Malaysia says EU palm oil curbs lack scientific proof, breach WTO rules

[BRUSSELS] A European Union proposal to limit the use of palm oil lacks comprehensive scientific evidence and breaches global trade rules, Malaysia's marketing agency for the edible oil said on Friday.

Malaysia, the world's second largest palm oil-producing country, which accounts for two-fifths of global production, has along with world number one Indonesia and other producing countries challenged the EU move announced in January last year.

The European Commission wants to phase out the use of palm oil in motor fuel because it says its cultivation leads to deforestation. The move is part of the EU's bid to achieve its climate goals.

Interested parties were allowed to provide feedback starting from Friday. The EU executive wants to finalise the Act on March 14, after which the European Parliament will have two months to review and potentially object to the plan.

The Commission failed to do an impact assessment of the curbs in the EU and on trade, and used selectively chosen or assumed data, according to a document submitted by the Malaysian Palm Oil Council (MPOC) to the EU and seen by Reuters.

The proposal "is not based on sound, accurate and comprehensive scientific evidence... thereby jeopardising the methodological approach and the conclusions reached," the paper said.

The document also criticised the 2008-2016 reference period the EU used to conduct its scientific modelling, saying it had been intentionally selected to show disproportionate growth in palm oil compared to other crops like wheat, maize and soya beans.

It said total acreage of palm oil production worldwide is much smaller than that for these three crops.

The EU curbs violate the World Trade Organization's non-discrimination obligations, while some elements go against the General Agreement on Tariffs and Trade (GATT), the paper said.

REUTERS