KUALA LUMPUR (REUTERS) - Malaysia is taking legal action at the global trade watchdog against the European Union and member states France and Lithuania for restricting palm oil-based biofuels, the government said.

The world's second-largest palm oil producer, which has called an EU renewable-energy directive "discriminatory action", is seeking consultations under the World Trade Organisation's Dispute Settlement Mechanism, the Plantation Industries and Commodities Ministry said in a statement on Friday (Jan 15).

Minister Mohd Khairuddin Aman Razali said the EU proceeded with implementing the directive without considering Malaysia's commitment and views, even after Malaysia gave feedback and sent economic and technical missions to Europe.

The EU directive "will mean the use of palm oil as biofuel in the EU cannot be taken into account in the calculation of renewable energy targets, and in turn create undue trade restrictions to the country's palm oil industry", he said in the statement.

The ministry filed the WTO request with cooperation from the Attorney General's Chambers and the International Trade and Industry Ministry, taking action it had warned of in July against the EU's Renewable Energy Directive II.

Malaysia will act as a third party in a separate WTO case lodged by neighbouring Indonesia, the world's biggest palm oil producer, as a sign of solidarity and support, the ministry statement said.