Malaysia trade ministry to approach WTO on EU move to limit palm oil use

KUALA LUMPUR, Jan 22 (Reuters) - Malaysia, the world’s second-largest palm producer, said on Monday it would work with other producing countries to voice “strong concerns” to the World Trade Organization, following the European Union’s move to back a ban on using palm oil to make biofuels.

European lawmakers approved draft measures last week to reform the power market there and reduce energy consumption to meet more ambitious climate goals. The plan includes a ban on the use of palm oil in motor fuels from 2021.

Indonesia and Malaysia, who produce nearly 90 percent of the world’s palm oil, called the move discriminatory and said there should be fair treatment for all vegetable oils.

A large portion of European palm oil imports is used to make biofuels, giving the industry’s top two producers cause for concern as they fear overall demand will fall.

Malaysia’s trade minister called the move a “regressive step which will fuel further uncertainty surrounding global trade,” according to a statement on Monday evening.

“Malaysia will intensify collaboration with other palm oil producing countries to consider more concerted efforts to voice our strong concern before the various committees under the WTO,” said Mustapa Mohamed, minister of international trade and industry, in the statement, adding that the ministry would raise the issue with two committees in March and April.

Mustapa also said Malaysia would seek a solution through the Malaysia-EU free trade agreements and the proposed ASEAN-EU free trade agreement.

Palm oil exports are a key source of revenue for Malaysia. The European Union is its second-biggest market after India.

Reporting by Emily Chow; Editing by Sunil Nair