Malaysia says Europe's move to limit palm oil use will affect ties

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KUALA LUMPUR (Jan 8): Malaysia on Tuesday said relations with Europe will be affected, following a move by European countries to restrict the use of palm oil in biofuels in coming years.

Last year, European lawmakers backed measures to limit the use of palm oil in biofuels, ahead of an eventual ban in 2030. More recently, France laid out plans to curb imports of palm oil and exclude it from biodiesel feedstock, while Norway approved plans to ban biofuels containing palm oil from 2020.

The palm oil industry is often linked by environmental groups with deforestation and displacement of wildlife and indigenous communities. Malaysia, as the world's second biggest producer, has criticised the move by European countries.

Primary industries minister Teresa Kok said she expects more European countries to pass similar resolutions.

"This is going to affect bilateral relations between Malaysia and all these EU countries," Kok told reporters on the sidelines of a palm oil industry conference.

The issue has been discussed with the cabinet and Prime Minister Mahathir Mohamad will write to the president of France and the prime minister of Norway, she said.

Last year, top palm oil producers Indonesia and Malaysia criticised the European Union for backing a ban on the use of palm oil in biofuels, with a Malaysian minister calling the move a protectionist trade barrier and a form of "crop apartheid".

Minister Kok also said she hopes palm oil prices will rise to 2,700 ringgit (US$657.09) per tonne or more this year.

Prices of the vegetable oil, used in everything from cookies and soap to lipstick, have taken a hit from high inventories.

Benchmark palm oil prices were trading at 2,186 ringgit per tonne on Tuesday.

(US$1 = 4.1090 ringgit)