Palm oil-based biofuels: the WTO rules in favor of the EU

Published Mar 6, 2024

Tridge summary

Malaysia's attempt to challenge the European Union's restrictions on palm oil biofuel at the World Trade Organization (WTO) has been unsuccessful. The EU, under the Red II Directive, has ruled that palm oil biofuel will not contribute towards its renewable energy targets for 2030. Malaysia argued that these measures were 'incompatible' with international trade rules and 'discriminatory', potentially impacting the livelihoods of three million people. However, the WTO panel determined that Malaysia could not prove that the measures were excessively restrictive for trade, beyond what was necessary to achieve a legitimate objective.

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Original content

Malaysia, the world's second largest producer of palm oil, had obtained the establishment of this group of experts in 2021, after announcing in July 2020 its intention to sue the EU before the WTO in this matter. Under the Red II Directive, the EU has decided that palm oil biofuel will not count towards its targets for the use of renewable energy in 2030, which is expected to succeed to restrict its use. Kuala Lumpur alleged that certain measures imposed by the EU, as well as France and Lithuania, were “incompatible” with certain international trade rules. She judged that the European restrictions were “discriminatory” and risked destabilizing the livelihoods of three million people. “Malaysia has failed to establish” that certain measures taken under the “Red II” directive were “incompatible with the obligation (...) to ensure that technical regulations are not more restrictive for trade than is necessary to achieve a legitimate objective,” the panel concluded in its report. ...

Source: TerreNet