Malaysia says WTO agreed to establish panel to examine EU palm oil rules

KUALA LUMPUR, May 31 (Reuters) - Malaysia’s government said on Monday that the World Trade Organisation (WTO) agreed to a request from Kuala Lumpur to establish a panel examining a European Union law that restricts the use of palm oil-based biofuels.

Under the EU’s renewable energy directive, palm oil-based fuels are to be phased out by 2030, since palm oil has been classified by the bloc as resulting in excessive deforestation and can no longer be considered a renewable transport fuel.

Palm oil producers say some EU member states have started to phase it out ahead of the deadline.

Malaysia, the world’s second-largest palm oil producer, and bigger rival Indonesia, have in recent years launched separate cases with the WTO, saying the EU measures are discriminatory.

“Malaysia will remain committed to pursuing legal action against the EU,” Malaysia’s Commodities Minister Mohd Khairuddin Aman Razali said. Malaysia and Indonesia together produce 85% of the world’s palm oil.

In a statement, Mohd Khairuddin said the WTO on Friday acceded to a second request from Malaysia that a panel be set up. The application was made since consultations with the EU on March 17 failed to yield a solution, he said.

Reporting by Mei Mei Chu; Editing by Kenneth Maxwell