KUALA LUMPUR: After years of battling vigorously, Malaysia has achieved a significant victory by winning a ruling that removes palm oil-based biofuel from the European Union’s (EU) trade restrictions, according to industry experts. The World Trade Organisation’s (WTO) decision, which generally favours Malaysia, is deemed “significant” due to the discrimination against palm oil while similar products available in the EU market face no such restrictions.
This victory is crucial for safeguarding biodiesel producers and the overall economy, experts emphasize. An industry expert, speaking on the condition of anonymity to Business Times, stated, “Malaysia can now expand its biofuel market to the EU without facing discrimination, especially with the growing demand for sustainable aviation fuel (SAF) and marine biofuel.”
With the WTO overseeing the situation, Malaysia is poised to challenge any unnecessary rules or limits imposed by the EU, thereby promoting fair global trade. “Local biofuel producers can ramp up production and expand their market share in the EU, leading to gradual growth in palm-based biofuel consumption,” the expert added.
However, despite this victory, Malaysia may need to navigate carefully to ensure full acceptance of palm-based biofuel, particularly with the EU retaining rules on Indirect Land Use Change (ILUC).
On Wednesday, Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani announced that the WTO panel had issued its final report on March 5, concluding that the EU’s renewable energy policy, which restricted palm oil biofuels, was discriminatory. “This ruling demonstrates that Malaysia’s claims of discrimination are justified, vindicating our pursuit of justice for biodiesel traders, companies, and employees,” he affirmed.
Cargill Malaysia senior merchant Cassendre Lau noted that the ruling on the EU’s biofuel policy could have a positive impact on Malaysia’s palm oil industry, as it is a major producer of palm oil used in biofuels. “If the policy is deemed discriminatory, it could potentially open up more opportunities for Malaysian palm oil in the EU market,” she explained.
Malaysia, a leading palm oil producer, initiated WTO dispute consultations with the EU in January 2021 over measures affecting palm oil and palm crop-based biofuels.
While the impact of this ruling remains to be seen, its implications could be significant for trade relations between Malaysia and the EU, potentially leading to increased market access and fairer trade practices. However, experts caution that it is still too early to comment on the ruling’s full impact, pending any appeals or adjustments to EU regulations.
In a separate interview with FMT, Johari highlighted Malaysia’s success in challenging various measures maintained by France. He emphasized that the ruling underscores the need for the EU and France to align their measures with WTO obligations.
Malaysian Palm Oil Board director-general Datuk Ahmad Parveez Ghulam Kadir echoed Johari’s sentiments, affirming Malaysia’s commitment to advocating for sustainable palm oil production. He expressed anticipation for the EU to amend its renewable energy policy in accordance with WTO rules, fostering fair trade practices and recognizing Malaysia’s contributions to sustainable palm oil production.
