KL says EU's proposed palm oil curbs a form of trade war

A worker unloading oil palm fruit bunches from a lorry in Malaysia, the world's second-biggest palm oil producer after Indonesia.
A worker unloading oil palm fruit bunches from a lorry in Malaysia, the world's second-biggest palm oil producer after Indonesia.PHOTO: REUTERS

BRUSSELS • Malaysia has accused the European Union of launching a "trade war" over its plan to curb the use of palm oil in biofuels, and threatened retaliatory action at the World Trade Organisation (WTO).

The South-east Asian country is the world's second-biggest palm oil producer after Indonesia and would be hit hard by the EU's plan to phase out its use in biofuels by 2030.

Ms Teresa Kok, the Malaysian minister responsible for palm oil, is beginning a tour of European capitals to press her case. She vowed that her government would fight back if the EU did not back down.

"We see this as a form of trade war by the EU against Malaysia and Indonesia as palm oil-producing countries," she said on Monday. "We will definitely look at what are the trade items that we import from Europe and we will look at other countries (to source them)."

Ms Kok said Malaysia would consult Indonesia before looking into what action could be launched at the WTO.

Palm oil is a major ingredient in a wide range of products, from food to cosmetics, but it has long been controversial as environmentalists say it drives deforestation, with huge swathes of rainforest logged to make way for plantations.

Its use in food and cosmetics has dropped in Europe, partly due to pressure from green groups on major corporations, but has been increasing in biofuels.

Ms Kok doubled down on a threat by Malaysian Prime Minister Mahathir Mohamad to retaliate over palm oil by buying new fighter jets from China instead of France.

"Our Prime Minister said he likes China's fighter jets but two weeks ago our Defence Minister went to Russia to look at their weapons and planes," she said.

"And Russia is willing to buy more palm oil from Malaysia. We're looking at all these options."

AGENCE FRANCE-PRESSE

A version of this article appeared in the print edition of The Straits Times on May 08, 2019, with the headline 'KL says EU's proposed palm oil curbs a form of trade war'. Print Edition | Subscribe