WTO circulates panel report on Malaysia’s biodiesel policy complaints against EU

In Geneva, the WTO circulated the panel report in the case brought by Malaysia in “European Union and Certain Member States — Certain measures concerning palm oil and oil palm crop-based biofuels”.

Malaysia challenges certain measures introduced by the European Union (EU) concerning biofuels, notably those relating to the determination of palm oil as a biofuel feedstock having a high indirect land-use change (ILUC) risk, a measure introduced by France regarding a tax exemption that does not apply to palm oil as a biofuel feedstock, as well as measures by Lithuania that implement the EU’s measures relating to conventional biofuels and ILUC-risk.

Malaysia contends that the 7% limit, the high ILUC-risk cap, and the high ILUC-risk phase out, as set out in Article 26 of the RED II and/or the Delegated Regulation, are technical regulations within the meaning of Annex 1.1 of the TBT Agreement.

In the present case, the WTO appellate body says it is extremely difficult to determine the extent of any contribution that is made toward the achievement of the objective(s) of the measures. Much of this difficulty derives from the fact that the chosen metric for ascertaining the success or failure of the measures (i.e., ILUC) can neither be observed nor measured and, therefore, it is impossible to attribute ILUC-risks exclusively to oil palm crop-based biofuel, from, inter alia, Malaysia. Similarly, it is impossible to precisely estimate to what extent, if at all, ILUC GHG emissions occur and the extent to which said emissions would be abated by the high ILUC-risk cap and the high ILUC-risk phase out.