MITI and MPI working together on palm oil dispute settlements


MALAYSIA’S International Trade and Industry Ministry (MITI) and the Primary Industries Ministry (MPI) are working together in seeking dispute settlements on the European Union’s (EU) decision to phase out palm oil imports.

MITI said Malaysia is fully committed to negotiating in a constructive manner to ensure the commodity receives a non-discriminatory treatment and prevent the unnecessary barrier for its market access into the EU.

“MITI will continue to work closely with MPI to fully utilise and make use of the various international platforms, such as the World Trade Organisation (WTO), in the best interest of our palm oil exporters and smallholders.

“Moving forward, Malaysia will also be elevating this issue to the dispute settlement mechanism under the WTO,” the ministry said in a statement on Monday.

It added that Malaysian delegations have been expressing the country’s concerns on the consequences of EU’s decision to the livelihood of palm oil farmers in the producing countries.

“Malaysia has repeatedly emphasised its concern at the WTO platforms since 2018 and we will continue to do so.

“Our concerns are also being supported by other palm oil-producing countries such as Indonesia, Colombia, Guatemala, Honduras and Ecuador,” it said.

According to MITI, Malaysia’s palm oil industry is being monitored to achieve the full certification of Malaysian Sustainable Palm Oil (MSPO), which will be implemented on a mandatory basis by Dec 31, 2019.

“Malaysia emphasises that the oil palm industry is committed to produce palm oil in accordance with the MSPO certification scheme.

“Malaysia urges the EU to accept and recognise MSPO as one of the voluntary schemes for the low indirect land-use change risk of biofuels and bioliquids,” it said.

The government is looking to implement the B20 (a blend of 20% palm oil and 80% fossil fuel) and B30 biodiesel programme by 2025 to increase the domestic consumption of palm oil should the local industry is affected by the EU’s restriction of the commodity.

“The government continues to explore initiatives to increase the usage of palm oil in biodiesel for domestic consumption as an alternative if palm oil exports to the EU markets are affected by the directive.

“For the transport sector, Malaysia has implemented biodiesel B10 starting in February 2019. Currently, MITI and MPI are working together towards implementing biodiesel B20 in 2020 and B30 by 2025 or earlier,” said MITI.

The EU has adopted the Delegated Act that implements the EU Renewable Energy Directive II (RED II) for 2021-2030, a mandate that contains strict requirements against a significant expansion of crops for biofuel usage.

The RED II suggested that such expansion could be extended into agriculture land areas with high-carbon stock — such as forests, wetlands and peatlands, and known as the Indirect Land Use Change (ILUC).

According to the directive, oil palm plantation has been identified as “high ILUC-risk” and will be phased out by 2030.

“Palm oil is categorised as “high ILUC-risk” in the Delegated Act and this is noticeably a form of disguised trade and protectionist measure against the crop,” MITI said.