European lawmakers approved draft measures last week to reform the power market there and reduce energy consumption to meet more ambitious climate goals. The plan includes a ban on the use of palm oil in motor fuels from 2021.

Indonesia and Malaysia, who produce nearly 90% of the world’s palm oil, called the move discriminatory and said there should be fair treatment for all vegetable oils.

A large portion of European palm oil imports is used to make biofuels, giving the industry’s top two producers cause for concern as they fear overall demand will fall.

International Trade and Industry Minister Mustapa Mohamed called the move a “regressive step which will fuel further uncertainty surrounding global trade”, according to a statement yesterday evening.

“Malaysia will intensify collaboration with other palm oil producing countries to consider more concerted efforts to voice our strong concern before the various committees under the WTO,” Mustapa said, adding that the ministry would raise the issue with two committees in March and April.

Mustapa also said Malaysia would seek a solution through the Malaysia-EU free trade agreements and the proposed Asean-EU free trade agreement.

Palm oil exports are a key source of revenue for Malaysia. The EU is its second-biggest market after India.