Malaysia and Indonesia to appeal WTO against EU’s palm oil ban

Malaysia and Indonesia announced earlier this week that they would file a joint complaint with World Trade Organisation regarding the European Union’s ban over use of palm oil in biofuels.

Last month, on June 10, 2019, the EU passed the Delegated Act to ban the use of palm oil in manufacturing biofuel for vehicles, by 2030. EU took the decision in order to prevent excessive deforestation, which is caused due to its cultivation.

Indonesia and Malaysia, largest and the second-largest palm-oil producer respectively, deemed the Delegated Act, discriminatory and unfair as it hampers their exports. Besides Southeast Asia nations, the move is said to equally impact African and Latin American nations who are major producers of palm oil in the world.

“About the WTO, yes we are pursuing it, in fact, the documents are with the attorney general chambers now… They are assisting us… (and) helping us identify experts who can argue the case in the WTO,” Primary Industries Minister Teresa Kok told reporters on Monday.

Council of Palm Oil Producing Countries (CPOPC) revealed that the joint complaint to challenge EU’s decision would be filed by November this year.

Palm oil is used as a key ingredient in making various products ranging from food to cosmetics. Now it’s increasingly used in biofuels as well. Europe has imposed curb on its imports, succumbing to the pressure from green groups over its MNCs. Palm oil plantation, done by clearing a huge chunk of rainforest land, has been severely criticized by environmentalists for causing deforestation, along with affecting biodiversity and climate change.

CPOPC contradicts the EU’s justification for imposing the ban. CPOPC published a detailed study proving that palm-oil cultivation adheres to the 17 UN Sustainable Development Goals SDGs. The study was deduced out of extensive surveys conducted across palm oil-producing nations of Indonesia, Malaysia, Thailand, Colombia, and Nigeria.

Malaysia and Indonesia heavily rely on palm-oil exports for earning a significant amount of foreign exchange and supporting hundreds of thousands of jobs. The collectively supply about 60 million tonnes or 85 percent of the world’s palm oil.

Malaysian foreign ministry released a statement earlier this year describing the EU ban as a “calculated political act” aimed at taking out palm oil imports from the EU market.

The statement read, “Such an aggressive trade barrier targeted at Malaysia’s national interests, and our 650,000 small farmers, cannot pass without a strong response.”

Malaysian Prime Minister Mahathir Mohamad warned that the EU ‘grossly unfair’ decision could lead to a trade war between the two.

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