Malaysia says still open to filing WTO suit against EU on palm oil

KUALA LUMPUR (Reuters) - Malaysia has not abandoned an option to file a World Trade Organization (WTO) suit against European Union (EU) restrictions on palm oil-based biofuel, the minister in charge of palm oil said on Friday.

She was responding to a Reuters story that said the Southeast Asian country no longer planned to file a lawsuit and would instead seek to convince the EU to change its treatment of the crop in a review scheduled for 2021.

The European Commission concluded last year that palm oil cultivation results in excessive deforestation and passed a law to phase out its use as transport fuel by 2030.

Palm's biggest producer Indonesia challenged the law in December, but second-biggest producer Malaysia is still considering its options, its Primary Industries Minister Teresa Kok said in a statement.

"In fact, our highest level legal team is examining with a fine comb, our potential response to make our petition as watertight as possible," she said.

"We have thus always agreed to intervene as a co-complainant and join the likes of Indonesia and other palm oil producers at the opportune juncture at the WTO proceedings."

Kok, who earlier said Malaysia would launch a WTO case by November last year, spoke with Reuters in Brussels on Thursday during a trip to explain to European leaders the initiatives taken by the country to grow palm in a sustainable way.

"We did have this intention, but we thought that before we come to Europe... we shouldn't file the suit hastily," Kok said. "This is what we told Indonesia too."

Kok, who met EU energy commissioner Kadri Simson on Thursday, said Malaysian palm oil was much greener than its critics claim.

Forest cover in Malaysia has stayed above 50%, the government says, and the yield for palm oil per hectare far surpasses competing oils, such as from rapeseed or soybeans.

EU consumption of palm oil in food has been in steady decline, but its use as a biofuel has increased. Last year, the bloc consumed more than 7 million tonnes, with some 65% for energy.

Indonesia and Malaysia, which produce more than 85% of the world's palm oil, and the EU plan to discuss the issue together. Kok said she wanted those discussions to speed up.

(Reporting by Philip Blenkinsop and Mei Mei Chu, Editing by William Maclean)