THE WORLD Trade Organisation (WTO) Panel has concluded in its Final Report that the European Union’s (EU) delegated act which restricted palm oil biofuels is discriminatory.
In hailing the ruling made yesterday, Plantation and Commodities Minister Datuk Seri Johari Abdul Ghani said that the world body has demonstrated that Malaysia’s claims of discrimination are indeed justified.
“This vindicates Malaysia’s pursuit of justice for our biodiesel traders, companies and employees,” he said in a statement today.
According to the European Commission, the “delegated act” establishes the criteria to determine which food and feed-crop based biofuels have a “high risk” of increasing greenhouse gas emissions due to the changes in the use of land – such as deforestation. It however allows for such crops to be certified as “low risk” under certain circumstances.
“The WTO Final Report clearly finds fault with the EU’s use of indirect land use change (ILUC) to ban palm oil biofuels,” Johari said.
“It also finds fault with the EU’s approach to notifying and consulting with other economies when introducing new trade measures.”
Johari said that the EU had agreed to comply with the WTO ruling before it could impose restrictions in accepting Malaysia’s palm oil biofuels.
“The Malaysian government will closely monitor the EU’s changes to its regulations to bring it in line with the WTO’s findings, and pursue compliance proceedings if necessary,” he added.
He expressed the government’s continued full commitment to defend the interests of palm oil biofuels industry players against trade barriers and discrimination.
European Commission explains ruling
In a report on the case, the European Commission explained that the WTO panel had ruled in a dispute brought by Malaysia against measures taken by the EU under RED II concerning palm oil and oil palm crop-based biofuels, as well as certain related French measures.
RED II refers to the Renewable Energy Directive, a legal framework for the development of clean energy, from renewable sources, across all sectors of the EU economy. It reportedly covers various raw materials and fuels, including agricultural and forest biomass, waste and residues, and other non-food biomass materials for the production of biofuels, bioliquids, and biomass fuels.
“The panel confirmed the overall WTO compatibility of the RED II legal framework, but noted that certain aspects of the implementation and design of an EU Delegated Act under the directive were inconsistent with WTO rules,” the report said.
“The matters identified by the panel are, to a very large extent, required anyway to be adjusted under EU law.”
The report added that the EU intends to take the necessary steps to adjust the Delegated Act.
It also said that a parallel WTO dispute brought by Indonesia, heard by the same panel, was suspended for a duration of two months at the request of Indonesia with effect from yesterday.
Unless the WTO panel report is appealed, it should be adopted by the WTO Dispute Settlement Body within the next two months, the report said.
“If adopted, the report will become binding between Malaysia and the EU,” it said.
“The EU will then take the necessary steps to respect its WTO obligations.
“The parties usually try to agree on a reasonable period of time for the defending WTO member to comply. If this cannot be agreed, it will be decided by an arbitrator.” – The Vibes, March 6, 2024
