Case Note on WTO Panel Reports in Palm Biodiesel Disputes

A case note by Yury Rovnov on the WTO panel reports in disputes brought by Indonesia and Malaysia over the EU’s biofuels regime (DS593, DS600) is published in the April issue of the American Journal of International Law.

The complainants challenged, among other things, EU law provisions under which member states will, as a general rule, be unable to count palm biodiesel toward renewable energy targets in the transport sector as from 2030. Since the EU justifies this by high greenhouse gas (GHG) emissions associated with indirect land-use change (ILUC) from palm plantations, these disputes represent the first WTO cases to address product differentiation based on carbon footprints.

The note focuses on the analysis by the panel (formally two panels with identical members) of Malaysia’s and Indonesia’s claims regarding violations of Article 2.1 of the Agreement on Technical Barriers to Trade, which prohibits technical regulations from discriminating against “like products” of different origins. The panel found biofuels based on rapeseed and soybean were “like products” to palm biodiesel. Although the panel identified several discriminatory aspects in the EU measure, none of them struck at the heart of the policy—the classification of palm oil as the only first-generation biofuel feedstock carrying an especially high risk of ILUC-associated GHG emissions. In its analysis, the panel implicitly moved away from the Appellate Body’s established non-discrimination test (whereby any “detrimental impact on competitive opportunities” for imported products must stem “exclusively” from legitimate regulatory distinctions) in favour of a more respondent-friendly standard, which asks whether there is a “reasonable basis” for the regulatory differences embodied in the measure.

The full commentary is available at the following link: https://doi.org/10.1017/ajil.2025.10151