Malaysia to raise EU move to back palm oil ban to WTO, says trade minister Mustapa

Malaysia to raise EU move to back palm oil ban to WTO, says trade minister Mustapa

palm oil
File photo of workers inspecting the quality of palm oil fruits at a factory in Sepang, outside Kuala Lumpur, Malaysia. (AFP PHOTO/MOHD RASFAN)

KUALA LUMPUR: Malaysia's Minister of International Trade and Industry Mustapa Mohamed has described the European Union's (EU) backing of a ban on the use of palm oil in biofuels as a "potential violation of World Trade Organisation (WTO) rules".

In a statement issued on Monday (Jan 22), the minister said the move by the EU was a "deliberate attempt" to block the access of palm oil into their market and said that Malaysia would raise the issue at WTO committees in March and April this year.

The country will also "intensify collaboration" with other palm oil producing countries to consider "more concerted efforts to voice our strong concern" before committees under the WTO, he added.

European lawmakers approved draft measures last Wednesday to reform the power market there and reduce energy consumption, with the plan including a ban on the use of palm oil in motor fuels from 2021.

In his statement, Mustapa said he shared the strong concerns expressed by Malaysia's Minister of Plantation Industries and Commodities Mah Siew Keong, who lashed out last week at the move, calling it a form of "crop apartheid".

"This latest development is a clear case of discrimination against palm oil producing countries," said Mustapa. "It is also a regressive step which will fuel further uncertainty surrounding global trade." 

He said Malaysia would also be seeking a comprehensive solution for the "discriminatory treatment" to palm oil-based biofuels as compared to other crop-based biofuels such as soya and rapeseed oil through Malaysia-EU free trade agreement negotiations, slated for relaunch sometime this year, as well as through the proposed Association of Southeast Asian Nations-EU free trade agreement.   

His ministry is also chairing a meeting of technical experts of a "Friends of Palm Oil" group to explore further actions, Mustapa added.

He called the EU's move a "worrying development" which - together with what he called "unfair" labelling practices by EU member states' private sectors - would "adversely affect the livelihood" of more than 650,000 Malaysian oil palm smallholders.

"I urge the European private sector to be fair and not to be influenced by the vote in the European Parliament and the negative sentiment against our palm oil," he added. "Facts must prevail above unsubstantiated claims in this matter."

Meanwhile, Wisma Putra hopes that developments will not affect ties with the EU, Malaysia's Deputy Foreign Minister Reezal Merican told Channel NewsAsia.

"It shouldn't affect ties if we can negotiate," he said. "This concerns our country's interests - we need to explain, we need to make them understand our position; it's not too late."

Malaysia is the world’s second-largest exporter of palm oil after Indonesia.

In 2016, 15.2 per cent of the country's total palm oil exports - worth RM10.3 billion (about US$2.6 billion) - went to the EU.

Source: CNA/Agencies/nc