofuels derived from Malaysian oil palm crops.
First of all, Malaysia contends that the measures in question, adopted as part of the EU policy to promote the use of biofuels, unfairly benefit EU domestic producers of certain biofuel feedstocks by limiting the amount of this oil which can be accounted for to meet EU renewable energy targets and consequently palm oil to be sold on the EU market.
But Malaysia noted that consultations on the matter were held with the EU on March 17, without resolving differences between the two parties, prompting Malaysia’s request for a panel.
Instead, the European Union said that the consultations with Malaysia on March 17 were constructive and that it had expressed hope that the talks had provided the necessary information and clarification.
The EU said it firmly believes that the measures in question are fully justified and is confident that its measures will prevail after this dispute.
Furthermore, the EU said it was not ready to accept the establishment of a panel.
The DSB agreed to revert to the matter at a future meeting if requested by a member.
Malaysia has a dichotomous agricultural structure, with large plantations primarily dedicated to palm oil production and small producers dominating other sectors.
A large part of this oil production and transformation activities are carried out by large companies with international activity.