GENEVA: Malaysia is set to escalate a trade dispute with the European Union and two member states for restricting palm oil-based biofuels, WTO filings showed ahead of a meeting of its dispute settlement body on Friday.
The EU is implementing a renewable energy directive that the world's top two palm oil producers Malaysia and Indonesia are contesting at the global trade watchdog in two separate, parallel cases.
They say the EU measures confer "unfair benefits" on local producers of biofuels, such as rapeseed and sunflower oil.
Malaysia's request for the establishment of a WTO panel to adjudicate on the case is set to be formalised at a meeting later on Friday.
Brussels has said that palm oil cultivation results in excessive deforestation and should not count towards renewable energy targets.
This would mean palm oil-based diesel would not be considered a biofuel and its use in transport would be phased out by 2030. Malaysia exported 1.94 million tonnes of palm oil to the EU in 2020.
(Reporting by Emma Farge; editing by Barbara Lewis)