WT/DS600/R/Add.1  
 
5 March  2024 
(24-2038) Page: 1/116 
  Original: English  
 
  
EUROPEAN UNION AND CERTAIN MEMBER STATES  – CERTAIN 
MEASURES CONCERNING PALM OIL AND  
OIL PALM CROP -BASED BIOFUELS  
REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to C to the Report of the Panel to be found in document  
WT/DS600/R . 
 
 
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LIST OF ANNEXES  
ANNEX  A 
WORKING PROCEDURES OF THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
ANNEX B  
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of Malaysia  12 
Annex  B-2 Integrated executive summary of the arguments of the European Union  41 
ANNEX  C 
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Australia  62 
Annex  C-2 Integrated executive summary of the arguments of Brazil  65 
Annex  C-3 Integrated executive summary of the arguments of Canada  69 
Annex  C-4 Integrated executive summary of the arguments of Colombia  74 
Annex  C-5 Integrated executive summary of the arguments of Costa Rica  79 
Annex  C-6 Integrated executive summary of the arguments of Ecuador  82 
Annex  C-7 Integrated executive summary of the arguments of Indonesia  86 
Annex  C-8 Integrated executive summary of the arguments of Japan  91 
Annex  C-9 Integrated executive summary of the arguments of the Republic of Korea  96 
Annex  C-10 Integrated executive summary of the arguments of the Russian Federation  99 
Annex  C-11 Integrated executive summary of the arguments of Ukraine  102 
Annex  C-12 Integrated executive summary of the arguments of the United Kingdom  108 
Annex  C-13 Integrated executive summary of the arguments of the United States  112 
 
 
 
 
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  ANNEX A  
WORKING PROCEDURES OF THE PANEL  
Contents  Page  
Annex  A-1 Working Procedures of the Panel  4 
 
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 ANNEX A -1 
WORKING PROCEDURES OF THE PANEL  
Adopted on 13 September 2021  
Revised on 16 February 2022  
General  
1. (1) In this proceeding, the Panel shall follow the relevant provisions of the Understanding 
on Rules and Procedures Governing the Settlement of Disputes ("DSU"). In addition, the 
following Working Procedures apply.  
(2) The Panel reserves the right to modify these procedures and adopt  additional 
procedures, as necessary, after consultation with the parties.  
Confidentiality  
2. (1) In accordance with the DSU, the deliberations of the Panel shall be confidential, and the 
documents submitted to it shall be treated as confidential and shall  be made available to the 
parties and the third parties1 to the dispute. Members shall treat as confidential information 
that is submitted to the Panel which the submitting Member has designated as confidential.  
(2) In accordance with the DSU, nothing in these Working Procedures shall preclude a party 
or third party from disclosing statements of its own positions to the public.  
(3) If a party submits a confidential version of its written submissions to the Panel, it shall 
also, upon request of a Member, pr ovide a non -confidential summary of the information 
contained in its submissions that could be disclosed to the public. The Panel may, upon 
request, fix a time -limit within which the party should endeavour to provide such summary.  
(4) Upon request, the Pan el may adopt appropriate additional procedures for the treatment 
and handling of confidential information after consultation with the parties.  
Submissions  
3. (1) Before the substantive meeting of the Panel with the parties, each party shall submit a 
writte n submission and a rebuttal submission in which it presents the facts of the case and its 
arguments, in accordance with the timetable adopted by the Panel.  
(2) Each third party that chooses to make a written submission before the substantive 
meeting of the  Panel with the parties shall do so in accordance with the timetable adopted by 
the Panel.  
(3) The Panel may invite the parties or third parties to make additional submissions during 
the proceeding, including with respect to requests for preliminary ruling s in accordance with 
paragraph 4 below. Should the Panel exercise this right, it will provide an appropriate 
opportunity, where relevant, to the other party or third parties to comment on such additional 
submissions.  
Preliminary rulings  
4. (1) If the Europ ean Union considers that the Panel should make a ruling before the issuance 
of the Report that certain measures or claims in the panel request or the complainant's first 
 
1 To the extent provided for in Article 10.3 of the DSU.  WT/DS600/R/Add.1  
 
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 written submission are not properly before the Panel, the following procedure applies.  
Exceptions to this procedure shall be granted upon a showing of good cause.  
a. The European Union shall submit any such request for a preliminary ruling at the earliest 
possible opportunity and in any event no later than in its first written submission. 
Malaysia shall submit its response to the request before the substantive meeting of the 
Panel, at a time to be determined by the Panel in light of the request.  
b. The Panel may issue a preliminary ruling on the issues raised in such a preliminary 
ruling req uest before, during or after the substantive meeting, or the Panel may defer 
a ruling on the issues raised by a preliminary ruling request until it issues its Report to 
the parties.  
c. If the Panel finds it appropriate to issue a preliminary ruling before the issuance of its 
Report, the Panel may provide reasons for the ruling at the time that the ruling is made, 
or subsequently in its Report.  
d. Any request for such a preliminary ruling by the respondent before the substantive 
meeting, and any subsequent s ubmissions of the parties in relation thereto before the 
substantive meeting, shall be served on all third parties. The Panel may provide all third 
parties with an opportunity to provide comments on any such request, either in their 
submissions as provided  for in the timetable or separately. Any preliminary ruling issued 
by the Panel before the substantive meeting on whether certain measures or claims are 
properly before the Panel shall be shared with all third parties.  
(2) This procedure is without prejudi ce to the parties' right to request other types of 
preliminary or procedural rulings during the proceeding, and to the procedures that the Panel 
may follow with respect to such requests.  
Evidence  
5. (1) Each party shall submit all evidence to the Panel no later than during the substantive 
meeting, except evidence necessary for purposes of rebuttal, or evidence necessary for 
answers to questions or comments on answers provided by the other party. Additional 
exceptions may be granted upon a showing of good ca use. 
(2) If any new evidence has been admitted upon a showing of good cause, the Panel shall 
accord the other party an appropriate period of time to comment on the new evidence 
submitted.  
6. (1) If the original language of an exhibit or portion thereof is not a WTO working language, 
the submitting party or third party shall simultaneously submit a translation of the exhibit or 
relevant portion into the WTO working language of the proceeding. The Panel may grant 
reasonable extensions of time for the translat ion of exhibits upon a showing of good cause.  
(2) Any objection as to the accuracy of a translation should be raised promptly in writing, 
preferably no later than the next submission or meeting (whichever occurs earlier) following 
the submission which contains the translation in question. Any objection shall be accompanied 
by an explanation of the grounds for the objection and an alternative translation.  
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of 
submissions, each party and third party shall sequentially number its exhibits throughout the 
course of the dispute, indicating the submitting Member and the number of each exhibit on 
its cover page. Exhibits submitted by Malaysia should be numbered MYS -1, MYS-2, etc. 
Exhibits submitted by the European Union should be numbered EU -1, EU -2, etc. If the last 
exhibit in connection with the first submission was numbered MYS -5, the first exhibit in 
connection with the next submission thus would be numbered MYS -6. If a party withdraws 
one or more exhibits, or submits one or more exhibits intentionally blank, it should indicate 
"exhibit withdrawn"; or "exhibit left intentionally blank", respectively.  WT/DS600/R/Add.1  
 
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 (2) With each submission, oral statement, and response to question s attaching new 
exhibits, a party shall provide an updated list of exhibits in Word or Excel format.  
(3) If a party submits a document that has already been submitted as an exhibit by the 
other party, it should explain why it is submitting that document ag ain. 
(4) If a party includes a hyperlink to the content of a website in a submission, and intends 
that the cited content form part of the official record, the cited content of the website shall be 
provided in the form of an exhibit along with the date that  it was accessed.  
Editorial Guide  
8. In order to facilitate the work of the Panel, each party and third party is invited to make its 
submissions in accordance with the WTO Editorial Guide for Panel Submissions (electronic 
copy provided).  
Questions  
9. The P anel may pose questions to the parties and third parties at any time, including:  
a. Before the substantive meeting, the Panel may send written questions, or a list of topics 
it intends to pursue in questioning orally during a meeting. The Panel may ask dif ferent or 
additional questions at the meeting.  
b. The Panel may put questions to the parties and third parties orally during the 
substantive meeting, and in writing following the meeting, as provided for in paragraphs 15 
and 22 below.  
Substantive meeting  
10. The Panel shall meet in closed session.  
11. The parties shall participate in the meeting only when invited by the Panel to appear before it.  
12. (1) Each party has the right to determine the composition of its own delegation when 
meeting with the Panel.  
(2) Each party shall have the responsibility for all members of its delegation and shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceed ing and the 
submissions of the parties and third parties.  
13. Each party shall provide to the Panel the list of members of its delegation no later than 5.00 
p.m. (Geneva time) three working days before the first day of the meeting with the Panel.  
14. A req uest for interpretation to a WTO working language by any party should be made to the 
Panel as early as possible, preferably at the organizational stage, to allow sufficient time to 
ensure availability of interpreters.  
15. The substantive meeting of the Pan el with the parties shall be conducted as follows:  
a. The Panel shall invite Malaysia to make an opening statement to present its case first. 
Subsequently, the Panel shall invite the European Union to present its point of view. Before 
each party takes the floor, it shall provide the Panel and other participants at the meeting with 
a provisional written version of its statement. If interpretation is needed, each party shall 
provide additional copies for the interpreters before taking the floor.  
b. Each party  should avoid lengthy repetition of the arguments in its submissions. Each 
party is invited to limit the duration of its opening statement to not more than 45 minutes. If 
either party considers that it requires more time for its opening statement, it shoul d inform WT/DS600/R/Add.1  
 
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 the Panel and the other party at least three working days before the meeting, together with 
an estimate of the expected duration of its statement. The Panel will accord equal time to the 
other party.  
c. After the conclusion of the opening statemen ts, the Panel shall give each party the 
opportunity to make comments or ask the other party questions, through the Panel.  
d. The Panel may subsequently pose questions to the parties.  
e. Once the questioning has concluded, the Panel shall afford each party an opportunity to 
present a brief closing statement, with the European Union presenting its statement first. 
Before each party takes the floor, it shall provide the Panel and other participants at the 
meeting with a provisional written version of its closi ng statement, if available.  
f. Following the meeting:  
i. Each party shall submit a final written version of its opening statement no later 
than 5.00 p.m. (Geneva time) on the first working day following the meeting. At the 
same time, each party should also submit a final written version of any prepared closing 
statement that it delivered at the meeting.  
ii. Each party shall send in writing, within the timeframe established by the Panel 
before the end of the meeting, any questions to the other par ty to which it wishes to 
receive a response in writing.  
iii. The Panel shall send in writing, within the timeframe established by the Panel 
before the end of the meeting, any questions to the parties to which it wishes to receive 
a response in writing.  
iv. Each party shall respond in writing to the questions from the Panel, and to any 
questions posed by the other party, within the timeframe established by the Panel 
before the end of the meeting.  
17. The Panel reserves the right to adopt additional working p rocedures governing substantive 
meetings with remote participation, as necessary.  
Third party session  
18. Each third party may present its views orally during a session of the substantive meeting with 
the parties set aside for that purpose.  
19. Each third party shall indicate to the Panel whether it intends to make a statement during the 
third-party session, along with the list of members of its delegation, in advance of this session 
and no later than 5.00 p.m. (Geneva time) three working days before the th ird-party session 
of the meeting with the Panel.  
20. (1) Each third party has the right to determine the composition of its own delegation when 
meeting with the Panel.  
(2) Each third party shall have the responsibility for all members of its delegation and  shall 
ensure that each member of its delegation acts in accordance with the DSU and these Working 
Procedures, particularly with regard to the confidentiality of the proceeding and the 
submissions of the parties and third parties.  
21. A request for interpr etation to a WTO working language by any third party should be made to 
the Panel as early as possible, preferably upon receiving the working procedures and timetable 
for the proceeding, to allow sufficient time to ensure availability of interpreters.  
22. The third -party session shall be conducted as follows:  WT/DS600/R/Add.1  
 
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 a. The parties and third parties may be present during the entirety of this session.  
b. The Panel shall first hear the statements of the third parties, who shall speak in 
alphabetical order. Each third party making a statement at the third -party session shall 
provide the Panel and other participants with a provisional written version of its statement 
before it takes the floor. If interpretation of a third party's statement is needed, that third 
party shall provide additional copies for the interpreters before taking the floor.  
c. Each third party should limit the duration of its statement according to the Panel's 
instructions and avoid repetition of the arguments already in its submission. If a thir d party 
considers that it requires more time for its opening statement, it should inform the Panel and 
the parties at least seven days before the meeting, together with an estimate of the expected 
duration of its statement. The Panel will accord equal time  to all third parties for their 
statements.  
d. After the third parties have made their statements, the parties shall be given the 
opportunity to pose questions to any third party, through the Panel, for clarification on any 
matter raised in that third part y's submission or oral statement.  
e. The Panel may subsequently pose questions to any third party.  
f. Following the third -party session:  
i. Each third party shall submit the final written version of its statement no later 
than 5.00 p.m. (Geneva time) on th e first working day following the meeting.  
ii. Each party may send in writing, within the timeframe to be established by the 
Panel before the end of the meeting, any questions to one or more third parties to which 
it wishes to receive a response in writing . 
iii. The Panel may send in writing, within the timeframe to be established by the 
Panel before the end of the meeting, any questions to one or more third parties to which 
it wishes to receive a response in writing.  
iv. Each third party choosing to do so shall respond in writing to the questions from 
the Panel or a party, within the timeframe established before the end of the meeting.  
23. The Panel reserves the right to adopt additional working procedures governing third -party 
sessions with remote particip ation, as necessary.  
Descriptive part and executive summaries  
24. The description of the arguments of the parties and third parties in the descriptive part of the 
Panel report shall consist of executive summaries provided by the parties and third parties, 
which shall be annexed as addenda to the report. These executive summaries shall not in any 
way serve as a substitute for the submissions of the parties and third parties in the Panel's 
examination of the case.  
25. Each party shall submit a single  integrated executive summary of the facts and arguments as 
presented to the Panel in its written submissions and oral statements in accordance with the 
timetable adopted by the Panel.  
26. The integrated executive summary shall not exceed 30 pages.  
27. Each third party that submitted arguments (either in writing or at the third -party session) 
shall submit an integrated executive summary of its arguments as presented in its written 
submission and statement in accordance with the timetable adopted by the Pane l. This 
integrated executive summary may also include a summary of responses to questions, if 
relevant. The executive summary to be provided by each third party shall not exceed six 
pages. If a third -party submission and oral statement do not exceed six pa ges in total, they 
shall serve as the executive summary of that third party's arguments. If the third -party WT/DS600/R/Add.1  
 
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 submission and statement exceed six pages in total, the third party shall indicate if its 
submission or its statement should serve as its executive summary. If the third party indicates 
that it does not wish for the submission or oral statement, or both, to serve as its executive 
summary, it shall submit a separate integrated executive summary.  
28. The Panel may request the parties and third parties t o provide executive summaries of facts 
and arguments presented to the Panel in any other submissions.  
Interim review  
29. Following issuance of the interim report, each party may submit a written request to review 
precise aspects of the interim report and r equest a further meeting with the Panel, in 
accordance with the timetable adopted by the Panel. The right to request such a meeting shall 
be exercised no later than at the time the written request for review is submitted.  
30. If no further meeting with the  Panel is requested, each party may submit written comments 
on the other party's written request for review. Such written comments shall be limited to the 
other party's written request for review and shall be submitted in accordance with the 
timetable adop ted by the Panel.  
Interim and Final Report  
31. The interim report, as well as the final report before its official circulation, shall be kept strictly 
confidential and shall not be disclosed.  
Service of documents  
32. The following procedures regarding serv ice of documents apply to all documents submitted by 
parties and third parties during the proceeding:  
a. Each party and third party shall submit all documents to the Panel via the Disputes On - 
Line Registry Application (DORA) https://dora.wto.org by 5:00 p .m. (Geneva time) on 
the due dates established by the Panel. The electronic version uploaded into DORA shall 
constitute the official version for the purposes of submission deadlines and the record 
of the dispute. Upload of a document into DORA shall consti tute electronic service on 
the Panel, the other party, and the third parties. Each party shall serve any document 
submitted in advance of the substantive meeting with the Panel directly on the third 
parties. For greater clarity, this includes, in accordanc e with paragraph 3(1) of these 
Working Procedures, the parties' rebuttal submissions.  
b. By 5:00 p.m. (Geneva time) the next working day following the electronic submission, 
each party and third party shall deliver one paper copy of all documents it submit s to 
the Panel, including the exhibits, to the DS Registry (office No. 2047) for the DS 
Registry's archive. The DS Registrar shall stamp the documents with the date and time 
of delivery of the paper copy. If an exhibit is in a format that is impractical to  deliver as 
a paper copy, then the party may deliver such exhibit in electronic format (email or on 
a CD-ROM, DVD or USB key). In this case, the cover page of the exhibit should indicate 
that the exhibit is only available in electronic format. If, for any reason, the DS Registry 
office is unavailable for the service of paper copies, the "next working day" shall mean 
the day that the Panel determines for such delivery once normal operations have 
resumed.  
c. The Panel shall provide the parties with the Descri ptive Part of the Report, the Interim 
Report and the Final Report, as well as all other documents or communications issued 
by the Panel during the proceeding, via DORA.  
d. If the parties or third parties have any questions or technical difficulties relatin g to 
DORA, they are invited to contact the DS Registry (DSRegistry@wto.org).  
e. If any party or third party is unable to meet the 5:00 p.m. deadline because of technical 
difficulties in uploading these documents into DORA, the party or third party concerne d WT/DS600/R/Add.1  
 
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 shall inform the DS Registry (DSRegistry@wto.org) without delay and provide an 
electronic version of all documents to be submitted to the Panel by email including any 
exhibits. The email shall be addressed to DSRegistry@wto.org, the Panel Secretary, the 
other party and, if appropriate, the third parties. The documents sent by email shall be 
submitted no later than 5:30 p.m. on the due date established by the Panel. If the file 
size of specific exhibits makes transmission by email impossible, or it would r equire 
more than five email messages, owing to the number of exhibits to be filed, to transmit 
all of them by email, the specific large file size exhibits, or those that cannot be attached 
to the first five email messages, shall be filed with the DS Regist ry (office No. 2047) 
and provided to the other party and, if appropriate, the third parties by no later than 
9:30 a.m. the next working day on an electronic medium acceptable to the recipient. In 
that case, the party or third party concerned shall send a n otification to the DS 
Registrar, copying the Panel Secretary, the other party, and the third parties, as 
appropriate, via email, identifying the numbers of the exhibits that cannot be 
transmitted by email.  
f. In case any party or third party is unable to a ccess a document filed through DORA 
because of technical difficulties, it shall promptly, and in any case no later than 5 p.m. 
on the next working day after the due date for the filing of the document, inform the 
DS Registrar, the Panel Secretary, and the party or third party that filed the document, 
of the problem by email and shall, if possible, identify the relevant document(s). The 
DS Registrar will promptly try to identify a solution to the technical problem. In the 
meantime, the party or third party t hat filed the document(s) shall, promptly after being 
informed of the problem, provide an electronic version of the relevant document(s) to 
the affected party or third party by email, with a copy to the DS Registry 
(DSRegistry@wto.org) and the Panel Secret ary to allow access to the document(s) while 
the technical problem is being addressed. The DS Registrar may provide an electronic 
version of the relevant document(s) by email if the affected party or third party so 
requests. The DS Registrar shall in that case copy the party or third party that filed the 
document(s) on the email message.  
Correction of clerical errors in submissions  
33. The Panel may grant leave to a party or third party to correct clerical errors in any of its 
submissions (including paragra ph numbering and typographical mistakes). Any such request 
should identify the nature of the errors to be corrected and should be made promptly following 
the filing of the submission in question.  
 
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  ANNEX  B 
ARGUMENTS OF THE PARTIES  
Contents  Page  
Annex  B-1 Integrated executive summary of the arguments of Malaysia  12 
Annex  B-2 Integrated executive summary of the arguments of the European Union  41 
 
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  ANNEX B -1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF MALAYSIA  
INTRODUCTION  
1. 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. 
2. Malaysia is the world 's second largest producer of palm oil. In 2020, Malaysia produced 
around 19.14 million metric tonnes of crude palm oil, accounting for 26% of world palm oil 
production (73.79 million tonnes)1 and 34% of world palm oil exports. In 2020, Malaysia 
exported around 1.94 million metric tonnes of palm oil to the EU. Malaysia 's palm oil industry 
indirectly employs more than 3 million people and about 28% of all oil palm -planted area in 
Malaysia is owned or farmed by smallholder farmers, who have benefited enormously from 
oil palm cultivation.2 Palm oil production and exports have been major factors  in Malaysia's 
ability to reduce poverty from 50% in the 1970s, down to less than 5% today.  
3. As one of the major producers and exporters of palm oil and products derived from palm oil, 
Malaysia recognises that it has an important role to play in fulfilli ng the growing global need 
for oils and fats in a sustainable manner. Malaysia is a responsible producer of palm oil and 
has long taken a global leadership role in instituting a continuous stream of oil palm 
cultivation and palm oil process innovations aim ed at making palm oil production more 
sustainable and environmentally friendly. As of 31 December 2020, nearly 90% of Malaysia 's 
total oil palm cultivation and around 95% of Malaysia 's palm oil mills had obtained the 
Malaysian Sustainable Palm Oil (MSPO) c ertification. Starting from 1 January 2020, Malaysia 
made the MSPO certification mandatory.  
4. In the context of addressing the environmental risks posed by the extensive use of fossil 
fuels, the EU and its Member States have, since 2009, adopted a policy of promoting the 
use of biofuels by setting national targets for the use of renewable energy in various sectors, 
including the transport sector. This policy led to a rapid increase in the EU consumption of 
biofuels, produced mainly from food and feed crops , including from palm oil.  
5. In the most recent incarnation of its renewable energy directive, and in related 
implementation by EU Member States, there are elements that Malaysia considers to be 
inconsistent with the EU 's and certain EU Member States ' WTO obligations. At the centre of 
these concerns is the EU 's determination that only palm oil entails a high ILUC risk. On that 
basis, the EU has determined that the share of oil palm crop -based biofuel and palm oil as 
a biofuel feedstock, unless certified as  having a low ILUC -risk, shall not exceed the level of 
consumption of such fuel in each EU Member State in 2019 and, from 2023 to 2030, it shall 
gradually decrease to 0%.  
MEASURES AT ISSUE 
A. Challenged EU Measures  
6. Directive (EU) 2018/2001 of the European Parliament and of the Council of 11 December 
2018 on the promotion of the use of energy from renewable sources  (RED II) establishes a 
new binding EU target of a share of at least 32% of renewable energy in the EU gross final 
consumption of energy by 2030, aiming at "[e]nsur(ing) robust GHG emission savings and 
 
1 Oil World No.  6, Vol. 64, page 77.  
2 "Oil Palm Planted Areas 2020 ", Malaysi an Palm Oil Board, available at 
https://bepi.mpob.gov.my/images/area/2020/Area_summary.pdf . WT/DS600/R/Add.1  
 
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  minimiz(ing) unintended environmental impacts".3 EU Member States were required to 
transpose this general renewable energy policy framework by 30 June 2021.4 Malaysia does 
not challenge the  WTO consistency of the entire RED II, nor the network of regulation that 
the EU refers to as the "EU Biofuels Regime". Rather, Malaysia challenges certain specific 
measures taken by the EU under that "regime", which, jointly and severally, serve to remove  
oil-palm crop -based biofuel the EU biofuels market.  
7. The RED II places a limit on biofuel consumption in the transport sector, which an EU Member 
State may take into account for its calculation of the share of energy from renewable sources 
and, ultimat ely, when assessing whether it achieves its renewable energy target. The 
amount of biofuels that may be derived from food and feed crops is set at 7% (or lower) of 
total energy consumption in the transport sector (hereinafter, the "7% limit"). For the 
transport sector, the RED II sets an overall objective of achieving 14% of its energy 
consumption from renewable sources by 2030.  
8. After 1 January 2021, EU Member  States ' share of energy from renewable sources may not 
fall below certain specified thresholds.  The thresholds are based on a calculation of the sum 
of: (i) the gross final consumption of electricity from renewable sources; (ii) the gross final 
consumption of energy from renewable sources in the heating and cooling sector; and (in 
relevant part) (ii i) the final consumption of energy from renewable sources in the transport 
sector.  
9. The Delegated Regulation (EU) 2019/807 of 13 March 2019 supplementing Directive (EU) 
2018/2001 of the European Parliament and of the Council as regards the determination of 
high indirect land -use change -risk feedstock for which a significant expansion of the 
production area into land with high carbon stock is observed and the certification of low 
indirect land -use change -risk biofuels, bioliquids and biomass fuels suppleme nts the RED II 
by laying down the criteria for determining the high ILUC -risk feedstock, i.e., feedstock for 
which a significant expansion of the production area into land with high -carbon stock is 
observed, as well as for certifying low ILUC -risk biofuels , bioliquids and biomass fuels. The 
alleged "scientific basis" for these criteria is provided in an accompanying Status Report.  
10. In calculating an EU Member State 's gross final consumption of energy from renewable 
sources, the share of biofuels, bioliqu ids, or biomass fuels associated with a high ILUC -risk 
, must be below the consumption level of such fuels in that EU Member State in 2019 (unless 
such fuels are certified to be "low ILUC -risk" fuels). The share of these "high ILUC -risk" 
biofuels, bioliqui ds, or biomass fuels may not exceed the level of consumption of such fuels 
in a given EU Member State in 2019 (hereinafter, referred to as the "high ILUC -risk cap"), 
unless they are certified to be "low ILUC -risk" biofuels, bioliquids or biomass fuels. The  RED 
II provides that "[f]rom 31 December 2023 and until 31 December 2030 at the latest, that 
limit is to gradually decrease to 0%" (hereinafter, referred to as the "high ILUC -risk phase 
out").  
11. The certification as low ILUC -risk (hereinafter, referred to as "low ILUC -risk certification") 
under Article 4 of the Delegated Regulation is theoretically possible for biofuels, bioliquids, 
and biomass fuels if all relevant criteria are met, namely: (i) such products comply with the 
sustainability and greenhouse  gas (GHG) emissions saving criteria set out in Article 29 of 
the RED II; (ii) such products have been produced from additional feedstock obtained 
through additionality measures that meet the specific criteria set out in Article 5 of the 
Delegated Regulati on; and (iii) the evidence needed to identify the additional feedstock and 
to substantiate claims regarding the production of additional feedstock is duly collected and 
thoroughly documented by the relevant economic operators.  
12. The conditions set out in  Articles 4 and 5 of the Delegated Regulation appear to have been 
designed so as to effectively exclude oil palm crop -based biofuels from the EU market.  
 
3 Article 3(1) of and recital 8 in the pr eamble to the RED II.  
4 Article 36(1) of the RED II.  WT/DS600/R/Add.1  
 
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  13. As a result of the EU 's measures, the demand for biofuels will inevitably turn to fuels that 
may be  taken into account in order to meet the EU renewable energy targets and that benefit 
from EU Member States ' support measures.  
B. Challenged Measures of Certain EU Member States  
14. The policy objectives set in the EU 's Renewable Energy Directives must be transposed into 
domestic law by EU Member States and the RED II envisages that the renewable energy 
targets be reached by EU Member States with the help of various support schemes, including 
tax refunds, reductions, or exemptions. In thi s context, Malaysia challenges 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 
ILUC-risk. 
1. France 's Measures  
15. In order to promote the consumption of biofuels, France has resorted to fiscal incentives by 
implementing a fuel tax reduction mechanism based on the quantity of eligible biofuel 
incorporated into the energy mix through the incentive tax on incorporating  biofuels ( taxe 
incitative relative à l'incorporation de biocarburants , TIRIB) (the "French fuel tax 
reduction"). The objective of the TIRIB is to maximise the rate of biofuel incorporation in 
the production of fuels and to promote the inclusion of eligible biofuels in petrol and diesel 
released for consumption within France. The distinctive feature of the tax is the exclusion of 
palm oil -based biofuels as of 2020. In practice, no rational economic operator releasing fuel 
containing renewable energy will incorporate "ineligible" biofuels into the energy mix under 
circumstances where another commercially attractive alternative exists.  
2. Lithuania 's Measures  
16. As an EU Member State, Lithuania is required to transpose EU Directives into national law. 
In view of the provisions of the RED II and the Delegated Regulation, Lithuania has amended 
its law on renewable energy to transpose the EU rules on ILUC.  
17. Malaysia submits that, if the EU 's measures at issue were to be found inconsistent with the 
EU's relevant WTO commitments, Lithuania 's rules transposing the relevant elements of the 
RED II would also have to be found to be inconsistent with Lithuania 's relevant WTO 
commitments.  
CLAIMS UNDER THE TBT  AGREEMENT IN RESPECT OF THE EU MEASURES  
A. Introduct ion 
18. Malaysia  claims  that the measures  at issue violate  the EU's obligations  under  the TBT 
Agreement and,  in particular,  its obligations  under  Articles  2.1, 2.2, 2.4, 2.5, 2.8, 2.9, 5.1.1,  
5.1.2,  5.2, 5.6, 5.8, 12.1  and 12.3 of the TBT Agreement.  
B. The 7% limit,  the high ILUC -risk cap, and the high ILUC -risk phase  out are 
technical  regulations within the meaning of Annex 1.1 of the TBT 
Agreement  
19. 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.  
20. Based on the definition, the Appellate Body has developed a three -tier test for  determining 
whether a measure is a "technical regulation" under the TBT Agreement. Pursuant to this 
test, a measure is a technical regulation when:  
i) it applies to an identifiable product or group of products;  WT/DS600/R/Add.1  
 
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  ii) it lays down one or more product charact eristics or their related processes and 
production methods; and  
iii) compliance with the product characteristics or their related processes and production 
methods is mandatory.  
21. For a measure to be a "technical regulation", it must "be applicable to an identifiable product, 
or group of products".5 
22. Malaysia contends that the measures concerned clearly meet this requirement. The 7% limit 
applies, as is stated in Article 26(1) of the RED II, to "biofuels, bioliquids and biomass fuels 
produced from food  and feed crops". The high ILUC -risk cap and the high ILUC -risk phase 
out apply, as provided in Article 26(2) of the RED II, to oil palm crop -based biofuel, which 
is regarded as a "biofuel with high ILUC -risk". Both "biofuels, bioliquids and biomass fuels 
produced from food and feed crops" and "oil palm crop -based biofuel with high ILUC risk" 
are an identifiable product or group of products.  
23. In addition to its applicability to an identifiable product or group of products, Annex 1.1 also 
provides that such measure must be a measure, which "lays down product characteristics 
or their related processes and production methods".  
24. "Product characteristics" within the meaning of Annex 1.1 have been understood to cover 
"objectively definable "features",  "qualities", "attributes", or other "distinguishing mark" of 
a product" and to relate to "a product 's composition, size, shape, colour, texture, hardness, 
tensile strength, flammability, conductivity, density, or viscosity". while product 
characteristics may be prescribed or imposed in either a positive or a negative form.6 
25. Article 26(1), first sentence, of the RED II, which sets out the 7% limit, explicitly states that 
the products falling within its scope of application are biofuels, bioliquids, and  biomass fuels 
consumed in transport, "where produced from food and feed crops". Since Article 26(1) of 
the RED II provides for the content of biofuels, bioliquids, and biomass fuels, Malaysia 
submits that the 7% limit stipulates the composition of the pro ducts to which it applies. By 
doing so, the 7% limit lays down a product characteristic within the meaning of Annex 1.1.  
26. The high ILUC -risk cap and the high ILUC -risk phase out specify, in Article 26(2), first 
sentence, of the RED II, the products fall ing within the scope of their application as:  
"high indirect land -use change -risk biofuels, bioliquids or biomass fuels produced from food 
and feed crops for which a significant expansion of the production area into land with high -
carbon stock is observed […] unless they are certified to be low indirect land -use change -
risk biofuels, bioliquids or biomass fuels […]".  
27. The high ILUC -risk cap and the high ILUC -risk phase out thus stipulate the composition of 
the products to which they apply. By doing so, t he high ILUC -risk cap and the high ILUC -
risk phase out lay down a product characteristic within the meaning of Annex 1.1.  
28. Finally, for a measure to be a technical regulation, Annex 1.1 requires that compliance with 
this measure is mandatory.  
29. While biofuels, bioliquids and biomass fuels produced from food and feed crops and high 
ILUC-risk oil crop -based biofuels can technically still be placed on the EU market, the 
measures at issue instead affect the extent to which these products can be taken  into 
account in meeting EU renewable energy targets. As the Appellate Body made clear in US – 
Tuna II (Mexico) , whether a product can or cannot be placed on the market when it does 
not comply with the requirements of the measure at issue does not determin e whether 
compliance is "mandatory" or not, and thus whether it must be viewed as a technical 
regulation or a standard. Such determination must be made in light of the features of the 
measure and the circumstances of the case at hand. Malaysia argues that the 7% limit, the 
 
5 Appellate  Body Report, EC – Asbestos , para. 70. 
6 Ibid., para. 67 and 69.  WT/DS600/R/Add.1  
 
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  high ILUC -risk cap, and the high ILUC -risk phase out are mandatory in nature and, therefore, 
technical regulations. They form part and parcel of EU legislation; they prescribe a particular 
conduct; and they set out specific requirements t hat constitute the sole means of addressing 
a particular matter.  
30. Article 26(1), first paragraph of the RED II states that:  
"the share of biofuels and bioliquids, as well as of biomass fuels … shall be no more than 
one percentage point higher than the s hare of such fuels in the final consumption of energy 
in the road and rail transport sectors in 2020 in that Member State, with a maximum of 7% 
…" (emphasis added).  
31. The 7% limit is clearly expressed in mandatory terms. Also, the 7% limit prescribes a 
particular conduct, and sets out a specific requirement that constitutes the sole means of 
addressing a particular matter, namely, to be taken into account for achieving the EU 
renewable energy targets.  
32. With regard to the high ILUC -risk cap, Article 26( 2), first sentence, of the RED II states that:  
"the share of high indirect land -use change -risk biofuels, bioliquids and biomass fuels … shall 
not exceed the level of consumption of such fuels in that Member State in 2019 …" (emphasis 
added).  
33. Article 2 6(2), second sentence, of the RED II states, with regard to the high ILUC -risk phase 
out, that the limit referred to Article 26(2), first sentence, " shall gradually decrease to 0%". 
Hence, both the high ILUC -risk cap and the high ILUC -risk phase out are ma ndatory in 
nature.  
34. Therefore, based on the overall design, structure, and operation of the 7% limit, the high 
ILUC-risk cap, and the high ILUC -risk phase out, the measures at issue are mandatory. 
These measures are laid down in Article 26 of the RED II  and the Delegated Regulation that 
prescribe rules "in a binding or compulsory fashion"7 and the compliance with which is 
mandatory.  
35. It is to be highlighted that the RED II and the Delegated Regulation are binding legal acts 
of the EU. According to Ar ticle 288 of the Treaty on the Functioning of the European Union 
(TFEU), a regulation is of "general application" and "binding in its entirety and directly 
applicable in all Member States"; while a directive is "binding, as to the result to be achieved, 
upon each Member State to which it is addressed" and "leave[s] to the national authorities 
the choice of form and methods". Thus, regulations are directly applicable and legally valid 
in the EU Member States without any need for implementation. Although dire ctives are not 
directly applicable, they are mandatory "as to the result to be achieved", and EU Member 
States are obliged to transpose them into national law within the established deadline.  
36. In view of the foregoing, Malaysia submits 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.  
C. The high ILUC -risk cap and the high ILUC -risk phase out are inconsistent 
with the national treatment and MFN obligations under Article 2.1 of the 
TBT Agreement  
37. Article  2.1 of the TBT Agreement  sets out a three-tier test of consistency  with the 
national  and MFN treatment obligations under this provision. For the  purposes  of its claim  
under  Article  2.1, Malaysia  submits  that: 
i) the measures at issue are "technical regulations" within the meaning of Annex 1.1;  
 
7 Appellate Body Report, EC – Asbestos , para. 68.  WT/DS600/R/Add.1  
 
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  ii) the products  at issue are "like products",  i.e., that oil palm crop-based  biofuel  is "like"  
other oil crop -based biofuel, such as biofuel made of rapeseed oil or soyabean oil; and  
iii) the treatment accorded to Malaysia 's oil palm crop -based biofuel imported into the EU 
is less favourable than that accorded to domestic "like products" and to "like products" 
imported into the EU from other countries.  
38. With respect to the first element, Malaysia has concluded above that the high ILUC -risk cap 
and the high ILUC -risk phase out are technical regulations.  
39. The second element of the Article 2.1 test requires an assessment as to whether the products 
at issue are "like products". Whether the products at issue are "like" is to be objectively 
assessed on the basis of the nature and extent  of the competitive relationsh ip between the 
products in the market of the regulating Member.8 'A sufficiently close  competitive 
relationship ' is, therefore, an essential indicator that the products at issue are like.9 
40. To determine whether the products at issue were in a genuine and sufficiently close 
competitive relationship to be considered "like" within the meaning of Article 2.1, the 
Appellate Body 's approach  essentially  consists  of employing  four general criteria in analysing 
"likeness":  
i) the properties,  nature  and quality  of the products;  
ii) the end-uses of the products;  
iii) consumers ' tastes and  habits – also referred  to as consumers ' perceptions  
and behaviour – in respect of the products; and  
iv) the tariff classification  of the products.  
41. With respect to physical characteristics, oil palm crop -based biofuel (PME) and other oil crop -
based biofuels, such as biofuel made of rapeseed oil (RME) or biofuel made of soyabean oil 
(SBME), share the same chemical nature and similar basic physical characteristics.10 
42. One of the main properties of biodiesel is its low temperature operability, which is usually 
determined by three parameters, of which the cold filter plugging point (CFPP) is considered 
to be the most reliable. The CFPP refers to "the temperature at wh ich the biodiesel turns 
back into fat and cannot be used as fuel".11 The CFPP value of biodiesel differs depending 
on the oil crop feedstock of which it is made. The CFPP of biodiesel made of RME or SBME is 
lower than the CFPP of biodiesel made of PME. Wh ile this difference in CFPP values relates 
to the physical characteristics of the biodiesel made from palm oil and biodiesel made of 
rapeseed or soyabean oil, it does not significantly affect the competitive relationship 
between and among oil crop -based bi ofuels in the EU market. Malaysia refers to the position 
taken by the European Commission in 2009 in the context of an anti -dumping investigation 
relating to biodiesel, noting that the difference in CFPP values "is a minor difference which 
can easily be co mpensated either by mixing different types of biodiesel or by using additives" 
and that "[t]he difference in CFPP practically does not play any role in most of the blends".12 
 
8 Appellate Body Report, US – Clove Cigarettes , para. 192.  
9 Appellate Body Report, US – Clove Cigarettes , para. 191.  
10 B. R. Moser,  "Influence  of Blending  Canola,  Palm,  Soybean,  and Sunflower  Oil Methyl  Esters  on Fuel 
Properties  of Biodiesel " (2008),  Vol. 22, Energy  & Fuels, pp. 4301-4306,  available  at 
https://pubs.acs.org/doi/10.1021/ef800588x  (acc accessed  13 October 2021);  I. Barabás  and I.-A. Todoruţ, 
"Biodiesel  Quality,  Standards  and Properties ", in G. Montero,  Biodiesel  – Quality,  Emiss ions and By -Products 
(IntechOpen, 2011), available at https://www.intechopen.com/chapters/23666  (accessed 13 October 2021).  
11 Panel  Report, EU – Biodiesel  (Indonesia) , para. 7.122.  
12 Commission Regulation (EC) No 193/2009 of 11 March 2009 imposing a provisional anti -dumping 
duty on imports of biodiesel originating in the United States of America, OJ 2009 L 67, p. 26, para. 33(c), 
available at https://eur -lex.europa.eu/legal -content/EN /ALL/?uri=CELEX%3A32009R0193 (accessed 13 
October 2021).   WT/DS600/R/Add.1  
 
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  43. Notably, in light of technological developments in recent years, all oil cro p biofuel feedstocks 
can be interchangeably used to produce hydrotreated (hydrogenated) vegetable oil (HVO), 
with a final product that displays the same physical and chemical properties, irrespective of 
the particular feedstock(s) used to produce it. HVO d elivers the same performance and can 
be used in all seasons in all EU Member States ' markets, irrespective of the particular 
feedstock(s) used to produce it. HVO allows biofuel producers and blenders to decide on the 
specific feedstock to be used only on t he basis of price considerations and market 
availability. With respect to its physical characteristics and chemical properties, HVO oil palm 
crop-based biofuel is not only "like" vis -à-vis other oil crop -based biofuels, but in fact 
identical to any other H VO oil crop -based biofuels.13 
44. With respect to product end uses, Malaysia notes that biofuel made of PME and other oil 
crop-based biofuels (such as RME and SBME) are typically blended to produce FAME, which 
is in turn blended with conventional diesel t o produce the fuel sold at the gas station. Oil 
crop-based biofuels, thus, have the same end use. The share of each type of oil crop -based 
biofuels in FAME depends on price, availability of supply, and the need to meet the relevant 
quality standards. Malay sia notes that the EU standard EN 59014 for diesel fuel and the EU 
standard EN 1421415 for biodiesel do not differentiate among the different types of biofuels 
based on the feedstock from which they are made.  
45. With respect to the end use of HVO oil palm crop -based biofuel, Malaysia recalls that the 
final product displays the same physica l and chemical properties, irrespective of the 
particular feedstock(s) used to produce it, and that it delivers the same performance, and 
can be used in all seasons in all EU Member States ' markets, irrespective of the particular 
feedstock(s) used.  
46. As relates to consumer preferences, perceptions and behaviour, Malaysia notes that 
consumers of oil crop -based biofuels are the producers of FAME and HVO. These consumers 
typically blend various types of biofuels. They do not have a particular preference for any of 
the biofuels, which are blended to produce FAME. What matters to customers is the CFPP, 
irrespective of the feedstock used. Therefore, their choice between biofuels is based on price, 
availability of supply, and the need to meet the relevant quality  standards. These standards 
may differ from season to season and from country to country, depending on climatological 
conditions. Given the difference in CFPP values, some oil crop -based biofuels may, in some 
circumstances, be more appropriate to use or us ed more than others to meet the relevant 
quality standards. However, the different types of oil crop -based biofuels are highly 
substitutable from the perspective of consumers. With respect to HVO oil palm crop -based 
biofuel, Malaysia notes that HVO deliver s the same performance and can be used by the 
relevant consumers, namely the biofuel blenders and fuel producers, in all seasons in all EU 
Member States ' markets, irrespective of the particular feedstock(s) used to produce it.  
47. In light of the above, Ma laysia submits that all oil crop -based biofuels are "like products" 
within the meaning of Article 2.1.  
48. The third element of the test of consistency relates to the question of whether the measure 
at issue accords "treatment no less favourable". In US – Clove Cigarettes , the Appellate 
Body established a two -tier test to determine whether a technical regulation accords 
"treatment no less favourable" within the meaning of Article 2.1. First, it must be examined 
whether the measure at issue distorts the cond itions of competition to the detriment of 
products imported by the complainant. Second, in cases of de facto  discrimination, it has to 
be determined whether the detrimental impact of the measure at issue stems exclusively 
 
13 Ibid.,  at paras. 156 -175 
14 EN 590 provides for the requirements and test methods for automotive diesel fuels.   
15 EN 14214 is the European specification for FAME that sets out the requirements  and test methods for 
biodiesel for use in diesel engines. EN 14214 allows the use of many different feedstocks and manufacturing 
processes as long as the finished FAME product meets certain minimum specifications. Regardless of the FAME 
source, compositio n, or manufacturing process, the marketed FAME products must comply with the EN 14214 
specification in order to manufacture EN 590 diesel fuel and, thus, have the same end use.  WT/DS600/R/Add.1  
 
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  from a legitimate regulatory disti nction rather than reflecting discrimination against the 
group of imported products.16 
49. Malaysia contends that the high ILUC -risk cap and the high ILUC -risk phase out distort the 
conditions of competition on the EU market of oil crop -based biofuels to the detriment of oil 
palm crop -based biofuel imported from Malaysia, and that the detrimental impact of these 
measures does not stem from a legitimate regulatory distinction. The high ILUC -risk cap and 
the high ILUC -risk phase out, as set out in Article 26 (2) of the RED II, first limit and 
subsequently de facto  exclude oil palm crop -based biofuel from being counted towards the 
EU renewable energy targets. As the principal feature of the EU market of oil crop -based 
biofuels is that this market would not exis t but for the EU renewable energy targets (and 
related support measures), these measures virtually guarantee the elimination of oil palm 
crop-based biofuel on the market. Malaysia, thus, contends that the measures at issue have 
a detrimental impact on the competitive conditions of oil palm crop -based biofuel from 
Malaysia when compared to the competitive conditions of domestic EU biofuels made from 
other oil crops, as well as biofuels made from other oil crops imported into the EU from other 
countries. The measures at issue are, therefore, inconsistent with both the national 
treatment obligation and the MFN treatment obligation under Article 2.1.  
50. In the present case, the high ILUC -risk cap and the high ILUC -risk phase out are de facto  
discriminatory. The  Panel must, therefore, examine whether the detrimental impact of these 
measures on the competitive conditions of oil palm crop -based biofuel stems exclusively 
from a legitimate regulatory distinction. In determining whether it does, the Panel must 
careful ly scrutinise the design, architecture, revealing structure, operation, and application 
of these measures. In particular, the Panel must analyse whether they are designed and 
applied in an even -handed manner, or whether they lack even -handedness, for examp le, 
because they are designed or applied in a manner that constitutes a means of arbitrary or 
unjustifiable discrimination.  
51. High ILUC -risk biofuels, which are subject to the measures at issue, are biofuels made from 
feedstock for which a significant ex pansion of the production area into land with high carbon 
stock is observed. Article 3 of the Delegated Regulation sets out two cumulative criteria for 
determining high ILUC -risk feedstocks: i) the average annual expansion of the global 
production area of the feedstock since 2008 must be higher than 1% and affect more than 
100,000 hectares; and ii) the share of that expansion into land with high -carbon stock must 
be higher than 10%.  
52. The result of the application of these criteria is that only palm oil, and no other oil crop, is 
classified as a high ILUC -risk feedstock, and that only oil palm crop -based biofuel, and no 
other oil crop -based biofuels, are subject to the high ILUC -risk cap and the high ILUC -risk 
phase out. However, Malaysia contends that the  use of high ILUC -risk as a regulatory 
distinction is highly problematic, as it is impossible to establish a causal link between the 
cultivation of food and feed crops for the production of biofuel in one geographical location, 
and the growing of crops in another geographical location. Furthermore, the modelling of 
ILUC emissions is too uncertain to yield an accurate estimation of ILUC. Malaysia, thus, 
submits that high ILUC -risk is not a reliable and appropriate regulatory distinction, and, 
therefore, not justifiable.  
53. Malaysia submits, in the alternative, that the high ILUC -risk cap and the high ILUC -risk 
phase out, the measures at issue, are not applied in an even -handed manner. According to 
Malaysia, the regulatory distinction drawn by these measures is not calibrated to the risk 
that they seek to address. The aforementioned classification of high ILUC -risk result of the 
application of these criteria is that only palm oil, and no other oil crops, is classified as a 
high ILUC -risk feedstock, and that on ly oil palm crop -based biofuel, and no other oil crop -
based biofuels, are subject to the high ILUC -risk cap and the high ILUC -risk phase out.  
54. Malaysia also submits that the high ILUC -risk cap and the high ILUC -risk phase out have 
been designed and app lied in a manner that constitutes a means of arbitrary or unjustifiable 
discrimination. The measures at issue apply to oil palm crop -based biofuel, but not to 
biofuels made from other oil crops. This discrimination is both unjustified and arbitrary, since 
 
16 Appellate Body Report, US – Clove Cigarettes , paras. 180 and 182.   WT/DS600/R/Add.1  
 
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  there is no rational relationship between the discrimination and the primary objective of the 
measures at issue, namely the avoidance of additional GHG emissions.  
55. Based on the fact that the regulatory distinction drawn by the measures at issue is not 
calibrated with the risks these measures seek to address, on the serious doubts regarding 
the rational relationship between the regulatory distinction and the objective pursued by the 
measures at issue, and on the fact that the measures at issue are designe d and applied in 
a manner that constitutes arbitrary and unjustifiable discrimination, Malaysia submits that 
the detrimental impact of the measures at issue does not stem exclusively from a legitimate 
regulatory distinction, but reflects discrimination of oil palm crop -based biofuel from 
Malaysia.  
D. The 7% limit, the high ILUC -risk cap and the high ILUC -risk phase out 
create unnecessary obstacles to international trade and, therefore, are 
inconsistent with Article 2.2 of the TBT Agreement  
56. Malaysia subm its that the 7% limit, the high ILUC -risk cap and the high ILUC -risk phase out 
are inconsistent with the obligations under Article 2.2 of the TBT Agreement.  
57. The case law has concluded that, in essence, Article 2.2 serves as a necessity test in the 
TBT Agreement. It seeks to achieve a balance between two opposing objectives, namely 
trade liberalisation and the pursuit of a legitimate policy objective by WTO Members. The 
established case law has set out a four -tier test of consistency with Article 2.2. Ba sed on 
this four -tier test, Malaysia submits that:  
i) the measures at issue in this dispute, i.e., the 7% limit, the high ILUC -risk cap and 
the high ILUC -risk phase out, are "technical regulations" within the meaning of Annex 
1.1; 
ii) the measures at issue  are "trade -restrictive";  
iii) they fulfil their alleged objectives to an extent that is very difficult, if not impossible, 
to determine, and is, in any case, quite limited; and  
iv) the measures at issue are "more trade -restrictive than necessary" to fulfi l a legitimate 
objective, taking account of the risks non -fulfilment would create.  
58. With regard to the first element, Malaysia has concluded above that the 7% limit, the high 
ILUC-risk cap and the high ILUC -risk phase out are technical regulations.  
59. The second element of the test of consistency with Article 2.2 relates to the question of 
whether the measure at issue is "trade -restrictive". Here, a panel must determine that the 
measure(s) at issue have "a limiting effect on trade".17 
60. The high ILUC -risk cap and the high ILUC -risk phase out unmistakably have a restrictive, 
i.e., limiting, effect on trade in oil palm crop -based biofuel because these measures first 
limit and subsequently de facto  exclude oil palm crop -based biofuel from be ing counted 
towards the EU 's renewable energy targets. There is no demand for oil palm crop -based 
biofuel that cannot be counted towards the EU renewable energy targets. Hence, Malaysia 
submits that the high ILUC -risk cap and the high ILUC -risk phase out a re "trade restrictive" 
within the meaning of Article 2.2.  
61. The third element of the test of consistency with Article 2.2 relates to the question of whether 
the measure at issue fulfils a legitimate objective. This question raises a number of 
intermediat e questions, such as: (i) how to establish the objective(s) pursued by the 
measure at issue; (ii) which objectives are "legitimate objectives" within the meaning of 
Article 2.2; (iii) when a measure "fulfils" a legitimate objective; and (iv) how to establi sh 
 
17 Appellate Body Report, US – Tuna II (Mexico) , para. 319.   WT/DS600/R/Add.1  
 
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  whether, and if so, to what extent, the measure at issue fulfils the legitimate objective 
pursued.  
62. With respect to the determination of a proper objective, the parties agree that a panel is not 
bound by a Member 's characterisation of the objectives it pursues through the measure. 
Similarly, Malaysia agrees with the EU 's assessment that the Appellate Body in US – Tuna 
II (Mexico)  "clarified that a panel must make an objective  and independent  assessment  of 
the objectives pursued by a Member".18 Malaysia contends that, given that the objectives 
pursued are fundamental drivers of a piece of legislation, it is reasonable to assert that these 
goals would be memorialized in the relevant regulation(s). It is Malaysia 's position that 
objectives which are explicitly stated in relevant regulations (most typically set forth in 
preambular language), are therefore worthy of strong consideration in assessing the true 
and immediate objective(s) of a measure.  
63. Based on the Preamble to the RED II and the Delegated Regulation, Malaysia contends that 
the expressed primary objective of the measures is the avoidance of additional GHG 
emissions by limiting direct and indirect land -use change.  
64. With regard to the second  intermediate question, namely, which objectives are "legitimate 
objectives", it is worth noting both that certain 'legitimate objectives ' are explicitly 
enumerated in the third sentence of Article 2.2 (namely: (i) national security; (ii) the 
prevention of  deceptive practices; (iii) the protection of human health and safety, and animal 
or plant life or health; and (iv) the protection of the environment), and that these 
enumerated objectives do not constitute an exhaustive list. The assessment of legitimacy 
is, obviously, closely tethered to what the panel determines the EU 's objective(s) to be.   
65. With regard to the third intermediate question, namely, when does a measure "fulfil" a 
legitimate objective, the Appellate Body ruled that "the question of whet her a technical 
regulation "fulfils" an objective is concerned with the degree of contribution that the 
technical regulation makes towards the achievement of the legitimate objective".19 That 
degree of contribution towards the achievement of the legitimat e objective is of significant 
importance in both the "relational analysis" and the "comparative analysis" under the fourth 
element of the test of consistency.  
66. Regarding the last intermediate question of how to establish whether, and, if so, to what 
extent, the measure at issue fulfils the legitimate objective pursued, the Appellate Body 
noted in US – Tuna II (Mexico)  that the degree of fulfilment of the objective pursued (the 
degree of contribution towards the achievement of the objective), may be disc erned from 
the design, structure, and operation of the technical regulation, as well as from evidence 
relating to the application of the measure.  
67. In the present case, it is extremely difficult to determine the extent of any contribution that 
is made to ward 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 i mpossible 
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.  
68. The fourth and last element of the test of consistency with Article 2.2 relates to the question 
of whether the measure at issue is "not more trade -restrictive than necessary" to fulfil a 
legitimate objective, taking account of the risks non -fulfilment would create. Here, a panel 
should begin by considering factors that include: (i) the degree of contribution made by the 
measure to the legitimate objective at issue; (ii) the trade restric tiveness of the measure; 
and (iii) the nature of the risks at issue and the gravity of the consequences that would arise 
 
18 First Written Submission by the EU, para. 796 (emphases added).  
19 Appellate Body Report, US – Tuna II (Mexico) , para. 315  WT/DS600/R/Add.1  
 
- 22 - 
 
  from non -fulfilment of the objective(s) pursued by the Member through the measure.20 This 
balancing of factors constitutes the aforeme ntioned "relational analysis".  
69. The Appellate Body has emphasised that, in most cases, a comparison of the challenged 
measure and possible alternative measures should be undertaken. In other words, in 
addition to a "relational analysis", in most cases also a "comparative analysis" should be 
undertaken to establish whether a technical regulation is "more trade -restrictive than 
necessary". In the context of such "comparative analysis", it may be relevant to consider, 
in particular: (i) whether the propose d alternative measure is less trade -restrictive; (ii) 
whether it would make an equivalent contribution to the relevant legitimate objective(s), 
taking account of the risks non -fulfilment would create; and (iii) whether it is reasonably 
available.  
70. As to the first factor to be considered in the relational analysis under Article 2.2, Malaysia 
has laid out that the measures at issue are highly trade restrictive.  
71. As to the second factor to be considered in the relational analysis under Article 2.2, name ly 
the contribution to the achievement of the primary objective of the measures at issue ( i.e., 
to avoid additional GHG emissions by limiting direct and indirect land -use change), Malaysia 
again notes that, this contribution would be very difficult, if not  impossible, to be 
determined, whether in quantitative or qualitative terms, and would, in any case, be quite 
limited. Malaysia notes that the contribution made by the measures at issue to the primary 
objective is significantly undermined in its effectiven ess by the fact that there is no certainty 
that the expansion of production into land with high -carbon stock will not continue, or even 
accelerate, in order to expand the production of feedstocks other than palm oil for the 
production of biofuel destined f or the EU market.  
72. As to the third factor to be considered in the relational analysis under Article 2.2, namely 
the nature of the risks at issue and the gravity of consequences that would arise from non -
fulfilment of the objective pursued by the EU thro ugh the measures at issue, Malaysia 
submits that the risks and the gravity of consequences that non -compliance would create 
are, while not insignificant, rather limited. This is so because the measures at issue, at best, 
only make a limited contribution to  the primary objective being pursued by the EU, and, 
therefore, the risks and consequences that non -compliance with these measures would 
create are also limited.  
73. As relates to the aforementioned "comparative analysis" under Article 2.2, Malaysia 
consid ers that less trade -restrictive alternative measures are available and that examples 
of such measures are already successfully applied by the EU in other sectors and should 
have been employed by the EU vis -à-vis the production and use of biofuels, bioliqui ds, or 
biomass fuels associated with a high ILUC -risk in the transport sector. Malaysia contends 
that these measures would not be discriminatory and would be more effective in ensuring 
that the shortfall from the progressive reduction in the use of high IL UC-risk oil crops is not 
replaced by other crops that look poised to have similar or even worse effects on 
deforestation, encroachment onto land with high -carbon stock and related GHG emissions, 
or other negative environmental consequences (e.g., greater u se of pesticides and 
fertilisers, lower yields, and/or the need for larger planted areas).  
74. As an indicative and non -exhaustive description of the alternative measures that the EU 
should have considered and adopted, which is the only burden of proof fal ling on Malaysia, 
the following measures are of particular relevance:  
i) A legality scheme, such as the EU 's Forest Law Enforcement, Governance and Trade 
(FLEGT) scheme;  
ii) The EU 's approach applied in its deforestation -free initiative  
 
20 See, for example, Appellate Body Report, US – Tuna II (Mexico) , para. 322. WT/DS600/R/Add.1  
 
- 23 - 
 
  iii) Certification  by public authorities, such as the catch certificate under the EU 's Illegal, 
Unreported and Unregulated (IUU) fishing scheme;  
iv) Certification by existing non -governmental organisations, such as under the 
International Sustainability and Carbon Certifica tion (ISCC) and the Roundtable on 
Sustainable Palm Oil (RSPO) and the RSPO -RED; 
v) Market access quotas; and  
vi) Specific import requirements applied on a consignment basis.  
75. On the basis of the above considerations, Malaysia contends that the 7% limit,  the high 
ILUC-risk cap, and the high ILUC -risk phase out are inconsistent with Article 2.2.  
E. The high ILUC -risk cap and the high ILUC -risk phase out are not based on 
the relevant international standards and, therefore, are inconsistent with 
Article 2.4 of the TBT Agreement  
76. Article 2.4 of the TBT Agreement sets out a three -tier test of consistency. To determine 
whether or not a technical regulation is consistent with Article 2.4, a panel must examine:  
i) whether there exists a relevant international standard (or its completi on is imminent);  
ii) whether the relevant international standard is "used as a basis" for the technical 
regulation at issue; and  
iii) whether the relevant international standard is an effective and appropriate means for 
the fulfilment of the legitimate obj ectives pursued.  
77. As to the first element of the three -tier test of consistency with Article 2.4, namely whether 
there exists a relevant international standard (or its completion is imminent), Malaysia 
submits that the relevant international standards a re: 
i) International Organization for Standardization (ISO) 14040 and ISO 14044 laying down 
international standards on life cycle assessment;  
ii) ISO 14067 specifying the principles, requirements and guidelines for quantifying and 
communicating the carbon footprint of a product; and  
iii) ISO 13065 concerning the sustainability criteria for bioenergy.  
78. ISO standards are "international standards" within the meaning of Article 2.4.  
79. As to the question whether these international standards are "relevant" international 
standards within the meaning of Article 2.4, the panel in EC – Sardines  held, and the 
Appellate Body agreed, that, for an international standard to be "relevant", it must be an 
international standard that "bear[s] upon or relat[es] to the mat ter in hand" or is "pertinent" 
to the matter addressed by the technical regulation.  
80. Malaysia submits that the ISO standards referred to above are "relevant" international 
standards within the meaning of Article 2.4. These ISO standards, and in particul ar ISO 
14067:2018, read together ISO 14040:2016 and ISO 14044:2017, set out principles, 
requirements, and guidelines for determining the carbon footprint of products, including 
biofuel. As the measures at issue are measures, which first limit and then de facto exclude 
oil palm crop -based biofuel from being counted towards the EU renewable energy targets 
on the basis of, essentially, its carbon footprint, the ISO standards for determining the 
carbon footprint are "relevant" in the assessment of the consisten cy of the measures at 
issue with Article 2.4. Moreover, ISO 13065:2015, which relies also on ISO 14067:2018, is 
a standard applying to the entire supply chain and setting forth "principles, criteria and WT/DS600/R/Add.1  
 
- 24 - 
 
  indicators for the bioenergy supply chain to facilita te assessment of environmental, social 
and economic aspects of sustainability".21 
81. The second element of the test of consistency with Article 2.4 relates to the question of 
whether the relevant international standard is "used as a basis" for the techni cal regulation 
at issue. The EU stipulated that it did not use the aforementioned standards as a basis for 
the technical regulations at issue.22 
82. The third and last element of the test of consistency with Article 2.4 relates to the question 
of whether the relevant international standard is an effective and appropriate means for the 
fulfilment of the legitimate objective(s) pursued. Malaysia submits that the ISO standards 
referred to above are effective and appropriate means to fulfil the primary objecti ve of the 
EU measures at issue, namely the avoidance of additional GHG emissions by limiting direct 
and indirect land use change.  
83. On the basis of the above considerations, Malaysia contends that the high ILUC -risk cap and 
the high ILUC -risk phase out a re inconsistent with Article 2.4 of the TBT Agreement.  
F. The EU, in preparing, adopting or applying the measures at issue, notably 
the 7% limit, the high ILUC -risk cap and the high ILUC -risk phase out, has 
failed, upon the request of Malaysia, to explain the justification for those 
measures in terms of Articles 2.2 to 2.4 of the TBT Agreement and, 
therefore, acted inconsistently with Article 2.5 of the TBT Agreement  
84. To assess whether a Member acted inconsistently with Article 2.5 of the TBT Agreement, in 
particular the first sentence, a panel must establish whether:  
i) the Member is "preparing, adopting or applying a technical regulation";  
ii) this technical regulation "may have a significant effect on trade of other Members";  
iii) there was a "request of another Member" to explain the justification of the technical 
regulation at issue in terms of the provisions of Article 2.2 to 2.4; and  
iv) the Member in question failed to "explain the justification for that technical regulation" 
in terms of t he provisions of Article 2.2 to 2.4.  
85. With regard to the first element of the four -tier test of consistency with the first sentence of 
Article 2.5, Malaysia submits that the EU measures at issue, namely the 7% limit, the high 
ILUC-risk cap and the high ILUC-risk phase out, are technical regulations.  
86. With regard to the second element of the test of consistency with the first sentence of Article 
2.5, Malaysia notes that, as the panel in US – Clove Cigarettes  held, it suffices under Article 
2.5 that the  technical regulation at issue "may have a significant effect on trade". Malaysia 
submits, as discussed above, that the technical regulations at issue, namely the 7% limit, 
the high ILUC -risk cap and the high ILUC -risk phase out, not only "may have", but " have" 
an effect on the trade of Malaysia with the EU. Moreover, the effect on the trade of Malaysia, 
as discussed above, is clearly "significant" within the meaning given to this term in WTO 
case law, namely "sufficiently great or important to be worthy of  attention; noteworthy", or 
"important, notable or consequential".23 
87. With regard to the third element of the test of consistency with the first sentence of Article 
2.5, namely whether there was a "request of another Member" to explain the justificatio n of 
the technical regulation at issue in terms of the provisions of Article 2.2 to 2.4, the EU has 
already stipulated that Malaysia had made such a request.24 
88. With regard to the fourth element of the test of consistency with the first sentence of Art icle 
2.5, namely whether the Member in question failed to "explain the justification for that 
technical regulation" in terms of the provisions of Article 2.2 to 2.4, Malaysia emphasises 
 
21 ISO 13065:2015 (Sustainability criteria for bioenergy), para. 1.  
22 See EU Responses to Panel questions, para. 721.  
23 See, for example, Appellate Body Report, US – Large Civil Aircraft (2nd Complaint) , para. 1052; and 
Panel Report, Korea – Comm ercial Vessels , para. 7.570 (in respect of Article 6.3(c) of the SCM Agreement).   
24 EU Responses to the Panel's Questions, para . 732. WT/DS600/R/Add.1  
 
- 25 - 
 
  that the first sentence of Article 2.5, requires from the Member conce rned a "justification 
for the technical regulation". The mere provision of general information on the technical 
regulation is insufficient.  
89. Malaysia further contends that the EU has not given any explanation of the justification for 
the technical regul ations at issue in terms of the obligations assumed under Articles 2.2 and 
2.4. In responding to the repeated requests by Malaysia and other Members to explain the 
justification for the technical regulations at issue, the EU did not go further than stating  that 
the measures at issue were not technical regulations.  
90. Based on the foregoing, Malaysia concludes that the EU acted inconsistently with Article 2.5 
of the TBT Agreement.  
G. The high ILUC -risk cap on and the high ILUC -risk phase out of oil palm 
crop-based biofuel are based on an abstract and unsubstantiated high -
ILUC risk concept instead of the performance of such biofuel and, 
therefore, are inconsistent with Article 2.8 of the TBT Agreement.  
91. The high ILUC -risk cap and the high ILUC -risk phase o ut are based on an abstract and 
unsubstantiated high -ILUC risk concept instead of the performance of such biofuels and, 
therefore, are inconsistent with Article 2.8 of the TBT Agreement.  
92. Malaysia submits that the high ILUC -risk cap on and the high ILUC -risk phase out of oil palm 
crop-based biofuel are based on an abstract and unsubstantiated high -ILUC risk concept 
instead of the performance of such biofuel and, therefore, are inconsistent with Article 2.8.  
93. The high ILUC -risk cap and the high ILUC -risk phase out are technical regulations 
determining which oil crop -based biofuels may be taken into account towards the EU 
renewable energy targets. First limited and eventually de facto  excluded under the measures 
at issue is biofuel, which is high ILUC -risk. The high ILUC -risk cap and the high ILUC -risk 
phase out set out product requirements in terms of a descriptive characteristic, namely high 
ILUC-risk. Moreover, this descriptive characteristic is an abstract and unsubstantiated 
concept for which there i s no scientific basis. High ILUC -risk does not relate to the 
environmental performance of biofuel.  
94. In the context of its claim of inconsistency with Article 2.4, Malaysia submitted that there 
are international standards setting principles, criteria, an d guidelines on how to determine 
the environmental performance of a product, such as biofuel, and the sustainability of 
bioenergy. These international standards are the ISO standards ISO 14067:2018, read 
together ISO 14040:2016 and ISO 14044:2017, and ISO 13065:2015. To identify biofuels 
that are not to be counted towards its renewable energy targets because of their negative 
environmental impact, the EU could and should have based the technical regulations at issue 
on these ISO standards which would have e nabled it to specify product requirements in 
terms of performance.  
95. Whereas Article 2.8 states that "Members shall specify technical regulations based on 
product requirements in terms of performance rather than design or descriptive 
characteristics", Ar ticle 2.8 qualifies this obligation by stating "[w]henever appropriate". The 
panel in US – Clove Cigarettes  held that the term "wherever appropriate" is to be understood 
as where it is "proper", "fitting" and "suitable" to specify the product requirements in terms 
of performance. Malaysia contends that, in the present case, it is "proper", "fitting" and 
"suitab le", and thus "appropriate", to specify the product requirements for biofuel in terms 
of performance in line with the ISO standards referred to above.  
96. In light of the above, Malaysia concludes that the high ILUC -risk cap and the high ILUC -risk 
phase ou t are inconsistent with Article 2.8 because these measures are based on product 
requirements in terms of descriptive characteristics instead of in terms of performance.  WT/DS600/R/Add.1  
 
- 26 - 
 
  H. The 7% limit, the high ILUC -risk cap and the high ILUC -risk phase out were 
adopted w ithout the required timely publication and notification of these 
measures and organising an adequate process for commenting and, 
therefore, are inconsistent with Article 2.9 of the TBT Agreement  
97. Malaysia submits that the 7% limit, the high ILUC -risk ca p, and the high ILUC -risk phase 
out are inconsistent with Article 2.9.2 and/or 2.9.4 of the TBT Agreement.  
98. When no relevant international standard exists or when a proposed technical regulation is 
not in accordance with a relevant international standard and the proposed technical 
regulation may have a significant effect on trade of other Members, Article 2.9 imposes on 
Members detailed transparency, notification, and consultation requirements.  
99. Malaysia contends that the 7% limit , the high ILUC -risk cap and the high ILUC -risk phase 
out are inconsistent with Article 2.9.2, because the EU did not notify the proposals of the 
RED II and of the Delegated Regulation, which set out the measures at issue. Malaysia also 
concludes that the high ILUC -risk cap and the high ILUC -risk phase out are inconsistent with 
Article 2.9.4, because the EU failed to organise a meaningful commenting process on the 
proposal for the Delegated Regulation.  
I. Low ILUC -risk certification is a conformity assessme nt procedure within 
the meaning of Annex 1.3 of the TBT Agreement.  
100. Malaysia submits that the low ILUC -risk certification, as set out in Articles 4 to 6 of the 
Delegated Regulation, is a conformity assessment procedure within the meaning of Annex 
1.3 of the TBT Agreement.  
101. Malaysia does not make a claim of inconsistency of the technical regulation that is directly 
relevant for the conformity assessment procedure at issue. Malaysia, by following the 
language of the Delegated Regulation and its underl ying logic, considers "the exemption 
from the high ILUC risk cap and phase out" to be the technical regulation that is directly 
relevant for the conformity assessment procedure at issue.   
102. Furthermore, Malaysia claims an indirect link between the conf ormity assessment procedure 
at issue, namely the low ILUC -risk certification on the one hand, and the high ILUC -risk cap 
and phase out on the other, to determine whether biofuels, in this case, oil palm crop -based 
biofuels, fulfil the requirements to be ex empted from the limitations instituted by the high 
ILUC-risk cap and high ILUC -risk phase out.  
103. Malaysia submits that low ILUC -risk certification, as set out in Articles 4 to 6 of the Delegated 
Regulation, is a conformity assessment procedure within th e meaning of Annex 1.3 of the 
TBT Agreement, and thus subject to the disciplines set out in Article 5 of the TBT Agreement.  
J. Low ILUC -risk certification is inconsistent with Article 5.1.1 of the TBT 
Agreement  
104. Malaysia submits that low ILUC -risk cert ification is inconsistent with Article 5.1.1 of the TBT 
Agreement because it discriminates against Malaysian suppliers of oil palm crop -based 
biofuel as compared to the suppliers of the EU or other foreign origin of oil crop -based biofuel 
produced from fee dstocks other than palm oil.  
105. Article 5.1.1 provides for MFN treatment and national treatment obligations with regard to 
conformity assessment procedures.  
106. The panel in Russia – Railway Equipment  held that an importing Member would act 
inconsistent ly with Article 5.1.1 if three elements are established:  
i) the suppliers of another Member who have been granted less favourable access are 
suppliers of products that are "like" the products of domestic suppliers or suppliers 
from any other country who ha ve been granted more favourable access;  WT/DS600/R/Add.1  
 
- 27 - 
 
  ii) the importing Member (through the preparation, adoption, or application of a covered 
conformity assessment procedure) grants access for suppliers of products from 
another Member "under conditions less favourable"  than those accorded to suppliers 
of domestic products or products from any other country; and  
iii) the importing Member grants access under conditions less favourable for suppliers of 
like products "in a comparable situation".  
107. With regard to the firs t element of the test of consistency with Article 5.1.1, Malaysia has 
already shown that the products at issue, namely oil palm crop -based biofuel and other oil 
crop-based biofuels are "like" within the meaning of Article 2.1. They are, therefore, also 
"like" under Article 5.1.1.  
108. With regard to the second element of the test of consistency with Article 5.1.1, Malaysia 
submits that conditions for access to low ILUC -risk certification granted by the EU modify 
the conditions of competition between, on the  one hand, the Malaysian suppliers of oil palm 
crop-based biofuel and, on the other hand EU suppliers and suppliers of other countries of 
like oil crop -based biofuels, to the detriment of the Malaysian suppliers. This is so, because 
as a result of Article 3 of the Delegated Regulation, only oil palm crop -based biofuel is high 
ILUC-risk biofuel and, therefore, subject to low ILUC -risk certification. The like oil crop -based 
biofuels are not high ILUC -risk biofuels and, therefore, not subject to low ILUC -risk 
certification. The fact that Malaysian suppliers are subject low ILUC -risk certification if they 
would like their biofuel to be counted towards meeting the EU renewable energy targets, 
while EU and other suppliers of like biofuels are not, clearly distorts  the conditions of 
competition to the detriment of Malaysian suppliers. By not being applicable to like biofuels 
from EU suppliers and suppliers from other countries, low ILUC -risk certification grants 
access to conformity assessment to Malaysian suppliers  of oil palm crop -based biofuel under 
conditions less favourable.  
109. With regard to the third element of the test of consistency with Article 5.1.1, namely, the 
determination of whether access is granted under conditions no less favourable "in a 
comparab le situation", Malaysia submits that the Malaysian suppliers of oil palm crop -based 
biofuel, on the one hand, and EU suppliers and suppliers from other countries of like oil crop -
based biofuels, on the other hand, are "in a comparable situation". All these  suppliers are 
suppliers of like oil crop -based biofuels. The fact that the biofuels of EU suppliers and 
suppliers from other countries are not subject to low ILUC -risk certification does not mean 
that the Malaysian, EU, and other suppliers are not "in a s imilar situation". If this were the 
case, no conformity assessment procedure would ever be found to be inconsistent with 
Article 5.1.1.  
110. In light of the above, Malaysia concludes that low ILUC -risk certification is inconsistent with 
the MFN treatment a nd the national treatment obligations enshrined in Article 5.1.1.  
K. Low ILUC -risk certification is inconsistent with Article 5.1.2 of the TBT 
Agreement  
111. Malaysia submits that low ILUC -risk certification is inconsistent with Article 5.1.2 of the TBT 
Agreement because the EU, by applying the conformity assessment procedure at issue, 
creates unnecessary obstacles to international trade.  
112. Article 5.1.2 requires that conformity assessment procedures are not applied "with a view 
to or with the effect of creating unnecessary obstacles to international trade".  
113. As under Article 2.2 with regard to technical regulations, the analysis required under Article 
5.1.2 to establish whether a conformity assessment procedure is an "unnecessary obstacle 
to international trade", i.e., is more trade -restrictive than necessary,  involves, according to 
the Appellate Body, a holistic weighing and balancing of all relevant factors with respect to 
the challenged conformity assessment procedure ( i.e., the "relational analysis") and in 
comparison with proposed alternative measures ( i.e., "the comparative analysis").25 
 
25 Appellate Body Report, Russia – Railway Equipment , para. 5.186   WT/DS600/R/Add.1  
 
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  According to the Appellate Body, relevant factors to be considered by a panel in its analysis 
under Article 5.1.2 are:  
i) whether the conformity assessment procedure provides adequate confidence of 
conformity with the und erlying technical regulation or standard;  
ii) the strictness of the conformity assessment procedure or of the way in which it is 
applied; and  
iii) the nature of the risks and the gravity of the consequences that would arise from non -
conformity with the tec hnical regulation or standard.  
114. With regard to the first factor to be considered by the Panel in the relational analysis under 
Article 5.1.2, namely whether to examine whether low ILUC -risk certification, as set out in 
Articles 4 to 6 of the Delegated Regulation, provides adequate confidence of conformity with 
the underlying technical regulations, namely the high ILUC -risk cap and the high ILUC -risk 
phase out, Malaysia notes that low ILUC -risk certification obviously relates to ILUC and, as 
discussed ab ove, ILUC can neither be observed nor measured. Hence, low ILUC -risk 
certification cannot provide adequate confidence that the certified biofuel is indeed low -ILUC 
risk. In fact, low ILUC -risk certification provides no confidence of conformity at all.  
115. With regard to the second factor to be considered in the relational analysis, namely the 
strictness of low ILUC -risk certification, Malaysia points out that pursuant to Article 4 of the 
Delegated Regulation, biofuel produced from high ILUC -risk feedstock can be only certified 
as low ILUC -risk biofuel if three conditions are met:  
i) the biofuel complies with the sustainability and GHG emissions saving criteria set out 
in Article 29 of the RED II;  
ii) the biofuel has been produced from additional feedstock o btained through additionality 
measures that meet the specific criteria set out in Article 5 of the Delegated 
Regulation; and  
iii) the evidence needed to identify the additional feedstock and to substantiate claims 
regarding the production of additional fe edstock is duly collected and thoroughly 
documented by the relevant economic operators.  
116. Regarding the second of these cumulative conditions, namely that the biofuel has been 
produced from additional feedstock obtained through additionality measures, M alaysia notes 
that Article 5(1)(a) of the Delegated Regulation provides, as discussed above, for three so -
called "additionality pathways" and that each of these pathways shows the strictness of low 
ILUC-risk certification.  
117. Moreover, there is a great deal of uncertainty about the efficacy of low ILUC -risk certification 
more broadly. These concerns have recently been confirmed by the results of a Pilot report 
on said certification in Malaysia in the context of an oil palm plantation.26 Notably, t he entire 
approach regarding "additionality measures" is put into question by the evidence regarding 
the influence of external events on the yield and the relevant "dynamic yield baseline" (DYB) 
with which additional yield of a given feedstock is measured.  In simple terms, as the Pilot 
report notes, "Since yield is influenced by a large range of factors, including weather, tree 
density, fertilizer regime, etc., to disentangle the sole effect of an additionality measure 
from yield is a challenge". Furthermor e, and relevant to the strictness of the conformity 
assessment procedure, the Pilot report finds that "only relatively small volumes of additional 
biomass can be certified as low ILUC -risk, and only in years in which the actual yield is above 
the DYB" and that "it is a large administrative burden for certification to certify low volumes 
of biofuel".  
118. In addition to demonstrating the strictness of low ILUC -risk certification, Malaysia contends 
that the Pilot study is also probative of the third factor to  be considered by the Panel in the 
relational analysis under Article 5.1.2, namely the nature of the risks at issue and the gravity 
of consequences that would arise from the non -conformity with the technical regulations. 
Indeed, contrary to what has been a sserted by the EU, low ILUC -risk certification does not 
 
26 Low ILUC -risk certification: Pilot report and rec ommendations Malaysia, Oil palm yield increase, 
February 2021, 9 June 2021, available at 
https://iluc.guidehouse.com/images/reports/Phase1_Pilot_Report_Malaysia.pdf . WT/DS600/R/Add.1  
 
- 29 - 
 
  allow for a reliable pathway for conforming oil palm; rather it serves to further reinforce the 
most restrictive elements of the underlying technical regulations to which said conformity 
assessment pr ocedure, both directly and indirectly, relates.  
119. Malaysia submits that the Panel may, already on the basis of the relational analysis alone, 
come to the conclusion that low ILUC -risk certification is more strict, and definitely currently 
applied more strictly, than it is necessary to give the EU adequate confidence that oil palm 
crop-based biofuel conforms with the technical regulations at issue.  
120. As noted above, in the context of the "comparative analysis" under Article 5.1.2, the Panel 
needs to d etermine whether an alternative measure to low ILUC -risk certification:  
i) is reasonably available;  
ii) is less strict or applied less strictly; and  
iii) provides an equivalent contribution to giving the importing Member adequate 
confidence that products c onform with the applicable technical regulations or 
standards.  
121. Malaysia considers that less strict or less strictly applied alternative measures are available. 
These measures are already successfully applied by the EU in other sectors and could have 
easily been employed by the EU with respect to low ILUC -risk certification.  
L. Low ILUC -risk certification is inconsistent with Article 5.2.1 of the TBT 
Agreement  
122. Malaysia submits that low ILUC -risk certification is inconsistent with Article 5.2.1 of the TBT 
Agreement because the EU has failed to make available "as expeditiously as possible" the 
detailed implementing rules required to "undertake and complete" the co nformity 
assessment procedure at issue, i.e., low ILUC -risk certification.  
123. The obligation under Article 5.2.1 to ensure that the conformity assessment procedures are 
"undertaken and completed as expeditiously as possible" relates to the timeframe wit hin 
which a conformity assessment procedure must be undertaken and completed. The adverb 
"expeditiously" is understood to indicate that "the obligation relates to the speed and/or 
timing" of the performance of a conformity assessment procedure. The require ment to 
undertake and complete the conformity assessment procedure "as expeditiously as possible" 
indicates that the purpose of any conformity assessment procedure is to secure "a positive 
assurance of conformity with technical regulations".27 
124. Malays ia submits that, due to the EU 's failure to adopt implementing rules, it has not been 
possible to date to undertake, let alone undertake and complete expeditiously, low ILUC -
risk certification. As such, Malaysia concludes that EU acts inconsistently with A rticle 5.2.1.  
M. Low ILUC -risk certification is inconsistent with Article 5.6 of the TBT 
Agreement  
125. Malaysia submits that low ILUC -risk certification is inconsistent with Articles 5.6.1, 5.6.2, 
and 5.6.4 of the TBT Agreement because the EU, with regard  to low ILUC -risk certification, 
neither notified nor entered into meaningful consultations with other WTO Members or 
allowed for comments on this conformity assessment procedure, as required by those 
articles.  
N. Low ILUC -risk certification is inconsisten t with Article 5.8 of the TBT 
Agreement  
126. Malaysia submits that low ILUC -risk certification is inconsistent with Article 5.8 of the TBT 
Agreement because the EU neither promptly published nor otherwise made available the 
 
27 Ibid. WT/DS600/R/Add.1  
 
- 30 - 
 
  measure at issue, namely low ILU C-risk certification, in such a manner as to enable 
interested parties in Malaysia to become acquainted with it.  
O. The 7% limit, the high ILUC -risk cap, the high ILUC -risk phase out, and 
low ILUC -risk certification are inconsistent with Articles 12.1 and 12.3 of 
the TBT Agreement  
127. The TBT Agreement requires WTO Members to take into account the circumstances specific 
to developing countries and to provide differential and more favourable treatment to 
developing country Members. Malaysia submits that the  EU acted inconsistently with Article 
12.1 and 12.3 of the TBT Agreement.  
128. Malaysia contends that the EU, in the preparation and application of the measures at issue, 
notably the 7% limit, the high ILUC -risk cap, the high ILUC -risk phase out, and low I LUC-
risk certification, failed to take into account the circumstances specific to developing 
countries, in particular Malaysia, where palm oil and oil palm crop -based biofuel are 
produced.  
129. In connection with its claims, Malaysia submits that, simply e ngaging in communications 
and considering the inputs received, without "active and meaningful consideration" of the 
"special development, financial and trade needs" of developing country Members, must not 
be considered sufficient and cannot be regarded as a responsible attitude when trying to 
avoid or minimise trade effects and trade restrictions, especially if less trade restrictive and 
reasonably available alternatives are being suggested by affected developing country 
Members, as Malaysia did.  
130. Malay sia, while cognizant of the seemingly lax requirements imposed upon developed 
countries heretofore under Article 12, requests that, as a baseline obligation, WTO Members 
must be able to evidence how the special development, financial, and trade needs of 
developing country Members have indeed been taken into account.  
131. In summary, Malaysia contends that, in the preparation and application of the measures at 
issue, the EU failed to take into account the circumstances specific to developing countries, 
in particular Malaysia, and failed to provide differential and more favourable treatment to 
developing country Members, thereby acting inconsistently with Article 12.3 of the TBT 
Agreement.  
CLAIMS  UNDER  THE  GATT  1994  IN RESPECT  OF THE  EU MEASURES  
A. Introduction  
132. Malaysia submits that the measures at issue are inconsistent with the EU 's obligations under 
Articles I:1, III:4, X:3(a), and/or XI:1 of the GATT 1994.  
B. The high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -risk 
certificat ion are inconsistent with Article I:1 of the GATT 1994  
133. Malaysia submits that the high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -
risk certification discriminate among "like" oil crop -based biofuels and their feedstocks 
originating in th ird countries and, therefore, are inconsistent with Article I:1 of the GATT 
1994. In particular, by limiting and phasing out the use of only oil palm crop -based biofuel 
for meeting EU renewable energy targets, the measures at issue discriminate between 
Malaysian oil palm crop -based biofuel and palm oil and like oil crop -based biofuels and their 
feedstocks of other foreign origin.  
134. The principal purpose of the MFN treatment obligation of Article I:1 is to ensure all Members 
the equality of opportunity to  import from, or to export to, other Members (or any other 
country).  
135. The MFN treatment obligation of Article I:1 prohibits de jure , as well as de facto , 
discrimination. In other words, Article I:1 applies not only to "origin -based" measures (which WT/DS600/R/Add.1  
 
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  are discriminatory by definition), but also to measures which, on their face, appear "origin -
neutral" but are, in fact, discriminatory.  
136. Article I:1 sets out a four -tier test to determine whether a measure affecting trade in goods 
is consistent with the M FN treatment obligation. Based on this four -tier test, Malaysia 
submits that:  
i) the measures at issue, namely, the high ILUC -risk cap, the high ILUC -risk phase out, 
and low ILUC -risk certification, are measures covered by Article I:1;  
ii) the measures at issue grant an "advantage";  
iii) the products concerned are "like products"; and  
iv) the advantage at issue is not accorded "immediately and unconditionally" to all like 
products concerned.  
137. The MFN treatment obligation of Article I:1 conce rns "any advantage, favour, privilege or 
immunity" granted by any Member to any product originating in, or destined for, any other 
country with respect to, inter alia , "the matters referred to in Article III:4 of the GATT 1994", 
i.e., laws, regulations and  requirements affecting internal sale, offering for sale, purchase, 
transportation, distribution or use of any product.  
138. In the present case, the measures at issue, namely, the high ILUC -risk cap, the high ILUC -
risk phase out, and low ILUC -risk certifi cation are, as discussed, national laws or regulations 
affecting internal sale and/or use of the products concerned and fall within the scope of 
Article III:4. Therefore, the measures at issue are also covered by Article I:1.  
139. The second element of the  test of consistency with the MFN treatment obligation of Article 
I:1 relates to the question of whether the measure at issue grants an "advantage". According 
to the Appellate Body, Article I:1 requires that:  
"any advantage … granted by any Member to any p roduct originating in or destined for any 
other country shall be accorded immediately and unconditionally to the like product 
originating in or destined for the territories of all other Members".28 
140. Malaysia submits that the EU measures at issue, name ly the high ILUC -risk cap, the high 
ILUC-risk phase out, and low ILUC -risk certification, grant advantages to oil crop -based 
biofuels and their feedstocks imported from some Members that are not granted to all 
Members, and in particular not to Malaysia.  
141. As Malaysia has already demonstrated above, the high ILUC -risk cap and the high ILUC -risk 
phase out will not only limit and eventually exclude oil palm crop -based biofuel from the EU 
biofuel market, these measures will obviously also adversely affect de mand for, and the 
importation of, palm oil, i.e., the feedstock for oil palm crop -based biofuel. As a result of the 
measures at issue, palm oil will eventually be de facto  excluded from the EU biofuel feedstock 
market and oil palm crop -based biofuel is ove rwhelmingly imported into the EU.  
142. The third element of the test of consistency with the MFN treatment obligation of Article I:1 
relates to the question of whether the products at issue are "like products". The concept of 
"like products" is not defined  in Article I:1 and the case law on "likeness" within the meaning 
of Article I:1 is limited. However, the more extensive case law on "likeness" within the 
meaning of Article III of the GATT 1994 is of direct relevance.  
143. The fourth element of the test of consistency with the MFN treatment obligation of Article 
I:1 relates to the question of whether the advantage granted by the measure at issue is 
accorded "immediately and unconditionally" to all "like" products irrespective of their origin 
or destinatio n.  
144. As noted above, none of the advantages available to oil crop -based biofuels and their 
feedstocks, such as soyabean oil and rapeseed oil, imported from some Members is granted 
 
28 Appellate Body Report, Canada – Autos , para. 79   WT/DS600/R/Add.1  
 
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  to oil palm crop -based biofuel and palm oil imported from Malaysia. Thus , the advantages 
previously discussed have not been afforded immediately and unconditionally.  
145. Malaysia therefore submits that the high ILUC -risk cap, the high ILUC -risk phase out, and 
low ILUC -risk certification are inconsistent with the MFN treatmen t obligations of Article I:1 
of the GATT 1994.  
C. The high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -risk 
certification are inconsistent with Article III:4 of the GATT 1994  
146. Malaysia submits that the high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -
risk certification accord less favourable treatment to imported oil palm crop -based biofuel 
and palm oil than they accord to "like" domestic feedstocks and derived biofuels and, 
therefore, are inconsistent with Article III:4 of t he GATT 1994.  
147. Article III:4 sets out the three -tier test of consistency with the national treatment obligation. 
Based on this three -tier test, Malaysia submits that:  
i) the measures at issue, namely, the 7% limit, the high ILUC -risk cap, the high ILUC -
risk phase out, and low ILUC -risk certification, constitute a "law, regulation or 
requirement" covered by Article III:4;  
ii) the imported and domestic products at issue are "like products"; and  
iii) the imported products are accorded "less favourable treatment".  
148. The national treatment obligation of Article III:4 thus applies, inter alia , to domestic laws 
and regulations affecting the sale and the use of products. The high ILUC -risk cap, the high 
ILUC-risk phase out, and low ILUC -risk ce rtification are indisputably laws or regulations 
affecting the internal sale and use of the imported biofuels concerned and/or their 
feedstocks.  
149. The term "affecting" in Article III:4 has been interpreted to cover not only laws and 
regulations which di rectly govern the conditions of sale or use but also any laws or 
regulations which might adversely modify the conditions of competition between domestic 
and imported products.29 As discussed, the high ILUC -risk cap, the high ILUC -risk phase 
out, and low ILUC -risk certification, each in their own way, limit or eventually even exclude 
imported biofuels from being counted towards meeting the EU renewable energy targets, 
thereby 'affecting ' the market in the manner proscribed by Article III:4.  
150. The second element of the test of consistency with the national treatment obligation of 
Article III:4 relates to the question of whether the imported and domestic products 
concerned are "li ke". 
151. The third and last element of the test of consistency with the national treatment obligation 
of Article III:4 relates to the question of whether the measure at issue accords "treatment 
no less favourable". The Appellate Body 's interpretation of " treatment no less favourable" 
focuses on the conditions of competition between imported and domestic like products. 
Under current case law, a measure gives rise to "treatment less favourable" inconsistent 
with Article III:4 when it modifies the conditions of competition in the relevant market to 
the detriment of the imported products.  
152. With regard to the high ILUC -risk cap and the high ILUC -risk phase out, Malaysia has already 
demonstrated in the context of its claim under Article 2.1 of the TBT Agreeme nt that these 
measures apply solely to oil palm crop -based biofuel and result in treatment less favourable 
than the treatment accorded to like domestic oil crop -based biofuels.  
153. Similarly, with regard to low ILUC -risk certification, Malaysia has alrea dy demonstrated that 
this measure modifies the conditions of competition between, on the one hand, the 
 
29 Panel Report, Canada – Autos , para. 10.80.  WT/DS600/R/Add.1  
 
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  Malaysian suppliers of oil palm crop -based biofuel and, on the other hand, EU suppliers of 
like oil crop -based biofuels to the detriment of the Malaysian  suppliers.  
154. Thus, the high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -risk certification 
accord treatment less favourable to imported oil palm crop -based biofuel than the treatment 
accorded to like domestic oil -based biofuels.  
D. The hi gh ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -risk 
certification are inconsistent with Article XI:1 of the GATT 1994  
155. Article XI:1 of the GATT 1994 on "General Elimination of Quantitative Restrictions" sets out 
a general prohibition on q uantitative restrictions.  
156. Based on the text of Article XI:1, two elements must be demonstrated to establish an 
inconsistency with that provision. First, the measure must fall within the scope of application 
of Article XI:1. Second, the measure must b e a prohibition or restriction on the importation 
of any product of the territory of any other Member or on the exportation or sale for export 
of any product destined for the territory of any other Member.  
157. Article XI:1 applies to prohibitions or restr ictions other than duties, taxes, or other charges, 
whether made effective through quotas, import or export licences or other measures. 
Malaysia notes that Article XI:1 does not refer to laws or regulations but more broadly to 
measures . Article XI:1 does n ot only prohibit de jure quantitative restrictions. A panel ruled 
in 2000 that "the disciplines of Article XI:1 extend to restrictions of a de facto nature".30 
158. In previous disputes, the question has arisen whether Article XI:1 covers only border 
meas ures or also internal measures concerning, for example, the sale, offering for sale, 
transportation, distribution and use of products after they have been imported. A panel 
noted on the relationship between Article III:4 and Article XI:1 that it cannot be excluded a 
priori that different aspects of a measure may affect the competitive opportunities of imports 
in different ways, making them fall within the scope either of Article III:4 (where competitive 
opportunities on the domestic market are affected) or of Article XI:1 (where the 
opportunities for importation itself, i.e., entering the market, are affected), or even that 
there may be a potential for overlap between the two provisions. Such overlap would not 
make either Article XI:1 or Article III:4 redund ant. On the contrary, it would allow Members 
to challenge a measure both under Article XI:1 and under Article III:4 depending on the 
aspect of the measure the complainant focuses on.  
159. In view of the scope of application of Article III:4 and Article XI: 1, referred to above, 
Malaysia agrees with the panel in India – Autos  that a measure may fall under both Articles 
III:4 and XI:1.  
160. As to the question of how the limitation of the importation or exportation is to be 
demonstrated, the Appellate Body rul ed that this limitation need not be demonstrated by 
quantifying the effects of the measure at issue, and that the limiting effects "can be 
demonstrated through the design, architecture, and revealing structure of the measure at 
issue considered in its rele vant context".  
161. In the present case, each of the measures at issue, namely, the high ILUC -risk cap, the high 
ILUC-risk phase out, and low ILUC -risk certification, have the effect of limiting de facto  the 
quantities of the products at issue that are imp orted into the EU.  
162. Malaysia submits that the measures at issue, namely the high ILUC -risk cap, the high ILUC -
risk phase out, and low ILUC -risk certification, affect the opportunities for importation into 
the EU as well as, as demonstrated above, the c ompetitive opportunities on the domestic 
market of the EU.  
 
30 Panel Report, Argentina – Hides and Leather , para. 11.17. See also Panel Reports, Colombia – Ports 
of Entry , US – Poultry (China) , China – Raw Materials , and EU – Energy Package , currently under appeal.   WT/DS600/R/Add.1  
 
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  163. Malaysia therefore concludes that the high ILUC -risk cap, the high ILUC -risk phase out, and 
low ILUC -risk certification are inconsistent with the prohibition on quantitative restrictions 
under Article XI:1 of the GATT 1994.  
E. The high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -risk 
certification are inconsistent with Article X:3(a) of the GATT 1994  
164. Malaysia submits that the measures at issue, notably the high ILUC-risk cap, the high ILUC -
risk phase out, and low ILUC -risk certification, are administered in a manner that is not 
impartial and/or reasonable, and, therefore, are inconsistent with Article X:3(a) of the GATT 
1994.  
165. Under Article X:3(a) of the GATT  1994, one can challenge:  
i) the manner in which legal instruments of the kind falling under Article X:1 are applied 
or implemented in particular cases; and  
ii) legal instruments that regulate such application or implementation.  
166. The measures at issue,  namely the high ILUC -risk cap, the high ILUC -risk phase out and low 
ILUC certification, as set out in the RED II and the Delegated Regulation, are, as discussed 
above, regulations of general application pertaining to restrictions on imports of oil palm 
crop-based biofuel and of palm oil and affecting the sale or use of these products. They are, 
therefore, measures of the kind falling under Article X:1 and, thus, also within the scope of 
application of Article X:3(a).  
167. As regards the high ILUC -risk cap and the high ILUC -risk phase out, Malaysia argues that 
these measures are administered in a manner that is neither impartial nor reasonable 
because they are based on/apply the concept of high ILUC -risk, for which there is insufficient 
scientific support an d which cannot be directly observed, measured or otherwise established. 
The concept of high ILUC -risk does not allow these measures to be applied or implemented 
in an impartial, i.e., fair, unbiased and unprejudiced manner.  
168. As regards low ILUC-risk certification, Malaysia argues that this measure is administered in 
a manner that is not reasonable because, as discussed above, the EU failed to timely adopt 
implementing legislation, providing for detailed rules that would allow for products to  be 
certified as having low ILUC -risk. 
CLAIMS UNDER THE GATT  1994  IN RESPECT OF THE FRENCH MEASURE  
A. Introduction  
169. Malaysia claims that the French measure at issue, namely the French fuel tax reduction, 
which is a measure that reduces the tax on petro l and diesel fuels containing oil crop -based 
biofuels, but excludes from this reduction petrol and diesel fuels to the extent that they 
contain oil palm crop -based biofuel, violates the obligations of France under the GATT 1994. 
Malaysia 's claims of GATT i nconsistency focus in particular on the exclusion of petrol and 
diesel fuels, to the extent that they contain oil palm crop -based biofuel, from the French fuel 
tax reduction.  
B. The exclusion of petrol and diesel fuels that contain oil palm crop -based 
biofuel from the French fuel tax reduction is inconsistent with Article I:1 
of the GATT 1994  
170. As already discussed above in the context of Malaysia 's claims regarding the EU measures, 
Article I:1 of the GATT 1994 sets out a four -tier test to determine whet her a measure 
affecting trade in goods is consistent with the MFN treatment obligation under Article I:1 of 
the GATT 1994. Based on this four -tier test, Malaysia provides the following analysis.  
171. In the present dispute, the French fuel tax imposed on p etrol and diesel, when they are 
released for consumption in France, together with the tax reduction that applies to petrol WT/DS600/R/Add.1  
 
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  and diesel fuels that contain certain types of biofuels, amount to an "internal tax or charge" 
within the meaning of Article III:2 of  the GATT 1994.  
172. Demonstrating that the exclusion of petrol and diesel fuels, to the extent that they contain 
oil palm crop -based biofuel, from the French fuel tax reduction is a "matter" referred to in 
Article III:2 of the GATT 1994, is sufficient to establish that the French measure at issue 
falls within the scope and is covered by Article I:1.  
173. The second element of the test of consistency with the MFN treatment obligation of Article 
I:1 relates to the question of whether the measure at issue gra nts an "advantage".  
174. Malaysia submits that the French measure at issue, namely the exclusion of petrol and diesel 
fuels, to the extent they contain oil palm crop -based biofuel, from the French fuel tax 
reduction grants an advantage to petrol and diesel  fuels that contain oil crop -based biofuels 
imported from some Members that is not granted to all WTO Members, and in particular not 
to Malaysia. The French measure at issue, thus, indirectly discriminates among "like" 
biofuels and their feedstocks origina ting in some third countries, and this advantage is not 
granted to all WTO Members, and, in particular, not to Malaysia.  
175. The third element of the test of consistency with the MFN treatment obligation of Article I:1 
relates to the question of whether t he products at issue are "like products". Malaysia refers 
to earlier "likeness" discussions with regard to the high ILUC -risk cap, the high ILUC -risk 
phase out, and low ILUC -risk certification, and reiterates its contention that oil palm crop -
based biofuel  and palm oil as a biofuel feedstock, as well as other oil crop -based biofuels, 
such as biofuels made from rapeseed oil, soyabean oil, or sunflower oil, and their respective 
feedstocks, are "like products".  
176. The fourth element of the test of consistenc y with the MFN treatment obligation of Article 
I:1 relates to the question of whether the advantage granted by the measure at issue is 
accorded "immediately and unconditionally" to all "like" products irrespective of their origin 
or destination. Malaysia s ubmits that by excluding oil palm crop -based products from the 
classification of renewable energy sources, the French legislation fails to extend the 
advantage granted to petrol and diesel fuels that contain certain imported oil crop -based 
biofuels and the ir feedstocks "immediately and unconditionally" to petrol and diesel fuels, to 
the extent that they contain oil palm crop -based biofuel and palm oil.  
177. In view of the foregoing, Malaysia concludes that the exclusion of petrol and diesel fuels, to 
the ex tent that they contain oil palm crop -based biofuel, from French fuel tax reduction 
amounts to an advantage benefitting petrol and diesel fuels that contain imported oil crop -
based biofuels and their feedstocks, which is not granted immediately and uncondit ionally 
to petrol and diesel fuels, to the extent that they contain like imported products, such as oil 
palm crop -based biofuel and palm oil. Malaysia submits that the French measure is 
inconsistent with the MFN treatment obligation of Article I:1.  
C. The exclusion of petrol and diesel fuels, to the extent that they contain oil 
palm crop -based biofuel, from the French fuel tax reduction is inconsistent 
with Article III:2 of the GATT 1994.  
178. Malaysia submits that, by excluding petrol and diesel fuels,  to the extent that they contain 
oil palm crop -based biofuel, from the French fuel tax reduction, France discriminates against 
such petrol and diesel fuels, favouring petrol and diesel fuels that contain other domestic 
"like" oil crop -based biofuel and the ir feedstocks of French origin. The French measure at 
issue, thus, indirectly discriminates against imported oil palm crop -based biofuel and its 
feedstock, while favouring other domestic "like" oil crop -based biofuels and their feedstocks 
of French origin.  Malaysia, therefore, considers that the French measure is inconsistent with 
Article III:2 of the GATT 1994.  
179. Malaysia contends that the exclusion of petrol and diesel fuels, to the extent that they 
contain oil palm crop -based biofuel, from the French fuel tax reduction is inconsistent with 
Article III:2, first sentence. To determine consistency of a measure with the first sentence 
of Article III:2, a panel must consider:  WT/DS600/R/Add.1  
 
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  i) whether the measure at issue is an internal tax or other internal charge on pro ducts;  
ii) whether the imported and domestic products are "like" products; and  
iii) whether the imported products are taxed in excess of the domestic product.  
180. Internal taxes are fiscal non -tariff measures applied at the border or within the territory of 
the relevant Member. With respect to Article III:2, first sentence, Malaysia argues that the 
tax on petrol and diesel fuels containing oil palm crop -based biofuel, which results from the 
exclusion of such petrol and diesel fuels from the French fuel tax  reduction, amounts to an 
"internal tax".   
181. The second element of the test of consistency with the national treatment obligation of 
Article III:2, first sentence, relates to the question of whether the imported and domestic 
products concerned are "lik e". In the context of its claims of inconsistency of the EU 's 
measures at issue with Article I:1, Malaysia has already demonstrated that oil palm crop -
based biofuel and other oil crop -based biofuels, made from rapeseed oil, soyabean oil, or 
sunflower oil a nd, thus, petrol and diesel fuels that contain oil palm crop -based biofuel and 
other oil crop -based biofuels, are "like products". Likewise, Malaysia has shown that palm 
oil and other oil crop feedstocks, such as rapeseed oil, soyabean oil, or sunflower oi l are 
"like products". Malaysia submits that it follows that petrol and diesel fuels that contain oil 
palm crop -based biofuel and petrol and diesel fuels that contain other oil crop -based biofuels 
are also in a sufficiently close competitive relationship t o be considered "like" within the 
meaning of Article III:2, first sentence.  
182. The third and last element of the test under Article III:2, first sentence relates to the 
question of whether the imported products are taxed "in excess of" the like domestic 
products, which has been interpreted proscribe 'even the smallest amount '31. 
183. Notably, Malaysia formulates and makes two alternative claims under Article III:2. First, it 
argues that the exclusion of petrol and diesel fuels, to the extent that they contain oil palm 
crop-based biofuel, from the French fuel tax reduction, is inconsist ent with Article III:2, first 
sentence because the tax, which France applies when the economic operators release for 
consumption in France petrol and diesel fuels that contain imported oil palm crop -based 
biofuel from, inter alia , Malaysia, is in excess of  the tax that applies when such economic 
operators resort, instead, to oil crop -based biofuels made from "like" domestic feedstocks.  
184. In the alternative, Malaysia challenges the exclusion of petrol and diesel fuels, to the extent 
that they contain oil palm crop -based biofuel, from the French fuel tax reduction under 
Article III:2, second sentence. According to Malaysia, the measure at issue results in 
dissimilar taxation that applies to the economic operators that release, for consumption in 
France, pet rol and diesel fuels that contain imported oil palm crop -based biofuel from, inter 
alia, Malaysia, vis -à-vis those that contain directly competitive or substitutable oil crop -
based biofuels made from domestic feedstocks. Malaysia contends that this dissimi lar 
taxation affords protection to domestic production and is, therefore, inconsistent with Article 
III:2, second sentence. Malaysia submits, that by excluding petrol and diesel fuels, to the 
extent that they contain biofuel made from palm oil, from the Fr ench fuel tax reduction, 
France directly taxes petrol and diesel fuels that contain imported oil palm crop -based biofuel 
"in excess of" petrol and diesel fuels that contain other domestic like oil crop -based biofuels.  
JUSTIFICATION UNDER ARTICLE XX OF THE GATT  1994  
185. With respect to the EU 's attempt to justify its measures, as well as the French measure, with 
respect to their inconsistency with the GATT 1994, under certain paragraphs of Article XX of 
the GATT 1994, Malaysia contends that the EU 's interpr etation of Article XX goes against 
decades of well -established case law and has no textual basis in Article XX. The EU attempts 
to justify its truly novel and erroneous approach to Article XX by arguing that this approach 
 
31 Appellate Body Report, Japan – Alcoholic Beverages II , p.27 -28. WT/DS600/R/Add.1  
 
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  is 'embedded in the nature and ope ration of the composite objectives pursued by the 
measure at issue '. The EU errs.  
186. The EU 's misinterpretation of Article XX is most pronounced in its conflation of the 
'necessary ' test of Article XX(a) and (b) with that of the 'related to ' test of Arti cle XX(g). The 
EU believes these tests to be largely 'similar ', but this is incorrect.  
i) First, the EU 's interpretation ignores the plain wording of Article XX. Article XX(a) and 
(b) require a measure to be 'necessary ', while Article XX(g) requires a meas ure to be 
'related to '. 
ii) Second, in arguing that the 'necessity ' test in Article XX(a) and (b) and the 'relate to ' 
test in Article XX(g) seek in essence to establish whether the measures at issue are 
'rational and reasonable ' in their design, the EU is contending that any measure that is 
'rational and reasonable ' in its design would pass the 'necessity ' test under Article XX(a) 
and XX(b). Malaysia contends that reducing the 'necessity ' test to a 'rational and 
reasonable ' test is a dramatic deviation of t he well -established case law on the 
'necessity ' test under Article XX(a) and (b).  
iii) Third, in arguing that the 'necessity ' test in Article XX(a) and (b) and the 'relate to ' test 
in Article XX(g) seek in essence to establish whether the measures at issue are 'rational 
and reasonable ' in their design, the EU suggests that a measure would be justified under 
Article XX(g) when that measure is 'rational and reasonable '. This is i ncorrect. Article 
XX(g) further requires that the measure at issue be 'made effective in conjunction with 
restrictions on domestic production or consumption ', but the EU 's approach fails to 
acknowledge this second requirement.  
187. In addition to the gener al conflation of Articles XX(a) and (b) standards with Article XX(g), 
the EU also fails to properly interpret other aspects of these sections. Consider, for example, 
the EU 's expansive take on Article XX(a). For its part, Malaysia agrees with the EU that 
panels and the Appellate Body have – correctly – given this concept a broad meaning. 
However, Malaysia disagrees with the EU to the extent that the latter would argue that all 
matters that 'affect and concern us all ' or matters with regard to which 'citizen s are more 
and more concerned ' are covered by the concept of public morals. Such an interpretation is 
an invitation to obviate any and all WTO obligations through an appeal to 'public morals '. 
188. The EU 's misinterpretation of Article XX also extends to the chapeau of Article XX. Here, the 
EU's presentation on the issue is suspiciously incomplete. Perhaps most notably in its 
omission is the Appellate Body 's interpretation of the chapeau in US-Shrimp , where the 
Appellate Body found that the appl ication of a provisionally justified measure would 
constitute 'arbitrary discrimination ' within the meaning of the chapeau of Article XX when it 
imposes, as the US measure at issue in that case did, 'a single, rigid and unbending 
requirement … without inqu iring into the appropriateness ' of the measure 'for the conditions 
prevailing in the exporting countries '.32  
189. Malaysia contends that, by not taking into account the conditions of biofuel production in 
Malaysia, the measures at issue are applied in a manner that constitutes 'arbitrary 
discrimination ' within the meaning of the chapeau of Article XX.  
190. Ultimately, the EU, in advancing arguments unfounded in text or legal interpretation, has 
failed to make a prima facie  case under Article XX(a), XX(b),  and/or XX(g).  
CLAIMS UNDER THE SCM  AGREEMENT IN RESPECT OF THE FRENCH MEASURE  
A. Introduction  
191. Malaysia submits that the French fuel tax reduction is a subsidy within the meaning of Article 
1 of the SCM Agreement, inasmuch as it involves a "financial contribution" by the French 
Government or, alternatively, a form of "income or price support" confer ring a "benefit". 
 
32 Appellate Body Report, US – Shrimp , para. 177   WT/DS600/R/Add.1  
 
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  Secondly, Malaysia contends that the measure at issue is specific to certain enterprises, as 
provided for by Article 2 the SCM Agreement. Thirdly, Malaysia asserts that the French fuel 
tax reduction is an actionable subsidy under Article 5(c) of the SCM Agreement, as it causes 
adverse effects to the interests of Malaysia and, in particular, "serious prejudice" within the 
meaning of Articles 6.3(a) and (c) of the SCM Agreement.  
192. The SCM Agreement defines four constituent elements of a " subsidy" subject to the 
disciplines of the SCM Agreement:  
i) a financial contribution (or income or price support);  
ii) a financial contribution by a government or any public body;  
iii) a financial contribution (or income or price support) conferring a ben efit; and  
iv) the concept of "specificity".  
193. For a measure to be a subsidy within the meaning of Article 1.1 of the SCM Agreement, it 
must constitute a "financial contribution" or take the form of an income or price support in 
the sense of Article XVI of the GATT 1994.  
194. Malaysia contends, that the French fuel tax reduction is a financial contribution in the form 
of government revenue that is otherwise due is foregone under Article 1.1(a)(1)(ii).  
195. The foregoing (or non -collection) of revenue othe rwise due under Article 1.1(a)(1)(ii) implies 
that less (or no) revenue has been raised by the Government compared with the revenue 
that would normally be raised. In accordance with the case law, tax break estimates, have 
to be based on a conceptual view a bout "normal" benchmark taxation. Typically, the 
benchmark is defined to include normal features of the tax system, whereas exemptions 
that are intended to address objectives other than the basic function of the tax (e.g., 
internalizing externalities) may be considered to be deviations from the benchmark. For the 
purposes of "government revenue, otherwise due, that is foregone or not collected" analysis 
of this normative benchmark has to be compared with "the challenged tax treatment and 
the reasons for it" . 
196. Malaysia submits that the normative benchmark, as "applied to all comparable income of 
any comparably situated taxpayers", is, in the present case, the General Tax on Polluting 
Activities established by the French Government in 1999 and extended in 2005 to 
distributors of automotive fuels that do not meet annual biofuels targets. Under this 
benchmark treatment, the French Government is entitled to collect the tax and retain the 
amount of the tax paid. In this respect, the amount of the tax that could  be generated 
constitutes what is "due" to the French Government under the benchmark treatment.  
197. At the same time, an exception from the fuel tax can be considered as a combination of a 
binding incorporation mandate and a tax credit. The amount of the tax corresponds to the 
difference between the national target percentage ( i.e., the required level of incorporation 
of renewable biofuels in conventional fuels, namely petrol and diesel) and the actual level of 
eligible biofuel that is incorporated. The cl oser the level of eligible biofuel incorporation to 
the national target percentage, the lower the tax that must be paid by the economic 
operators releasing for consumption in France petrol and diesel fuels containing eligible ( i.e., 
renewable) biofuels. Th is tax may even reach zero.  
198. Under this rather common scenario, i.e., one in which the economic operators that 
incorporate and release for consumption in France petrol and diesel fuels containing eligible 
biofuels, the French Government does not collec t at all or not in full the tax revenue, which 
it would normally collect.  
199. Malaysia submits that the defining element of the French measure that may allow to develop 
a full and comprehensive understanding of its intended operation is the exclusion of petrol 
and diesel fuels, to the extent that they contain oil palm crop -based biofuel, which is not 
classified as a renewable energy source, from the French fuel tax reduction and, thus, all 
the benefits that emanate therefrom.  WT/DS600/R/Add.1  
 
- 39 - 
 
  200. For all the se reasons, Malaysia claims that the French Government has, by "its own choice", 
established "for itself"33 the rules of taxation for petrol and diesel fuels released for 
consumption in France. More specifically, it does not collect revenue "otherwise due " through 
the provision of fiscal incentives to economic operators incorporating biofuels other than oil 
palm crop -based biofuel into petrol or diesel fuels and subsequently release those fuels for 
consumption in France. Alternatively, should the Panel fin d that the French fuel tax reduction 
is not captured by the concept of "financial contribution", Malaysia argues that the French 
measure at issue falls under the concept of "income or price support" enshrined in Article 
1.1(a)(2) of the SCM Agreement.  
201. For a financial contribution to be a subsidy within the meaning of Article 1.1, the financial 
contribution must be made by a government or a public body, including regional and local 
authorities as well as State -owned companies. Malaysia, hence, argues th at in the present 
case, there is no discussion that the measure at issue, the French fuel tax reduction, is a 
financial contribution (in the form of government revenue, otherwise due, that is foregone) 
granted by the French Government.  
202. The second elem ent for demonstrating the existence of a subsidy under Article 1.1 is the 
conferral of a "benefit". An analysis of benefit under Article 1.1(b) requires consideration of 
whether the financial contribution in issue accords "[b]etter treatment to the recipie nt than 
the treatment available in the market". In the present case, the French measure at issue is 
a tax reduction that imposes a lower or no tax on the economic operators releasing for 
consumption in France petrol and diesel products incorporating biofue ls other than oil palm 
crop-based biofuel.  
203. Malaysia asserts that the French measure, being either a financial contribution or a form of 
income support, clearly confers a benefit to its recipients.  
204. The WTO rules on subsidies do not apply to all f inancial contributions by a government that 
confer a benefit. Pursuant to Article 1.2, they apply only to specific subsidies. A subsidy that 
is widely available within an economy is presumed not to distort the allocation of resources 
within that economy an d, therefore, does not fall within the scope of the SCM Agreement. 
In determining whether a subsidy is "specific" to an enterprise or industry or group of 
enterprises or industries (referred to in short as "certain enterprises"), the principles set out 
in subparagraphs (a), (b) and (c) of Article 2.1 of the SCM Agreement are to be applied.  
205. In the present case, Malaysia contends that the measure at issue, i.e., the French fuel tax 
reduction, is a de jure specific subsidy under Article 2.1(a) access to w hich is limited to 
certain enterprises, in particular, to the economic operators that release for consumption 
petrol and diesel fuels that contain biofuels other than oil palm crop -based biofuel for the 
following reasons.  
206. First, the measure is enshrin ed in French legislation. Second, this legislation, pursuant to 
which the granting authority, i.e., the French Government, operates, explicitly limits access 
to the subsidy to the economic operators that release for consumption in France petrol and 
diesel fuels containing biofuels other than oil palm crop -based biofuel. Third, most 
importantly, the economic operators that release for consumption in France petrol and diesel 
fuels incorporating oil palm crop -based biofuel are expressly deemed non -eligible for  the 
purposes of the French fuel tax reduction. However, given the particularities of the blending 
process ( i.e., the possibility to incorporate different types of biofuels in the petrol and diesel 
fuels) these economic operators will benefit from a tax re duction, yet only commensurate 
to the amount of oil crop -based biofuel other than oil palm crop -based biofuel contained 
therein. In other words, France simply disregards and does not account for the share 
attributable specifically and solely to the oil pal m crop -based biofuel in the petrol and diesel 
fuels released for consumption in France.  
207. Under these circumstances, Malaysia concludes that the French fuel tax reduction is a 
specific subsidy within the meaning of Article 2.1(a), access to which is exp licitly limited to 
and benefits solely and exclusively those economic operators that incorporate and release 
 
33 Appellate Body Report, US - Large Civil Aircraft (2nd complaint) (Article 21.5 – EU), para. 5.1444 . WT/DS600/R/Add.1  
 
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  for consumption petrol and diesel fuels incorporating biofuels other than oil palm crop -based 
biofuel.  
208. Having established that the measure at issue is a specific subsidy within the meaning of 
Articles 1 and 2, Malaysia further submits that this measure is inconsistent with Article 5 of 
the SCM Agreement because it causes "serious prejudice" to the interests of Malaysia within 
the meaning of Arti cle 5(c). Arguably, this trend will inadvertently persist in the future, thus 
perpetuating the adverse effects caused by the subsidy to the interests of Malaysia.  
209. Pursuant to Article 6.3, "serious prejudice" may arise where the subsidy, inter alia , displaces 
or impedes imports of a "like" product (6.3(a)); or results in a significant price undercutting 
by the subsidised product in comparison to the "like" product of another Member in the same 
market, or significant price suppression, price depression o r lost sales in the same market 
(Article 6.3(c)).  
210. In connection with its claim and the legal standard related to Articles 5(c) and 6.3, in 
particular Articles 6.3 (a) and (c), Malaysia contends that:  
i) the products in question are in actual or poten tial competition ( i.e., the relevant 
"product market" has been considered) with in the French market ( i.e., the 
"geographical market");  
ii) the effect of the French fuel tax reduction is displacement imports of "like" products 
from Malaysia;  
iii) the effec t of the French fuel tax reduction is "significant" lost sales of the like products 
from Malaysia; and  
iv) the displacement of imports is caused by the challenged subsidies.  
MALAYSIA 'S REQUEST FOR FINDINGS AND RECOMMENDATIONS  
211. For the reasons set out, Malaysia respectfully requests the Panel to make the corresponding 
findings of inconsistency with the relevant obligations under the TBT Agreement, the GATT 
1994, and the SCM Agreement with respect to the EU 's measures, the French measure, as 
well as Lithuania 's measures, in line with Malaysia 's claims.  
212. Malaysia respectfully requests the Panel to recommend that the EU, France, and Lithuania 
take the appropriate steps to bring the measures at issue into consistency with their 
obligations under the TBT Agreement, the GATT 1994, and/or the SCM Agreement.  WT/DS600/R/Add.1  
 
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  ANNEX B -2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION  
1. INTRODUCTION   
1. Creating a sustainable future in the face of climate breakdown and biodiversity collapse is a 
global priority. These intertwined phenomena cannot be tackled in isolation. Fighting climate 
change while minimising the impact on biodiversity are among the mos t important objectives 
of the European Union. Seeking to protect these objectives is necessary to protect EU public 
morals. Promoting the increased use of renewable energy is a way to contribute to these 
intertwined objectives.  
2. The "EU Biofuels regime"  promotes the use of renewable energy sources, specifically certain 
biofuels, bioliquids and biomass fuels, in the European Union as part of a strategy to 
decarbonise the European Union's transport sector. The EU Biofuels regime is laid down by 
different l egal instruments including Directive (EU) 2018/2001 (RED II), Commission Delegated 
Regulation (EU) 2019/807, and the Status Report.   
3. RED II establishes two binding Union targets (the EU targets):  
• The overall renewable energy target: the share of energy obtained from renewable sources 
in the Union's gross final consumption of energy must be at least 32% by 2030.  
• The transport target: Member States must set an obligation on fuel suppliers to ensur e 
that the share of renewable energy within the final consumption of energy in the transport 
sector is at least 14% by 2030.  
4. In view of the environmental risks associated with increased demand for conventional biofuels, 
as well as to ensure that the EU  Biofuels regime contributes to the EU objectives of mitigating 
climate change and avoiding biodiversity destruction, thereby protecting EU public morals, RED 
II seeks to address land use change (LUC) induced by the cultivation of crops used to produce 
biofuels, both direct (DLUC) and indirect (ILUC).  
5. RED II also defines sustainability and greenhouse gas emission criteria that all biofuels, 
bioliquids and biomass fuels must comply with in order to be eligible to be counted towards the 
EU targets. Biofue ls produced from feedstock grown on high carbon stock land do not comply 
with those criteria.  
6. ILUC refers to the situation when non -agricultural land is brought into agricultural production 
as a consequence of land previously being used for non -fuel de mand being diverted to the 
production of feedstock used for biofuels. ILUC is a global phenomenon that is transmitted 
through global markets for agricultural commodities. Consequently, ILUC induced by policies 
that promote biofuels may occur anywhere in th e world. The global nature of ILUC explains 
why a country by country or even a regional approach to address ILUC risk would be ineffective 
and inappropriate to meet the EU's objectives.  
7. Because the production of conventional biofuels causes LUC, RED II  encourages a gradual shift 
in the transport sector away from those biofuels. It does so by setting a maximum share of the 
renewable energy target in the transport sector to which conventional biofuels may contribute 
(7% maximum share) and by incentivising  the use of advanced biofuels by imposing a 
minimum share ("advanced biofuels obligation"). RED II also caps and progressively limits the 
contribution of those biofuels produced from feedstock for which a high risk of significant 
expansion of the productio n area into land with high -carbon stock is observed (high -ILUC risk 
biofuels) to the transport renewable energy target (high ILUC risk cap and high ILUC risk phase -
out). WT/DS600/R/Add.1  
 
- 42 - 
 
  8. The three measures identified by Malaysia, the 7% maximum share, the high ILUC risk  cap 
and the high ILUC risk phase out, all contribute to the overall objectives of the EU biofuels 
regime as they are designed to avoid that ILUC linked to the production of the crops used to 
produce these biofuels is exacerbated by a further increase in E U demand driven by the EU 
renewable energy policy.  
9. RED II also establishes a system to certify biofuels as low ILUC -risk (low ILUC -risk certification). 
Biofuels certified as low ILUC -risk are not subject to the high ILUC risk cap and high ILUC risk 
phase-out and may contribute to the renewable energy targets to the same extent as other 
conventional biofuels, namely up to the 7 % maximum share.  
10. Malaysia only challenges certain elements of the EU biofuels regime. It brings claims under a 
plethora of WT O provisions. Malaysia also challenges the methodology used by the EU to 
identify high ILUC risk feedstock.   
11. In that regard, Commission Delegated Regulation 2019/807 determines:  
• Criteria for the identification of feedstock with high ILUC risk for wh ich a significant 
expansion of the production area into land with high carbon stock is observed; and  
• Criteria for determining low ILUC risk biofuels, and for certifying low ILUC -risk biofuels.  
12. The criteria to identify high ILUC -risk feedstock are se t down in Article 3 of Delegated 
Regulation 2019/807. They are met when:  
• the average annual expansion of the global production area of the feedstock since 2008 is 
higher than 1% and affects more than 100 000 hectares;  
• the share of such expansion into l and with high -carbon stock is higher than 10%, in 
accordance with a formula, whose variable have been set by the European Union on the 
bases of the available scientific literature and a study based on satellite information (the 
GIS-based assessment), as se t out in details in the Status Report.  
13. "Land with high -carbon stock" refers to wetlands, including peatland, and continuously forested 
areas within the meaning of Article 29(4)(a), (b) and (c) of the RED II.  
14. The result obtained by applying the form ula is a percentage, which indicates the share of annual 
expansion of each feedstock into land with high -carbon stock. The percentage must be 
compared with the identified threshold of significant expansion, which is 10%. This represents 
a normative choice indicating the level of risk accepted by the European Union. If the 
percentage is higher than 10%, then that feedstock is considered as a high ILUC -risk feedstock.  
15. The Annex to Delegated Regulation 2019/807 sets out the results when the formula in Arti cle 
3 of the Delegated Regulation is applied to a range of different crops used to produce biofuels. 
At present, only palm oil meets the conditions to be classified as a high ILUC risk feedstock. 
This assessment is subject to periodic review in the light o f new data (Article 7 of the Delegated 
Regulation).  
16. The criteria for identifying ILUC -risk seek to determine which feed crops, if demand were 
further stimulated, would be likely to give rise to crop expansion into types of land associated 
with such hi gh levels of GHG emissions and biodiversity loss that any additional unit of biofuel 
produced from that feed crop would not give rise to lower GHG emissions. This conclusion is 
based on observed crop expansion and takes account of the known characteristics  of certain 
types of land as well as the characteristics (yield and by -products) of individual crops.  
17. Observable rates of expansion allow for an assessment of ILUC risk precisely because high 
rates of expansion sustain the conclusion that there is insu fficient existing arable land available 
to accommodate additional demand for that crop without an extension of the production land 
and hence LUC. The share of expansion into high carbon stock land is indicative of the 
magnitude of additional GHG emissions and biodiversity loss resulting from the overall 
expansion of the cultivated area of a given crop. High levels of observable LUC for a specific WT/DS600/R/Add.1  
 
- 43 - 
 
  crop into environmentally sensitive areas (high carbon stock/biodiverse) in parallel with 
increasing global dema nd for the same crop is an indicator that further increases in demand 
(for whatever purpose) will likely stimulate additional displacement effects. Therefore, the 
formula for identifying high ILUC risk crops aims to identify crops for which there is strong  
evidence that an increased feedstock demand will lead to a high rate of expansion into high 
carbon stock land, i.e. pose a high ILUC -risk. 
18. However, high ILUC risk feedstock used to produce biofuels may be cultivated in conditions 
minimising the risk o f expansion into high carbon stock land and therefore, may be certified as 
low ILUC risk. There are three alternative "pathways" to this end: financial attractiveness, 
cultivation on abandoned land or severely degraded land, and cultivation by small holder s. 
2. CLAIMS  UNDER  THE  TBT  AGREEMENT  
2.1. Applicability of the TBT Agreement  
19. As regards the high ILUC risk cap, the high ILUC risk phase out and the 7 % maximum share, 
Malaysia has not shown that any of these measures are technical regulations within the 
meaning of Annex 1.1 to the TBT Agreement.  
20. These measures concern the pot ential eligibility of certain biofuels to contribute to a "renewable 
energy target" but they leave discretion to Member States to determine their respective fuel 
mix. They do not "provide for" or "stipulate" the "composition of the products" to which they 
apply, either positively or negatively. They identify certain products on the basis that they are 
composed of certain inputs and define the implications for eligibility to contribute to the 
renewable energy targets on that basis. This is analogous to a tar iff schedule which identifies 
products on the basis of their composition and defines the implications resulting from that in 
terms of applicable duties but does not purport to regulate their composition as such. In fact, 
the "composition" of fuel is regula ted in the European Union by other legislation, which is not 
within the scope of this dispute.   
21. Malaysia has also failed to show that low ILUC risk certification is a conformity assessment 
procedure within the meaning of Annex 1.3 to the TBT Agreement . Malaysia has not shown 
that this measure establishes procedures to assess conformity with a technical regulation. 
Malaysia claims that the relevant technical regulation is the "exemption from the high ILUC risk 
cap and phase out" but Malaysia has not sou ght to demonstrate that the said exemption is a 
technical regulation within the meaning on Annex 1.1 of the TBT Agreement. Indeed, there is 
no reference in Malaysia's Panel request either to that technical regulation or to it constituting 
the legal basis o f Malaysia's claim that low ILUC risk certification is a conformity assessment 
procedure. Consequently, none of Malaysia's claims based on this premise are properly before 
the Panel.  
22. It follows, that Malaysia has not established that the TBT Agreement is applicable to this 
dispute.  
2.2. Order of Analysis of Malaysia's claims  
23. If the Panel were to consider that the TBT Agreement is applicable, the Panel should address 
Malaysia's claims under Article 2.2 of the TBT Agreement before considering whethe r Malaysia 
has demonstrated that the high ILUC risk cap or the high ILUC risk phase out are de facto 
discriminatory and hence violate Article 2.1 of the TBT Agreement.  
24. Given that Malaysia has presented its claims under Article 2.1 of the TBT Agreement  in a 
manner which effectively invites the Panel to proceed on the (erroneous) premise that the 
measures "eliminate" the use of palm oil, this implies that there has already been an evaluation 
of the degree of trade restrictiveness that the measures in fac t entail. As that assessment is to 
be conducted under Article 2.2 of the TBT Agreement, the European Union submits that the 
Panel should start by assessing the claims under that provision. Moreover, this order of analysis 
is consistent with the exercise th at a Panel must undertake when considering the claims under 
the GATT 1994.  WT/DS600/R/Add.1  
 
- 44 - 
 
  2.3. Article 2.1 of the TBT Agreement  
25. Malaysia claims that there is a violation of Article 2.1 of the TBT Agreement on the basis that 
two of the measures it has identified, name ly the high ILUC risk cap and the high ILUC risk 
phase out, are de facto discriminatory and hence accord less favourable treatment to palm -oil 
based biofuel.   
26. To establish a violation of Article 2.1 of the TBT Agreement, it is not sufficient for Malay sia to 
identify differentiation in treatment. Members may, in the exercise of regulatory autonomy, 
introduce distinctions provided they are linked to legitimate objectives and applied in an even -
handed manner. Whilst Malaysia bears the burden of showing th at any distinction between 
different feedstock used to produce biofuels cannot be rationally linked to the objectives 
pursued by the measures, Malaysia effectively invites the Panel to conduct its analysis on the 
assumption that there is less favourable tr eatment because palm oil is categorised as a high 
ILUC risk feedstock. This approach is flawed.  
27. Moreover, there is no obligation under the TBT Agreement for Members to protect specific 
volumes in trade. Therefore, Malaysia's arguments that there have been campaigns against 
palm oil and that stable access to the EU market is necessary for Malaysia's development are 
not relevant to its claims. The Panel must focus on the architecture and design and intended 
operation of the measures at issue. That requir es the Panel to evaluate the measures as part 
of their broader context, namely the EU Biofuels regime.  
28. As to the assessment of "like" products, whilst the products identified by Malaysia are the 
starting point for the Panel's analysis, Article 2.1 of the TBT Agreement and Articles I and III 
of the GATT 1994 require panels to assess objectively, on the basis of the nature and extent 
of the competitive relationship between the products in the market of the regulating Member, 
the universe of domestic prod ucts that are like the products imported from the complaining 
Member. Malaysia has failed to demonstrate that PME, RME, and SME are like products under 
of Article I, III:4 of the GATT 1994 and Article 2.1 of the TBT Agreement.  
29. First, as regards the pr oducts' properties, these three biofuels have significant CFPP differences 
that are not compensated by mixing and additives. The amount of PME used in a blend depends 
on the season and location across Europe and FAME0 blends often include only up to 20% of  
PME. This indicates that PME has a limited substitutability with other biofuels.  
30. Second, regarding end -use, PME is only commonly used during the summer season in Southern 
Europe. The data reported under the Fuel Quality Directive also shows that in s everal EU 
Member States, PME has only a small market share of the biofuels market.  
31. Third, regarding consumer tastes and habits, due to the high requirements on the CFPP, 
predominantly FAME blends with rapeseed methyl ester as a main component are used  in 
winter. Some fuel companies in the Nordic countries indicate that their products do not include 
palm oil biofuel. Furthermore, despite the absence of biofuel feedstock labelling requirements, 
the EU consumers' tendency to avoid products containing palm  oil products has also started 
manifesting in the fuels sector.  
32. Fourth, regarding tariff classification, biodiesel products are classified under code 3826 00. This 
includes biodiesel made from waste oils, animal fats and various biodiesel mixtures. Th e lack 
of detail in the tariff classification undermines Malaysia's claim that the products it identified 
are "like".  
33. Finally, with regard to input products, Malaysia has failed to prove that the vegetable oils it 
refers to are "like". Theses oils have  different physical characteristics (such as different cloud 
points, iodium values, melting points and "unsaponification in g" values), different end -uses 
and customers' preferences and different tariff classifications.  
34. In any event, were the Panel to  consider that Malaysia has demonstrated that PME, RME, and 
SME are like products because they are partially substitutable, Malaysia's definition of the 
products that it claims to be like is flawed because it does not include the entire universe of 
like bi ofuel products, which are partially substitutable and therefore should have been included.   WT/DS600/R/Add.1  
 
- 45 - 
 
  35. First, there is no reason to excluded other oil crop -based biofuels (e.g. made from sunflower 
oil) and focus only on PME, RME and SME.  
36. Second, Malaysia it self argues that HVO and FAME are like products. There is therefore no 
justification to exclude HVO from the group of like products for the purposes of Malaysia's GATT 
and TBT claims.  
37. Third, if the Panel were to accept that PME, RME and SME other biof uels, such as biofuels made 
from waste oil or animal fat should also be considered as "like products".  
38. Malaysia has not demonstrated less favourable treatment. Malaysia rightly acknowledges that 
there is no import prohibition, given that the measures o nly address the eligibility of biofuels 
to count towards renewable energy targets. However, Malaysia has not substantiated its claims 
as regards the alleged distortive effects on competition.   
39. First, Malaysia relies on evidence relating to the market shares of biofuels which did not meet 
the certification requirements under RED I as demonstrating that the measures at issue in 
these proceedings will have the result that there will be no market for palm oil -based biofuel. 
The European Union accepts that RED I had an impact in the sense that market penetration of 
renewables would have been lower in the face of price competition from fossil fuels. However, 
that does not sustain the conclusion that, absent incentivisation, renewable energy would have 
no mark et share at all. This assertion presumes that the only parameter relevant to market 
share is price. However, consumer demand is increasingly driven by other concerns, including 
environmental and climate change considerations. Therefore, the existence of el igibility criteria 
for a renewable energy target does not determine whether a market for biofuels exists at all.  
40. In addition, RED II is not structured in the same way as RED I. The nature of the obligations 
on the Member States is different. One canno t extrapolate based on the operation of RED I 
that RED II will have the same competitive effects. Under RED II, the sectoral transport target 
does not guarantee any enhanced degree of market penetration for any specific "conventional 
biofuel" and it does n ot guarantee any specific market share for an oil -crop based biofuel. Nor 
does it guarantee that any specific conventional biofuel will be eligible for subsidisation.  
41. Second, when considering which renewable fuels to promote, the European Union is, in the 
exercise of its regulatory autonomy, entitled to select those fuels which best meet its legitimate 
policy objectives. It is not because one type of energy was subsidised historically that there is 
an indeterminate obligation to continue to incentivi se that source of energy.  
42. When assessing the alleged effects on the conditions of competition, Malaysia's case reposes 
on a definition of the "relevant market" which is excessively narrow. By the same token, the 
Panel must conduct the appropriate compa rative exercise. Once the "like" products have been 
identified, the Panel is required to examine the competitive opportunities afforded to the group 
of imported like products compared with those afforded to the group of domestic (or other 
foreign products)  products.  
43. Thus, Malaysia must show that the measure (or measures) complained of "modifies the 
conditions of competition" to the detriment of the group of imported like products compared to 
the group of domestic products (or the group of like imported  products of non -Malaysian 
origin). This analysis is absent, and Malaysia's arguments are essentially limited to bare 
assertions about the effects of the challenged measure on Malaysian palm oil -based biofuels. 
In any event, Malaysia's has not conducted th is analysis on the whole group of like products 
given that its own definition of "like product" is partial.  
44. Even if the Panel accepts that Malaysia has established distortive effects to the detriment of 
palm oil, this is not dispositive of a breach of Article 2.1 TBT precisely because Members are 
not precluded from adopting regulatory distinctions per se. There is no dispute that at present, 
on application of the formula established in the Delegated Regulation, only palm oil is identified 
as a feedstock  associated with a high ILUC risk of significant expansion into areas of high 
carbon stock.  WT/DS600/R/Add.1  
 
- 46 - 
 
  45. Malaysia essentially argues that there is no legitimate regulatory distinction between palm oil 
and other oil crop -based biofuels because it disputes the valid ity of the concepts of ILUC, high 
ILUC-risk and low ILUC risk certification. However, Malaysia has re -characterised the policy 
objectives pursued by the EU in an excessively narrow manner and sought to integrate a 
hierarchy between them. The EU biofuels re gime and the specific measures identified by 
Malaysia pursue several intertwined objectives simultaneously.  
46. Equally, Malaysia claims that ILUC lacks sufficient scientific basis but has limited its arguments 
to generalised assertions without clearly id entifying what it considers the relevant legal 
standard against which that scientific evidence falls to be assessed is.  ILUC is a real 
phenomenon. The methodology applied by the European Union to identify high ILUC risk 
feedstock is supported by a body of  scientific evidence and other information based on the data 
available at the time the measures were adopted. Malaysia has not shown that this provides 
an insufficient basis for the regulatory choices reflected in the EU biofuels regime.  
47. Malaysia argu es that the concept of high ILUC risk cannot be regarded as having been applied 
in an even -handed manner because it has not been calibrated to the risk. Malaysia also appears 
to contend that the degree of contribution to an objective is a relevant factor f or the assessment 
under Article 2.1 of the TBT Agreement. However, when looking at 'arbitrariness' or 'even -
handedness' in the context of a claim under Article 2.1, the Panel is not asked to determine 
the degree of contribution a measure can make to the ob jective it pursues. Indeed, the degree 
of protection a Member seeks to accord its legitimate policy objectives is a matter for it to 
decide.  
48. The European Union has applied a formula, built on a body of scientific evidence, which, when 
applied, results  in the classification of palm oil as high ILUC risk of expansion into high carbon 
stock land. At present, when the same formula is applied, other crops are not identified as 
presenting the same degree of risk. This is not probative of discrimination or ar bitrariness.  
2.4. Article 2.2 of the TBT Agreement  
49. Malaysia agrees that the EU has the right to act for the purposes of reducing GHG emissions, 
to protect the environment, to respond to climate change and biodiversity loss, which are moral 
concerns of  the highest importance.  
50. Indeed, the objectives pursued by the EU Biofuels Regime and the measures at issue are:  
a. climate change mitigation through reducing GHG emissions and decarbonising the 
transport sector;  
b. ensuring high standards of environme ntal protection including the preservation of 
biodiversity, and minimising the potential adverse effects resulting from the EU 
renewable energy policy including biodiversity loss;  
c. addressing the EU's moral concerns associated with the protection of the 
environment and preservation of biodiversity, and more generally, combating climate 
change.  
51. These objectives are interlinked because the underlying phenomena that contribute to climate 
change, destruction of biodiversity and offend the EU morals feed e ach other and cannot be 
dealt with in isolation.  
52. The EU disagrees with the proposition that the objectives of the measures can only be 
determined on the basis of explicit references contained in the piece of legislation laying down 
the measures. The p resence or the absence of an explicit reference to a certain objective cannot 
be determinative. A panel must make an objective and independent assessment of the 
objectives pursued by a Member. To recall, in Brazil — Taxation, the discriminatory measure 
that Brazil wanted to justify (the PATVD programme) did not contain any explicit link to a public 
morals objective.  
53. In any event, RED II and the legal framework of which it is part contain textual references to 
the need to address climate change, biodiver sity destruction and the associated EU moral 
concerns in the context of the EU policy promoting the use of biofuels. Given that ILUC induced WT/DS600/R/Add.1  
 
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  by biofuels' production may accentuate those phenomena, the EU measures concerning ILUC 
necessarily seek to protect  the mentioned objectives.  
54. The EU also disagrees with the contention that a measure can only pursue one objective (the 
primary objective) whereas all the rest are accessory considerations, which should play no role 
in the Panel assessment. This conten tion does not find any support in the text of covered 
agreements and is simply illogical and counterintuitive.  
55. Malaysia argues that, according to the EU, any measure adopted by any WTO Member that has 
any environmental or sustainability dimension could  be considered as necessary to protect 
public morals. But this is not the EU position. Indeed, the objectives pursued by the EU are not 
concerned with "any" environmental or sustainability issue". They address common concerns 
of humankind. Climate breakdow n and biodiversity destruction are among the most important 
and urgent challenges facing humanity in the XXI century and they raise ethical issues.  
56. The EU also disagrees that the true objective of the measures at issue is in fact protectionist. 
The mea sures at issue do not offer more favourable treatment to domestic products.  
57. The focus at the stage of the "design" of the measure means to ascertain whether the measure 
is apt to, or "not incapable" of contributing to its objective(s). Thus, for the " legitimate 
objective" stage of the analysis the EU considers that it is sufficient to have demonstrated that 
the 7% maximum share, the high ILUC -risk cap, and the high ILUC -risk phase out are each 
apt to making a contribution to the achievement of the inte rtwined objectives of these 
measures.  
58. The objectives pursued by the EU fall squarely within the open, non -exhaustive list of legitimate 
objectives enumerated in Article 2.2, which expressly refers to "protection of human health or 
safety, animal or pla nt life or health, or the environment". The protection of public morals is a 
legitimate objective under Article XX of GATT 1994, and therefore must be considered 
legitimate under Article 2.2 of TBT Agreement as well.  
59. Given that it is for each Member to establish its public morals (for instance, religious beliefs), 
instead of questioning whether certain concerns fall under the remit of "public morals", previous 
panels rather focused on whether the measure at issue was necessary and not an arbitr ary 
discrimination. Moreover, the ethical relevance of fighting climate change and protecting 
biodiversity is acknowledged by many countries and international organisations, religious and 
political leaders, philosophers and thinkers across the globe.  In t he present case, the public 
morals concerns are closely linked to the climate breakdown and biodiversity collapse, and the 
perceptions of the EU citizens and of the EU authorities in relation to those concerns.  
60. The EU has demonstrated the existence of the climate breakdown and biodiversity collapse and 
these phenomena are not questioned by Malaysia. The EU has also established that EU citizens 
and the EU authorities consider that the adoption of policies to tackle those phenomena is not 
only a question of environmental protection, but also a moral or ethical issue.  
61. Finally, similarly to Article XX of GATT 1994 and contrary to what is provided for in the SPS 
Agreement, there are no jurisdictional limitations in Art 2.2 of TBT Agreement.  
62. Malaysia has failed to prove the trade restrictiveness of the measures at issue within the 
meaning of Article 2.2 and in any event has not made any appreciation of the degree of alleged 
restrictiveness. Malaysia raises the same arguments to demonstrate the trade re strictiveness 
of all the measures it challenges notwithstanding that each measure operates in a different 
manner. For instance, Malaysia contends that having contributed to establishing the biofuel 
market, the EU has suspended the legal framework thereby r estricting international trade. 
However, it is not clear to which measure Malaysia refers.  
63. First, even if it is accepted that the measures have the effect of regulating economic activity 
on the biofuels market, any measure regulating an economic activ ity would likely alter the 
conditions of competition on the market for all relevant products and producers since market 
participants must adjust to the regulation. One cannot conclude from this that there is also a 
restriction of international trade.  WT/DS600/R/Add.1  
 
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  64. Second, the aim of RED II is to further promote renewable energy in a way that contributes to 
achieving its objectives. The degree to which eligible fuels will or will not be "supported" is 
however a matter for each EU Member State to determine.  
65. Third, there is no ban on the import, access to market or use of any biofuel in the EU. The 
measures at issue only determine eligibility to contribute towards the renewable energy targets 
of different biofuels, progressively reducing to zero by 2030 the counting of conventional 
biofuels produced from high ILUC -risk food and feed crops.  
66. Fourth, the use of palm oil in the EU is below 4% of total palm oil production. The EU measures 
challenged by Malaysia are not capable of significantly affecting global trade in  palm oil and 
palm oil biofuels or putting out of business Malaysia's producers. As abundantly explained, 
these EU measures seek to avoid that the EU renewable energy policy stimulates demand for 
biofuel crops that are associated with a significant ILUC ri sk. They are not designed to 
significantly restrict world trade in palm oil and palm oil biofuels, which depends only to a very 
marginal extent on EU demand. Therefore, given that EU consumption of palm oil is small in 
comparison to the worldwide productio n and consumption of the same product, it is clear that 
the degree of trade restrictiveness of the measure can only be limited, as it can only affect a 
minor part of the world trade in that product. The fact that palm oil prices continue to mount 
is a clea r indicator that the EU measures do not have the effect of materially restricting global 
trade in palm oil.    
67. Fifth, low ILUC -risk certification ensures that the use of palm oil -based biofuel can contribute 
to the renewable energy targets to the same degree as other conventional biofuels. Malaysia's 
arguments to the effect that low ILUC certification is impossible or impracticable is disproven 
by the fact that a number of voluntary certification schemes are already in place and have been 
recognised by the EU.  
68. Sixth, if one follows Malaysia, then one has to note that the creation through public intervention 
of a biofuels market is an alteration of the normal functioning of the market which has a trade 
restrictive effect for fossil fuels and a trade e nhancing effect for biofuels. The EU Biofuels 
Regime actually promotes the penetration of conventional biofuels in the EU transport energy 
market, and the 7% simply set the upper limits on that promotion. WTO rules require neither 
a Member to create a lega l framework for the promotion of conventional biofuels nor do they 
set the level of support conventional biofuels should receive.  
69. Seventh, to the extent that the Panel finds that Malaysia has demonstrated that the measures 
impact trade because palm oil -based biofuels are "disincentivised", the EU submits that this is 
only to the extent necessary to ensure that the measures contribute to the objectives pursued 
in first place.  
70. Eighth, the EU recalls that a panel may consider "both import -enhancing and  import -reducing 
effects on the trade of other Members".  
71. Finally, with regard to the 7% maximum share, Malaysia has never disputed the EU argument 
that by putting an overall limit to the eligibility of conventional biofuel (which broadly reflects 
the level of EU consumption of conventional biofuels when that limit was introduced) the 7% 
maximum share has very limited trade distortive effects because it tends to preserve the status 
quo at the time of the introduction of the measure, without affecting inv estments in the biofuel 
production chain regardless of where they have been realised.  
72. Moreover, regarding the high ILUC risk cap and the high ILUC risk phase -out Malaysia has 
underlined that by allowing economic operators sufficient time to adapt to t he new measures, 
the European Union minimised the trade restrictiveness (if any) of those measures.  
73. Malaysia contends that it is impossible to make a precise quantification of the contribution to 
the legitimate objectives because "ILUC can neither be o bserved nor measured". First, a 
quantitative assessment is not essential. Second, LUC can be observed and estimated. The fact 
that estimations of ILUC emissions are complex and lead to variable results is due to the indirect 
and global nature of ILUC. That  does not mean ILUC emissions do not exist. The ILUC analysis 
showed that the policy -driven increase in demand for biofuels was a significant risk WT/DS600/R/Add.1  
 
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  undermining the integrity of that policy and that different crops present a different risk in terms 
of increa sing ILUC emissions and impact on biodiversity.  
74. When considering the contribution of the measures to the objectives, it should be kept in mind 
first, the fact that international standards for assessing the carbon footprint of products do not 
aim to add ress ILUC. Hence, those standards are only partially suitable for decision making in 
order to properly mitigate climate change.  
75. Second, the increased demand for 'conventional biofuels' is associated with a risk of LUC and 
the 7% maximum share is inten ded to "prepare for the transition towards advanced biofuels 
and minimise the overall [ILUC] impacts"..  
76. Third, the palm oil market is an international market of such a nature that if expansion into 
high carbon stock land is slowed down in one country, the pace most certainly will pick up in a 
different location with similar climate characteristics. That is why it is appropriate to adopt a 
global approach considering a worldwide average and not a country by country approach.  
77. Fourth, the EU has chosen  to focus on a recent but sufficiently long period to observe the 
expansion into high -carbon stock land of different biofuel crops.   
78. Fifth, the EU's ILUC methodology takes the productivity factors of different biofuel crops into 
account as well as the high carbon sequestration value of oil palm.  
79. Sixth, in order to determine what represents a significant expansion into high carbon stock 
land the Status Report makes reference to scientific studies and other concrete data. It follows 
that the measures at issue are clearly apt to and certainly not incapable of making a 
contribution to the fulfilment of the intertwined objectives of the EU.  
80. Because of the nature of the risks and the fact that the consequences are far -reaching and 
difficult to predict with certainty (as they pertain to an emergency related to climate breakdown 
and biodiversity destruction), and considering the associated EU public morals, a qualitative 
analysis is more suitable than a quantitative one in the present case. Moreover, Mala ysia's 
approach to assessing the contribution to the objectives for each measure in isolation is 
unwarranted and artificial. These measures are part of a broader legal framework (the EU 
Biofuels Regime), which in turn is a part of a comprehensive set of me asures to address the 
climate breakdown, the biodiversity collapse and the associated public outcry. They do not 
operate in the real world in isolation from each other.  
81. Finally, the EU Biofuels Regime favours biofuels when they achieve a certain level  of emissions 
savings in comparison to fossil fuels. Advanced biofuels are preferred over conventional 
biofuels. These elements are all designed with the aim of making a material contribution to the 
intertwined objectives pursued.  
82. With regard to the na ture of the risks concerned and the gravity of the consequences of non -
fulfilment, Malaysia seems focused on the GHG emissions reduction objective, and does not 
really address the other intertwined objectives, and in particular biodiversity loss. It has to  be 
noted that in some contexts it might be difficult in practice to determine separately the nature 
of the risks and to quantify the gravity of the consequences that would arise from non -
fulfilment. In such circumstances, it may be more appropriate to con duct a conjunctive analysis 
of both the nature of the risks and the gravity of the consequences of non -fulfilment.  
83. As abundantly explained, the measures at issue pursue legitimate objectives as a composite 
whole, and climate change, biodiversity loss a nd the related moral concerns are regarded as 
values of high importance in the EU.  
84. The EU further notes that Article 2.2 employs a photographing technique and provides that a 
technical regulation should reflect (at the time of its adoption) the availa ble scientific and 
technical information. Article 2.3 requires that technical regulations are not maintained if 
circumstances that led to their adoption no longer exist. The two provisions are separate and 
to give meaning to each, one should not merge them . Malaysia has raised no claims under 
Article 2.3, but it has also acknowledged that the characterisation of a certain feedstock as WT/DS600/R/Add.1  
 
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  high ILUC risk may evolve over time.  This is at odds with its constant criticism that the 
measures at issue do not adapt to  changing circumstances. In fact, Malaysia wants adaptation 
that would suit its trade needs, but criticises adaptation which follows an objective 
methodology.  
85. Malaysia identified first five, then six possible alternative measures in respect of the high  ILUC-
risk cap, the high ILUC phase -out and the 7 % maximum share. They all suffer from common 
deficiencies: they all start from the wrong premise that the measure at issue is a total ban on 
palm oil, and they do not address expansion into high carbon stoc k land in a way that would 
be equivalent to the ILUC methodology.  
86. Indeed, even if the sustainability criteria and the ILUC methodology both look at crop expansion 
in high carbon stock land, that does not imply that they are somehow duplicative because there 
are profound differences in how the sustainability criteria and the ILUC methodology consider 
that factor. Indeed, Recital 81 of RED II also explains that the biofuels sustainability criteria 
"do not cover the issue of indirect land -use change".  
87. According to the sustainability criteria, in order to be eligible a g iven amount of biofuel must 
not have been produced by crops grown on high carbon stock land. Hence, rather than looking 
at expansion into carbon stock land that has occurred, under the sustainability criteria there is 
a requirement that any amount of biofu el is not the direct result of such expansion. On the 
other hand, biofuel crop production may take place on cropland that was previously used for 
growing the same or another crop for food or feed. Those crops would comply with the 
sustainability criteria.  
88. However, when this agricultural production for food or feed is still necessary, it may lead to the 
extension of agriculture into non -cropland, possibly including areas with high carbon stock such 
as forests, wetlands and peatlands. This process is ref erred to as indirect land use change 
(ILUC). As this may cause the release of CO2 stored in trees and soil, ILUC risks negating the 
greenhouse gas savings that result from increased use of biofuels. To address the issue of 
ILUC, the RED II introduces a new  approach. This approach looks at the expansion area of each 
biofuel crop that has actually occurred, be it for satisfying food, feed, or biofuel demand.  
89. With regard to the first alternative proposed by MAlaysia (a legality scheme modelled on the 
EU's FLEGT scheme), it has to be noted that a simple legality check is not enough. Climate 
responds to emissions, not to legality of production. Much deforestation in the world is legal 
and policy -driven.  
90. Avoiding expansion onto land with high -carbon stoc ks is already a requirement under the 
sustainability criteria. Hence, the proposed alternative is in reality a suggestion to remove the 
measure at issue altogether. Moreover, in this respect, the fitness check conducted has found 
that certain VPAs conclude d under the EU FLEGT regime are not so effective in preventing 
illegal destruction of forests (and its associated effects on climate change, biodiversity loss and 
public morals). Further explanations are provided in the impact assessment for minimising the  
risk of deforestation and forest degradation associated with products placed on the EU market.  
91. Malaysia adds a new alternative in its second written submission: the EU deforestation -free 
initiative. However, there are differences in scope and approach  between that newly proposed 
instrument and the measures at issue: the EU Biofuel Regimes stimulates demand for biofuel 
crops that would not otherwise exist and in that context, the measures at issue seek to limit 
the demand for biofuels crops with a high ILUC risk. On the other hand, the deforestation -free 
proposal addresses demand for certain goods that exists irrespective of a particular EU policy.  
92. The third alternative suggested by Malaysia refers to certification by public authorities, like the 
catch certificate under the EU's IUU fishing scheme.  
93. However, the IUU framework offers a complex toolbox of instruments working together but 
Malaysia isolates the part of the IUU "toolbox" that it finds convenient (catch certificates) and 
ignores the res t. WT/DS600/R/Add.1  
 
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  94. The fourth alleged alternative is the application of enhanced certification by existing non -
governmental organisations, such as under the ISCC and the RSPO and the RSPO -RED. The EU 
notes that those schemes address only DLUC.  
95. Malaysia's proposed enhanced certification requirements for all crops (hundreds of them) does 
not take into account the different ILUC risk of each feedstock, and in particular the degree of 
the risk of expansion of each crop in high carbon stock land. It is therefore not an equivalent 
to the challenged measures. This proposed alternative is also not available because it would 
place an undue administrative burden on economic operators and authorities, not substantiated 
by scientific information justifying identical treatment o f all agricultural products in a different 
situation with regard to the impact on the values protected.  
96. With regard to Malaysia's fifth alternative, concerning market access quotas capping imports 
of high ILUC -risk feedstocks at certain levels, the EU  notes that Malaysia is proposing a system 
of quantitative restrictions which would be WTO incompatible under Article XI of the GATT 
1994.  
97. Malaysia's sixth alternative is about specific import requirements applied on a consignment 
basis. This alternat ive relies on sustainability criteria and does not attempt to account for the 
ILUC emissions and hence fails to reflect the ILUC methodology.  
98. In light of the EU's detailed explanations, there is no doubt that the alternatives suggested by 
Malaysia are not reasonably available, they are not less trade restrictive and in particular do 
not make an equivalent contribution to the intertwined objectives sought by the EU.  
99. In conclusion, Malaysia's claims under Article 2.2 of TBT Agreement should be dismiss ed 
because the measures at issue pursue legitimate objectives and they are not more trade 
restrictive than necessary.  
2.5. Article 2.4 of the TBT Agreement  
100. The ISO standards referenced by Malaysia are partially relevant in the present case because 
they relate to the estimation of direct greenhouse gas emissions on the basis of a life cycle 
analysis. Malaysia does not take issue with this aspect of the case.  
101. On the other hand, ILUC risks and ILUC emissions are neither an integral part of the ISO 
standards mentioned by Malaysia, nor of other international standards. ISO standards only 
recognise the existence of ILUC but do not currently recommend any specific methodology to 
account for those emissions. Therefore, Malaysia has neither demonstrated the  relevance of 
those standards with regard to accounting for ILUC emissions, nor their appropriateness or 
effectiveness to that effect. It follows that Malaysia has failed to make its case under Article 
2.4 of the TBT Agreement.  
2.6. Articles 2.5, 2.9 and 2 .9.4 of the TBT Agreement  
102. The European Union was not subject to the procedural requirements enshrined in these 
provisions because the "measures" identified by Malaysia cannot be properly characterised as 
"technical regulations" within the meaning of A nnex 1 to the TBT Agreement. In any event, the 
European Union has engaged with Malaysia on multiple occasions and in multiple fora as 
regards the EU Biofuels regime, including prior to its adoption.  
2.7. Article 2.8 of the TBT Agreement  
103. The concept of  high ILUC risk does not lack sufficient substance to form the basis of any 
distinctions introduced by the measures. On application of the formula, the differences as 
between palm oil and other oil crops are not minor or marginal but significant in terms o f the 
risks they present.  
104. Malaysia fails to show that the concept of high ILUC risk is "unrelated" to the environmental 
performance of biofuel. While the ISO standards do not currently provide for a standardised 
methodology to quantify ILUC emissions , this does not mean that ILUC has no relationship to WT/DS600/R/Add.1  
 
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  environmental performance. Malaysia has also not explained why the ISO standards should be 
used to address the European Union's legitimate policy concerns over the effects of ILUC when 
those ISO standar ds only recognise the existence of ILUC but do not currently recommend any 
specific methodology to account for those emissions. Since the respective ISO standards are 
irrelevant, inappropriate and ineffective for the fulfilment of the legitimate objectives  pursued 
by the challenged measures, Malaysia's premise for its Article 2.8 claim falls.  
2.8. The Low ILUC -Risk Certification is not a conformity assessment procedure within 
the meaning of Annex 1.3 of the TBT Agreement  
105. Malaysia has not demonstrated that low ILUC -risk certification can be characterised as a 
"conformity assessment procedure".  
106. First, Malaysia has failed to clearly identify the relevant technical regulation which it contends 
this measure assesses conformity with.  
107. Second, in its second written submission it has clarified that the relevant technical regulation 
is the "exemption from the high ILUC risk cap and phase out". However, Malaysia has not 
sought to demonstrate that this "exemption" is a technical regulation w ithin the meaning on 
Annex 1.1 of the TBT Agreement.  
108. Third, there is no reference in Malaysia's Panel request either to that technical regulation or to 
it constituting the legal basis of the claim that low ILUC risk certification is a conformity 
assessment procedure. Consequently, none of Malaysia's claims based on this premise are 
properly before the Panel. The European Union's submissions on the substance of the claims 
are without prejudice to the above.  
2.9. Article 5.1.1 of the TBT Agreement  
109. When assessing whether suppliers are in a comparable situation, the scope of the assessment 
is between different suppliers of "like"' products which are subject to the "conformity 
assessment" procedure. Malaysia conflates the legal standard with a differe nt issue, namely 
that of equal access to the market as such. Under the EU Biofuels regime, "access" to the 
conformity procedures is only relevant to producers of biofuels produced from high ILUC -risk 
feedstock.  
2.10.  Articles 5.1.2 and 5.2.1 of the TBT Ag reement  
110. The absence of detailed certification rules falls outside the scope of Article 5.1.2. Malaysia has 
not claimed that the certification rules are prepared with a view to or with the effect of creating 
an unnecessary restriction to international trade. In any case, the absence of detailed 
certification rules does not prevent low -ILUC risk certification and there was sufficient time for 
setting -up voluntary schemes before RED II became applicable. Malaysia's criticism is rather 
directed against the  low-ILUC risk certification rules set out in Delegated Regulation. Those 
arguments have been addressed elsewhere. In any event, the European Union does not accept 
the premise that any form of verification amounts to an obstacle to trade.  
111. Second, rega rding Article 5.2.1, the phrase "undertaken and completed" shows that this 
provision covers approval procedures after receiving an application. Malaysia's claim falls 
outside the scope of this provision because it complains only about the absence of certif ication 
rules. Moreover, the recognition procedure of voluntary schemes by the European Commission 
falls outside the Panel's terms of reference and, in any event, outside the definition of 
conformity assessment procedures.  
2.11.  Articles 5.6.1, 5.6.2 and 5 .6.4 of the TBT Agreement  
112. The European Union considers that, in any event, it complied with the procedural obligations 
contained in these provisions through an expert workshop, a four -week feedback period and a 
stakeholder meeting.  WT/DS600/R/Add.1  
 
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  2.12.  Article 5.8  of the TBT Agreement  
113. Malaysia incorrectly asserts that the European Union failed to promptly publish or otherwise 
make available the conformity assessment procedure in this case. The Delegated Regulation 
was published on 21 May 2019 while the impleme nting act was published on 27 June 2022.     
2.13.  Articles 12.1 and 12.3 of the TBT Agreement  
114. The term "take into account" in Article 12.3 of the TBT Agreement means to give active and 
meaningful consideration to the special needs of developing country Members before reaching 
a decision. Article 12.3 imposes neither an obligation of result, nor pre scribes how to take 
account or to document specifically how account was taken. This obligation is met if the 
developing country communicated its concerns and if the Member adopting the measure 
discussed these concerns, either internally or in exchanges or consultations with the developing 
country.  
115. Moreover, Malaysia has not established that RED II would affect its "development, financial 
and trade needs". In any event, the EU has demonstrated that it gave meaningful and active 
consideration to Malaysi a's relevant needs and adjusted some aspects of the measures at issue.  
3. MALAYSIA'S  CLAIMS  UNDER  THE  GATT  1994  
3.1. Article I:1 of the GATT 1994  
116. Malaysia has not established a violation of Article I.1 of the GATT 1994. With regard to 
"likeness" of t he products, the EU refers to its arguments above. Malaysia has also not 
demonstrated that the measures at issue "affect" the internal sales of biofuels. Nor has it 
demonstrated that the measures at issue "affect" the internal sales of palm oil as an input  for 
biofuels. Any possible limitation of demand for palm oil is not the result of any treatment 
imposed by the challenged measures.  
117. Malaysia's claims are premised on the same misconceptions as to the design and operation of 
the measures that undermin e the claims brought in respect of Article 2.1 of the TBT Agreement. 
The measures at issue do not differentiate between oil crop -based biofuel on grounds of origin. 
All palm oil, whether imported from Malaysia, another member or produced in the European 
Union, is equally eligible to contribute to the European Union's renewable energy target. 
Moreover, the measures at issue do not operate to guarantee that there will be any 
"advantage". Member States frame obligations on their fuel carriers in such a way as to ensure 
that the overall transport target is met but are free to determine their respective fuel mix and 
have no obligation to incentivise any conventional biofuel at all.  
118. Article I:1 of the GATT 1994 does not require WTO Members to extend an "adva ntage" which 
is subject to certain conditions to all Members in cases where their products do not meet those 
specified conditions. As the overall GHG emissions associated with the production of different 
biofuels are different, there is a legitimate basis on which to confer the alleged "advantage" 
only to the subset of "like" products (regardless of their origin) which meet the prescribed 
conditions in terms of overall GHG emissions.  
3.2. Article III:4 of the GATT 1994  
119. Malaysia claims that the high IL UC-risk cap, the high ILUC -risk phase out, and low ILUC -risk 
certification accord less favourable treatment to imported oil palm crop -based biofuel and palm 
oil than they accord to "like" domestic feedstocks and derived biofuels. Malaysia asserts, on 
essen tially identical grounds to those advanced in respect of its claims under Article 2.1 of the 
TBT Agreement, that the European Union has accorded less favourable treatment to palm oil.  
120. Article III:4 does not imply that any time an advantage is not conf erred on one product of a 
group of like imported products a Panel can conclude that there is discrimination under Article 
III:4 of the GATT 1994.  WT/DS600/R/Add.1  
 
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  121. The comparison is to be conducted at the level of the group of like products. However, because 
Malaysia bases its "less favourable treatment" analysis on a skewed analysis and partial 
definition of the group of "like products", Malaysia's arguments are inc apable of demonstrating 
that the challenged measures have an asymmetrical impact on imported products vis -à-vis 
domestic products, when the whole group of products is considered.  
3.3. Article XI of the GATT 1994  
122. Malaysia's claim implies that any int ernal regulatory measure which is at odds with Article III 
of the GATT 1994 (because it negatively affects the competitive opportunity of imported 
products) would also automatically be at odds with Article XI of the GATT 1994 (because it 
would decrease int ernal demand for imported products and then create a disincentive to 
importation).  
123. However, it follows from the text of Articles XI and III as well as the jurisprudence, that only 
prohibitions or restrictions on importation or measures that impose a condition on importation 
capable of limiting the quantity of imports of a product fall within Article XI. On the other hand, 
as a rule, internal regulatory measures fall under Article III. The detrimental impact on 
commercial opportunities for imported pro ducts that results from the application of an internal 
regulation cannot be considered as a measure falling within Article XI, least Article III and XI 
would substantially coincide and one of those two provisions would be inutile.  
124. The high ILUC -risk cap, the high ILUC risk phase -out and the low ILUC -risk certification regulate 
within the EU internal market the eligibility of high ILUC risk biofuels for the purpose of EU 
renewable energy targets. Therefore, any detrimental impact on commercial opportuni ties for 
imported products that might result from the application of these internal regulations is neither 
an import restriction nor a measure through which an import restriction is instituted or 
maintained within the meaning of Article XI of the GATT 1994 . 
125. It follows that the high ILUC -risk cap, the high ILUC -risk cap phase -out do not fall within the 
purview of Article XI.  
126. Also low ILUC -risk certification does not constitute a measure that falls within Article XI of the 
GAT 1994, because it is a  measure favourable to the producers of high -ILUC risk crops.  
3.4. Article X:3(a) of the GATT 1994  
127. Malaysia's claims fall outside the scope of Article X:3(a). The rules regarding the high ILUC -
risk cap and the high ILUC -risk phase measures are substan tive in nature and do not concern 
the administration of these measure or the way they are put into practical effect. Malaysia's 
claim relates to alleged flaws of these measures that can be examined for consistency with 
other provisions of the GATT 1994.  
128. The absence of detailed certification rules is not inconsistent with Article X:3(a) as it does not 
demonstrate "unreasonable administration" or inconsistent implementation of the low ILUC -
risk certification. The criteria set out in the Delegate Regulati on for that purpose are already 
sufficiently detailed. Moreover, the Commission's recognition of three voluntary schemes before 
the adoption of the detailed certification rules shows that they are not indispensable for the 
set-up and operation of voluntary  schemes.  
3.5. Article XX of the GATT 1994  
129. The objectives pursued by the EU are intertwined. Climate change, environmental degradation 
and biodiversity loss trigger moral concerns. It cannot be contested that climate change induces 
biodiversity loss and biodiversity loss leads to climate change. Moreover, biodiversity has a 
high medical value and is of direct interest to humankind also from that perspective. The legal 
standard under Article XX easily accommodates the intertwined objectives approach ad opted 
by the EU.  WT/DS600/R/Add.1  
 
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  130. Not only do Articles XX(b) and XX(g) protect similar values, but also the "necessary" and "relate 
to" tests are in practice very similar according to the relevant jurisprudence. Furthermore, the 
chapeau analysis may also serve as a t ool to approach the necessity and "relate to" legal tests.  
131. In the present case, the EU has demonstrated that there is a close and genuine relationship of 
ends and means between the measures at issue and the protection of public morals, of life and 
health of humans, animals and plants, and the conservation of exhaustible natural resources. 
In other words, the measures at issue are "necessary" within the meaning of Articles XX(a) 
and (b) and "relate to" as required by Article XX(g).  
132. In addition, th e EU considers that the text and aim of the chapeau requires an examination of 
the multiple objectives of the measures at issue. These measures are part of a comprehensive 
set of policies to address climate breakdown, environmental protection and biodivers ity 
collapse, and to protect public morals in the EU.  
133. Climate change has several relevant characteristics. In particular, its effects are not 
circumscribed to specific boundaries or regions and there is no direct connection between the 
source of GHG emissions and the effects of climate change: devastating effects can be produced 
in places that have low GHG emissions.  
134. There is an unprecedented biodiversity collapse in the history of humankind. Species do not 
have time to adapt to changes that come  in a split of a second in evolutionary terms. According 
to a scientific report from 2019, 1 million species are threatened with extinction on our planet 
and biomass studies from 2018 show that 96% of the mass of all mammals on Earth are the 
humans and the ir domesticated mammals, and only 4% wild mammals.  
135. Importantly, there is a direct link between biodiversity loss and climate change, which is 
increasingly recognised by political leaders. It is clear that a rich biodiversity mitigates climate 
change t o a very great extent. The climate breakdown and the biodiversity collapse, affect and 
concern us all. That climate change, environmental degradation and biodiversity loss are of 
moral concern transcends boundaries, professions, age, wealth and political o rientation.  
136. Therefore, the EU relies concurrently on Article XX(a), (b) and (g) in the present proceedings. 
This means that the three values -based and science -based objectives are intertwined and for 
our composite defence to fail it would mean that t he three justifications should fail altogether. 
The EU is not requesting a "revolutionary" leap in case law, but to apply the existing case law 
to the new realities.  
137. The objectives of the measures are within the framework of the values recognised as l egitimate 
objectives by Article XX(a), (b) and (g) of GATT 1994. The measures meet the required level 
of connection between them and the objectives sought and are applied in a non -discriminatory 
manner between countries where the same conditions prevail, a s required by the chapeau of 
Article XX.  
138. There is no explicit or implicit territorial limitation in Article XX or in Article 2.2 of the TBT 
Agreement. Moreover, the Panel does not need to address the issue of whether there are or 
not implied jurisdict ional limitations in Article XX in order to ensure a positive resolution of this 
dispute, as climate change and biodiversity are global in nature and therefore the required 
nexus with the EU territory exists. These elements are internationally recognised, including by 
the United Nations Framework Convention on Climate Change (UNFCCC) and the Convention 
on Biological Diversity. Moreover, the ILC Guidelines on the protection of the atmosphere 
express the obligation incumbent on States to "protect the atmosphe re".  
139. In any event, the very text of Article XX supports the European Union's position. For instance, 
Article XX(a) can be invoked for the protection of public morals in the WTO Member concerned 
related to circumstances outside its territory. If that were not the case, Members could not 
limit or prevent the import of goods produced in a way that offends their public morals (e.g. 
using slave labour, or in a way that does not conform to their religious beliefs) for the sole 
reason that the circumstances resulting in an offence to their public morals do not occur within 
their borders. The same holds true under Article 2.2 of the TBT Agreement.  WT/DS600/R/Add.1  
 
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  140. Moreover, Article XX(g) of the GATT 1994 is explicitly intended to protect from risks that arise 
also outside  a Member's borders. Indeed, a measure to be justified under that article must be 
accompanied by an even -handed restriction on domestic production or consumption which 
contributes to the same objective (i.e. a restriction applying within the borders of the  Member 
adopting the measure). Therefore, necessarily the measure must pursue the same objective of 
conserving living and non -living natural resources outside the Member's territory.  
141. Second, the treaty drafters put an express territorial limitation wh en they considered necessary 
to do so, such as in the SPS Agreement.  
142. Third, this interpretation is confirmed by the object and purpose of the provision at issue. By 
applying the principle of effectiveness, the only conclusion that can be reached is t hat an 
effective protection of the non -trade values covered under Article XX or Article 2.2 cannot be 
reconciled with a territorial limitation.  
143. Fourth, Malaysia summarily refers to a Panel's finding in EC – Tariff Preferences, which did not 
benefit from appellate review. Moreover, the panel in that case was faced with a different 
factual setting. On the other hand, already during the GATT era the US – Tuna (EEC) panel 
"could see no valid reason supporting the conclusion that the provisions of Article XX(g) apply 
only to polices related to the conservation of exhaustible natural resources located within the 
territory of the regulating member".  
144. Fifth, the EU is not regulating what is happening in Malaysia. All that the EU is doing, in a 
manner that is perfectly consistent with WTO law, is to impose certain conditions for the 
products at issue to be considered eligible for the EU renewable energy  targets when they are 
used in the EU market. Indeed, the very purpose of measures taken for the protection of the 
values embodied in the general exceptions in Article XX of the GATT 1994 (or in the balancing 
exercise in Article 2.2 of the TBT Agreement) i s to induce compliance with certain legitimate 
policies, as confirmed by the Appellate Body.  
145. Sixth, because of the global nature of ILUC, the risk for climate change and biodiversity 
destruction do not necessarily arise outside the EU borders, but may  very well occur also within 
the EU. Hence, the 7% maximum share and the criteria for assessing high -ILUC risk biofuels 
apply to all conventional biofuel crops.  
146. Finally, as the public morals are those of the EU, this aspect should be non -controversia l. The 
fact that the EU public morals concerns are shared by a wide variety of cultures, religions, 
professions and across all age segments only reinforces our standpoint. Therefore, the effect 
of climate change and destruction of biodiversity may be felt in places different from those 
where GHG emissions occurs or where biodiversity is affected. Likewise, where the GHG 
emissions occurs or where biodiversity is affected does not make a difference for the EU public 
morals. If pristine habitats are wiped out and wild species are eliminated in Malaysia, the EU 
or elsewhere it still impacts the EU public morals.  
147. The EU has demonstrated that the measures at issue are apt to, and certainly capable of 
contributing to the stated objectives. The EU already expla ined that the objectives pursued by 
the specific measures challenged by Malaysia are the same as those pursued more generally 
by the entirety of the EU's regulatory framework promoting the use of energy from renewable 
sources, including under the EU Biofue ls Regime.  
148. Malaysia's has identified certain aspects of the EU Biofuels Regime as the measures at issue.  
However, the various EU measures challenged by Malaysia do not exist in the void. They are 
part of a complex legal framework which addresses int ertwined realities and they operate 
together to pursue the objectives of climate change mitigation, mitigating biodiversity loss and 
responding to correlative EU moral concerns.  
149. The objectives pursued are important to the highest degree and measures a t issue make a 
genuine contribution to these objectives. To the extent that the Panel finds that Malaysia has 
demonstrated that the measures impact on trade because palm oil -based biofuels are 
"disincentivised", then that this is only to the extent necessa ry to ensure that the measures 
contribute to the objectives sought.  WT/DS600/R/Add.1  
 
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  150. The measures at issue do not ban the use of certain biofuels in the transport sector. The 
respective rules only cap the amount considered eligible to contribute towards the renewable 
energy targets, progressively reducing to zero by 2030 the counting of conventional biofuels 
produced from high ILUC -risk food and feed crops. This is complemented by the low ILUC 
certification criteria. Thus, the trade impact of the measures at issue is l imited.  
151. To provide for an appropriate less trade restrictive alternative, the complainant must propose 
a solution that would be capable of achieving the same level of protection of all three 
intertwined objectives at the same time. But as shown by th e analysis of the alternatives 
proposed by Malaysia in the context of Article 2.2 of the TBT Agreement, Malaysia has failed 
to propose any appropriate less trade restrictive alternative in the context of Article XX.  
152. The measures at issue are even han ded, as required by Article XX(g). The 7% maximum share 
as well as the methodology for determining high ILUC -risk crops apply to all domestic and 
imported food and feed crops, irrespective of their origin.  
153. Finally, the measures at issue are applied in  a non -discriminatory manner. The EU has engaged 
in very extensive efforts over a long period of time in various international fora in order to find 
common ground to properly address the climate and biodiversity emergency and will continue 
to do so. Howeve r, as international instruments usually express the lowest common 
denominator the EU has to address these urgent phenomena as there is no Planet B.  
154. For the purposes of the chapeau analysis, given the global nature of ILUC and of the market in 
the bio fuel crops the "relevant condition" is the risk of ILUC induced by the production of a 
certain feedstock. That is because different feedstocks have a different impact on the 
environment. The difference in treatment under the measures at issue is between di fferent 
feedstock crops regardless of the countries where they are produced. It is therefore necessary 
to adopt an approach that examines the overall worldwide position with respect to each 
feedstock, rather than an approach that discriminates between coun tries, because the risk of 
ILUC linked to the production of a given feedstock is the same whatever country is producing 
that feedstock.  
155. In conclusion, the EU's approach (i) is solidly grounded in the very legal text of Article XX(a), 
(b) and (g), and (ii) is embedded in the nature and operation of the composite objectives 
pursued by the measure at issue. Therefore, the measures at issue are justified under Article 
XX(a), (b) and (g) of GATT 1994 and its chapeau.  
4. THE  FRENCH  MEASURE  
4.1. Factual backg round  
156. The TIRIB (i.e. Taxe Incitative Relative à l'Incorporation de Biocarburant) is a behavioural tax 
designed to change the behaviour of economic operators so that they will incorporate 
renewable energy in the fuel that they release for consumption,  thereby contributing to 
achieving France's climate change and environmental objective. Accordingly, the TIRIB is 
designed to tax only fuels containing a proportion of renewable energy lower than the 
incorporation targets fixed by law.  
157. The TIRIB is o rganised around a fiscal imposition and a reduction/exemption, which applies 
proportionally to the renewable energy incorporated, up to the target set by the French 
legislator. Palm oil biofuels are not considered "renewable energy" for the purpose of the TIRIB. 
The TIRIB and the TIRIB reduction are inseparably linked. One would have no reason to exist 
without the other.  
158. The legislator does not pursue a budgetary objective through the TIRIB and indeed, since its 
establishment, the revenues produced by  the TIRIB have been negligible.  
4.2. Malaysia's GATT claims against the TIRIB  
159. Malaysia challenges the TIRIB both under Article III:2, first sentence and second sentence of 
the GATT 1994, as well as under Article I:1 of the GATT 1994. While initially  the EU understood WT/DS600/R/Add.1  
 
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  that Malaysia was arguing that the TIRIB discriminates among "like" or "directly competitive or 
substitutable" imported and domestic (or from another WTO Member) biofuels and their 
feedstocks, Malaysia clarified in its second written sub mission that the discrimination it 
complains about is between domestic (or from another WTO Member) petrol and diesel fuels 
that contain oil crop -based biofuels (other than palm oil biofuels) and imported petrol or diesel 
fuels that contain oil palm crop -based biofuels.  These are the products that Malaysia considers 
to be "like" or "directly competitive or substitutable" and whose treatment should be compared 
for the purposes of the Malaysia's GATT claims against the TIRIB.  
160. However, Malaysia's Panel r equest does not mention any claim based on Article I or III of the 
GATT 1994 against the TIRIB based on an alleged discrimination between those "like" or 
"directly competitive or substitutable" products. Therefore, Malaysia's GATT claim against the 
TIRIB a re not properly before the Panel.  
161. Moreover, Malaysia has demonstrated neither that petrol and diesel fuels that contain oil crop -
based biofuels (other than palm oil biofuels) and petrol and diesel fuels that contain oil palm 
crop-based biofuels are li ke product, nor that the first are domestic/or originate in a country 
other than Malaysia, while the latter are imported/or originate in Malaysia. Malaysia has neither 
argued (let alone demonstrated) that it produces petrol and diesel fuels that contain oi l palm 
crop-based biofuel, nor that it exports to France petrol and diesel fuels that contain oil palm 
crop-based biofuels. As a consequence, Malaysia has not demonstrated that it could be de facto 
discriminated by an origin neutral measure that allegedly affects petrol and diesel fuels that 
contain oil palm crop -based biofuel. In a nutshell, Malaysia has failed to make any prima facie 
case that the requirements for the application of Article I:1 and III:2 of the GATT 1994 are 
met.  
162. In light of the foregoing, the EU asks the Panel to reject Malaysia's claims against the TIRIB 
based on Article I:1 and III:2 of the GATT 1994. Were the Panel to find that any of the GATT 
claim against the TIRIB is well founded (quod non), the European Uni on considers that the 
exclusion from the TIRIB reduction of palm oil -based biofuel is justified on the basis of Article 
XX of the GATT 1994. The arguments developed by the EU under Article XX of the GATT 1994 
with respect to the EU measures challenged by M alaysia apply mutatis mutandis to the TIRIB.  
4.3. Malaysia's claims under the SCM Agreement  
163. Malaysia argues that the French measure constitutes a (i) financial contribution or (ii) income 
or price support by a government or a public body, that (iii) it confers a benefit, and that (iv) 
it is a specific subsidy.  
164. With regard to (i)  Malaysia contends that the General Tax on Polluting Activities is the 
normative benchmark, and that the TIRIB reduction is the exception. Malaysia claims that the 
exclusi on from the TIRIB reduction of petrol and diesel fuels to the extent that they contain 
palm oil -based biofuels is the tax treatment that should instead apply to the income of the 
alleged subsidy recipients.   
165. Malaysia applies an automatic and formalist ic "rule/exception test" without taking into account 
the design, structure and organising principle of the TIRIB. In any event, if one were to identify 
a "general rule" which reflects the "normal" or "common situation" under the regime of the 
TIRIB, that w ould be a situation where the economic operators incorporate a sufficient quantity 
of "renewable" biofuels so that they are not liable to pay the TIRIB. The exception, is therefore 
the release in the French market of fuel not containing "renewable" biofuel  which triggers 
payment of the tax. It follows that Malaysia's normative benchmark is incorrect, as the 
exclusion from the TIRIB reduction is neither the normative benchmark of the TIRIB nor the 
general rule of taxation, or the common scenario resulting fr om the organising principles of the 
TIRIB.  
166. Economic operators incorporating palm oil -based biofuel are not in a situation comparable to 
that of economic operators incorporating biofuels other than palm oil -based biofuel, as the 
latter do not contribu te in any way to the public interest objectives that the TIRIB pursues. 
Their respective income is therefore not comparable either. On the other hand, all taxpayers WT/DS600/R/Add.1  
 
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  that incorporate renewable energy and their income are treated the same way, as they will n ot 
be liable to pay the TIRIB.  
167. Accordingly, because the challenged tax treatment constitutes the normative benchmark (i.e. 
it is the tax treatment applied to all comparable income of any comparably situated taxpayers 
and also the general rule of taxat ion under the TIRIB), the government is not foregoing any 
revenue that is otherwise due.  
168. With regard to (ii), a Member that wants to demonstrate that a measure is a form of income 
or price support that falls within Article 1 of the SCM Agreement must necessarily refer to 
Article XVI of the GATT 1994 to make its case. Such a reference is however absent from 
Malaysia's Panel Request. Malaysia's claim that the TIRIB reduction is an income or price 
support is therefore not properly before the Panel.  
169. In any event, the measure does nothing to maintain "the value of prices or the income received 
by an industry/undertaking(s)" and notably of domestic producers, as argued by Malaysia. 
Indeed, there is no industry incorporating only biofuels other than palm oil, because all relevant 
economic operators mix different types of biofuels in order to meet the national fuel standard. 
Second, the TIRIB does not lower the biofuel production costs or the costs of acquiring biofuels, 
which must still be integrally borne  by the economic operators. The measure simply encourages 
the incorporation and release for consumption of different source of renewable energy, 
whatever their origin.  
170. In any event, the TIRIB reduction cannot be described as "an income support policy insulating 
such economic operators from the true costs that they would have to face in the absence of 
the measure at issue." Without the TIRIB reduction there would be no TIRIB altogether as the 
whole regime of the TIRIB would lack purpose. Hence, the "tru e costs" that operators would 
have to face in the absence of the measure would be no TIRIB altogether. Accordingly, the 
TIRIB exemption does not constitute a mechanism to support the income of domestic 
producers.  
171. Malaysia's arguments concerning the e xistence of a benefit are purely consequential to the 
Panel finding that the TIRIB reduction is a financial contribution of a form of income support. 
Given that the latter set of arguments are not well founded the Panel should conclude that 
Malaysia has no t demonstrated that the TIRIB reduction confers a benefit.  
172. In any event, Malaysia has not demonstrated that the TIRIB is a specific subsidy as required 
by Article 2 of the SCM Agreement. Whilst Malaysia's approach to de jure specificity 
presupposes t hat certain economic operators are excluded from the reduction because they 
incorporate only a given type of biofuel , Malaysia itself denies this assumption and explains 
that in reality there is no such a group of enterprises.  .  
173. Malaysia admits that  all the enterprises to which the TIRIB applies (economic operators that 
release fuels for consumption on the French market) are eligible (have access) to the TIRIB 
exemption, because they all incorporate any type of biofuel. Hence, the TIRIB exemption cou ld 
not have a broader scope in terms of enterprises that have access to it, as no operator liable 
to pay the TIRIB is ineligible for the TIRIB exemption. Moreover, Malaysia has not made any 
effort to assess whether the criteria for determining eligibility and amount of the subsidy 
comply with Article 2.1(b) of the SCM Agreement.  
174. Finally, Malaysia has not demonstrated that the TIRIB reduction has caused serious prejudice 
to Malaysia under Article 6.3(a) and 6.3(c) of the SCM Agreement. First, Malaysia h as 
considered data pertaining to a partial and incorrect definition of 'like products' in its 
assessment of whether the effect of the TIRIB reduction was to displace imports of the 'like 
products' from Malaysia, or to cause lost sales of the 'like product'  from Malaysia. Second, 
Malaysia claims that the "lost sales" occur in the EU market, whereas the only market where 
the TIRIB applies is the French market: therefore, the potential impact of the TIRIB reduction 
on the overall sales of Malaysian palm oil -based biofuel and feedstock into the entire EU market 
remains undemonstrated. Third, Malaysia does not show the occurrence of any significant lost 
sales. Fourth, Malaysia has not provided sufficient evidence to demonstrate any displacement WT/DS600/R/Add.1  
 
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  effect. Finally, M alaysia has failed to demonstrate a genuine and substantial relationship of 
cause and effect between the TIRIB reduction and the alleged displacement and lost sales.   
5. LITHUANIA'S  MEASURES  
175. Malaysia's claims regarding Lithuania's measures fall outsi de the Panel's terms of reference. 
First, Malaysia neither identifies the Lithuanian provisions implementing the relevant parts of 
the EU measures it challenges, nor does it make clear which provisions of Lithuania's legal 
order are allegedly inconsistent with which WTO obligation.  
176. In any event, Malaysia has failed to make a prima facie case against the Lithuanian measure(s) 
because it has not properly submitted to the Panel the evidence which allegedly contain the 
measure(s) it wishes to challenge (in  violation Rule 5(1) and Rule 6(1) of the Panel Working 
Procedure) and therefore it has not demonstrated what this(these) measure(s) consist of, 
thereby making it impossible for the EU to defend this(these) measure(s) and for the Panel to 
make any finding in that respect. In light of the above, Malaysia' claims should be rejected by 
the Panel in their entirety.  
 
_______________  
 WT/DS600/R/Add.1  
 
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  ANNEX C  
ARGUMENTS OF THE THIRD PARTIES  
Contents  Page  
Annex  C-1 Integrated executive summary of the arguments of Australia  62 
Annex  C-2 Integrated executive summary of the arguments of Brazil  65 
Annex  C-3 Integrated executive summary of the arguments of Canada  69 
Annex  C-4 Integrated executive summary of the arguments of Colombia  74 
Annex  C-5 Integrated executive summary of the arguments of Costa Rica  79 
Annex  C-6 Integrated executive summary of the arguments  of Ecuador  82 
Annex  C-7 Integrated executive summary of the arguments of Indonesia  86 
Annex  C-8 Integrated executive summary of the arguments of Japan  91 
Annex  C-9 Integrated executive summary of the arguments of the Republic of Korea  96 
Annex  C-10 Integrated executive summary of the arguments of the Russian Federation  99 
Annex  C-11 Integrated executive summary of the arguments of Ukraine  102 
Annex  C-12 Integrated executive summary of the arguments of the United Kingdom  108 
Annex  C-13 Integrated executive summary of the arguments of the United States  112 
 
 WT/DS600/R/Add.1  
 
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  ANNEX  C-1 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF AUSTRALIA* 
1. Australia welcomes the opportunity to present its views on the legal issues raised in these 
proceedings, which concern WTO Members' obligations under the TBT Agreement1 and the GATT 
1994.2  
2. At the outset, Australia would like to emphasise that it recognises the right of WTO Members to 
take measures n ecessary for protecting legitimate public policy objectives such as environmental 
protection. However, it is Australia's firmly held view that WTO Members should not, under the 
guise of environmental protection, implement trade protectionist measures.  
3. WTO rules recognise a WTO Member's right to regulate to address legitimate public policy 
objectives. These rules, expressed in the WTO Agreements and interpreted in numerous WTO 
disputes, provide ample guidance for this panel to determine whether the measu res at issue in 
this dispute meet those standards. In this statement, Australia makes no comment on the factual 
issues in this dispute or the merits of either party's case but provides views on the legal 
standards that must be met.  
4. To that end, this st atement will focus first on the correct legal standard for determining 'trade 
restrictiveness', 'contribution' and 'less trade restrictive alternatives' under Article 2.2 of the TBT 
Agreement; and second on the meaning of 'necessary' and 'relating to' in c ertain paragraphs of 
Article XX of the GATT 1994.  
5. Australia recalls that it has previously provided similar observations to the members of this panel 
in its submission in the proceedings for DS593,3 and our views remain unchanged. Australia 
thanks the  panel for the advance questions to the third parties in this dispute, and will provide 
written responses in due course.  
Trade Restrictiveness of the Technical Regulation  
6. First, Australia provides some observations on determining the 'trade restrictive ness' of a 
technical regulation.  
7. In Australia's view, t o determine the extent of 'trade restrictiveness', the panel should be guided 
by what the Appellate Body said in Australia – Tobacco Plain Packaging . That is, it should 
examine the structure, desig n, and operation of the measure, as well as take  into account all 
relevant evidence adduced by the parties.4  
8. In its first written submission, the EU contended that the trade impact of the measures at issue 
is 'not very important' because they do not p revent market access.5 Australia does not agree 
with this contention. The prevention of market access is not the appropriate legal standard for 
determining the degree of 'trade restrictiveness' under Article 2.2.  
9. It is well established that Article 2.2  of the TBT Agreement recognises trade restrictiveness is 
permissible. What is actually prohibited are those restrictions on international trade that go 
beyond what is necessary to achieve the degree of contribution that a technical regulation makes 
to a legitimate objective.    
10. In determining the degree of 'trade restrictiveness,' a panel should not limit its examination to 
a subset of the evidence, such as market access. Rather, qualitative or quantitative arguments 
 
* Australia requested that its oral statement serves as its executive summary.  
1 The Agreement on Technical Barriers to Trade.  
2 The General Agreement on Tariffs and Trade 1994.  
3 EU — Palm Oil (Indonesia).  
4 Appellate Body Reports, Australia – Tobacco Plain Packaging , paras. 6.392 -6.393.  
5 See eg, European Union 's First Written Submission, para 842.  WT/DS600/R/Add.1  
 
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  and evidence demonstrating the compl ete prevention of market access , could be probative to 
the extent that such evidence demonstrates the degree to which the measures have a limiting 
effect on trade.  The relevant question is whether the trade restrictiveness is beyond what is 
required for a legitimate objective, not whether there is market access.  
11. Second, Australia recalls that, in addition to claims under Article 2.2, this dispute involves claims 
under Article 2.1 of the TBT Agreement. In Australia's view, a finding of less favourable 
treatment by the Panel in relation to Malaysia's claims under Article 2.16 may have probative 
value in the Panel's assessment of 'trade restrictiveness' under Article 2.2.  
12. In support of this view, Australia recalls that the Appellate Body in Australia  – Tobacco Plain 
Packaging  indicated that, when assessing a claim under Article 2.1 of the TBT Agreement, a 
measure modifying the conditions of competition for a group of imported products – as compared 
to a group of domestic products – may suffice to indi cate that the technical regulation is 'trade 
restrictive' within the meaning of Article 2.2.  
Degree of Contribution that the Technical Regulation makes to the Achievement of a 
Legitimate Objective  
13. Next Australia will provide views on the degree of con tribution that a technical regulation makes 
to the achievement of a legitimate objective. Australia's comments concern consideration of 
'evidence' relating to the application of the measure.  
14. The EU contends that  the Panel, while considering the scienti fic evidence  related to the measure, 
should limit its examination to whether the measures at issue have adequate support from 
qualified scientific opinions.7 This is irrespective of whether the scientific opinions represent the 
majority view.8 Australia disagrees with the EU's characterisation of the limited role for the Panel 
in examining scientific evidence.  
15. In Australia's view, it is appropriate for a panel to consider the extent to which the body of 
evidence before it collectively prov ides a reasonable basis in support of the proposition.9 A panel 
should have regard to whether such evidence 'comes from a qualified and respected source', 
whether it has the 'necessary scientific and methodological rigor to be considered reputable 
science ' or reflects 'legitimate science according to the standards of the relevant scientific 
community', and 'whether the reasoning articulated on the basis of the scientific evidence is 
objective and coherent.'10  
16. Furthermore, as recognised by the Panel i n Australia – Tobacco Plain Packaging , Australia 
submits that limitations on, or the lack of, available evidence in demonstrating 'contribution' has 
probative value and should also be considered by the Panel.11 
Less Trade Restrictive Alternatives  
17. Australia will now turn to the comparative analysis that should be undertaken when considering 
whether the technical regulation is 'more trade restrictive than necessary'. Australia recalls that 
the Appellate Body has said that it does not expect a 'complainan t…to provide detailed 
information on how a proposed alternative would be implemented by the respondent in  
practice… .'12 
18. In Australia's view, while the complainant must establish a prima facie  case, it is for the 
respondent to establish that a propos ed alternative measure is not reasonably available.13 
 
6 Malaysia 's First Written Submission, paras 522 – 585. 
7 European Union 's First Written Submission, para 362.  
8 Ibid, para 781.  
9 Panel Reports, Australia – Tobacco Plain Packaging, para. 7.627.  
10 Panel Reports, Australia – Tobacco Plain Packaging, para. 7.516.  
11 Panel Reports, Australia – Tobacco Plain Packaging , paras 7.938 - 7.943.  
12 Appellate Body Reports, U S – COOL (Article 21.5 – Canada and Mexico), para 5.338  
13 Ibid. WT/DS600/R/Add.1  
 
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  Article XX of GATT 1994  
19. Finally, Australia would like to provide some comments on the meaning of 'necessary' and 
'relating to' in certain paragraphs of Article XX of the GATT 1994.  
20. Paragraphs ( a) and (b) of Article XX require that the measures at issue be 'necessary', while the 
standard under paragraph (g) requires that the measures at issue are 'relating to' the 
conservation of exhaustible natural resources. Both standards have been interpreted  by the 
Appellate Body.  
21. 'Necessary' involves a holistic weighting and balancing of a number of factors, such as the 
importance of the interest furthered by the measure, its contribution to the objectives pursued, 
and the trade restrictiveness of the m easure at issue. It also involves comparing the measure 
to possible alternative measures that achieve the same level of protection while being less trade 
restrictive.14 By comparison, 'relating to' requires 'a close and genuine relationship of ends and 
means' between the measure at issue and the conservation objective.15  
22. These two are considerably different legal standards. Relying upon Articles XX(a) and (b) 
requires more than the mere establishment of a 'close and genuine relationship of ends and 
means' between the measure at issue and the legitimate policy objectives. It instead requires a 
holistic weighting and balancing of a range of factors. These two legal standards should not be 
conflated.  
Conclusion  
23. Australia thanks the Panel for the opportunity to present these views.  
 
14 Appellate Body Report, Brazil – Retreaded Tyres, para 178 - 182; Appellate Body Report, US – 
Gambling, para. 307; Appellate Body Report, Korea – Various Measures on Beef, para. 164; Appell ate Body 
Report, Colombia – Textiles , paras. 5.71 -5.74.  
15 Appellate Body Reports, China – Rare Earths , para. 5.90.  WT/DS600/R/Add.1  
 
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  ANNEX  C-2 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF BRAZIL  
I. INTRODUCTION  
1. Brazil welcomes the opportunity to take part in these proceedings as a third  party.  This dispute  
will require  the Panel  to address  systemic  issues  of undeniable importance, relating to the 
balance between a Member's right to  pursue legitimate policy goals and the need to prevent 
abuses that could result in trade  restrictions  that are  inconsistent with the WTO  agreements.  
II. ARGUMENTS  
A. High -ILUC does not constit ute a legitimate regulatory distinction for the  
purposes  of Article 2.1 of the  TBT Agreement  
(i) High  ILUC -risk is  not a  reliable  and appropriate  regulatory  distinction.  
2. As part of the analysis under Article 2.1 of the TBT Agreement, the Panel will  likely have to 
determine  whether  the challenged  measures  accord  a less favourable treatment to products 
imported from Malaysia in comparison to the  treatment accorded to domestic products or to 
products imported from other  countries.  
3. As recognized  by the EU, there are widely  acknowledged  parametric  uncertainties  associated  
with modelling  ILUC emissions  in the relevant  scientific literature.1 Such uncertainties stem, 
fundamentally, from the fact that  ILUC cannot be directly observed or measured and must be 
estimated according  to models.  
4. There is, however, no widely recognized model for the estimation of ILUC risk  in connection with 
specific crops. Nevertheless, the model adopted by the EU is not complex at all, as it only takes  
two criteria into account. The absence of other variables in the model chosen by the EU is 
conspicuous.  Additionally,  there is a very real possibility  that the pressure  in demand  resulting 
from the repurposing of a certain crop to the biofuel market may be  compensated by th e 
expansion of a different crop, including in areas of high - carbon  stock.   
5. The EU argues that "the question for the panel is therefore, whether these  environmental (of 
which climate change and biodiversity) and moral objectives  are legitimate, not pure ly whether 
or not the notion of ILUC risk is 'legitimate'  as such".13 Brazil respectfully  disagrees.  
6. In Brazil's  view,  the Appellate  Body was clear in determining  that, in an analysis  under  Article  
2.1 of the TBT Agreement,  a Panel  must ascertain  whether the detrimental impact on imports 
stems exclusively from a legitimate  regulatory distinction. In the measures challenged in this 
dispute, the regulatory  distinction elected by the EU is ILUC -risk, calculated according to the 
formula  estab lished  in Article 3 of the  Delegated Regulation.  
(ii) The challenged  measures  are not applied  in an  even -handed  manner.  
7. As an alternative argument, Malaysia claims that the challenged measures are  incompatible  with 
Article  2.1 of the TBT Agreement  because  they are not applied in an even -handed manner and 
are not calibrated to the risk that they  seek to address.2 
8. In Brazil's  view,  the notion  of ILUC risk pertaining  to individual  crops  is currently  unreliable,  
because  such risk may only be estimated  based  on arithmetical  models  that lack sufficient  
scientific  robustness.  There  are no internationally agreed parameters regarding which variables 
should be taken into account in designing models such as the one applied by the EU. This mea ns 
 
1 First Written  Submission  of the European  Union,  para. 748.  
2 First Written  Submission  of Malaysia,  para. 578. WT/DS600/R/Add.1  
 
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  that any such model could easily lend itself to a high degree of manipulation.  
B. The 7% limitation  and the high ILUC -risk cap and phase  out are not in 
conformity  with Article  2.2 of the TBT Agreement  because  they are more  trade -
restrictive  than necessary to fulfill  a legitimate  objective.  
(i) Relational  and Comparative  Analyses  
9. Brazil recalls that, in applying the necessity test under Article 2.2 of the TBT  Agreement,  Panels  
are expected  to consider  three factors:  i) the degree  of contribution made by the measure to 
the legitimate objective at issue; ii) the  trade-restrictiveness of the measure; and iii) the nature 
of the risks at issue and  the gravity  of the consequences  that would  arise from non-fulfilment  
of the objective(s)  pursued  by the Member  through  the measure.3 The balancing of these  
three elements is  known as  "relational analysis".  
10. Moreover, in most cases, Panels should also undertake a "comparative analysis"  between  the 
challenged  measures and  possible alternative measures  that are  reasonably  available  to the 
respondent  and that could  make  an equivalent  contribution to the relevant legitimate 
objectives.4 
11. With regard to the "comparative analysis" with alternative, less trade -restrictive  measures  that 
are reasonably  available  to the EU, Brazil  encourages  the Panel  to analyze each of the 5  
examples presented by Malaysia5 in light of,  inter alia , the Appellate  Body's  findings  in US – 
COOL  (Article 21.5  – Canada  and Mexico) . 
12. In Brazil's view, the Appellate Body's finding that an equivalent degree of  contribution may be 
achieved in different ways from the technical regulation at  issue could be read to mean that 
alternative measures do not necessarily have to  be based on the elusiv e notion of crop -specific  
ILUC emissions.  
13. Additionally, Brazil considers that, based on the nature, quantity and quality of  the evidence 
available in this dispute, it is not possible to measure the degree of  contribution (if any) of the 
challenged measures.  
(ii) Assumptions  in the  formula  chosen  by the EU 
14. Brazil notes that the EU seeks to respond to an argument by Malaysia  that builds on elements 
which Brazil submitted as a third party in the EU – Palm Oil (Indonesia)  dispute.6 In response to 
the argument relied on by Malaysia, the EU effectively concedes  that it makes most of the 
assumptions that were pointed out by Brazil .  
15. The EU disingenuously  asserts  that the argument  of Brazil  (and Malaysia)  "seems to assume the 
possibility that all the increase in demand [for biofuel] can and will be met without a significant 
expansion into high carbon stock land".36 This is a mischaracterization  of Brazil's  argument.  This 
is because the savings arising  from fossil fuel replacement  with biofuels  could  be greater  than 
the GHG emissions  resulting  from the induced expansion  into high  carbon  stock land.  
16. As is clear from the above, it is the EU that assumes that all the increase in  demand for biofuel 
will be met through a significant expansion into high carbon  stock land.  
III. Conclusion  
17. Brazil appreciates the opportunity to comment on some of the important issues  raised i n this 
dispute, and hopes that the arguments presented in this submission  will prove  helpful to the  
 
3 Appellate  Body Report,  US – Tuna II  (Mexico) , para. 322. 
4 Ibid. 
5 First Written Submission by Malaysia, para. 635.  
6 First Written Submission by the European Union, paras. 860 -866; First Written Submission of 
Malaysia, para. 610. Brazil 's third party submission in the EU – Palm Oil (Indonesia) dispute is incorporated to 
this submission as exhibit BRA -001. WT/DS600/R/Add.1  
 
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  Panel in assessing  the matter before  it. 
Executive Summary of the Oral Statement  
1.  Brazil would like to use this opportunity to present its views on the characterization of a technical 
regulation under of Annex 1.1 of the TBT Agreement. This is an important issue in contention in 
the present case.  
2. Brazil cautions against an overly n arrow interpretation of the concept of technical regulations, in 
particular with regard to the understanding of production methods. This may result in a finding 
that such measures would fall outside the scope of the TBT Agreement, potentially preventing 
the otherwise correct application of specific obligations in the Covered Agreements.  
3. The Appellate Body7 established a three -tier test that a document must meet to fall within the 
definition of "technical regulation". If the Panel is to undertake such an  analysis, it will need to 
evaluate whether the production of goods in a supposedly more environmentally friendly manner 
has a sufficient nexus to the identified product characteristics. This is particularly relevant when 
the object and purpose of the meas ures being scrutinized are precisely curbing GHG emissions, 
as it is the case in the present dispute.  
Executive Summary of Brazil's Responses to the Panel's Questions  
QUESTION 2:  
1. The legal inquiries under Article III:4 of the GATT and Article 2.1 of the  TBT Agreement – as 
these provisions have been interpreted by panels and the Appellate Body – are not the same.  
2. With respect to Article III:4 of the GATT 1994, GATT panels found that "the 'no less favourable' 
treatment requirement set out in Article III :4 [is] unqualified. Article 2.1 of the TBT Agreement, 
in turn, entails a different assessment as far as technical regulations are concerned.  The 
Appellate Body found that, specifically in the context of Article 2.1, the context and object and 
purpose of the TBT Agreement weigh in favor of a further inquiry.   
QUESTION 3:  
3. In light of the standard set out by the Appellate Body8, the fact that Malaysia "happens to only 
produce palm oil based biofuel from the group of like products" is highly relevant to the 
comparison to be conducted under Articles 2.1 of the TBT Agreement and III:4 of GATT 1994. 
It appears therefore that, as far as oilcrop -based biofuels are concerned, taken as a whole, the 
group of like products imported from the complaining Member (i.e . palm oil based biofuel) is 
treated less favourably than the group of domestic like products taken as a whole.   
QUESTION 4:  
4. Brazil disagrees with the European Union's description of the applicable legal test under Article 
2.1 of the TBT Agreement.  If  the Panel is to apply this legal test, it bears noting that its key 
element revolves around the concept of a "legitimate regulatory distinction ", rather than the 
professed objectives  of the technical regulation  
QUESTION 7:  
Response:  
5. Brazil has not found any support for the European Union's assertion regarding "trade enhancing 
effects" of the measures at issue towards other WTO Members.  To Brazil's knowledge, such 
effects (if any) are therefore unspecified. Brazil agrees with Australia that " a findi ng of less 
favourable treatment by the Panel in relation to Malaysia's claims under Article 2.1 may have 
 
7 Appellate Body Report, EC – Sardines , para. 176.   
8 Appellate Body Report, US – Clove Cigarettes , para. 194 (underlining added).  WT/DS600/R/Add.1  
 
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  probative value in the Panel's assessment of 'trade restrictiveness' under Article 2.2".9 
QUESTION 17:  
6. In Brazil's view, if the evidence indicates that a measure is "trade restrictive" in the sense of the 
TBT Agreement, this evidence could have probative value in a panel's assessment of whether 
the measure would amount to a "restriction" under Article XI:1 of the GATT 1994, on the basis 
of the plain meaning of the terms of Article XI:1 of the GATT 1994  
QUESTION 19:  
7. Brazil sees no justification for the Panel to depart from the understanding of Article XX that has 
been established by decades of case law in the GATT in the WTO, in favor of such a lax and 
vague standard as the one advocated by the European Union.  In Brazil's view, the understanding 
consolidated in the case law flows from the text of Article XX as it should be properly interpreted. 
The legal test under each of the invoked paragraphs mus t be assessed on its own merits, on the 
basis of the relevant facts and the applicable legal standard.10  Brazil fails to see why, in 
assessing a given measure, the interpretation and application of one subparagraph (say Article 
XX(b)) and the chapeau sho uld be different depending on whether the respondent has also 
invoked other subparagraphs.  
QUESTION 22:  
Response:  
8. It is not clear how any "spill -over" effects of R&D activities aided by subsidies are to be 
considered.  The inquiry the Panel should under take is not whether such subsidies ensure or 
harm "the proper functioning of the market", but rather whether the subsidies contribute, in a 
"genuine" and "substantial" way, to producing or bringing about one or more of the effects, or 
market phenomena, enu merated e.g. in Article 6.3 of the SCM Agreement. In any event, in the 
context of this dispute, Brazil does not disagree that the Panel may have to consider the nature, 
design, and operation of the French fuel tax reduction when considering the effect of t he subsidy.   
 
9 Third Party Ora l Statement of Australia, para. 11.  
10 If the Panel decides to begin its assessment with one of the invoked subparagraphs (and the 
chapeau) and finds that the measure is justified thereunder, this should be sufficient to conclude the 
assessment.  WT/DS600/R/Add.1  
 
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  ANNEX  C-3 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF CANADA  
I. ARTICLE 2.1 OF THE TBT AGREEMENT  
A. The legal standard for "less favourable treatment" under Article 2.1 of the TBT 
Agreement  
1. Canada disagrees with the European Union 's position that Article 2.1 of the TBT Agreement 
disciplines only origin -based discrimination.  In Canada's view, the non -discrimination obligations 
are intended to capture situations where imported products that are "like " domestic products face 
inequality of competitive conditions, regardless of whether the inequality is origin -based or not.  
2. The European Union refers to EC – Approval and Marketing of Biotech Product1 to support its 
position that the scope of less fav ourable treatment under Article 2.1 of the TBT Agreement (and 
Article III:4 of the GATT 1994) is limited to scenarios where the detrimental impact is related to the 
foreign origin of the product.  However, the Appellate Body subsequently clarified that it would be 
incorrect for a panel, in determining less favourable treatment, to base that finding on whether the 
detrimental impact is related to the foreign origin of the product2.  This view has been repeatedly 
affirmed by panels and the Appellate Body3.   
B. The Legitimate Regulatory Distinction test under Article 2.1 of the TBT Agreement  
3. The parties to the dispute propose a two -step analysis when applying the legitimate regulatory 
distinction (LRD) test under Article 2.1 of the TBT Agreement4.  According to the parties, the first 
step in the analysis is for the Panel to determine whether the regulatory distinction at issue is 
legitimate.  Further, the European Union submits that Article 2.1 requires a panel to consider the 
legitimacy of the objectiv e pursued by the WTO Member5. 
4. Canada disagrees with the disputing parties that the LRD test involves a two -step analysis.  
The legal standard adopted by the Appellate Body to determine whether a detrimental impact stems 
exclusively from a legitimate re gulatory distinction is whether the measure is even -handed6.  There 
are various ways to show even -handedness.  These include whether the measure is designed or 
applied in an arbitrary or unjustifiable manner that constitutes a means of discrimination (AUD )7, 
and whether the regulatory distinction is calibrated to the risks against which the measure aims to 
protect8.  
5. An assessment of whether the measure is designed or applied in an arbitrary or unjustifiable 
manner to determine whether a regulatory di stinction is even -handed, must be "made in the light 
of the objective of the measure"9.  The Appellate Body has noted that, "the form and content of the 
calibration test must be appropriately informed by the objectives pursued by the measure, and the 
calibration test should itself be applied taking account of the measure's objectives"10.  Under either 
example (AUD or calibration), there must be a rational relationship between the regulatory 
distinction and the objective of the measure for the distinction to stem exclusively from a LRD11.   
 
1 Panel Reports, EC – Measures Affecting Approval and Marketing of Biotech Products , para.  7.2514.  
2 Appellate Body Report, US – Clove Cigarettes , para. 1879, at fn 37.  
3 Appellate Body Reports, US – Tuna II (Mexico) , para. 215; US – COOL , para. 271; and EC– Seal 
Products , paras. 5.104 -5.105.  
4 Malaysia's first written submission, paras. 573 -577 and European Union's first written submission, 
para. 697.  
5 Ibid. 
6 Appellate Body Reports, US – Clove Cigarettes , paras. 182 and 215; US – Tuna ( Mexico),  para. 216.   
7 Appellate Body Reports, US– COOL, para 340.  
8 Appellate Body Report, US – Tuna II (Mexico), para. 297.  
9 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico) , para. 7.92.  
10 Panel Report, US – Tuna II (Mexico) (Article 21.5 – Mexico) , para. 5.47.  
11 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – US), para. 6.13.  WT/DS600/R/Add.1  
 
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  6. A panel therefore needs to assess the relationship between the objectives of the measure and 
the regulatory distinctions.  In making this assessment, a panel might inquire into the nature  of the 
objective s pursued by the technical regulation, including whether the objectives are legitimate 
objectives under the TBT Agreement.  Where an objective is not legitimate, a panel could consider 
this factor in the LRD analysis.  The presence of this factor may even support a finding that the 
detrimental impact on imported products does not stem exclusively from a legitimate regulatory 
distinction under Article 2.1.  However, an assessment of an objective's legitimacy is not a specific 
element in the LRD analysis in A rticle 2.1 compared to Article 2.2. Under Article 2.2, the legitimacy 
of the objective is a specific determination that must be made by a panel before it can assess whether 
a technical regulation is more trade -restrictive than necessary.  
II. ARTICLE 5.1 O F THE TBT AGREEMENT  
A. The proper scope of the non -discrimination obligation under Article 5.1.1   
7. Malaysia argues that Article 5.1.1 of the TBT Agreement applies to a situation where suppliers 
of a product are subject to a conformity assessment proced ure (CAP) while suppliers of like products 
are not.  Canada disagrees.  
8. In Canada's view, for Article 5.1.1 to apply, there must be suppliers of products imported into 
the territory of a WTO Member that imposes a conformity assessment procedure on those  products, 
and suppliers of like domestic products (or like products imported from a third country) to which the 
conformity assessment procedure also applies.  Hence, the scope of potentially like products of the 
suppliers under Article 5.1.1 is limited to  those products for which assurance of conformity is 
required.  The suppliers of such like products must be in a comparable situation under Article 5.1.112.   
9. The focus of Article 5.1.1 is on the conditions for access to a conformity assessment granted  
to suppliers13.  A violation of Article 5.1.1 occurs if the conditions that apply to the supplier of 
imported products are less favourable than the conditions for suppliers of domestic like products/like 
products from a third country (i.e. if the conditi ons for access modify the conditions of competition 
to the detriment of suppliers of imported like products)14. 
10. Article 5.1.1 does not apply to a situation where just one group of like products is subject to 
the conformity assessment procedure and tho se products happen to be imported like products.  
Domestic like products and those originating in other countries would not be subject to the 
conformity assessment procedure.  Therefore, the conditions of access to the conformity assessment 
procedure do no t apply to suppliers of like products of domestic or third country origin.  Access to 
the procedure is not at issue because those products are not required to conform to the technical 
regulation.  As a result, no comparison of the conditions of access to t he procedure between different 
suppliers of like products can be made and Article 5.1.1 does not apply.  
B. The application of Article 5.2.1 of the TBT Agreement to conformity assessment 
procedures in the absence of rules implementing the procedure  
11. Article 5.2.1 is not triggered until an application for assessment of conformity with a technical 
regulation is received in accordance with the requirement that the product in question must be 
assessed for conformity before it can be placed on the market.  Th e obligation begins to apply upon 
the regulating Member's receipt of an application for conformity and extends to the completion of 
the conformity assessment process15.  Upon the receipt of the application, a WTO Member is required 
to undertake and comple te a conformity assessment procedure as expeditiously as possible.  
12. The fact that the conformity assessment procedure cannot be undertaken due to the absence 
of implementing rules for the procedure is not necessarily determinative of whether the obligat ion 
under Article 5.2.1 applies.   The date when a measure comes into force is "not the correct benchmark 
against which the time taken for the undertaking and completion of the CAP is to be judged"16. 
 
12 Appellate Body Report, Russia – Railway Equipment, para. 5.125.  
13 Panel Report, Russia – Railway Equipment , para. 5.123.  
14 Appellate Body Report, Russia – Railway Equipment , para. 5.123.  
15 Panel Reports, EC – Seal Products , paras. 7.563 and 7.579.  
16 Ibid. para. 7.579.  WT/DS600/R/Add.1  
 
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  13. What determines whether Article 5.2.1 is engaged is if an application of the conformity 
assessment procedure has commenced, which, according to the Panel, is triggered upon the "receipt 
of an application"17 for conformity.  The Panel should make a  specific finding regarding when an 
application f or conformity was received by the European Union under Article 5.2.1 rather than 
focussing its assessment on whether the European Union's implementing rules for the conformity 
assessment procedure are in place.  
III. ARTICLE 12.3 OF THE TBT AGREEMENT  
14. The nature of the evidence needed by the complainant to show that the responding member 
did not "take account of the special development, financial and trade needs of developing country 
Members"18, will depend on the factual context of the dispute.  However , Article 12.3 does not 
prescribe specific actions, or the manner in which "active and meaningful" consideration to the 
special development, financial, and trade needs of developing countries must take place19.  
15. Canada disagrees with Malaysia's statem ent in paragraph 877 of its first written submission 
that a WTO Member must provide evidence of "special provisions in the measures at issue, which 
are tailored to address the special needs of developing country Members and to provide differential 
and more  favourable treatment to developing country Members".  Evidence of specific actions is not 
needed for a respondent to successfully rebut a claim under Article 12.3.  An example of a specific 
action that is not needed would include special provisions in the  measure at issue that take account 
the needs of developing country Members and provide differential and more favourable treatment.  
Therefore, a failure of a WTO Member to include specific provisions in its technical regulations, such 
as the exception requested by Indonesia in US – Clove Cigarettes20, would not be sufficient to 
establish a violation of Article 12.3.  
IV. ARTICLE XI OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE  
16. In determining whether Article XI:1 is also applicable to the measures at issue, the Panel must 
focus on whether the measure, or an aspect of it, is by nature a measure that has a limiting effect 
on the import ation of palm oil.  In Canada's view, it is not evident from the design, content, or 
architecture of the high ILUC -risk cap, high ILUC -risk phase out, and low ILUC -risk certification , or 
from the explanation provided, that these measures are also governed by Article XI:1.  They indicate 
that these measures are imposed to regulate biofuel in the European Union's internal market, rather 
than to restrict the quantity of palm oil imported into the European Union.  
17. An internal measure that has a detrimental i mpact on competitive opportunities for imported 
products could have a limiting effect on the quantity imported.  However, it is not sufficient to point 
to the detrimental impact on competitive opportunities for imported products to demonstrate that 
the int ernal measure covered by Article III:4 is also governed by Article XI:1.  It must be shown 
how the measure, or an aspect of it, is by nature also a measure that operates to impose a restriction 
on importation.  A "restriction" in this context would not inc lude a reduction in demand for an 
imported product.  
V. ARTICLE XX OF THE GENERAL AGREEMENT ON TARIFFS AND TRADE (1994)  
A. The analytical structure under Article XX for measures pursuing multiple objectives  
18. The European Union submits that the "[E]U Biof uels Regime and the measures challenged by 
Malaysia are designed to pursue at the same time multiple intertwined, legitimate objectives, none 
of which can be assessed in isolation"21.  The European Union adds that its interlinked measures 
"pursue the comp osite objectives of combating climate change, biodiversity loss and protection of 
 
17 Ibid. 
18 TBT Agreement, Marrakesh Agreement Establishing the World Trade Organization, 15 April 1994, 
Annex 1A, 1869 U.N.T.S. 14, Article 12.3.  
19 Panel Reports, US – COOL , para. 7.788.  See also para. 7.7877, where the panel stated: "As to what 
such active and meaningful consideration means in practical terms, we do not read Article 12.3 of the TBT 
Agreem ent as prescribing any specific way."(emphasis added).  
20 Panel Report, US – Clove Cigarettes , para. 7.646.  
21 European Union's first written submission, para. 280.  WT/DS600/R/Add.1  
 
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  the EU public morals"22.  As the objectives of the Biofuels Regime are intertwined, the European 
Union advances what it refers to as a "composite defence"23, and argues tha t it requires the 
concurrent application of Articles XX (a), (b) and (g).  
19. In other words, given the design of the Biofuels Regime, which pursues several objectives, 
the European Union is asking the Panel to consider the interrelationship of the indivi dual paragraphs, 
with the result that, in the European Union's view, a single test for all of the paragraphs should be 
applied24.  Canada respectfully disagrees with the European Union's position.  Such an approach 
disregards the structure of Article XX a s a whole, and the textual and contextual differences between 
the individual paragraphs in Article XX.  Following the European Union's proposed approach would 
also upset the analytical structure of Article XX reflected in the case law.  A WTO Member must s till 
demonstrate that the required elements under each paragraph in Article XX have individually been 
met.  The intertwined nature of the objectives of a measure does not change this.  
20. In cases where more than one exception has been invoked by a complai nant, the Appellate 
Body has been able to apply different legal tests under the paragraph that pertains to each particular 
objective.  So long as the inquiry into the degree of connection or relationship between the 
challenged measure and the state interes t or policy to be promoted or realized aligns with the 
language used in each paragraph under Article XX, there is nothing inherently problematic with a 
panel considering multiple objectives in the defence of a measure.  
B. The importance of maintaining dist inct legal tests under the paragraphs in Article  XX 
21. The European Union asserts that the "necessity" test under Articles XX(a) and XX(b) and the 
"relating to" test under Article XX(g) are "very similar in practice"25.  The European Union emphasizes 
that both tests include a consideration of a close and genuine relationship of ends and means 
between the objectives pursued and the measure.  As a result of this similarity, the European Union 
argues that both tests should be boiled down to an assessment by the Panel to determine whether 
the measures at issue as designed are "rational and reasonable"26.  
22. It is well established that whether a measure is provisionally justified under one of the Article 
XX paragraphs involves an examination of  the degree of connection or relationship between the 
disputed measure and the state interest or policy to be promoted or realized27.  However, the degree 
of such a connection depends on the terms used in each paragraph of Article XX28.  
23. While the term "relating to" under Article XX(g) is defined to require a "close and genuine 
relationship of ends and means29, the relationship between the measure and the policy of the WTO 
Member plays only a partial role in a determination of whether a measure is necessary under 
paragraphs (a) and (b) of Article XX.  The relationship between the measure and its objectives (i.e. 
how much the measure contributes to the objective) is one factor to be weighed and balanced along 
with other factors (i.e. importance of va lues and interests and the degree of a measure's trade -
restrictiveness)30.  As an assessment of the close and genuine relationship between ends and means 
plays a different role in the "necessity" and "relating to" tests, it follows that the tests should n ot be 
collapsed into a single "rational and reasonable" test that would eliminate this distinction.  
24. The European Union argues that the "necessity" and "relating to" tests differ in intensity31.  
Although Canada agrees there are significant difference s in the wording and context in each 
paragraph under Article XX, this does not equate to varying levels of intensity.  If a WTO Member 
chooses to put forward defences under the Article XX paragraphs in which there are different legal 
tests, this would be t heir prerogative – a prerogative that can be exercised based on a self -held 
 
22 European Union's first written submission,  para. 793. 
23 Ibid. para. 1329.  
24 Ibid. para. 1273.  
25 Ibid. para. 1265.  
26 Ibid. paras. 1265 and 1272.  
27 Appellate Body Report, US – Gasoline , p. 18.  
28 Ibid. 
29 Appellate Body Reports, China – Rare Earths, para. 5.90.  
30 Appellate Body Report, Brazil – Retreaded Tyres, para. 145.  
31 European Union first written submission, paras. 1267 and 1268.  WT/DS600/R/Add.1  
 
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  perception about those differences.  But in order to successfully invoke the paragraphs of Article XX, 
a WTO Member must meet the requisite elements of the tests that apply to each  paragraph32. 
 
32 Canada's responses to Panel's questions to the third parties, para 75.  WT/DS600/R/Add.1  
 
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  ANNEX  C-4 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF COLOMBIA  
Colombia recognizes Members' sovereign right to implement measures for the legitimate objective 
of protecting the environment, subject  to the full complia nce of WTO rules and , at a minimum, to 
the requirement that these measures are not applied in a manner that would constitute a means of 
arbitrary or unjustifiable discrimination between Members where the same conditions prevail or are 
a disguised restricti on on international trade.   
In its relevant procedural acts, Malaysia focused on the inconsistency of the challenged measures 
with Articles 2.1, 2.2, 2.4, 2.5, 2.8, 2.9, 5.1, 5.6, 5.8, and 12 of the Agreement on Technical Barriers 
to Trade ("TBT Agreement "), Articles I:1, III:2, III:4, X:3, and XI:1 of the General Agreement on 
Tariffs and Trade of 1994 ("GATT 1994"), and Articles 6.3(a) and 6.3(c) of the Agreement on 
Subsidies and Compensatory Measures ("SCM Agreement").  
The EU, for its part, alleged that  the TBT Agreement is not applicable and rebutted the claims under 
Articles 2.1, 2.2, 2.4, 2.5, 2.8, 2.9.2, 2.9.4, 5.1.1, 5.1.2, 5.2.1, 5.6.1, 5.6.2, 5.6.4, 5.8, 12.1, and 
12.3 of the TBT Agreement. Furthermore, the EU considered unfounded Malaysia's argum ents 
regarding a supposed breach of articles 6.3(a) and 6.3(c) of the SMC Agreement.  
Colombia has presented its views on the following:  
• The challenged measures are inconsistent with Article I:1 of the GATT 1994   
• The challenged measures are inconsistent  with Article III:2 and III:4 of the GATT 1994  
• The challenged measures are not justified under Article XX of the GATT 1994  
• Article XX of the GATT 1994 has a territorial limitation   
• The TBT Agreement is fully applicable  
• The challenged measures are inconsistent with Article 2.1 of the TBT Agreement   
• The challenged measures are inconsistent with Article 2.2 of the TBT Agreement  
• The challenged measures are inconsistent with articles 5.1.2  
• The challenged measures are inconsistent wit h articles 12.1 and 12.3 of the TBT Agreement  
Colombia agrees with Malaysia that the challenged measures adopted by the European Union ("EU") 
discriminate against palm oil and oil palm crop -based biofuels, thereby breaching the EU's 
multilateral obligation s and nullifying and impairing the WTO rights of Malaysia, Indonesia, Colombia, 
and other Members of the World Trade Organization ("WTO"). Colombia notes that Malaysia explicitly 
claims that the challenged measures are de facto establishing a trade barrier  and influencing 
competition conditions in the EU market. Article 2.1 and III:4 of the GATT 1994. Colombia 
underscores that Article XX does not provide a valid justification for the measures. Finally, Colombia 
asserts that Articles 12.2 and 12.3 are breach ed by the EU 's measures.  
This summary divides Colombia 's arguments in three parts: 1. Colombia provides its views on the 
issue of discrimination, focusing in this document for brevity on Article 2.1 of the TBT Agreement. 
2. Colombia provides its views on Article XX as an untenable justification for the measure s. 3. 
Colombia asserts that articles 12.2 and 12.3 of the TBT Agreement are independently breached. 
Then, Colombia concludes.  
 
1. First, concerning the issue of discrimination  WT/DS600/R/Add.1  
 
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Colombia submitted a deep explanation of what it considers the correct readin g of Article 2.1 of 
the TBT Agreement   provision. The explanation on article 2.1 of the TBT provides the main 
reasoning to understand Colombia 's views on the discriminatory aspect of the EU measures. 
Assertions for Article III.1, III.2 of the GATT Agreemen t, and for 2.2 of the TBT Agreement, follow 
the same systemic line of reasoning. For purposes of space, we focus here on the argumentation 
that Colombia provided under article 2.1, under its general interpretation of what considers 
discrimination.  
 
Some m ain issues to that regard, as submitted by Colombia either in its First Written submission 
and/or in its responses to the panel questions:  
 
i. Article 2.1 of the TBT Agreement prohibits measures that "give" or "grant" a "less advantageous" 
type of treatmen t to imported products, as compared to national products. The terms "accorded" or 
"dé," in the Spanish language, indicate that Article 2.1 concerns measures effectively  giving or 
granting less favourable treatment to imported products, regardless of the ex istence of factors 
or circumstances related to the foreign origin of the product . It is Colombia's opinion that 
measures by which a member is "giving" or "granting" a "less favourable" treatment to imported 
products, vis-à-vis national products, are incons istent with Articles 2.1 of the TBT Agreement and 
III:4 of the GATT. Thus, it seems irrelevant whether the measure at issue was based on origin or 
non-origin -related motives.  
 
ii. Concerning the question of discrimination of "like products" , not only in t he context of 
Article 2.1 of the TBT Agreement, but also in the context of Article III:4 of GATT 1994, Colombia 
has submitted that both panels and the Appellate Body have concluded that, in determining the 
relevant domestic and imported products for conduc ting the likeness analysis, the first step in a 
likeness examination is to identify the domestic and imported products that must be compared.1 
Additionally, the Appellate Body has stated that a likeness analysis is essentially about determining 
the extent  to which two products are in a "competitive relationship" in a given market.2 It has also 
recognized that under Article 2.1 of the TBT Agreement, the same four criteria of similarity that have 
traditionally been used under Article III: 4 of the GATT 1994  can be applied, namely: (i) the 
properties, nature, and quality of the products; (ii) its end uses; (iii) the habits and preferences of 
consumers; and (iv) the tariff classification.3 It is essentially about determining the extent to which 
two products a re in a "competitive relationship" in a given market.4 
 
In this sense, the Republic of Colombia submitted that the products that must be compared are first -
generation biofuels from palm oil crops and other crops, such as rapeseed and soybean. In fact, 
biofuels from palm oil crops and biofuels from other crops, such as rapeseed and soybean, are in a 
competitive relationship, meaning that they are like products under Article III:4 of the GATT and 
under Article 2.1 of the TBT Agreement. Moreover, as explained  in the Third -Party Submission of 
Colombia, palm oil crop -based biofuels and other oil crop -based biofuels share the same end -uses 
(a transport fuel) and have the same tariff classification (382600)5. Furthermore, from the 
consumers' perspective, biofuels  made out of different crops are substitutable, especially considering 
that the demand for biofuels in the EU does not reveal any preference for a particular type of oil 
crop used as raw material.  
 
In this regard, the EU states that Malaysia "exaggerates"  the magnitude of the effects on the 
conditions of competition in the relevant market. However, such statement is irrelevant and must 
not be taken into account by the Panel since no quantitative threshold needs to be exceeded for 
there to be a violation of  Article 2.1 of the TBT Agreement. For a measure to be inconsistent with 
Article 2.1 of the TBT it is only required that less favourable treatment is accorded to a foreign 
product that is in a competitive relationship with a local product. It is important to highlight that the 
EU subdivides the oil -crop based biofuels market in several categories that fit under the criteria of 
their questioned measures. This, in an effort to rebut the likeness of the products under 
consideration.6  
 
 
1 Panel Report, US – Clove Cigarettes , para. 7.227.  
2 Appellate Body Report, US - Clove Cigarettes , para. 120. 
3 EC - Asbestos , para. 101. 
4 Appellate  Body Report,  US - Clove  Cigarettes , para. 120. 
5 Third-Party Submissio n of Colombia , para. 3.13.  
6 First Written  Submission  of the EU, paras. 707 – 708. WT/DS600/R/Add.1  
 
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  As to a potential diffe rence on the standard of proof between articles 2.1 of the TBT Agreement and 
III:4 of GATT 1994 suggested by the UE on its First Written Submission7, Colombia considers that 
such difference is non -existent, as the substantial non-discrimination obligation set forth on both 
articles is essentially identical, and therefore by no means the TBT Agreement considers a more 
demanding standard of proof as compared to article III:4 of GATT 1994, regarding the concept of 
discrimination.  
 
iii. Colombia also submitted comments on the legal standard under Article 2.1 of the TBT 
Agreement.  Colombia explained:   
 
- That the Appellate Body has considered that in order to review whether the detrimental 
impact on competitive opportunities "stems e xclusively from a legitimate regulatory 
distinction ", it is necessary to carefully examine the measure's design, architecture, 
revealing  structure, operation, application, including whether the measure is even-
handed .8  
- That under the legal standard in Article 2.1, if a measure has a "detrimental impact on 
imports", a panel must assess whether that impact on imports " stems exclusively from a 
legitimate regulatory distinction ".9  The focus of a panel's assessment is, therefore, the 
regulatory distinction , and not the objective.  
- That an assessment of a measure's objective informs this analysis but is not decisive.  The 
adjudicator should consider whether the objective is, in principle, legitimate.  The mere 
fact that a measure's objective is, in principl e, legitimate does not, however, mean that 
the specific regulatory distinction at stake is legitimate. A Member may pursue a legitimate 
objective but may do so through a regulatory distinction that lacks legitimacy.  Further, 
even if a regulatory distincti on is legitimate, the detrimental impact on imports may not 
stem exclusively from the legitimate regulatory distinction , whether or not the objective is 
legitimate.  
- That a regulatory distinction lacks legitimacy if the adopting Member did not respect th e 
due process interests of affected stakeholders, including exporting governments, in 
drawing the distinction.10  In this case, the EU's formula relied on crop expansion data for 
different oil crops, in each producing country, including Colombia .  In Colo mbia's view, 
when an adopting Member seeks to distinguish between goods using data relating to 
events in the country of production (e.g. crop expansion), that Member must give the 
exporting country, and its producers, an appropriate opportunity to provide,  and comment 
on, data relating to their own production in their own country; and the adopting Member 
should, in principle, use such data.  
- That the word "exclusively" means that there cannot be additional  factors that contribute 
to the detrimental treatme nt.  To assess whether the detrimental impact stems exclusively  
from a legitimate regulatory distinction, a panel should assess the relationship between the 
detrimental impact on imports and the legitimate regulatory distinction.  Among others, 
adjudicator s have examined whether the relationship is rational, and whether the 
detrimental impact on imports is properly calibrated with the risks that the regulatory 
distinction seeks to address (here, the level of ILUC risk).11  If the relationship is not 
ration al, or not properly calibrated with the risks that the distinction seeks to address, the 
detrimental impact on imports does not stem exclusively from the regulatory distinction.  
 
 
7 First Written  Submission  of the EU, paras. 704 and 724. 
8 Appellate Body Report,  US – Clove Cigarettes , para. 182 ; The Appellate Body has compared Article 2.1 
and the Article XX of the GATT, finding some similarities, but also differences: "We recognize that there are 
important parallels b etween the analysis under Article 2.1 of the TBT Agreement and the chapeau of Article XX. 
In particular,  we note that the concepts of "arbitrary or unjustifiable discrimination between countries where 
the same conditions prevail" and of a "disguised restriction on trade" are found both in the chapeau  of Article 
XX of the GATT 1994 and in the sixth recital of  the preamble of the TBT Agreement, which the Appellate Body 
has recognized as providing relevant context for Article 2.1 of the TBT Agreement. Moreover , both Article 2.1 
and the chapeau of Article  XX do not "operate to prohibit a priori any obstacle to in ternational trade." Instead, 
as interpreted by the Appellate Body, Article 2.1 "permit[s] detrimental impacts on competitive opportunities 
for imports t hat stems exclusively from legitimate regulatory distinctions," while under the chapeau of Article 
XX, d iscrimination is permitted if it is not arbitrary or unjustifiable ". EC –Seal Products , para. 5.310 (footnotes 
omitted) . 
9 Appellate Body Report, US – Clove Cigarettes , para. 215 (emphasis added) . See also  US – Tuna II  
(Mexico) , para. 215. 
10 US – Shrimp , paras. 178 -184. 
11 US – Tuna (Mexico) , para. 297 ; US – Tuna II (Mexico) (Article 21.5 DSU) , para. 6.13.    WT/DS600/R/Add.1  
 
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  iv. Colombia provided comments with extensive detail and graphic formulations on the 
application  of the legal standard to the current case.  Colombia  explained, in turn, that (1) the 
EU formula used to draw a regulatory distinction between low and high ILUC  risk oil crops lacks 
legitimacy; and that (2) the EU criteria for distinguishing low -ILUC risk production of oil palm, which 
is otherwise high ILUC risk, through low ILUC risk certification, lack legitimacy.  For both reasons, 
the measure is inconsistent with Article 2.1 of the TBT Agreement  
In addition, on the issues of discrimination , Colombia used the same line of reasoning following 
systemic interests, and found that, in its view, Article 2.2 of the TBT Agreement, was also breached 
by the EU measures, as these exceed the degree of restrictiveness necessary to achieve the allegedly 
pursued goal. Articles III.1 and III.4 of the GATT were also discussed, with similar representations 
and final assertions.  
Finally thus, C olombia concluded  with the assertion  that the measures are discriminatory and  
inconsistent with the different rules against discrimination provided by the GATT Agreement and by 
the TBT Agreement (which is, by the way, fully applicable). The EU measure is botched from origin 
to end, and no c omplex argumentation can disguise it.  
Simply put, after dissection of the complex formulae and legalese, a fact jumps to view: the 
restriction only applies to palm oil, no matter where it is grown  (and there are no non -
negligible palm oil producers in loc al EU market, if at all); and not to all other similar products  
(of which there are quite a few non -negligible producers in the EU market) which will be able to 
continue to trade and contribute to renewable energy targets – because the entire global crop 
production is deemed to be low ILUC risk.12 
 
2. Second , Colombia provided its analysis of Article XX as a justification.  
Colombia focused its interventions on Article XX of the GATT on the following main arguments: (i ) 
the territorial scope of the Article XX exception; (ii) the necessity test enshrined in paragraphs (a) 
and (b) of Article XX; (iii) the contribution of the measure to the alleged legitimate objective and 
the analysis of alternative measures; (iv) the ana lysis of Article XX (g); and (v) the analysis of the 
chapeau  of Article XX.  
Colombia concluded: that the legal interpretations advanced by the EU to justify the measures are 
far-fetched and present systemic risks; that its reasoning for the implementation of the provision to 
the specific case was erroneous as well; and that the Article XX has intrinsic territorial limitations 
whose de -estimation could again, pose systemic risks. In sum, Colombia concluded that the EU 
challenged measures are not justified -nor justifiable - under Article XX of the GATT 1994  
 
3. Third, Colombia addressed the question on the special and differential treatment 
for developing countries provided for in Articles 12.1 and 12.3 of the TBT 
Agreement.  
 
Colombia fully supported Malaysia 's request for a more stringent enforcement of the obligation  to 
take into account developing countries ' needs, as required by the text of the Agreement. The term 
" to take account", further developed with the qualifiers "of the special development, financial and 
trade needs of developing country members"  shall be i nterpreted in good faith in accordance with 
its ordinary meaning in the context of the TBT Agreement and in light of its object and purpose. 
Moreover, according to the interpretive principle of effectiveness, a treaty must be interpreted in a 
way that give s meaning to all its terms and provisions, harmoniously. Therefore, to consider the 
term "take into account", and then a specific and enumerated set of needs, as a mere formality 
would deprive the term of any meaning and, therefore, would contravene custom ary rules of 
interpretation that are mandatory through Article 3.2 of the DSU.  
Colombia notes that Article 12.3 provides no specific guidance on the kind of evidence required to 
demonstrate the compliance with the obligations therein. In any event, the inc lusion of Article 12.3 
in the Agreement should effectively mean something in practice. An additional procedural discipline 
 
12 For the same reasons, the measure does not meet the requirements of the subparagraphs (i.e., (a), 
(b) and (g), and the chapeau, of Article  XX of the GATT 1994.         WT/DS600/R/Add.1  
 
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  was negotiated, and this implies a specific activity from the part of Members establishing TBT 
measures.  
Although the way to offer s pecific evidence could be quite open and left to the Member States, some 
meaningful examples to comply with the provision could be: to enter into meaningful consultations 
with the developing Member; to afford adequate and non -general opportunity for engage ment 
regarding the design, implementation or modification of the measures;  to provide a dedicated 
dialogue regarding any representations made by the regulating Member concerning the facts on the 
ground of a developing Member, as well as deference to its o wn factual representations; and to take 
notice of differences and specificities of the affected developing Members, be them geographical or 
in terms of development, and not just conflating them as if developing Members were one and only 
one.  
 
Under this u nderstanding, Colombia considers that the EU did not demonstrate compliance with 
Article 12.3 by pointing to its engagement with Malaysia as per the European Union's first written 
submission13, nor by merely claiming that it undertook its regulation "with  a view to" assess 
developing country needs.  Simply, Colombia is unclear on how developing countries enumerated 
needs of development were actively considered in the preparation and application of the measure at 
issue.  
 
In particular, finally, the exigence  of a "financial non -attractiveness" as a requisite for certification 
(as thoroughly discussed in Colombia 's answer to question 4 of the panel), is as simple a case can 
be of blatantly "not taking account of the […] financial … needs of developing country Members", 
and a violation of Article 12.3 in itself; as well as additional evidence of not compliance with the 
provision during the general regulatory process.   
 
4. Finally, as a general conclusion, Colombia supported Malaysia's claims , without 
prejudice of Malaysia's claims and arguments.  
 
Colombia supports Malaysia's claim that the challenged measures are inconsistent with both the 
GATT 1994, the TBT Agreement and the SCM  Agreement. Colombia highlighted particularly only the 
following particula r issues:  
- The EU and EU members challenged measures are in breach of Article I:1 of the GATT 1994  
- The EU challenged measures are in breach of Article III:4 of the GATT 1994  
- The EU challenged measures are not justified under Article XX of the GATT 199 4  
- The EU challenged measures are in breach of Article 2.1 of the TBT Agreement  
- The EU challenged measures are in breach of Article 2.2 of the TBT Agreement  
- The EU challenged measures are in breach of article 12.1 and 12.3 of the TBT Agreement;  
- The EU Members challenged measures are in breach of article III:2 of the GATT 1994. 
(Section 3.6)  
 
 
13 Second written submission  of the EU , paras. 1.111 -1.115  WT/DS600/R/Add.1  
 
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  ANNEX  C-5 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF COSTA RICA  
General remarks  
1. Costa Rica is participating as a Third Party in this dispute since it has a trade interest as a 
producer and exporter of palm oil.  In general terms, Costa Rica is concerned about the spillover 
effects that the measures applied by the European Union may have in the international markets 
for palm oil, whi ch may affect our exports to third markets.  
2. Our particular concerns regarding the measures in question can be summarized  as follows.  
3. First of all, we would like to say that we share a common understanding with the European 
Union that the use of alte rnative energies is an indispensable means to achieve the reduction 
of greenhouse gas (GHG) emissions and compliance with the objectives of the Paris Agreement.   
4. However, we are concerned about the particular approach adopted by the European Union in 
terms of limiting the use of biofuels that use palm and palm oil as raw materials.  These products 
are important to my country, given the employment opportunities that they generate in low -
income rural areas.   
5. We understand that the purpose of limiting the  use of biofuels is to respond to the potential 
damaging effects of the indirect land use, which occurs when the production of crops for biofuels 
displaces the traditional production of foodstuffs.  It is assumed that the additional demand for 
land would le ad to an extension of the land area dedicated to agriculture, to the detriment of 
forests and wetlands, and resulting in additional GHG emissions.   
6. However, this approach does not recognize the particular situations prevailing in different 
countries and  regions.  The actual situation of the lands dedicated to the production of palm in 
Costa Rica certainly does not correspond to the definition of high risk of changes in indirect land 
use put forward by the European Union.   
7. Costa Rica considers that ther e are other less trade restrictive measures that are reasonably 
available to the European Union and that would make similar contributions to the objectives 
pursued by the measures in question.  For example, Costa Rica has proposed to the European 
Union that  it should take into account the existence of international environmental certifications, 
such as the Roundtable on Sustainable Palm Oil (RSPO), that aim to guarantee that the 
production of palm is compatible with the objectives of sustainable development.   
8. We take note that Malaysia has included the RSPO as part of the proposed alternative measures 
that it argues the European Union should have considered and adopted.1 Costa Rica agrees with 
this approach.  
The determination of policy objectives under Ar ticle 2.2 of the TBT Agreement and Article 
XX of GATT 1994  
9. Costa Rica notes that there are some areas of convergence between the Parties in relation to 
the interpretation and application of Article 2.2 of the TBT Agreement and of Article XX of the 
GATT 1994, and, in particular, to the determination of the objectives pursued by the challenged 
measures.   
10. Both Parties seem to agree on the following fundamental issues:  
 
1 Malaysia 's first written submission, paragraphs 658 -666. WT/DS600/R/Add.1  
 
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  o That it is for each WTO Member to set its own policy objectives within the scope of the 
public interest areas enumerated in these provisions;  
o That it is up to each Member to select the level of protection it seeks to obtain through the 
measures or policies they choose to adopt;  
o That panels are not bound by a Member 's characterization of the objectives it pursues 
through the measures, and that panels must make an objective and independent 
assessment of the objectives pursued by a Member, taking into account all the evidence 
put before them in this regard.2 
11. Costa Rica also agree wit h these principles.   
12. Regarding the objectives identified in the dispute, we do note, however, that there are some 
important differences between the Parties.  The European Union has identified what it considers 
to be "multiple, intertwined, legitimate objectives, none of which can be assessed in isolation."  
These objectives include achieving climate change mitigation through the reduction of GHG 
emissions, the protection and preservation of biodiversity, and addressing the European Union 's 
related public moral concerns.3  
13. While Malaysia does not contest the possibility that a measure may pursue multiple objectives, 
it considers that the speci fic measures challenged in this dispute point to one primary objective, 
which is "the avoidance of additional GHG emissions by limiting direct and indirect land -use 
change".  4 
14. As indicated above, it will be up to the Panel to make an objective and ind ependent assessment 
of the objectives pursued by the measures in this dispute.  Costa Rica does not have a particular 
view on this issue.  However, it is important to mention that a proper identification of the 
objectives in question is key to determine if t he challenged measures comply with the 
requirements provided in Article 2.2 of the TBT Agreement and Article XX of the GATT 1994.   
15. In addition, Costa Rica note that the European Union has relied on subparagraphs a), b) and g) 
of Article XX of GATT 1994  in order to justify its measures.  Since the European Union has taken 
an intertwined objectives approach, it has indicated that it relies concurrently on these 
provisions.  This means that if its composite defense fails, the three justifications should fail  
altogether.5 This is consistent with the European Union's views that the "necessary" and "relate 
to" tests included in these provisions are very similar.   
16. While Costa Rica acknowledges the fact that a WTO Member may rely on several different policy 
objectives under Article XX to justify a contested measure, this does not mean that an aggregate 
test of these objectives would be appropriate or legally justified under the requirements of 
Article XX.  Article XX clearly uses different terms for each of the  different policy objectives that 
may be pursued under the individual subparagraphs.  These differences in wording were clearly 
chosen for a reason and should be subjected to a separate and distinct test in order to determine 
whether a defending Member's me asure satisfies the language of each relevant subparagraph.   
17. In this regard, the WTO Appellate Body has clearly stated that " it does not seem reasonable to 
suppose that the WTO Members intended to require, in respect of each and every category, the 
same kind or degree of connection or relationship between the measure under appraisal and 
the state interest or policy sought to be promoted or realized. "6  
18. Therefore, the analysis required in relation to paragraphs (a) and (b) of Article XX would differ  
from that required under paragraph (g). Paragraphs (a) and (b) would require WTO Members 
invoking Article XX to justify that the contested measure is "necessary to" (a) protect public 
 
2 European Union 's first written submission, paragraphs 763 and 776; Malaysia 's second written 
submission, paragraphs 34 and 53.  
3 European Union 's first written submission, paragraph 159.   
4 Malaysia 's second written submission, paragraphs 38 -39.  
5 European Union 's first written submission, paragraph 1329.  
6 Appellate Body Report, United States –Standards for Reformulated and Conventional Gasoline , 
WT/DS2/AB/R, adopted 20 May 1996 , paragraph.17.  WT/DS600/R/Add.1  
 
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  morals and (b) protect human, animal or plant life or health; whereas p aragraph (g) would 
require WTO Members to justify that the contested measure is "related to" the conservation of 
exhaustible natural resources.  
The issue of territorial or jurisdictional limitation in Article 2.2 of the TBT Agreement and 
Article XX of GATT  1994  
19. The European Union has stated in its written submissions that, contrary to what is provided in 
the SPS Agreement, there are no jurisdictional limitations in Article 2.2 of the TBT Agreement 
or in Article XX of GATT 1994.7 
20. Costa Rica notes th at the European Union does not elaborate on its arguments related to this 
issue.  However, it is our understanding that the challenged measures were taken by the 
European Union mainly to address its concerns with respect to biodiversity loss and GHG 
emissions that may occur as a result of indirect land use that happens outside the terri tory of 
the EU's member States .  
21. As we mentioned before, Costa Rica agrees that it is up to each WTO Member to select the level 
of protection it seeks to achieve through the measures or policies it chooses to adopt.  Certainly, 
national authorities of W TO Members in charge of designing those measures or policies are 
bound by jurisdictional and territorial limitations when setting up that level of protection. It is 
understood, in our view, that those limitations are embodied in WTO law, including the 
provisions in Article 2.2 of the TBT Agreement and Article XX of GATT 1994.  WTO Members 
cannot and should not be able to affect other WTO Members' sovereignty by imposing measures 
that tend to substitute WTO Member 's rights to set up their own  level of protect ion related to 
their biodiversity and natural resources in their own  territories.   
22. As Indonesia rightly mentions in its Third Party submission, the principles of territoriality and 
sovereignty of natural resources are primary features of international law.8 Silence, ambiguity, 
or simple references to other WTO Agreements should not serve as a basis for an interpretative 
departure from these core principles.  Any interpretation regarding the territorial or jurisdictional 
limitations of Article 2.2 of the  TBT Agreement or Article XX of GATT 1994 should follow the 
interpretative rules of the Vienna Convention of the Law of the Treaties, including Article 31 (3) 
(c), taken together with Article 3.2 of the DSU, and considering the context in which these 
Agree ments were drafted.   
23.  Having said this, it is Costa Rica 's view that the discussion related to the territorial or 
jurisdictional limitations of Article 2.2 of the TBT Agreement and Article XX of GATT 1994 in the 
current proceedings should be limited to  the interpretation and implementation of paragraphs 
(b) and (g) of Article XX of GATT 1994 and the related legitimate objectives provided in Article 
2.2 of the TBT Agreement.   
24. Regarding public morals under paragraph (a) of Article XX of GATT 1994, thi s jurisdictional 
discussion does not appear to be relevant, in our view, as the protection of public morals in the 
present case relates to the values of the citizens within  the territory of the WTO Member that 
designed the measures, that is, the European U nion.  
25. Public morals cannot be assessed in abstract.  Evidently, public morals arise from particular 
concerns related to a variety of issues, including concerns related to global challenges such as 
biodiversity loss or climate change.  In this regard, Costa Rica agrees with the European Union 
that these related objectives may be linked to public morals.  However, as we have previously 
explained, this does not mean that an aggregate test of these objectives would be appropriate 
or legally justified under the requirements of Article XX of GATT 1994.  In our view, given the 
territorial limitations that seem to exist under paragraphs (b) and (g) of Article XX of GATT 
1994, it would be appropriate to make one single analysis of these related obj ectives under 
paragraph (a) of Article XX of GATT 1994, which would mean that the "necessary to" standard 
would be applicable. 
 
7 European Union 's first written submission, paragraphs 825 and 1345.  
8 Indonesia 's third party submission, paragraphs 122 and 125.  WT/DS600/R/Add.1  
 
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  ANNEX  C-6 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF ECUADOR  
I. Ecuador's Oral statement  
As stated in similar cases where Ecuador has participated as a third party, Ecuador states that:  
The rules and procedures of the international trade system are established with the voluntary 
agreement of all participants and, therefore, the imposition of technical regulations adopted 
unilaterally by a country or group of States may violate this principle, provoke discrimination and 
even a restriction. In the same way, it can affect third parties and eventually end in a chain reaction 
of unilateral actions that affect everyone.  
In the event that unilateral decisions discriminate against some countries and also some products 
against similar ones; if these decisions lead to unnecessary or discriminatory technical barriers to 
products; and if they did not emerg e from international and transparent consultations prescribed by 
multilateral trade rules, those decisions are not aligned with the rules of the international trading 
system.  
If a Member adopts unilateral measures such as the ILUC -risk certification proced ure, not issued by 
or according to a recognized international organization that establishes international standards, it 
may affect agricultural producers from members who follow international standards in their industrial 
and commercial activities.  
II. The main arguments of Ecuador's brief as a third interested party are:  
a. The use of international standards, or their relevant parts, as a basis for technical 
regulations.  
Ecuador believes that the EU has not used international standards, which according to the Article  2.4 
of the TBT Agreement three main aspects can be identified: (i) the existence or imminent completion 
of international standards; (ii) the fact that such international standards -or parts of them - have 
been used as a basis for the technical r egulation; and (iii) whether such international standards are 
ineffective or inappropriate to fulfill the legitimate objective pursued by the Member State.  
it is evident that there are internationally accepted standards used to ensure the protection not on ly 
of the environment in general, but also that cover the side effects typical of the palm oil industry. 
This standard could have been used by the European Union to base, in whole or in part, the measure 
at issue. Thus, in the present case -assuming that t he European Union can demonstrate that its 
measure is covered by an international standard - the Panel must analyze whether said international 
standard is the principal constituent or fundamental principle for enacting the technical regulation.  
Therefore, t he Panel must analyze - assuming that the EU can prove that the ILUC risk analysis 
method is an international standard - he Panel must analyze if the manner in which the European 
Union measures ILUC risk is relevant to achieve the objective sought.  
b. Ensuring that technical regulations are not prepared, adopted or applied with a view to or 
with the effect of creating unnecessary obstacles to international trade.  
It is not the objective of Ecuador to determine whether or not the European Union measure is mo re 
restrictive to trade than others, but to emphasize the importance of verifying the existence of other 
less restrictive measures that have the ability to achieve the ultimate goal. of the European Union, 
which is, from what Ecuador can infer, the preserv ation of the environment. In this sense, Ecuador 
calls on the Panel to carry out an analysis that considers the possible trade restrictive measures 
presented by Malaysia.  
Ecuador finds three main elements that the Panel must take into account when conducti ng this 
analysis: i) whether the alternative measure is less trade restrictive than the measure at issue; ii) WT/DS600/R/Add.1  
 
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  whether the proposed measure will make at least an equivalent contribution to the objective that is 
being pursued through the measure at issue; an d iii) whether the alternative measure is "reasonably 
available" to the Member as an alternative to the measure at issue.  
Ecuador would like consider the RSPO Certification. This internationally accepted standard used to 
preserve the environment is not onl y a measure that is specifically directed to the palm growing 
sector, but it also complies with the three elements in question: i) it is a less restrictive measure of 
trade since it does not establish qualitative limitations in terms of product characteris tics.  In fact, 
19% of the palm oil produced worldwide is certified by the RSPO; ii) it is a measure that contributes 
in an equivalent way to the European Union's objective; as mentioned above, it provides its members 
with a greenhouse gas emission calcula tor so that it can be constantly monitored. In addition, it 
provides consumers with certainty knowing it is under constant audit processes that have strong 
consequences in case of non -compliance, ensuring safe palm oil for the environment at ALL levels 
of the value chain. ; and, iii) it is a measure that is entirely at the disposal of the European Union; 
in fact, it is a measure used in 92 countries with more than 4,000 members worldwide.  
c. Ensuring that imported products shall be accorded treatment no les s favorable than that 
accorded to like products of national origin and to like products originating in any other 
country.  
Ecuador believes that the Panel must analyze whether the measure in dispute affects similar 
products - the latter being understood in terms of the nature and scope of their competitive 
relationship. In order to do so, the Panel must follow the steps that previous panels and appellate 
bodies have laid out on this matter. Once the Panel determines whether the products are sim ilar or 
not, it can determine whether the measure imposed by the European Union grants less favorable 
treatment to imported products - in this case, palm oil.  
Ecuador strongly feels that, in the present case, the Panel shall examine: (i) whether the measur es 
at issue, distort the conditions of competition on the EU market of oil crop -based biofuels to the 
detriment of oil palm crop -based biofuel imported from Malaysia; and (ii) if the measures at issue 
are de facto, rather than de jure, discriminatory, whet her the detrimental impact of these measures 
stems exclusively from a legitimate regulatory distinction.  
d. Establishment of technical regulations based on product requirements in terms of 
performance rather than design or descriptive characteristics.  
The Panel must review whether the measure established by the European Union complies with the 
spirit of Article 2.8 of the TBT Agreement, or, on the contrary, is creating unnecessary technical 
barriers to trade by establishing product requirements in terms of product characteristics and not in 
terms of performance.  
At Ecuador's view, the ILUC risk analysis fully responds to the composition of the product rather 
than to its performance. The EU has failed to demonstrate how the final product "oil palm crop -
based biofuel" has a different performance or characteristic (other than its source) than "rapeseed 
oil-based biofuel" or "soybean oil -based biofuel". In this way, the European Union would be creating 
an unnecessary technical barrier to trade which might afford indirect protection to domestic and 
certain imported like products.  
e. Special and Differential Treatment of Developing Country Members  
It is a fact that not all Member States have the same conditions in terms of financing, trade, and 
development. For this reason, the Article 12 of the TBT Agreement, establishes certain 
considerations that must be taken into account when adopting a measure that has an impact on 
trade between States.  
Ecuador would like to emphasize that, the Panel must r eview whether or not the European Union 
has fulfilled its obligation to take into account the special needs in terms of financing, trade and 
development of all developing Member State from the moment it was formulated. If the special 
needs of developing co untries have not been taken into account, the European Union would be in 
breach of its multilateral obligations.  WT/DS600/R/Add.1  
 
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  In conclusion, Ecuador sustains that the European Union has failed to demonstrate that its measure 
is based on an international standard, or th at the relevant part of an international standard has been 
used as a basis for its technical regulation. Additionally, Ecuador sustains that the measure applied 
has been prepared not only disregarding the principle of avoidance of unnecessary obstacles, bu t in 
a manner which precisely creates an unnecessary obstacle which could've been avoided through the 
use of other international standards. The measure applied by the European Union establishes product 
requirements in terms of the characteristics of the pr oduct such as the production methods, instead 
of its performance characteristics.  Lastly, the European Union has not demonstrated how it has 
taken into account the special development, financial and trade needs of developing country 
Members.  
III. The main arguments of the written answers from Ecuador as a Third Party to 
questions raised by the Panel are:  
a. Question 3.  
i. Ecuador observes that Article 2.1 of the TBT Agreement contains a national 
treatment (NT) and a most -favored nation treatment (MFN) obligation. On one hand, 
the most favored nation treatment prohibits discrimination through technical 
regulations imposed on similar products imported from different Members, while the 
national treatment obligation prohibits discrimination between similar imported 
products from national products. Therefore, it determines that, " in order to achieve 
a satisfactory analysis, the Panel needs to establish, in the first place, whether the 
products that are the subject of these disputes are similar or not".  
ii. Ecuador reaffirms that in this dispute, the Panel must examine: (i) whether the 
measures at issue, distort the conditions of competition on the EU market of oil crop -
based biofuels to the detriment of oil palm crop -based biofuel imported from 
Malaysia; and (ii) if the measures at issue are de facto, rather than de jure, 
discriminatory, whether the detrimental impact of these measures stems exclusively 
from a legitimate regulatory distinction.  
b. Question 5.  
i. Ecuador understands that part of the evaluation elements under Article 2.2 of the 
TBT Agreement is that the measures adopted or applied do not pursue the purpose 
or object of creating unnecessary obstacles to international trade and ensure that 
that its technical regulations are not more trade restricti ve than necessary to fulfill 
a legitimate objective, taking into account the risks non -compliance would create.  
ii. Ecuador believes that while Article 2.1 of the TBT Agreement requires evaluating the 
existence of impartiality as a fundamental element for the design of a regulatory 
distinction so that a measure does not constitute arbitrary and unjustified 
discrimination in light of Article 2.1, paragraph 2 of the article supra requires that 
the legitimacy of its objectives be evaluated under criteria such as: the identification 
of the objective, the means to achieve the objective, the legality of the objective, 
and the adequacy and justification of the objective.  
c. Question 7.  
i. Regarding this question, Ecuador agrees with Malaysia in the context of 'trad e 
restrictiveness', the relevant discussion does not revolve around the 
existence/absence of a ban, nor in unsubstantiated claims of trade enhancement, 
but rather, whether the offending measures restricts (i.e., limits) trade. The 
measures at issue, (i.e.,  the 7% limit, the high ILUC -risk cap, and the high ILUC -
risk phase out) clearly do so, and are, therefore, trade -restrictive"1.  
 
1 (DS600). Second Writt en Submission of Malaysia, Par. 103  WT/DS600/R/Add.1  
 
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  d. Question 8.  
i. Regarding the level of detail that the WTO Member countries must provide when 
justifying the application of  the disputed measures in compliance with the obligation 
of Article 2.4 of the TBT Agreement, Ecuador reminds the Parties that the Appellate 
body in the EU – Sardines case, it determined that at least 3 main components must 
be evaluated: : (i) the existenc e or imminent completion of a relevant international 
standard; in other words, the international standard used is relative or pertinent to 
a technical regulation; (ii) whether the international standard has been used as a 
basis for the technical regulation , That is, verify that there is a very close link and a 
non-contradictory relationship between the international standard and the technical 
regulation and; (iii) whether the international standard is an ineffective or 
inappropriate means for the fulfilment  of the legitimate objectives pursued, taking 
into account fundamental climatic or geographical factors or fundamental 
technological problems.  
e. Question 13.  
i. Ecuador recognizes that there is no evidence in WTO jurisprudence that can be 
sufficiently con sidered in order to demonstrate that a Member adopting or applying 
a technical regulation or conformity assessment procedure has taken into account 
the needs of developing country Members under Article 12.3 of the TBT Agreement, 
except for the "voluntary n otification for notification of technical assistance needs 
and responses to those needs" adopted by the TBT Committee in November 2005.  
ii. In this context, the existence of a possible notification regarding the special needs 
issued in this case by Malaysi a or the economic, labor and other factors data 
available that cause an impact on the country's economy, and whose precepts have 
served as inputs at the time of preparing a certain technical regulation, would serve 
as proof at the time when the regulatory country,  (the European Union) in the 
present case, must find compliance with the provisions of Article 12 of the TBT 
Agreement.  
f. Question 17.  
i. Ecuador affirms that it may be easy to assume that the term "relating to" implies 
the same care that Members must take when applying the "necessity" test. That is, 
considering the relative importance of the interest or social value at stake, the 
degree of contribution and the degree of trade restriction to determine whether the 
measure is necessary to pro tect the legitimate objective selected by the regulatory 
country.  
ii. In addition, Ecuador concludes that according the analyzed jurisprudence that 
market characteristics could be important in determining the scope of a measure in 
the light of Article XX ( g) of the GATT, and that unlike GATT -inconsistent measures 
that could be justified under Article XX (a) and (b), a measure imposed under the 
exception in paragraph (g) of the same article is of a precautionary nature. Similarly, 
Ecuador concludes that whil e the analysis of a measure must take into account 
certain evaluation criteria such as those described above, it is also important to 
remember that the legitimate objectives to be protected and the effects on trade of 
a measure challenged under the excepti onality of GATT Article XX must be observed 
on a case -by-case basis.  
 WT/DS600/R/Add.1  
 
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  ANNEX  C-7 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF INDONESIA  
I. INTRODUCTION  
1. In DS593, Indonesia has challenged similar measures under similar claims. However, the 
arguments and evidence presented by Indonesia in DS593 are not the same as those put forward 
by Malaysia in DS600. Indonesia asks the Panel to be mindful of those differences.  
2. In the past decade, Indonesia has taken effective action s on sustainable development, 
deforestation prevention and climate change mitigation. Those actions include a permanent 
moratorium on the conversion of primary forest and peatland which has resulted in the protection 
of 66 million ha of primary forest and peatland. Despite high prices of palm oil, deforestation in 
Indonesia in 2021 declined to less than 5 % of historical levels. By 2030, Indonesia also seeks to 
restore 2  million ha of peatland and rehabilitate 5.3 million ha of degraded land. Indonesia's ac tions 
have already resulted in significantly reducing greenhouse gas ("GHG") emissions from land and 
forest use by 40.9 % in 2019 as compared to the 2015 level of GHG emissions and in the lowest 
rate of deforestation in the last 20 years. In adopting the m easures at issue in these proceedings, 
the European Union disregards the significant commitments made by developing country Members, 
such as Indonesia, and the effective achievements obtained as a result.  
II. THE MEASURES LACK AN OBJECTIVE AND COHERENT EXP LANATION  
3. As a result of the 7 % limitation and the high indirect land use change ("ILUC") risk cap and 
phase -out, the European Union limits and even excludes the use of biofuel made from food and feed 
crops, especially oil palm crop -based biofuel, in th e EU transport sector.  
4. Indonesia agrees with Malaysia that the measures at issue lack an objective and coherent 
explanation, including of their scientific basis. The Panel should also give due effect to the European 
Union's admissions as to the flaws o f ILUC modelling and its inability to offer an objective and 
coherent basis for the determination of ILUC GHG emissions and their attribution to biofuel used in 
the European Union.  
5. Indonesia submits that Article 11 of the Understanding on rules and proc edures governing the 
settlement of disputes ("DSU") requires the Panel to consider whether all of the evidence before it, 
considered as a whole, provides a reasonable basis in support of the proposition advanced by either 
party. This can include, but is no t limited to, scientific evidence. In respect of scientific evidence, the 
task of the Panel is to consider the necessary scientific and methodological rigor to be considered 
reputable science' according to the standards of the relevant scientific community , as well as the 
extent to which its use in support of the measures at issue is "objective and coherent". It is not 
sufficient that the respondent might have presented some scientific evidence reflecting a minority 
view for the Panel to be satisfied that t hat evidence supports that party's allegations.  
6. First, Indonesia fully agrees with Malaysia that the specific measures at issue serve EU 
protectionist interests. If the Panel nonetheless considers that they pursue a legitimate objective, at 
best, their  sole rationale is concerned with alleged ILUC GHG emissions offsetting net GHG emission 
savings. Thus, the alleged rationale of the specific measures at issue is a GHG emission savings 
rationale. It is not about ILUC, in the sense of indirect effects, as such. The measures at issue 
concern the alleged ILUC GHG emissions the European Union attributes to oil palm crop -based 
biofuel. However, the European Union accepts that ILUC GHG emissions cannot be causally linked 
or otherwise correlated with EU biofuel d emand. Nor can they be measured or quantified. Only direct 
land use change ("DLUC") GHG emissions exist in real and practical terms.  
7. Second, the European Union accepts a significant risk of ILUC GHG emissions – no mitigation 
is needed for ensuring that emissions related to using, for example, rapeseed oil -based biofuel within 
the 7 % limitation exceed the emissions of using fossil fuel. All oil crop -based biofuel presents, 
according to the European Union, a significant ILUC -risk. Up to  7 % of that biofue l, other than  oil 
palm crop -based biofuel, can be used. That  7 % does not bear any connection with that risk; instead, WT/DS600/R/Add.1  
 
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  it is apparently based on the need to protect investments. Moreover, in determining the risk of ILUC 
GHG emissions in respect of palm oil , there is no explanation of how the high ILUC -risk cap and 
phase -out takes into account the risk that might already be addressed through the 7 % limitation.  
8. Third, contrary to the approach taken in the Delegated Regulation to look at each crop 
separate ly, there is no causal link between the crop used to produce EU biofuel and the displaced 
crop for which new land might be cleared. The alleged ILUC GHG emissions are thus DLUC GHG 
emissions relating to the cultivation of other agricultural commodities, not used for meeting (EU) 
biofuel demand, grown anywhere in the world. Whether or not those DLUC GHG emissions and the 
assumed displacement occurs may depend on various factors. Moreover, there is no causal link 
between the country in which the crop used to produce biofuel is cultivated, and the country in which 
new land might be cleared. Likewise, there is no causal link between the crop used to produce biofuel 
destined for the EU market and the crop for which new land might be cleared. In fact, the European  
Union's logic implies that if EU -grown rapeseed is redirected to produce rapeseed methyl ester 
("RME") for use in the European Union, it can no longer be used for food purposes or for producing 
biofuel destined for non -EU States. To meet that demand, DLUC  might occur anywhere to grow 
another crop, such as oil palms, or the same crop for a different use. GHG emissions resulting from 
this land use change are, according to the European Union, ILUC GHG emissions. According to the 
European Union's logic, they s hould be attributed to RME consumed in the European Union, not RME 
consumed or produced elsewhere, or food products consumed or produced anywhere. In this 
example, RME resulting in DLUC GHG emissions relating to growing oil palms should be considered 
high ILUC-risk. Furthermore, land use change caused by demand in other sectors than food and feed 
crops, such as timber or cattle grazing, is frequently an intermediary step before starting to use land 
that was previously covered by primary forest for cultivati ng food and feed crops. If any displacement 
occurs, there is no basis to assume that oil palm will be grown in Indonesia (or other tropical 
countries) to meet food or feed demand.  
9. Fourth, the specific measures at issue are taken in total disregard of t he European Union's 
historical climate debt and on the blind assumption that countries like Malaysia and Indonesia, also 
parties to the Paris Agreement, take no action to prevent deforestation, protect and restore 
peatlands and reduce GHG emissions.  
10. Fifth, the European Union fails to explain how ILUC modelling, instead of the European 
Parliament's preferences and its interest in protecting investments at home, offers a basis for the 7 
% limitation. The rejection of the scientific basis of the 7 % limita tion is implied in the European 
Union's adoption of a new methodology for imposing the high ILUC -risk cap and phase -out. In fact, 
the impossibility of accurately modelling ILUC due to parametric uncertainty was already recognised 
by the European Commission  in the impact assessment for Directive 2015/1513.  Indonesia submits 
that if  the European Union seeks to address ILUC GHG emissions in adopting the 7  % limitation and 
then subsequently admits that the basis for that measure is flawed, prompting it to seek another 
methodology, then the 7  % limitation should not be maintained.  
III. THE OPERATION OF THE MEASURES AT ISSUE AND THE EU BIOFUEL MARKET  
11. The EU renewable energy targets have essentially created the market for biofuel in the 
European Union. There is no demand for biofuel that cannot be counted towards the targets. In  the 
absence of EU mandatory renewable energy targets, biofuel will remain uncompetitive in the 
transport fuel market for the foreseeable future. The European Union has not presen ted evidence 
showing the contrary. The 14 % target creates opportunities for biofuel to be placed on the EU 
market for renewable energy in the transport sector. The European Union admits this. The 7% 
limitation limits those competitive opportunities for fo od and feed crop -based biofuel. Moreover, as 
a result of the high ILUC -risk cap and phase -out, those competitive opportunities must disappear 
for oil palm crop -based biofuel. This is the regulatory model chosen by the European Union.  
12. Indonesia submits that an assessment of the scope of like products must focus on the products 
in the market of the regulating Member . That market is the market in which the measures are issue 
are applied. The choice of the like products by the complainant is directly linked to that relevant  
market.  
13. Given that the 7 % limitation "delimits when any incentive for biofuels from the EU renewable 
energy policy should stop" and that there are no competitive opportunities for biofuel in the EU WT/DS600/R/Add.1  
 
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  market without t hose incentives, both the 7 % limit and the high ILUC -risk cap and the high ILUC -
risk phase -out affect the competitive opportunities for food and feed crop -based biofuel, and 
specifically oil palm crop -based biofuel which is gradually being eliminated from  the EU market.  
IV. THE DEFINITION OF A TECHNICAL REGULATION AND A CONFORMITY ASSESSMENT 
PROCEDURE  
A. The 7 % limitation and the high ILUC -risk cap and phase -out lay down product 
characteristics of biofuel  
14. The parties disagree on whether the 7 % limit ation and the high ILUC -risk cap and phase -out 
are technical regulations.  
15. First, Indonesia agrees with Malaysia's position and submits that the composition of (bio)fuel 
is a product characteristic. A document laying down the composition of (bio)fuel i s covered by the 
definition of a technical regulation. In the present case, Article 26 of RED II and the Delegated 
Regulation prescribe that biofuel not made out of food or feed crops is not subject to the 7 % 
limitation and the high ILUC -risk cap and phas e-out. These provisions lay down requirements that 
apply only because of and in function of the composition of the product, namely biofuel. As a result, 
the Panel need not further address Malaysia's alternative argument that the high ILUC -risk cap and 
phase-out lays down related processes and production methods. Indonesia also agrees with Malaysia 
that, in determining whether a measure constitutes a technical regulation, it is irrelevant whether 
or not these measures prevent the products concerned to enter the EU market. Indonesia further 
submits that no condition may apply that would effectively place the burden on the complainant to 
show how a measure affects trade , to demonstrate that that measure is a technical regulation.  
16. Second, assuming the Panel  would disagree that the high ILUC -risk cap and phase -out lays 
down a product characteristic, the Panel would need to consider Malaysia's alternative argument. In 
particular, Malaysia appears to argue that even where a process and production method does no t 
alter the physical  characteristics of the product concerned, it can still be "related" to other 
characteristics of that product. Indonesia submits that the available case -law signals that the term 
"product characteristics" is to be given a broad meaning and is not strictly limited to physical 
characteristics of a product. If the Panel would identify a process and production method and agree 
with this interpretation of the term "product characteristics", the Panel could consider that there 
exists a suffici ent nexus because the high ILUC -risk cap and phase -out determines whether biofuel 
may be used based on the manner of production of palm oil, which is alleged to have a link with the 
GHG emissions related to that production of that product and the biofuel m ade from it.  
B. Low ILUC -risk certification is a conformity assessment procedure that is incomplete  
17. The high ILUC -risk cap and phase -out and the 7  % limitation in Article 26 of RED II are 
technical regulations. The first technical regulation limits and  eventually excludes from the EU 
market oil palm crop -based biofuel because of its composition, namely because it contains palm oil. 
Oil palm crop -based biofuel made from (solely) additional yield of oil palm can be exempted from 
that measure, and thus bec ome eligible to be used for the 7% limitation (the second technical 
regulation), provided that the criteria in Articles 4 and 5 of the Delegated Regulation are fulfilled and 
positive assurance of conformity is established. Certification is the mandatory pr ocedure to be used 
for this purpose. The conformity assessment procedure at issue remains incomplete and, contrary 
to what the European Union argues, no low ILUC -risk certification can be obtained.  
V. THE LEGAL STANDARD UNDER ARTICLE 2.1 OF THE TBT AGREEME NT 
18. Indonesia considers that the legal standard to be applied when assessing the measures at 
issue under Article 2.1 of the TBT Agreement and Article III:4 of the GATT 1994 is not exactly the 
same. In particular, unlike what is the case under Article 2.1 of th e TBT Agreement there is no need, 
for the purpose of Article III:4 of the GATT 1994, to assess whether a detrimental impact on 
competitive opportunities of like imported products stems exclusively from a legitimate regulatory 
distinction. The European Unio n's argument that, under Article 2.1 (similar to Article III:4), a 
measure does not accord "less favourable treatment" if it modifies conditions of competition for 
reasons other than origin has been previously rejected by the Appellate Body in US – Clove 
Cigarettes  and US – Tuna II (Mexico) . Indonesia submits that there are no grounds to revisit the WT/DS600/R/Add.1  
 
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  well-established interpretation of the no less favourable treatment standards under Article 2.1 of the 
TBT Agreement and Article III:4 of the GATT 1994.  
19. Indonesia also submits that the essence of the legitimate regulatory distinction test under 
Article 2.1 is that, where a technical regulation has a detrimental effect on the conditions of 
competition for imported products in the market, it is appropriate for protecting the right of each 
WTO Member to regulate, to verify whether that detrimental impact nonetheless exclusively stems  
from a legitimate regulatory distinction applied in an even -handed manner. In other words, a 
detrimental impact on conditions of co mpetition that cannot be entirely explained  on the basis of the 
alleged legitimate regulatory distinction must be eliminated. The European Union appears to read 
the test under Article 2.2 into Article 2.1, and essentially merges the two tests. Indonesia di sagrees 
with this approach. Under Article 2.1 of the TBT Agreement, even -handedness is the central concept. 
As part of the examination of the even -handedness of the measure , a panel may consider the 
objective of the measure . Even where the objective is con sidered legitimate within the meaning of 
Article 2.2 of the TBT Agreement, it is not determinative of the issue of the legitimacy of the 
regulatory distinction. In the present case, the lack of a coherent and objective explanation of the 
distinctions made by the European Union, without necessarily examining in great detail the alleged 
objective(s) of these measures, provides a very strong indication that the measures at issue are not 
even-handed within the meaning of Article 2.1 of the TBT Agreement.  
VI. THE SCOPE OF APPLICATION OF ARTICLE XI:1 OF THE GATT 1994 AND THE 
RESTRICTIONS ON IMPORTS OF PALM OIL INTO THE EUROPEAN UNION  
20. Putting aside the need for the Panel to be mindful of the important differences between 
Malaysia's case under Article XI:1 in t hese proceedings and Indonesia's case in DS593, Indonesia 
submits that where an internal measure is the measure through which a WTO Member makes 
effective a prohibition or restriction on importation of a product that is not and cannot be produced  
domestica lly, it falls within the scope of Article XI:1. First, previous WTO panels have recognised 
that "there may be circumstances in which specific measures may have a range of effects" and that 
"[i]n appropriate circumstances they may have an impact both in rel ation to the conditions of 
importation of a product and in respect of the competitive conditions of imported products on the 
internal market within the meaning of Article III:4". Second, it is also not disputed that, as confirmed 
by WTO case law, a Member' s measure may have aspects falling within the scope of Article XI and 
other aspects falling within the scope of Article III and that particular circumstances may justify 
applying both Article III and Article XI to the same measure. Such particular circumst ances exist in 
the present case, given that palm oil cannot be produced domestically and is exclusively imported  
into the European Union.  
21. Indonesia disagrees with the European Union that the fact that palm oil is imported also for 
other uses is a relev ant consideration under Article XI:1. Indonesia submits that the fact that palm 
oil will no longer be imported for use in the biofuel sector , as a result of the high ILUC -risk cap and 
phase -out, is sufficient to establish a breach of Article XI:1. In the p resent case, evidence shows 
that the high ILUC -risk cap and phase -out will lead "to lower net imports of palm oil into the EU".  
VII. THE EUROPEAN UNION'S DEFENCES OF THE MEASURES AT ISSUE MUST FAIL  
22. Indonesia submits that where a WTO Member relies on m ore than one paragraph of Article XX 
of the GATT 1994, it must meet the burden of proof in respect of each of the paragraphs and the 
chapeau taking into account the paragraph on which it has relied. In past cases, a respondent has 
sometimes argued that a m easure is justified under, for example, both paragraphs (b) and (g). In 
those cases, panels separately considered each defence.  
23. The European Union asks the Panel to carry out a single assessment under paragraphs (a), 
(b) and (g) of Article XX because t he same test for scrutinising the required nexus between the 
measures and their objective(s) applies under each paragraph. Indonesia objects to this 
interpretation. The text of the various paragraphs of Article XX of the GATT 1994 uses different 
terms to e xplain the required connection between a measure and the different legitimate objectives 
recognised under Article XX. Moreover, the European Union's position is not based on a proper 
interpretation of the ordinary meaning to be given to the phrase "necessa ry to" in its context and in 
the light of its object and purpose. It is the European Union's strategy in this dispute that causes 
concerns about circumvention of the conditions under Article XX. The European Union is also wrong WT/DS600/R/Add.1  
 
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  to pretend that the meaning of "necessary" and "relating to" has been conflated in the case -law, as 
evidenced by the fact that the Appellate Body has considered other actions that could have been 
taken under the chapeau. In sum, necessity includes an assessment of whether a different  measure 
could have been taken whereas the chapeau focuses on whether the measure taken could have been 
applied differently. These tests should not be conflated.  
24. The European Union argues that there is no explicit or implicit territorial limitation in Article  XX 
and that, because climate change and biodiversity are global phenomena, each Member has a 
legitimate interest in fighting climate change so as to preserve predictable weather patterns and 
biodiversity. Indonesia submits that the Panel need not t ake a general position on whether or not 
there is a territorial or jurisdictional limitation in Article XX of the GATT 1994 or Article 2.2 of the 
TBT Agreement. Instead, this question must be considered in the context of the specific objectives 
on which th e European Union relies in these proceedings. Moreover, in the context of Article XX of 
the GATT 1994, the question must be addressed in respect of the specific paragraphs of Article XX 
invoked by the European Union. Each of those paragraphs must be interp reted based on its ordinary 
meaning read within its context and in light of the object and purpose of Article XX of the GATT 1994 
and taking into account other principles of treaty interpretation in international law. Relevant rules 
of international law re cognise that it is for each WTO Member to account for the GHG emissions and 
removals taking place within its own territory and to act for the protection of the natural resources 
in its territory. As international law stands today, the concept of common con cerns of humankind 
invoked by the European Union cannot be resolved by States acting independently and instead 
require cooperation. It is the exact opposite of unilateral uncoordinated actions directed at such 
concerns.  
25. It is for the Panel to make an independent and objective assessment of the objective(s) of the 
measure and consider all the evidence presented to it. The protectionist objective of  the high ILUC -
risk cap and phase -out, as well as the 7 % limitation, is demonstrated by, considering toget her, 
evidence relating to: (i) the European Union's history of seeking to limit imports of oil palm crop -
based biofuel, inter alia through illegal trade barriers, (ii) the measure's legislative history and the 
stated intentions of the European Parliament, (iii) the design and structure of the measures, and 
(iv) the measures taken to preserve market access for important EU trading partners exporting 
soybean products.  
26. Indonesia also agrees with Malaysia that the measures do not seek to address biodiversit y 
loss and protect EU public morals. The general description of the legitimacy of the European Union's 
policy objectives bears no connection with the 7 % limitation nor the high ILUC -risk cap and phase -
out. In particular, the European Union has not demonst rated that the high ILUC -risk cap and phase -
out is designed to protect human, animal or plant life or health from risks that might result from 
biodiversity loss, nor if or how the measures act to protect EU public morals . In fact,  the high ILUC -
risk cap and phase -out, taking into account the criteria for determining high ILUC -risk feedstock and 
the criteria for certifying low ILUC -risk, does not even take into account that a carbon -rich area can 
be also non -biodiverse. Finally, the  European Union has not established the content of the EU public 
morals on which it relies. Nothing in the text of RED II refers to the protection of EU public morals.  WT/DS600/R/Add.1  
 
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  ANNEX  C-8 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF JAPAN  
I. INTRODUCTION  
1. Japan welcomes the opportunity to present its views as a third party in this dispute. Japan is 
participating in this dispute because of its systemic interest in the correct and consistent 
interpretation and implementation of the Agreement o n Technical Barriers to Trade ("TBT 
Agreement"), the General Agreement on Tariffs and Trade 1994 ("GATT 1994"), and the Agreement 
of Subsidies and Countervailing Measures ("SCM Agreement"). Japan does not take a specific 
position on the particular facts pr esented by the parties.  
II. RELATED PPMS ARE THOSE THAT RELATE TO PRODUCT CHARACTERISTICS  
2. The term "related processes and production methods" in the first sentence of Annex 1.1 of 
the TBT Agreement must be understood to refer to processes and production  methods ("PPMs") that 
relate to product characteristics. The term "related" establishes a nexus between the PPMs and the 
product characteristics. Only PPMs that relate to characteristics of the product are covered by the 
term "related processes and produc tion methods". As confirmed in EC – Seal Products , related PPMs 
must have a sufficient nexus to the characteristics of a product.1 Moreover, the Panel should consider 
to what extent the second sentence of Annex  1.1 would be necessary if all PPMs were allo wed to fall 
under the first sentence of Annex 1.1. This is because terminology, symbols, packaging, marking, 
or labelling requirements applicable to a process or production method would already be covered by 
the first sentence of Annex 1.1.  
3. If the Panel  ultimately finds that the challenged measures do not prescribe PPMs or that, if 
they do, such PPMs do not have a sufficient nexus to the characteristics of the biofuels or feedstocks, 
it would have to conclude that the measures do not lay down "related pr ocesses and production 
methods".  
III. THE ASSESSMENT OF THE LEGITIMACY OF THE REGULATORY DISTINCTION UNDER 
ARTICLE 2.1 OF THE TBT AGREEMENT  
4. The assessment under the two -step test2 for Article 2.1 of the TBT Agreement includes 
consideration of the legit imacy of the regulatory distinction drawn by the technical regulation. In 
articulating this test, the Appellate Body has consistently referred to regulatory distinctions that are 
"legitimate". This requirement is consistent with Article 2.2, which refers t o "legitimate objectives". 
It is also consistent with the Preamble of the TBT Agreement, which provides context for the 
interpretation of Article  2.1. The object and purpose of the TBT Agreement, which is to strike a 
balance between the objective of trade liberalization and Member's right to regulate,3 further 
supports that the regulatory distinction under the two -step test should be "legitimate".  
5. If Article 2.1 did not require an assessment on the legitimacy of the regulatory distinctions, 
Members coul d adopt regulatory distinctions for arbitrary reasons, such as to protect their domestic 
industry. As a result, technical regulations which draw arbitrary distinctions between imported 
products and the like products of national origin could evade the disci plines of Article 2.1. That would 
be an unreasonable outcome.  
6. Therefore, in applying the two -step test for less favourable treatment, panels may examine 
whether the objectives pursued by the regulatory distinctions drawn by the technical regulation are 
legitimate, particularly where the legitimacy is contested by the complainant.  
 
1 Appellate Body Reports, EC – Seal Products , para. 5.12.  
2 Appellate Body Report, US – Clove Cigarettes , paras. 166 -182. 
3 Appellate Body Report, US – Clove Cigarettes , para. 174.  WT/DS600/R/Add.1  
 
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  IV. FACTORS TO BE TAKEN INTO CONSIDERATION IN EXAMINING WHETHER A 
TECHNICAL REGULATION ACCORDS "LESS FAVOURABLE" TREATMENT UNDER 
ARTICLE 2.1 OF THE TBT AGREEMENT  
7. Article 2.1 of the TBT Agreement prohibits WTO Members from imposing technical regulations 
that accord to imported products less favourable treatment than that accorded to like domestic 
products or like products from other countries. The parties agree that, for purpos es of determining 
whether the EU measure accords less favourable treatment to palm oil biofuels from Malaysian 
origin, the Panel should follow the two -step test articulated by the Appellate Body in US – Clove 
Cigarettes . Under this test, the Panel first mu st determine whether the challenged technical 
regulation modifies the conditions of competition to the detriment of the imported product vis -á-vis 
the like products of domestic origin or originating in any other country. If the Panel answers this 
question in the affirmative, the Panel must then "further analyze" whether any detrimental impact 
stems exclusively from a legitimate regulatory distinction. In making this assessment, the Panel 
"must carefully scrutinize the particular circumstances of the case, t hat is, the design, architecture, 
revealing structure, operation, and application of the technical regulation at issue".4 Japan agrees 
with this approach.  
8. Malaysia contests the legitimacy of the regulatory distinction drawn by the EU measure (i.e., 
high ILUC -risk), arguing that ILUC cannot be observed or measured, and additionally argues that 
the measures at issue are designed and applied in a manner that constitutes arbitrary and 
unjustifiable discrimination.5 Japan is aware that the Appellate Body st ated that "[i]f we determine 
that the regulatory distinctions … are designed or applied in a manner that constitutes arbitrary or 
unjustifiable discrimination, those distinctions cannot be considered 'legitimate'". 6 In Japan's view, 
the key factor on whi ch a panel should focus when assessing less favourable treatment is whether 
there is a reasonable connection between the objective circumstances of the measure and its policy 
objectives. Japan will therefore focus on Malaysia's arguments on the nexus betwe en the regulatory 
distinction found in the measure and the measure's policy objectives.  
9. Japan recalls that the Appellate Body stated that the assessment of whether the detrimental 
impact stems exclusively from a legitimate regulatory distinction is "lik ely [to] involve[] 
consideration of the nexus between the regulatory distinctions found in the measure and the 
measure's policy objectives"7, although "consideration of other factors … may also be relevant to the 
analysis". 8 As Malaysia recognizes in its submission, the actual trade effects on certain countries 
resulting from imposition of the measure are not one of the "other factors" to be considered. 9While 
there could be circumstances where the products subject to the re gulatory measure at issue are 
imported mostly from a certain country or countries, such disproportionate impact as a result of the 
measure must not be a basis of the analysis in the second step of the test and the discrimination 
must not be inferred from t he trade effects.  
10. In light of the above, if the Panel agrees that the challenged measure is a "technical 
regulation", Japan requests the Panel to carefully scrutinize the relationship between the objective 
circumstances, including the design, architect ure, revealing structure, operation, and application of 
the technical regulation at issue and its policy objectives.  
11. In addition to this point, Japan wishes to address the factors that should be considered when 
determining whether "less favourable" tre atment has been accorded. Japan recalls that, to 
determine whether the U.S. measure was "even -handed" in US – Tuna II (Mexico) , the Appellate 
Body considered whether the different labelling conditions were "calibrated" to the risks to dolphins, 
even if it accepted that the fishing technique the measure was designed to combat "is particularly 
harmful to dolphins".10 Subsequently, the Appellate Body in US – Tuna II (Mexico) (Article 21.5 – 
US) / US – Tuna II (Mexico) (Article 21.5 – Mexico II)  explained that  "calibration is the means  to 
assess whether the detrimental impact of the measure at issue in this dispute stems exclusively 
 
4 Appellate Body Report, US – Clove Cigarettes , paras. 166 -182. (in particular, para. 182)  
5 Malaysia's first written submission, paras. 575 -576 and 583.  
6 Appellate Body Reports, US – COOL , para. 340. 
7 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico) , para. 7.97.  
8 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – Mexico) , para. 7.95.  
9 Malaysia's first written submission, para. 562.  
10 Appellate Body Report, US – Tuna II (Mexico) , para. 297. WT/DS600/R/Add.1  
 
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  from a legitimate regulatory distinction…"11 The calibration analysis should consider the rational 
relationship between the regul atory distinctions and the objectives of a measure; if calibrated 
properly, the regulatory distinctions "will not amount to arbitrary or unjustifiable discrimination…"12 
12. Thus, the key factor for the Panel to consider is whether there is a rational connection between 
regulatory distinctions drawn by the measure (taking into account the measure's design, structure, 
and operation), on the one hand, and the policy objectives of the measure, on the other. For 
measures concerning environmental pr otection, this analysis should take into account various 
relevant factors, such as the circumstances of each country, as the situation may differ depending 
on where, what, and how products are made. In this connection, Japan wishes to stress that this 
assessment should be firmly based on objective factors and evidence, including the design, 
structure, and operation of the measure, and not on the subjective intent of the Member  imposing 
the measure . 
V. ARTICLE 2.2 DOES NOT ALLOW THE REGULATING MEMBER TO OFFS ET THE TRADE -
RESTRICTIVE EFFECTS ON IMPORTS FROM SOME MEMBERS AGAINST ANY TRADE -
ENHANCING EFFECT ON IMPORTS FROM OTHER MEMBERS  
13. In general, the assessment of trade restrictiveness for purposes of Article 2.2 should begin 
with the objective structure of the measures and only in limited circumstances has relevance been 
given to the trade effect. The Appellate Body clarified that "a detrimental modification of competitive 
opportunities may be self -evident in respect of certain de jure  discriminatory measure s, whereas 
supporting evidence and argumentation of actual trade effects might be required to demonstrate 
the existence and extent of trade -restrictiveness in respect of non -discriminatory internal measures 
that address a legitimate objective".13 This is because trade effects will vary depending on market 
conditions. Moreover, as noted in Australia – Tobacco Plain Packaging , "it will not always be possible 
to quantify a particular factor analysed under Article 2.2, or to do so with precision".14 
14. If a measure is trade restrictive with regard to products imported from some Members, that 
trade restrictiveness is not offset by any trade enhancing effects on the products imported from 
some other Members. The obligation of Article 2.2 is owed to each WTO Mem ber and applies in 
respect of products imported from each WTO Member. This position is consistent with the approach 
taken in Australia – Tobacco Plain Packaging . Those panels found that "the 'trade restrictiveness' of 
a technical regulation need not be ass essed only on the basis of the effect of the measure on trade 
between all WTO Members, in all products  that are the subject of the technical regulation".15 Instead, 
they considered that a Member could demonstrate the existence of a trade restriction on a particular 
product in which it trades, even if the trade of other Member(s) has increased.  
VI. ARTICLE XX OF THE GATT 1994  
15. A question was raised in this case about the similarities and differences between the legal 
tests implicated by the term "necessa ry" in subparagraphs (a) and (b) of Article XX of the GATT 
1994, and the terms "relate to"[sic] in subparagraph (g) of the same provision.  
16. First of all, Japan believes that the legal tests should be deduced from the interpretation based 
on the ordinary  meaning of the terms of the provisions in accordance with the Vienna Convention 
on the Law of Treaties, and that categorizing and comparing the terms solely in the light of their 
function is not productive.  
17. While the "necessary" and "relate to" tests both have in common that they have the function 
of distinguishing measures that may be justified under Article XX of the GATT 1994, the two concepts 
are distinct. Therefore, subparagraphs (a) and (b) of Article XX, on the one hand, and subparagraph 
(g), on  the other hand, should be interpreted as requiring a different relationship between the policy 
 
11 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – US) /US – Tuna II (Mexico) (Article 21.5 
– Mexico II) , para. 6.13.  
12 Appellate Body Report, US – Tuna II (Mexico) (Article 21.5 – US) /US – Tuna II (Mexico) (Article 21.5 
– Mexico II) , para. 6.13. 
13 Appellate Body Reports, US – COOL (Article 21.5 – Canada and Mexico) , footnote 643 to para. 5.208. 
(original emphasis)  
14 Panel Reports, Australia – Tobacco Plain Packaging , para. 7.1076.  
15 Panel Reports, Australia – Tobacco Plain Packaging , para 7. 1088. (original emphasis)  WT/DS600/R/Add.1  
 
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  objective and the measure sought to be justified. Indeed, in US – Gasoline , the Appellate Body 
observed that "[i]t does not seem reasonable to suppose that the WTO Members intended to require, 
in respect of each and every category, the same kind or degree of connection or relationship between 
the measure under appraisal and the state interest or policy sought to be promoted or realized ".16 
18. Subparagraph (g) of Article XX uses the terms "relate to, " which ordinarily means "to have 
some connection with, "17 and its meaning has been construed by the Appellate Body.18 On the other 
hand, the assessment of "necessity " involves a weighing and balan cing a series of factors, including 
the importance of the societal interest or value at stake, the contribution of the measure to the 
objective it pursues, and the trade -restrictiveness of the measure.  
19. While there may be some overlap in the factors ana lysed and the outcome of the assessment 
may be similar in certain cases, the two tests are not identical. Therefore, Japan is of the view that 
the Panel is invited to examine the grounds of justification by each subparagraph of Article XX, 
including the ne xus between the measure at issue and the interest pursued therein, separately based 
on specific argument and evidence for each case.  
VII. REVENUE FOREGONE THAT IS OTHERWISE DUE UNDER ARTICLE  1.1(A)(1)(II) OF 
THE SCM AGREEMENT  
20. Prior panel and Appellate Body reports have found that exempting certain industrialized 
products from generally applicable taxes, provided that certain conditions are satisfied, constitutes 
a financial contribution. For example, in Canada – Autos , the panel and the Appellate Body 
considered a measure that exempted motor vehicles from import duties, when imported into Canada 
by car manufacturers that fulfilled certain conditions, such as a "ratio requirement" to domestically 
produce a certain minimum ratio of motor vehicles sold in C anada, as well as a Canadian value -
added ("CVA") requirement to maintain or decrease the prior year's level of domestic value added 
in the production of motor vehicles.19 The Appellate Body found that this conditional exemption from 
import taxes constitut ed a financial contribution within the meaning of Article 1 of the SCM 
Agreement, stating:  
… Canada has established a normal MFN duty rate for imports of motor vehicles of 
6.1 per cent. Absent the import duty exemption, this duty would be paid on imports 
of motor vehicles. Thus, through the measure in dispute, the Government of Canada 
has, in the words of United States – FSC, "given up an entitlement to raise revenue 
that it could 'otherwise' have raised." More specifically, through the import duty 
exemptio n, Canada has ignored the "defined, normative benchmark" that it 
established for itself for import duties on motor vehicles under its normal MFN rate 
and, in so doing, has foregone "government revenue that is otherwise due".20 
21. Thus, if a tax that othe rwise is due is foregone if certain domestic production and/or value -
added targets are met, this constitutes a financial contribution by a government within the meaning 
of Article 1.  
22. In a subsequent dispute, the Appellate Body set out the following thr ee analytical steps when 
comparing between the tax treatment that applies to the alleged subsidy recipients and the tax 
treatment of comparable income of comparably situated taxpayers: (1) Identify the tax treatment 
that applies to the income of the allege d recipients; (2) Identify a benchmark for comparison – that 
is, the tax treatment of comparable income of comparably situated taxpayers; and (3) Compare the 
reasons for the challenged tax treatment with the benchmark tax treatment identified after 
scrutin izing a Member's tax regime.21 
 
16 Appellate Body Report, US – Gasoline , p. 17.  
17 Oxford English Dictionary, www.oed.com, "relating [to]", verb, meaning 6.a.  
18 Appellate Body Reports, China – Rare Earths , para. 5.90 ("for a measure to 'relate to' conservation in 
the sense of Article XX(g), there must be 'a close and genuine relationship of ends and means' between that 
measure and the conservation objective of the Member maintaining the measure.").  
19 See Appellate Body Report, Canada – Autos , para. 9.  
20 Appell ate Body Report, Canada – Autos , para. 91. (footnotes omitted)  
21 Appellate Body Report, US – Large Civil Aircraft (2nd complaint) , paras. 811 -814. WT/DS600/R/Add.1  
 
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  VIII.  FACTORS TO BE TAKEN INTO CONSIDERATION IN EXAMINING THE EFFECTS OF 
SUBSIDIES UNDER ARTICLES 5 AND 6.3 OF THE SCM AGREEMENT  
23. Malaysia claims that the French fuel tax reduction is an actionable subsidy within the meaning 
of Article 5(c) of the SCM Agreement. In particular, Malaysia argues that the effect of the French 
fuel tax reduction is significant lost sales of palm oil as a biofuel feedstock, as well as of oil palm 
crop-based biofuel from Malaysia within the m eaning of Article 6.3(c) of the SCM Agreement.22 The 
EU argues that the French measure is neither a subsidy nor is it specific under Article 2 of the SCM 
Agreement and, moreover, Malaysia has failed to demonstrate that the measure has caused adverse 
effects on Malaysia in the form of serious prejudice to its interests within the meaning of Articles 
6.3(a) and 6.3(c) of the SCM Agreement.23 
24. Japan requests the Panel to consider the nature, design and operation of the subsidy at issue 
when examining the effect of subsidy. The Appellate Body has repeatedly emphasized the relevance 
of the nature of the subsidies for the analysis of causation. For example:  
• In US – Upland Cotton , the Appellate Body stressed in an operative passage that "[t]he 
nature of a su bsidy plays an important role in any analysis of whether the effect of the 
subsidy is significant price suppression under Article 6.3(c)".24 
• In EC – Large Civil Aircraft , the Appellate Body held that in order to determine whether the 
effect of the subsi dy is one of the situations expressed in Article 6.3 of the SCM Agreement:  
The appropriateness of a particular method may have to be determined on a 
case-specific basis, depending on a number of factors and factual circumstances 
such as the nature, design,  and operation of the subsidies at issue, the alleged 
market phenomena, and the extent to which the subsidies are provided in 
relation to a particular product or products, among others.25 
25. The relevance of the nature, design, and operation of subsidies  may be illustrated with the 
following examples. Japan believes that where certain subsidies have positive effects not only on 
the recipients, but also on any private entity in the relevant industry, such subsidies may be found 
not to cause serious prejudi ce depending on factual circumstances, including their "nature" as shown 
in the  US – Upland Cotton case. For example, research and development activities by a business 
enterprise are likely to generate technological spill -over effect in the relevant indust ry or in other 
industries. Subsidies to such activities to recompense such spill -over effect will help achieve the 
optimal level of the activities. Such subsidies ensure, rather than harm, the proper functioning of 
the competitive market.  
26. On the contra ry, if evidence shows that actors need not act based on commercial 
considerations due to subsidies they receive, it would provide a strong indication that the conditions 
of competition in the market are distorted, and, thus, may be found to have adverse ef fect. 
27. Thus, the Panel should consider the nature, design, and operation of the French fuel tax 
reduction when considering the effect of the subsidy and, in particular, in determining whether the 
effect of the challenged subsidy is significant  lost sale s within the meaning of Article 6.3(c) of the 
SCM Agreement.  
IX. CONCLUSION  
28. Japan hopes that its contribution to the present dispute is helpful to the Panel in its assessment 
of the matter before it and in developing legal interpretations of the releva nt provisions of the TBT 
Agreement, GATT 1994 and the SCM Agreement.  
 
22 Malaysia's first written submission, para. 1167.  
23 EU's first written submission, paras. 1677-1679.  
24 Appellate Body Report, US – Upland Cotton , para. 450.  
25 Appellate Body Report, EC and certain member States – Large Civil Aircraft , para. 1376.  WT/DS600/R/Add.1  
 
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  ANNEX  C-9 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE REPUBLIC OF KOREA* 
I. Introduction  
1. Mr. Chairperson and distinguished Members of the Panel, the Republic of Korea ( "Korea ") 
appreciates the opportunity to participate as a third party in this dispute and to present its views to 
the Panel.  
2. Before Korea 's oral statement in this dispute, Kor ea would like to express deep concern on 
Ukraine 's inability to fully participate in the WTO dispute settlement system, including as a third 
party. The Korean government joins others in strongly condemning Russia 's armed invasion against 
Ukraine as a viola tion of principles of the UN Charter and international law. The use of force that 
causes innocent casualties cannot be justified under any circumstances. Ukraine 's sovereignty, 
territorial integrity and independence should be respected. We also share deep concerns the 
international community has over the unfolding humanitarian situation in Ukraine.  
3. Now, I 'll turn to Korea 's statement. Korea intervenes as a third party because of its systemic 
interest in the correct interpretation of the provisions of th e WTO agreements at issue in this dispute.  
4. In today 's statement, Korea will address the issues concerning  the Article 2.2 of the TBT 
Agreement . However, we would like to emphasize that Korea will limit itself to commenting on legal 
issues and does  not take a position on the overall dispute between Malaysia and the European Union.  
II. Article 2.2 of the TBT Agreement  
5. Malaysia asserts that certain EU measures are inconsistent with Article 2.2 of the TBT 
Agreement in that: (i) the 7% limit, the high Ind irect Land -use Change ( "ILUC") - risk cap and the 
high ILUC -risk phase -out are "technical regulations "; (ii) these measures are trade -restrictive; (iii) 
they fulfill their alleged objectives to an extent that is very difficult, if not impossible, to determ ine, 
and is, any case quite limited; and (iv) finally, in any case, they are "more trade -restrictive than 
necessary ". 1 
6. The European Union submits that even if the Panel found that the measures at issue are 
technical regulations, Malaysia 's claim under  Article 2.2 of TBT Agreement fails because the 
measures at issue pursue legitimate objectives and they are not more trade restrictive than 
necessary.2 
7. Prior panels have found that (i) whether the measures at issue pursue the legitimate objective 
and ( ii) whether they are not more trade -restrictive than necessary (i.e., the necessity test) should 
be considered in assessing the inconsistency with Article 2.2.3 Korea will discuss them one by one.  
8. With regard to legitimate objectives , Korea notes that the Panel should firstly identify the 
objective pursued by a measure put forth by the Member, and determine whether such objective is 
"legitimate" thereafter.4 
9. In this connection, Korea concurs with Malaysia and the EU5 that the Panel  should 
"independently and objectively assess " the objective pursued by the challenged measures, while the 
Member 's characterization of the objective can still be a starting point.6 In conducting such 
 
* The Republic of Korea requested that its oral statement serves as its executive summary.  
1 Malaysia's FWS, para. 591.  
2 EU's FWS, paras. 770-771. 
3 Panel Report, US – Clove Cigarettes , para. 7.133; Panel Report, US – Tuna II (Mexico) , para. 7.387.  
4 Appellate Body Report,  US - Tuna II (Mexico) , para. 314; Appellate Body Report, US - COOL , paras. 
371-372. 
5 EU's FWS, paras. 776, 790; Malaysia's FWS, para. 600.  
6 Appellate Body Report, US – Tuna II (Mexico ), para.314; Appellate Body Report, US-COOL , paras. 
371-372. WT/DS600/R/Add.1  
 
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  independent and objective assessment, the Panel may ta ke into account the texts of statutes, 
legislative history, and other evidence regarding the structure and operation of the measure at 
issue.7 
10.  In US- Tuna II (Mexico ), the Appellate Body explained that the meaning of the term 
"legitimate objective " is an aim or target that is lawful, justifiable or proper.8 In this respect, Korea  
notes that Article 2.2 of the TBT Agreement contains a list of "legitimate objectives " and provides 
examples thereof, such as national security requirements; the prevention of deceptive practices; 
protection of human health or safety, animal or plant life or health, or the environment.  
11. Korea understands that the use of "inter alia " in the Article 2.2 indicates that the list of 
examples is non -exhaustive and thereby provi des a reference point for other objectives that may be 
considered.9 Further, the objectives recognized in the provisions of other covered agreements may 
provide guidance for, or may inform, the analysis of what might be considered to be a legitimate 
objec tive under Article 2.2 of the TBT Agreement.10  
12. In this regard, Korea recalls that Article 2.2 of the TBT Agreement provides guidance on how 
to interpret Article 2.1 .11 Specifically, a "legitimate objective " under Article 2.2 will be considered 
when the de facto  discrimination is discussed and the legitimate regulatory distinction ( "LRD") test 
is assessed under Article 2.1 of the TBT Agreement. 12 
13. This is because, in assessing the LRD test by way of dete rmining the "less favorable 
treatment ", the Panel must base its determination on the totality of facts and circumstances before 
it, including the design, architecture, revealing structure, operation and application of the technical 
regulation at issue.13  Lastly, the reviewing body asks if the regulatory distinction at issue is being 
implemented in a legitimate manner considering the objective sought.14  The legitimate objective in 
the context of Article 2.2 plays a role here.  
14. Next, Korea addresses  the second issue pertaining to the necessity test, which is the 
assessment of "not more trade -restrictive than necessary ". When discerning unnecessary obstacles 
to international trade under Article 2.2 of the TBT Agreement, the following three factors hav e been 
considered in prior cases to determine whether a technical regulation is "more trade -restrictive than 
necessary ":  
(i) the degree of contribution made by the measure to the legitimate objective at issue;  
(ii) the trade -restrictiveness of the measur e; and  
(iii) the nature of the risks at issue and the gravity of consequences that would arise from 
non-fulfilment of the objective(s) pursued by the Member through the measure. 15 
15. In most cases, a comparison of the challenged measures and possible a lternative measures 
should be undertaken.16 In the spirit of consistent application of the TBT Agreement, Korea 
understands that the Panel should carefully consider whether the proposed alternatives "would make 
an equivalent contribution to the relevant l egitimate objective, taking  account of the risks that non -
fulfillment would create, and whether it is reasonably available ". 17 
 
7 Appellate Body Report, US – Tuna II (Mexico ), para.314; Appellate Body Report, US-COOL , para. 395.  
8 Appellate Body Report, US – Tuna II (Mexico ), para.313.  
9 Appellate Body Report, US – Tuna II (Mexico ), para.313.  
10 Appellate Body Report, US – Tuna II (Mexico),  para. 313.  
11 Appellate Body Report, US - Tuna II (Mexico) , para. 212.  
12 Appellate Body Report, US - Tuna II (Mexico) , para. 212. 
13 Appellate Body Report, US - Tuna II (Mexico) , paras. 216, 347 -350. 
14 Appellate Body Report, US - Clove Cigarettes , para. 225; Appellate  Body Reports, US – COOL , para. 
349. 
15 Appellate Body Report, US - Tuna II (Mexico) , para. 322; Appellate Body Reports, US - COOL , para. 
471. 
16 Appellate Body Report, US – Tuna II (Mexico),  para. 322. 
17 Appellate Body Report, US – Tuna II (Mexico),  para. 322. WT/DS600/R/Add.1  
 
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  III. Conclusion  
16. This concludes Korea 's oral statement. Thank you for your attention.  WT/DS600/R/Add.1  
 
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  ANNEX  C-10 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE RUSSIAN FEDERATION* 
Introduction  
1. Thank you for providing an opportunity for the Russian Federation to present its views in this 
dispute. We emphasize that we will not take any specific position conc erning particular factual 
aspects of the case and we will limit our intervention solely to certain interpretative issues 
concerning Article XX of the GATT 1994.  
2. First, we would like to address the EU's threshold argument on cumulative justification und er 
Article XX (a), (b) and (g) of the GATT 1994. Second, we will touch upon the relevant and 
appropriate legal tests under each of the invoked subparagraphs of Article XX of the GATT 1994. 
Finally, we will close with the views on territorial limitation in Article XX of the GATT 1994.   
Certain aspects of the EU's interpretation of Article XX of the GATT 1994  
3. The EU in this dispute concurrently relies on three subparagraphs of the GATT general 
exceptions and claims that the measures at issue are "cumulat ively justified under Article XX 
(a), (b) and (g) of the GATT 1994".1 It argues that these measures are "part of a comprehensive 
set of policies to address climate breakdown, environmental protection and biodiversity 
collapse, and to protect public morals  in the European Union"2. According to the EU, such 
composite objectives are closely intertwined and, therefore, the Panel shall proceed with a single 
analysis.  
4. In the view of the Russian Federation, such approach is neither in line with the letter and the 
spirit of Article XX of the GATT 1994 nor with the well -established WTO jurisprudence.   
5. The claims in this dispute are relatively straightforward. Malaysia does not contest the overall 
environmental policy (the whole EU Biofuels Regime) stipulated by the EU, but specific separate 
measures. Each of these measures shall be assessed individually in accordance with the Panel's 
terms of reference. The fact that su ch measures might be taken in the context of certain national 
policy regime is not determinative for its assessment. Therefore, the Panel shall not extend its 
analysis beyond the measures provided in the request for establishment of the panel as urged 
by the complainant.  
6. It was the task of the EU to establish whether each measure at issue falls within the scope of 
one or another subparagraph of Article XX of the GATT 1994 and may be deemed justified. 
However, the so -called "three -pillar exceptions" appr oach does not expose the due relationship 
between each contested measure and the concrete objective it protects. Nevertheless, Russia 
does not exclude the possibility that a measure can address multiple objectives. In this case we 
believe that the defendin g Member shall separately establish and substantiate the relationship 
between the measure and each of the objectives pursued.    
7. However, in this dispute the EU engages in extensive discussions on correlation of 
subparagraphs of Article XX of the GATT 1 994. The EU, in particular, believes that protection of 
human, animal or plant life or health (Article XX(b)) and conservation of exhaustible natural 
resources (Article XX(g)) are similar values, and in the absence of subparagraph (g), 
subparagraph (b) wou ld also cover rare and endangered species.3  It believes as well that these 
values are also intertwined with public moral protection, as they "trigger moral concerns".4 
Therefore, according to the EU, "to apply a different intensity test to the same valu es" would 
be strange and misplaced.  This logic put forward by the EU is flawed.  
 
* The Russian Federation requested that its oral statement serves as its executive summary.  
1 Second Written Submission by the EU, paras. 1328 – 1329.  
2 Ibid, para. 1296.  
3 Ibid, paras. 1259 -1264.  
4 Ibid, paras. 1325 – 1333.  WT/DS600/R/Add.1  
 
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  8. The relevant subparagraphs of Article XX of the GATT 1994 provide for different requirements. 
If the EU's "cumulative justification" approach succeeds, it would mean that every measure 
introduced for public morals protection would also protect plant life, for example. It is obviously 
not the case.  
9. Moreover, subparagraphs invoked by the EU contain different types of connection between 
different values protected and the m easure adopted, i.e. "necessity" test for (a) and (b) and 
"relating to" test for (g). This was confirmed by the Appellate Body in US – Gasoline .  It 
concluded explicitly that due to different terms in respect of different categories used in Article 
XX it s eems unreasonable to believe that the same kind or degree of connection or relationship 
between the measure and the state interest or policy sought to be promoted or realized is 
required.5 
10.  According to well -established WTO practice, "necessity" test involves a process of weighing and 
balancing a series of factors, including the extent to which the measure contributes to  the 
realization of the end pursued, the relative importance of the interests at stake, trade -
restrictiveness of the challenged measur e.6  Furthermore, the Appellate Body in Korea – Various 
Measures on Beef  clarified that "necessary" refers closer to "indispensable" than to the opposite 
pole in the continuum, i.e. "making contribution to".7 Thus, "contribution" is a minimum degree 
of necessity test in subparagraphs (a) and (b).  
11.  "Relating to" test requires to establish "a close relationship of ends and means", i.e. to assess 
whether the measure is aimed at  a conservation objective.8   
12.  The EU tried to explain that the tests ar e in essence the same, referring, inter alia , to certain 
explanations of the Appellate Body that in both cases there should be a relationship of ends and 
means between the measure and objective pursued.9  This argument is pointless. Both words 
"necessary to" and "relating to" in fact require "a relationship of ends and means", as they are 
designed to establish a connection between the chapeau and the subparagraphs. However, the 
nature/character of this connection is different based on different meaning of the words used. 
In this regard, Russia relies on the previously cited jurisprudence and the different meaning of 
the words "contributes to" (used for "necessity" test) and "aimed at" (used for "relating to" 
test).  
13.  According to Merriam Webster diction ary, the word "contribute" means "to play a significant 
part in making something happen". Meanwhile, transitive form of the verb "aim" means "to 
direct toward a specified object or goal". In this vein, "necessary to" establishes the kind of 
provision where  the result is determinative, i.e. the measure taken leads to protection of a 
certain kind of policy. While "relating to" argues in favor of a certain degree of intention to 
influence on the final result.  
14. Therefore, it is unclear how the European Unio n arrived at its allegations about no difference 
"in practice" between these two tests.10  
15.  Further, the EU claims that it does not request a "revolutionary leap in case law".11 Meanwhile, 
it de facto asks the Panel to reduce both "necessary to" and "relating to" tests, totally ignoring 
the letter of the Article and to boil down its assessment "to determining whether the measure 
is rational and reasonable  both in its design and its application".12  
16.  In light of the above, Russia believes that there is no reason to conflate the legal standards 
under Article XX of the GATT 1994, the new visio n of the EU on the  Panel's course of action 
has no basis in the text. Therefore, in our opinion, the Panel shall consistently assess each 
 
5 Appellate Body Report, US – Gasoline , pp.17  
6 See, for example, Appellate Body Report, India – Solar Cells , para. 5.59; Appellate Body Reports, 
Colombia – Textiles , paras. 5.67 -5.70; Panel Report, US – Tariff Measures , para. 7.125.  
7 Appellate Body Report,  Korea – Various Measures on Beef , para. 161.  
8 See, for example, Appellate Body Reports, China – Rare Earths , para. 5.90.  
9 Second Written Submission by the EU, para. 1266.  
10 Ibid, para. 1265.  
11 Ibid, para. 1333.  
12 Ibid. paras. 1265 – 1272.  WT/DS600/R/Add.1  
 
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  challenged measure under each subparagraph involved. If a measure, in the whole or in part, 
is inconsistent with subp aragraph under consideration, then the Panel shall proceed with the 
assessment under the next subparagraph on consistency of such inconsistent part, etc. In this 
way, the Panel will sift the measure through the exceptions. If after such exercise every 
meas ure or every part of the measure at issue will be protected by a certain policy objective, 
only then the overall conclusion of its consistency could be made.  
17.  Lastly, Russia would like to briefly comment on the alleged "exterritorial" application of 
Article XX of the GATT 1994.13   
18.  In this regard, we refer to EC – Seals , in which the Appellate Body emphasized the importance 
of determining jurisdictional limitation of Article XX of the GATT 1994 as well as its nature and 
extent.14 Thus, the Appellate Body at minimum considered the option of territorial limitation in 
the said Article. It is logical, as the absence of such limitations creates room for different sorts 
of abuses. Looking beyond the wording of the Article (we agree with  the EU that there is no 
territorial indications in the Article), and guided by the principles of treaty interpretation, as 
provided in VCLT,  the Marrakesh Agreement as a whole and the GATT in particular are not 
designed in a manner to circumvent the Memb ers' rights and obligations. Exceptions provided 
in the Agreements serve to balance between Members' sovereign policies and their right to free 
trade.    
19.  Moreover, it should be noted that even if previous jurisprudence did not explicitly address the 
issue, it provided some useful guidance on this matter. In particular, the Appellate Body in US – 
Shrimp established "a sufficient nexus between the migratory and endangered marine 
populations involved and the United States for purposes of Article XX(g)", a s some of the turtles 
species were known to swim through waters subject to United States' jurisdiction .15 In EC – 
Seals the Appellate Body also established such nexus between the measure and the territory, 
as it pointed out that "EU Seal Regime is designe d to address seal hunting activities occurring 
within and outside the Community ".16  
20.  Thus, in light of the previous jurisprudence it seems that Article XX of the GATT 1994 requires 
a territorial link. In this particular case we believe that it is the  task of the EU to show particular 
environmental effects on its territory depending on palm oil production in Malaysia.  
Conclusion.  
21. This concludes the oral statement by the Russian Federation. We would like to thank you for 
your attention.  
 
13 Ibid. pa ra. 1345.  
14 Appellate Body Report, EC – Seals , para. 5.173.  
15 Appellate Body Report, US – Shrimp , para. 133.  
16 Appellate Body Report, EC – Seals , para. 5.173.  WT/DS600/R/Add.1  
 
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  ANNEX  C-11 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF UKRAINE* 
Third -party submission  
1. INTRODUCTION  
1. Ukraine welcomes the opportunity to participate as a third party in DS600  European Union 
and Certain Member States — Certain Measures Concerning Palm Oil and Oil Palm Crop -Based 
Biofuels and to present its views on certain issues raised by the parties in t his dispute.  
2. The issues raised in this dispute have important implications for Ukraine because of its 
systemic interest in the correct and consistent interpretation and application of the World Trade 
Organization ("WTO") covered agreements. Ukraine woul d like to focus on some issues related to 
the analyses and application of Articles I:1, III:4 and XX of the General Agreement on Tariffs and 
Trade 1994 ("GATT 1994").  
3. Ukraine clarifies that it will not comment on the specific factual aspects presented b y the 
parties in this dispute and will not take a specific position. Ukraine would also like to reserve the 
right to raise other issues at the third -party session  with the Panel.  
2. CLAIMS REGARDING ARTICLES I:1 AND III:2 OF THE GATT 1994 IN RESPECT OF THE  
EUROPEAN UNION'S MEASURES  
In its First Written Submission Malaysia stated that the regulatory framework that the 
European Union  ("EU") is currently establishing, and that is partially based on the concept 
of indirect land -use change ("ILUC"), is blatantl y discriminatory and by far not the least 
trade restrictive measure that is available to the EU and, therefore, not in line with the EU's 
commitments under various WTO agreements.1 
4. As Malaysia mentioned, the EU's Renewable Energy Directive ("RED II") introduces a new 
approach to address the risk of ILUC that has been identified for biofuels, bioliquids, and biomass 
fuels produced from feedstock for which a significant expansion of the production area into land with 
high-carbon stock is observed. T o this end, the RED II requires EU Member States to set a specific 
and gradually decreasing limit for high ILUC -risk biofuels.2 Malaysia assumes that some EU Member 
States have taken measures that already significantly reduce the use of oil palm crop -based biofuel 
in the transport sector well -ahead of the 2030 phase out provided under the RED II.3 
5. Malaysia's main argument that its palm oil cultivation does not bear an ILUC -risk is that 
Malaysia has implemented important procedures to ensure the protect ion of its forests and other 
natural environments. Most notably, Malaysia's laws require the undertaking of an Environmental 
Impact Assessment as part of the authorisation procedure for most economic activities.4 Therefore, 
in Malaysia's opinion, given th at the oil palm cultivated area may no longer be significantly increased, 
the EU's requirements related to ILUC and low ILUC -risk certification should not be imposed on 
Malaysia.  
6. Consequently, Malaysia submits that the measures at issue, inter alia , are inconsistent with 
the EU obligations under Article I:1.5 
 
* Pursuant to paragraph 27 of the Panel's Working Procedures, the third -party submission and oral 
statement of Ukraine serve as the executive summary of its arguments.  
1 Malaysia 's First Written Submission, para. 3.  
2 Ibid, para. 42.  
3 Malaysia 's First Written Submission, para. 12.  
4 Ibid, para. 24.  
5 Ibid, para. 886.  WT/DS600/R/Add.1  
 
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  7. According to Malaysia's First Written Submission and the Appellate Body Report in EC – Seal 
Products , the following elem ents must be demonstrated to establish an inconsistency with the 
Article  I:1 of the GATT 1994:  
(a) that the measure at issue falls within the scope of application of Article I:1;  
(b) that the imported products at issue are "like" products within the mean ing of 
Article I:1;  
(c) that the measure at issue confers an "advantage, favour, privilege, or immunity" 
on a product originating in the territory of any country;  
(d) that the advantage so accorded is not extended "immediately" and 
"unconditionally" to "li ke" products originating in the territory of all Members.6 
8. Building a position Malaysia emphasizes the "likeness" of foreign origin products and products 
produced from EU feedstocks. Therefore, Ukraine would like to pay attention to this criterion  in the 
determining compliance with the provisions of Article I:1 of the GATT 1994.  
9. According to Malaysia, the high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -
risk certification discriminate among "like" oil crop -based biofuels and their feed stocks originating in 
third countries and, therefore, are inconsistent with Article I:1 of the GATT 1994. In particular, by 
limiting and phasing out the use of only oil palm crop -based biofuel for meeting EU renewable energy 
targets, the measures at issue discriminate between Malaysian oil palm crop -based biofuel and palm 
oil and like oil crop -based biofuels and their feedstocks of other foreign origin.7 
10. Moreover, Malaysia submits that the EU measures at issue, namely the high ILUC -risk cap, 
the high I LUC-risk phase out, and low ILUC -risk certification, grant advantages to oil crop -based 
biofuels and their feedstocks imported from some Members that are not granted to all Members, 
and in particular not to Malaysia.8 At the same time, the measures at iss ue do not limit and eventually 
exclude "like" biofuels, namely other oil crop -based biofuels, such as biofuels made from rapeseed 
oil, soyabean oil or sunflower oil.9 In addition, Malaysia assumes that these biofuels are not subject 
to certification in or der to be counted towards meeting the EU renewable energy targets.10 
11. For the purposes of Article I:1 of the GATT 1994 Malaysia believes that oil palm crop -based 
biofuel and other oil crop -based biofuels are "like products", as well as their respective  feedstocks 
are "like products".  
12. In its First Written Submission, the EU stated that Malaysia has not demonstrated its case on 
"like" products' above. It refers to those submissions and further maintains its position that Malaysia 
has not adequately su bstantiated its claims in this respect.11 Furthermore, the EU notes that, in any 
event, its measures are justified under Article XX of the GATT 1994.12 
13. Article I:1 of the GATT 1994 states, inter alia , that any advantage, favour, privilege or 
immunity granted by any contracting party to any product originating in or destined for any other 
country shall be accorded immediately and unconditionally to the like product originating in or 
destined for the te rritories of all other contracting parties.  
14. The Panel in US – Poultry (China)  indicated that the concept of like product has been 
abundantly interpreted in the prior decisions of panels and the Appellate Body. Whatever the 
provision at issue, the Appellate Body has explained that a like product analysis must always be 
done on a cas e-by-case basis.13 
 
6 Appellate Body Report, EC – Seal Products , para. 5.86.  
7 Malaysia 's First Written Submission, para. 890. 
8 Ibid, para. 898.  
9 Ibid, para. 899.  
10 Ibid, para. 900. 
11 The European Union 's First Written Submission, para. 1133.  
12 Ibid. 1128.  
13 Panel Report, US – Poultry (China) , para. 7.424.  WT/DS600/R/Add.1  
 
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  15. Ukraine adheres to this view  and therefore, it is convinced that each case within the WTO 
must be considered by a panel step -by-step and in detail due to the unique nature of each case.  
According to this, the Panel should carefully analyze the criteria or factors that can determine the 
compliance of the EU measures with Article I:1 of the GATT 1994, including the "likeness" of the oil 
crop-based biofuels and their respective feedstocks that may bear ILUC -risk and not bear ILUC -risk. 
16. The last element of demonstration to establish an inconsistency with the provision of the 
Article I:1 of the GATT 1994 requires that the advantage so accorded is extended "immediately" and 
"unconditionally" to "like" products originating in the territo ry of all Members. Ukraine believes that 
the Panel firstly should found if the EU measures can be considered as a violation of the Article I:1 
of the GATT 1994 as a whole and only then begin to consider how immediately the same advantages 
were accorded or not accorded to Malaysia.  
17. In its turn, Ukraine holds certain beliefs that in this dispute the Panel should use the traditional 
approach for determining "likeness" that, in the main, consists of employing four general criteria:  
(a) the properties, natu re and quality of the products;  
(b) the end -uses of the products;  
(c) consumers' tastes and habits – more comprehensively termed consumers' 
perceptions and behaviour – in respect of the products; and  
(d) the tariff classification of the products.14 
18. According to Malaysia, the high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -
risk certification accord less favourable treatment to imported oil palm crop -based biofuel and palm 
oil than they accord to "like" domestic feedstocks and derived bi ofuels and, therefore, are 
inconsistent with Article III:4 of the GATT 1994.15 
19. As was explained in Appellate Body Report in Korea – Various Measures on Beef   for a violation 
of Article III:4 of the GATT 1994 to be established, three elements must be s atisfied: that the 
imported and domestic products at issue are "like products"; that the measure at issue is a "law, 
regulation, or requirement affecting their internal sale, offering for sale, purchase, transportation, 
distribution, or use"; and that the imported products are accorded "less favourable" treatment than 
that accorded to like domestic products.16 
20. As the issue of the determination of the "likeness" of the product was overviewed above, 
Ukraine would like to pay attention at the second eleme nt of the test.  
21. Referring to the provision of the Article III:1 of the GATT 1994 that reads "the contracting 
parties recognize that internal taxes and other internal charges, and laws, regulations and 
requirements affecting the internal sale, offering  for sale, purchase, transportation, distribution or 
use of products, and internal quantitative regulations requiring the mixture, processing or use of 
products in specified amounts or proportions, should not be applied to imported or domestic products 
so as to afford protection to domestic production", Ukraine suggests the Panel to take into account 
the following.  
22. Malaysia in its First Written Submission quoted the Panel Report in Canada – Autos , namely 
that the term "affecting" in Article III:4 of the  GATT 1994 has been interpreted to cover not only 
laws and regulations which directly govern the conditions of sale or use but also any laws or 
regulations which might adversely modify the conditions of competition between domestic and 
imported products.17 
 
14 Panel Report, US – Poultry (China) , para. 7.425.  
15 Malaysia 's First Written Submission, para. 921.  
16 Appellate Body Report, Korea – Various Measures on Beef , para. 133.  
17 Malaysia 's First Written Submi ssion, para. 924.  WT/DS600/R/Add.1  
 
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  23. Furthermore, Malaysia in its First Written Submission pointed out an important fact that there 
is no market in the EU for biofuel or biofuel feedstock that is not eligible to be counted towards the 
EU renewable energy targets.18 
24. The EU doesn't a gree with the opinion that the high ILUC -risk cap, the high ILUC -risk phase 
out, and low ILUC -risk certification accord less favourable treatment to imported oil palm crop -based 
biofuel and palm oil than they accord to "like" domestic feedstocks and derive d biofuels and submits 
that Malaysia has not demonstrated that the "measures" identified have the alleged discriminatory 
effect. Further and in any event, the measures are justified under Article XX of the GATT 1994.19 
25. In our opinion, the Panel should  carefully analyze the current situation on the domestic market 
of the EU as to whether there is fair competition in the market or the EU trying to protect biofuels 
made from domestic feedstocks by such measures, taking into account the EU Biofuels regime,  
including the RED II and the Delegated Regulation.  
26. The next element of the test and arguments of Malaysia relate to the imported products that 
are accorded "less favourable" treatment than that accorded to like domestic products, namely the 
7% limit, the high ILUC -risk cap, the high ILUC -risk phase out, and low ILUC -risk certification treats 
imported oil palm crop -based biofuel and palm oil from Malaysia less favourably than like products 
of EU origin.  
27. Malaysia assumes that when establishing whethe r there is "treatment less favourable", what 
is to be compared is the treatment given to the group of imported products as a whole and the 
treatment given to the group of like domestic products as a whole. A measure, which does not accord 
treatment less fa vourable to some products in the group of imported products, may still be found to 
accord "treatment less favourable" to the whole group of imported products.20 
28. The EU, in its turn, believes that in order to demonstrate that there is "less favourable 
treatment" within the meaning of Article III:4 of the GATT 1994, a complainant must both establish 
the appropriate product scope on the basis of which the comparison is to be conducted and further 
show that the "less favourable treatment" it has  identified is attributable to the measure at issue.21 
29. In Ukraine's opinion, in order to correctly determine whether products receive "less favourable 
treatment", the Panel should first determine whether mentioned imported and domestic products 
could be considered as "like".  
30. Ukraine assumes that the primary task of the Panel under the specified Articles of the GATT 
1994 lies in determining the "likeness" of products exported to the EU from Malaysia with products 
made from feedstocks grown in the E U. This conclusion can help the Panel to specify if the EU 
measures are consistent with the Articles I:1 and III:4 of the GATT 1994 in particular.  
3. THE EU JUSTIFICATION BY ARTICLE XX OF THE GATT 1994  
31. In its First Written Submission, the EU justifies its measures by Article XX  of the GATT 1994.  
32. The Article XX of the GATT 1994 reads in particular that subject to the requirement that such 
measures are not applied in a manner which would constitute a means of arbitrary or unjustifiable 
discrimination between countries where the same conditions prevail, or a disguised restriction on 
international trade, nothing in this Agreement shall be construed to prevent the adoption or 
enforcement by any contracting party of measures:  
(a) necessary to pro tect public morals;  
(b) necessary to protect human, animal or plant life or health; […]  
 
18 Ibid, para. 624.  
19 The European Union 's First Written Submission, paras. 1140 and 1142.  
20 Malaysia 's First Written Submission, para. 933.  
21 The European Union 's First Written Submission, para. 1159.  WT/DS600/R/Add.1  
 
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  (g) relating to the conservation of exhaustible natural resources if such measures are 
made effective in conjunction with restrictions on domestic production or 
consump tion; […].  
33. According to the EU, the EU Biofuels regime is designed to contribute to achieving the climate 
change mitigation objectives of the EU in terms of the reduction of greenhouse gas emissions, whilst 
at the same time contributing to wider envir onmental objectives, and in particular the prevention of 
biodiversity loss. Contributing to these objectives is necessary to protect the EU public morals, as 
the fight against climate change and biodiversity destruction constitute deep and longstanding mor al 
concerns for the EU public and the EU legislator.22 
34. The Appellate Body in the Report in US — Tariff Measures  noted that WTO Members can resort 
to Article XX as an exception to justify measures that would otherwise be inconsistent with their 
GATT 19 94 obligations. Specifically, the subparagraphs of Article XX list various categories of policies 
that WTO Members may invoke to justify the potential inconsistency of their (challenged) measures 
with the substantive obligations of the GATT 1994.23 
35. The Panel mentioned that traditionally, panels have analysed claims of justification under 
Article XX using a two -tiered analysis: panels have first examined whether the measure at issue 
provisionally falls under one of the exceptions listed in the subparagr aphs of Article XX, before 
considering whether the application of the challenged measure satisfies the requirements of the 
chapeau of Article XX.24 
36. Therefore, Ukraine believes that firstly the Panel should found if the EU measures, the EU 
Biofuels reg ime in particular, were introduced in accordance with the provision of the Article XX of 
the GATT 1994, namely to protect public morality, human, animal or plant life or health or relating 
to the conservation of exhaustible natural resources if such measur es are made effective in 
conjunction with restrictions on domestic production or consumption. Moreover, Ukraine assumes 
that the Panel should investigate in detail whether the EU evidence provided is in fact in line with 
the provisions of this Article.  If these measures may be justified  by mentioned provision, the Panel 
should explore if they satisfies the requirements of the chapeau of Article XX of the GATT 1994.  
4. CONCLUSIONS  
37. Ukraine thanks the Panel for the opportunity to share its views and hopes that its contribution 
in the present dispute will be helpful to the Panel in objectively assessing the matter before it and 
in developing the respective legal interpretations of the WTO agreements.  
Oral statement  
1. Mr Chairman, distinguished Members of the Panel, Ukraine appreciates the opportunity to 
participate as a third party in this dispute and, more generally, in the WTO's system of peaceful 
settlement of disputes between Members.  
2. Ukraine has a systemic interest in ensur ing the coherent interpretation of the covered WTO 
agreements and has already addressed some issues in its third -party submission and will not repeat 
them.  
3. But today, while Members work together to support multilateral trading system and maintain 
WTO's system of peaceful settlement of disputes, russia in its turn commits a blatant act of 
aggression against Ukraine through its brutal, unprovoked and unjustifiable military invasion.  
4. Ukraine is convinced that a military aggression of one WTO Member towar ds another WTO 
Member puts the multilateral trading system in an unprecedented situation. Russia's actions do not 
fall under the fundamental principles of the organization, and the exercise of its rights in today's 
 
22 The European Union 's First Written Submission, para. 4.  
23 Panel Report, US – Tariff Measures , para. 7.103.  
24 Ibid, para. 7.107.  WT/DS600/R/Add.1  
 
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  circumstances when Ukraine is forced to b e deprived of its right to fully participate in the dispute 
settlement procedures, should not be ignored.  
5. We understand the legal nature of WTO disputes and the importance for the parties to the 
dispute timely consideration of the merits therefore Ukrai ne respects any decision of the Panel and 
positions of the parties to the dispute.  
6. However, we would like to ask to think whether position of country which started war against 
WTO Member, could be taken into account within the organization, one of the m ain principles of 
which is to act in a good faith.  
7. We are very grateful to all Members who don't stay apart and condemn Russia's aggression 
against Ukraine.  
Thank you.WT/DS600/R/Add.1  
 
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  ANNEX  C-12 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNI TED KINGDOM  
1. An integrated executive summary of the United Kingdom 's third party submission and 
response to certain Panel questions is provided below.  
1. GENERAL EXCEPTIONS UNDER ARTICLE XX 
2. Article XX of the GATT 1994 provides exceptions for measures  taken to pursue certain policy 
objectives. An otherwise GATT -inconsistent measure may be justified under Article  XX where it: (a) 
meets the specific requirements of one of the subparagraphs; and (b) satisfies the conditions of the 
chapeau . 
3. The European  Union seeks to justify its measures through the cumulative application of 
subparagraphs (a), (b), and (g) of Article XX. According to the European Union, the challenged 
measures are part of a comprehensive set of policies that address climate change, envi ronmental 
protection (including the preservation of biodiversity), moral concerns, and the pursuit of sustainable 
energy. The European Union argues that the objectives of the challenged measures are 
"intertwined", and submits that if its defence were to fa il "the three justifications should fail 
together".1 The United Kingdom addresses the European Union 's "composite" defence and provides 
some observations on the legal standard to be applied under subparagraphs (a), (b), and (g).  
a. ARTICLE XX – "COMPOSIT E" LEGAL STANDARD  
4. The subparagraphs of Article XX provide distinct routes to defend a measure, each grounded 
in a different policy objective. This is reflected in the differing legal standards between the 
subparagraphs. For example, the subparagraphs us e different terms to describe the degree of 
connection required between the measure in question and the interest or policy objective. As noted 
by the Appellate Body in US – Gasoline : 
[i]t does not seem reasonable to suppose that the WTO Members intended to  require, in respect of 
each and every category, the same kind or degree of connection or relationship between the measure 
under appraisal and the state interest or policy sought to be promoted or realized.2  
5. Considering the subparagraphs invoked by the European Union in this dispute, subparagraphs 
(a) and (b) require that a measure be "necessary to" protect the relevant policy objective, while 
subparagraph (g) requires a measure to "relat[e] to" the same. The Appellate Body has found that 
the necessity analysis involves "weighing and balancing" several factors,3 and, in most cases, will 
require a comparison of the measure with other possible, less trade restrictive, alternatives.4 In 
contrast, under subparagraph (g), "relating to" has bee n found to require the measure be "primarily 
aimed at"5 the conservation of natural resources – there is no "weighing and balancing" and there 
are no less trade restrictive alternatives to consider.  
6. Moreover, a composite defence would conflate the legal standards and thus deprive the 
specific terms of each  of the individual subparagraphs of Article XX of their effet utile . Taking the 
example outlined above, it would effectively lower the standard imposed by the term "necessary" or 
increase the standard imposed by the term "relating to". Thus, the subparagra phs of Article XX 
should not be cumulatively invoked. For the avoidance of doubt, the United Kingdom recognises that 
multiple subparagraphs may be invoked to justify a measure, providing that the requirements of 
each subparagraph are fully met.   
 
1 European Union’s first written submission, para.  1329.   
2 Appellate Body Report, US – Gasoline , p. 18 . 
3 Appellate Body Report, Brazil – Retreade d Tyres , para . 178. See also Appellate Body Reports,  US – 
Gambling , para. 30 6; Korea – Various Measures on Beef , para. 164.  
4 Appellate Body Report, Brazil – Retreaded Tyres , para . 178.  
5 Appellate Body Report, US – Gasoline , p. 18.  WT/DS600/R/Add.1  
 
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  b. ARTICLE  XX( A) – PUBLIC MORALS  
7. To provisionally justify a measure under this subparagraph, a respondent must demonstrate 
that its measure: (i)  is "designed" to protect public morals; and that it (ii) is "necessary" to achieve 
its public moral objective.  
8. Interpretation of "Public Morals" . WTO panels have interpreted the term "public morals" 
to denote  "standards of right and wrong conduct maintained by or on behalf of a community or 
nation".6 Whether a social interest amounts to a "standard of right and wrong"  in a particular 
community or nation is ultimately a fact -specific determination.7 The content and scope of "public 
morals" will therefore be informed by the "prevailing social, cultural, ethical and religious values" in 
that community or nation.8 A Memb er must be afforded latitude to define public morals "in its 
territory, according to its own system and scales of values".9  
9. The United Kingdom considers that concerns about climate change, environmental 
destruction, and/or biodiversity loss may be cha racterised as a public moral for the purposes of 
subparagraph (a). As noted, whether these interests reach the level of a public moral in any given 
Member must be determined based on the prevailing values in that Member, keeping in mind the 
latitude afford ed to Members to define their own public morals.  
10. "Contribution" Element of the Necessity Test . The "necessity" analysis involves "weighing 
and balancing" a series of factors, including the contribution of the measure to the objectives 
pursued, the imp ortance of the values pursued by the measure, and the trade restrictiveness of the 
measure.10 If a panel makes a preliminary conclusion that the measure is necessary, it must confirm 
this result by comparing the measure with reasonably available less trad e-restrictive alternatives.  
11. When assessing the contribution of a measure to the objectives pursued, the Appellate Body 
has recognised that tackling complex environmental problems may require comprehensive policies 
with a "multiplicity of interacting m easures" and that it may therefore be difficult, in the short -term, 
to isolate the contribution of a specific measure from the contribution of the wider policy.11  
12. The Appellate Body accepted that contribution to the objective may be demonstrated in 
different ways. Members may demonstrate that the measure "brings about" a contribution by 
resorting to evidence or data, pertaining to the past or present. But Members may equally 
demonstrate that a measure "is apt to" produce a contribution to the objectiv e pursued (i.e., in the 
future).12 Importantly, the Appellate Body recognised that Members have discretion as to how to 
evidence this contribution.13  
13. In doing so, the Appellate Body "left open the possibility that a 'necessary ' measure could 
contribute to" the objective "as part of a policy framework comprising different measures, resulting 
in possible synergies between those measures".14 These finding s are of particular importance to 
measures adopted to combat climate change, which will necessarily form part of wide -ranging policy 
frameworks, with action required across a range of complex and interconnected sectors and systems, 
and which may not have i mmediately observable effects.  
 
6 Panel Report, US – Gambling , para. 6.465.  See also Panel Reports, EC – Seal Products , paras. 7.380, 
7.631; and Brazil – Taxation , para. 7.520.  
7 Panel Report, US – Gambling , para. 6.461.  
8 Panel Report, US – Gambling , para . 6.461.  See also Panel Reports,  EC – Seal Products , paras. 7.380 -
7.381, 7.631; and Brazil – Taxation , para. 7.520.  
9 Panel Reports, EC – Seal Products , para. 7.383; and Brazil – Taxation , para 7.520 (drawing on Panel 
Report, US – Gambling , para. 6.461).  
10 Appellate Body Report, Korea – Various Measures on Beef, para. 164 (addressing Article XX(d)); see 
also Appellate  Body Reports, China – Publications and Audiovisual Products, para. 240; and Colombia – 
Textiles , para 5.70 (addressing Article XX(a)).  
11 Appellate Body Report, Brazil – Retreaded Tyres , para. 151.  
12 Appellate Body Report, Brazil – Retreaded Tyres , para. 151.  
13 Appellate Body Report, Brazil – Retreaded Tyres , para. 151.  
14 Panel Report s, China – Rare Earths , para. 7.146, citing Appellate Body Report, Brazil – Retreaded 
Tyres , para. 151.  WT/DS600/R/Add.1  
 
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  c. ARTICLE XX( B) – PROTECTION OF HUMAN , ANIMAL OR PLANT LIFE OR HEALTH  
14. To provisionally justify a measure under this subparagraph, a respondent must demonstrate 
both that its measure: (i)  is "designed" to protect human, animal or plant life or health; and (ii) that 
it is "necessary".  
15. "Protect Human, Animal or Plant Life or Health" . To demonstrate that a measure is 
designed to protect human, animal or plant life or health, a panel must, first, establish "the existence 
of a risk to human, animal or plant life or health" before, second, examining "whether the policy 
underlying the measure aims to reduce such risk".15 It is well -established that "Members have the 
right to determine the level of protection that they deem a ppropriate".16 In determining whether a 
measure is aimed at reducing the identified risk to life or health, a panel should assess evidence 
relating to the design, structure, and application of the measure.17     
16. A range of environmental policies have  been recognised as protecting human, animal, or plant 
life or health.18 For example, in US – Gasoline , the panel agreed that "a policy to reduce air pollution 
resulting from the consumption of gasoline" was a policy within the range of those concerning the 
protection of human, animal, or plant life or health.19 More recently, the panel in Brazil – Taxation 
found that a set of policies aimed at reducing CO 2 emissions as part of a transport plan for "Climate 
Change Mitigation and Adaptation" pu rsued policy objectives that fell "within the range of policies 
that protect human life or health" and were therefore covered by subparagraph (b) of Article XX.20   
17.  The United Kingdom observes that the Intergovernmental Panel on Climate Change ("IPCC ") 
has found that higher global temperatures will result in environmental changes that threaten plant, 
animal, and human life and health. Climate change impacts have been found to threaten "health, 
livelihoods, food security, water supply, human security a nd economic growth".21  
18. The submissions on the necessity test and contribution analysis under Article XX(a) apply 
equally to the necessity analysis under Article XX(b).  
d. ARTICLE XX( G) – CONSERVATION OF EXHAUSTIBLE NATURAL RESOURCES  
19. To provisionally justify a measure under this subparagraph, a respondent must demonstrate 
that its measure: (i) seeks to conserve "exhaustible natural resources", (ii) is "relating to" the 
conservation of such resources, and (iii)  is "made effective in conjun ction with restrictions on 
domestic production or consumption".  
20. Meaning of "Exhaustible Natural Resources" . This term has been interpreted to include 
living and non -living resources, both of which are "finite" to the extent that they are susceptible t o 
depletion, exhaustion, or extinction.22 Notably, in US – Gasoline , the panel recognised that "clean 
air" is an exhaustible natural resource because it is capable of being depleted.23 The fact that the 
resource was renewable, and defined with respect to  its qualities (i.e. the cleanliness of the air), did 
not prevent it from being an exhaustible natural resource.24  
21.  When interpreting the term "exhaustible natural resources", the United Nations Framework 
Convention on Climate Change ("UNFCCC"), the Paris Agreement, and the Glasgow Climate Pact are 
relevant. These international conventions and  decisions confirm that a global atmosphere with safe 
levels of greenhouse gases is a resource that is at risk of being depleted. For example, the UNFCCC 
highlig hts that the substantial increase in the "atmospheric concentrations of greenhouse gases" will 
result "on average in an additional warming of the Earth 's surface and atmosphere" and that its 
 
15 Panel Report, Brazil – Taxation , para. 7.859.  
16 Panel Report, Brazil – Taxation , para. 7.859 . 
17 Panel Report, Brazil – Taxation , para. 7.884.  
18 Panel Report, China – Raw Materials , para. 7.479.  
19 Panel Report, US – Gasoline , para. 6.21. The panel findings in respect of Article XX(b) were not 
appealed.  
20 Panel Report, Brazil – Taxation , paras. 7.878 –7.881. The panel findings in respect of Article XX(b) 
were not appealed . 
21 IPCC Special Report, Summary for Policymakers, 2018, B.5.  
22 Appellate Body Report, US – Shrimp , paras. 128 and 131.  
23 Panel Report, US – Gasoline , para. 6.37. The panel findings on this issue were not appealed.  
24 Panel Report, US – Gasoline , paras.  6.36-6.37. The panel findings on this issue were not appealed.   WT/DS600/R/Add.1  
 
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  objective is "to achieve […] stabilization of greenhouse gas conc entrations in the atmosphere at a 
level that would prevent dangerous anthropogenic interference with the climate system".25 The Paris 
Agreement26 and the Glasgow Climate Pact27 support pursuit of this objective via their goal of holding 
the increase in the global average temperature to well below 2°C, and pursuing efforts to limit the 
temperature increase to below 1.5°C, above pre -industrial levels, by securing sustained reductions 
in global greenhouse emissions.  
22. Based on the above, the United Kingdo m submits that a global atmosphere with safe levels of 
greenhouse gases, i.e., a safe atmospheric composition, is an exhaustible natural resource within 
the meaning of Article XX(g). In the same way that air quality may be depleted by pollution, so too 
a safe atmospheric composition will be depleted by excess greenhouse gases.  
 
25 UNFCCC, Preamble and Article. 2, available at: 
https://treatie s.un.org/pages/ViewDetailsIII.aspx?src=TREATY&mtdsg_no=XXVII -
7&chapter=27&Temp=mtdsg3&clang=_en   (accessed 27 June 2022).  
26 Paris Agreement, Articles. 2.1 and 4.1, available at: 
https://treaties.un.org/Pages/ViewDetails.aspx?src=IND&mtdsg_no=XXVII -7-d&chapter=27&clang=_en   
(accessed 27 June 2022 ); The 2013 -2015 Review, Decision 10/CP.21 of the Conference of the Parties serving 
as the meeting of the Parties to the UNFCCC,  U.N. Doc FCCC/CP/2015/10/Add.2, para. 4 , available at  
https://unfccc.int/resource/docs/2015/cop21/eng/10a02.pdf#page=23   (accessed 27 June 2022 ). 
27 Glasgow Climate Pact, including Decision 1/CP.26 of the Conference of the Parties serving as the 
meeting of the Parti es to the UNFCCC , paras. 15 -17, available at: https://unfccc.int/documents/310475   
(accessed 27 June 2022 ) and Decision 1/CMA.3 of the Conference of the Parties serving a s the meeting of the 
Parties to the Paris Agreement , paras. 20 -22, available at: https://unfccc.int/documents/310497  (accessed 27 
June 2022 ).   WT/DS600/R/Add.1  
 
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  ANNEX  C-13 
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES  
EXECUTIVE SUMMARY OF THE U.S.  THIRD PARTY SUBMISSION  
I. INTERPRETATION OF ARTICLE 2.1 OF THE TBT  AGREEMENT  
1. Malaysia claims that the High ILUC Risk Cap breaches Article 2.1 of the TBT Agreement 
because it accords "to Malaysia's oil palm crop -based biofuel imported into the EU treatment less 
favourable than that accorded to 'li ke products' imported into the EU from other countries and to 
domestic 'like products'." To establish a breach of Article 2.1, the complainant must prove three 
elements: (i) that the measure at issue is a technical regulation; (ii) that the imported and do mestic 
products are "like"; and (iii) that the treatment accorded to imported products is less favorable than 
that accorded to like domestic products or like products from other countries.  
2. With respect to the third element, a complainant may seek to es tablish sufficient facts to 
demonstrate that the measure, de facto , treats imports less favorably than like domestic products 
(or other foreign products). Like Article III:4 of the GATT 1994, Article 2.1 does not forbid Members 
from making regulatory disti nctions between different products that may fall within a single group 
of "like products". Nor does Article 2.1 prohibit measures that may result in some detrimental effect 
on imported products as compared to some like domestic products. Instead, what Arti cle 2.1 
prohibits are measures that accord less favorable treatment to imported products as compared to 
like domestic products based on origin .  
3. The conclusion that Article 2.1 is directed to controlling origin -based discrimination is based 
on its text,  in its context. The provision itself compares the treatment accorded to different products 
on the basis of origin: "products imported from the territory of any Member", "products of national 
origin", and "products originating in any other Member". Similar ly, the preamble to the Agreement 
reflects that measures should not be "applied in a manner which would constitute a means of 
arbitrary or unjustifiable discrimination between countries  where the same conditions prevail".  
4. Examination of the reasons for  any distinctions made among a group of like products is 
particularly important in the context of technical regulations, where measures may necessarily draw 
distinctions between products based on "product characteristics or their related processes and 
production methods." If a respondent demonstrates that different and detrimental treatment is 
based on, for example, the environmental or public health aim pursued —and not the foreign origin 
of a product —then the measure does not amount to less favorable treat ment under Article 2.1.  
5. In recent reports, the Appellate Body has found that, in the context of the TBT Agreement, 
any detrimental impact found to exist with respect to imported products will constitute a breach of 
Article 2.1 unless the "detrimental i mpact on imports stems exclusively from  legitimate regulatory 
distinctions." This requirement —that any detrimental impact "stem exclusively from" a legitimate 
regulatory distinction —has no basis in the text of the TBT Agreement and significantly narrows th e 
scope of regulatory action permitted under the Agreement.  
6. The Appellate Body's erroneous approach may invite panels to attempt to balance the 
detrimental impact of a measure against its contribution to the objective at issue – an assessment 
that is m ore about proportionality (weighing costs and benefits), and less about origin -based 
discrimination.  
7. The Appellate Body's approach in essence imposes an obligation on the complainant to 
demonstrate the degree of trade restrictiveness of the measure in question. However, this "further 
obligation" is not found in Article 2.1 nor necessary to assess origin -based discrimination. The United 
States agrees that it is important under the TBT Agreement to assess the trade -restrictiveness of a 
measure. However, i n a manner unique  to the TBT Agreement, trade restrictiveness already 
comprises an affirmative obligation under Article 2.2. That is, where a technical regulation does not 
discriminate inconsistently with Article 2.1, for example, that measure may separate ly breach a WT/DS600/R/Add.1  
 
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  Member's obligations if it is nonetheless more trade restrictive than necessary to fulfil a legitimate 
objective under Article 2.2 of the TBT Agreement.  
8. In eliding these two provisions, the Appellate Body has not only narrowed the scope of a ctions 
that would otherwise survive a less favorable treatment examination (under the equivalent of Article 
III:4), it has narrowed the scope of actions that could survive a trade -restrictiveness review (under 
what should be Article 2.2). Thus, while the A ppellate Body may have intended to permit a broad 
scope of justified regulatory action in creating its "legitimate regulatory distinction" test, by 
collapsing the obligations in 2.1 and 2.2, the Appellate Body in fact combined more restrictive 
interpretati ons of each provision into a single test under Article 2.1. This Panel should not repeat 
the same error. Instead, the Panel should interpret Article 2.1 based on its text, and as panels and 
the Appellate Body have interpreted the same obligation under the GATT for decades, assess whether 
any different and detrimental impact is based on factors unrelated to a product's foreign origin. In 
so doing, the Panel would restore the balance in the WTO "between, on the one hand, the pursuit of 
trade liberalization an d, on the other hand, Members' right to regulate."  
9. The question of whether any detrimental impact is based on factors not relating to the origin 
of the products in question is one that should be answered taking all relevant facts into account. For 
examp le, if the regulatory purpose invoked bears a rational relationship to the measure at issue, 
this would be indicative of non -discrimination. Similarly, if the measure is apt to advance the 
regulatory purpose identified by the regulating Member, this too wo uld be indicative of non -
discrimination. A panel would evaluate this as part of the overall assessment of whether a measure 
modified the conditions of competition to the detriment of imported or other foreign products. If an 
evaluation of the measure did n ot support the proposition that detrimental impact was non -origin -
based, or if an examination of the facts reveals the regulatory distinction to be a proxy for origin, 
for example, then the measure would breach the national treatment or MFN obligation.  
10. For the reasons set out above, the Panel should interpret and apply Article 2.1 of the TBT 
Agreement according to its text as directed to prohibiting origin -based discrimination. As past reports 
on Article III:4 concluded, different and detrimental treat ment of imports will constitute a breach of 
the obligation where the alleged detriment is not explained by factors unrelated to the foreign origin 
of the product, such as where the measure and distinction at issue does not bear a rational 
relationship to t he regulatory purpose invoked. Here, the European Union argues that the regulatory 
purpose of the High ILUC Risk Cap is to limit climate change, protect biodiversity, and address public 
morals concerns. If, taking into account all the facts, the Panel find s that the impact on Malaysian 
imports is not origin -based, then the Panel should conclude that Malaysia has not met its burden to 
demonstrate "less favourable treatment" under Article 2.1.  
II. INTERPRETATION OF ARTICLE 2.2 OF THE TBT  AGREEMENT  
11. Malays ia also argues that the High ILUC Risk Cap breaches Article 2.2 of the TBT Agreement 
by creating unnecessary obstacles to international trade in palm oil and oil palm crop -based biofuel. 
The European Union argues that "the measures at issue have neither th e purpose nor the effect of 
creating 'unnecessary obstacles to trade', given that: they pursue legitimate objectives; and they 
are not more trade -restrictive than necessary in order to fulfil those objectives."  
12. The first sentence of Article 2.2 establi shes the general rule that Members shall ensure that 
technical regulations do not create unnecessary obstacles to international trade, while the second 
sentence of Article 2.2 makes this general rule operational by explaining that "for this purpose" 
"techn ical regulations shall not be more trade -restrictive than necessary to fulfill a legitimate 
objective."  
13. If the measure contributes, or is apt to contribute to, a legitimate objective, then a measure 
is inconsistent with Article 2.2 only if the measure  is "more trade -restrictive than necessary to fulfill" 
that legitimate objective. To establish that this is the case, a complaining Member must prove that: 
(1) there is a reasonably available alternative measure; (2) that fulfills the Member's legitimate 
objective at the level that the Member considers appropriate; and (3) is significantly less trade 
restrictive. As is the case for the parallel provision in the SPS Agreement, the key legal question for 
Article 2.2 is whether the importing Member could have adopted a less trade -restrictive measure to 
achieve its objective at the chosen level.  WT/DS600/R/Add.1  
 
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  14. The first step is for the panel to consider the extent to which the challenged measure 
contributes, or is apt to contribute, to the Member's "legitimate objective." According to Malaysia, 
the European Union adopted the measure to address "the expressed primary objective of … the 
avoidance of additional GHG emissions by limiting direct and indirect land -use change." The 
European Union argues that the measures at issue are meant to address the "composite" objectives 
of "combating climate change, biodiversity loss and protecting the EU public morals," claiming that 
these objectives are "interlinked." The United States observes that it is for the respondent —not the 
complai nant—to identify the legitimate objectives that motivate a given measure. If a complainant 
wishes to challenge the genuineness of a respondent's professed objective, it can do so by 
demonstrating that the measure makes no (or little) contribution toward th e alleged objective, and 
that thus, less trade restrictive options are available to meet the objective in question.  
15. Therefore, the Panel should base its analysis on the extent to which the High ILUC Risk Cap 
contributes, or is apt to contribute, the o bjective identified by the European Union; and whether 
another less trade -restrictive measure identified by Malaysia is available to the European Union that 
makes, or is apt to make, a similar contribution.  
III.INTERPRETATION OF ARTICLE 2.4 OF THE TBT  AGREEMENT  
16. With respect to whether a relevant international standard exists under Article 2.4, the TBT 
Agreement does not define the term "international standard." This term, however, is defined in 
ISO/IEC Guide 2 as a "[s]tandard that is adopted by an int ernational standardizing/standards 
organization and made available to the public." Moreover, the TBT Agreement defines "standard" as 
"a document approved by a recognized body," and specifies that an "international body" is a "body 
... whose membership is o pen to the relevant bodies of at least all Members."  
17. Regarding whether a given international standard is "ineffective or inappropriate" to fulfill the 
legitimate objectives pursued, the term "ineffective" refers to something which not "having the 
function of accomplishing", "having a result", or "brought to bear", whereas "inappropriate" refers 
to something which is not "specially suitable", "proper", or "fitting." If the Panel agrees with the 
European Union that the ISO standards Malaysia cites are no t effective and appropriate to address 
the specific objectives that the European Union has identified, this would suggest that an element 
of an Article 2.4 claim has not been made out.  
IV. INTERPRETATION OF ARTICLE 5.1 OF THE TBT  AGREEMENT  
18. Malaysia cl aims that the conformity assessment procedure (CAP) for the High ILUC Risk Cap 
breaches  Article 5.1 of the TBT Agreement.  To establish that a measure is inconsistent with Article 
5.1.1, a complaining Member must demonstrate three elements: (1) the measure concerns a 
"conformity assessment procedure"; (2) the products at issue are "like products"; and, (3) access 
to the CAP is granted on a "less favourable" basis to suppliers of products originating in the territory 
of a Member than to "suppliers of like pro ducts of national origin or originating in any other country, 
in a comparable situation ."  
19. In assessing this claim, the Panel must determine whether the difference in treatment under 
conformity assessment procedures provides a sufficient basis for find ing that like products are 
nonetheless not "in a comparable situation" or whether the difference in treatment is such that 
imported products are treated less favorably than like domestic products.  
EXECUTIVE SUMMARY OF THE U.S.  ORAL STATEMENT  
I. WHETHER ARTICLE XX DEFENSES ARE AVAILABLE IN CONNECTION WITH EXTRATERRITORIAL HARM  
20. According to Malaysia and Colombia (arguing as a third party), a Member cannot invoke Article 
XX to protect values and interests outside of that Member's territory. Noth ing in the text of Article 
XX supports the type of territorial limitation for the objective of the Member imposing the measure 
that Colombia and Malaysia are proposing. Furthermore, many measures involving extraterritorial 
interests have been challenged in  the past, and those same measures have been found to satisfy 
the requirements of the subarticles of Article XX.  WT/DS600/R/Add.1  
 
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  II. CONFIDENTIALITY  
21. In this dispute, Malaysia has filed several documents and excerpts of documents from DS593, 
the Indonesia/EU -Palm Oil c ase. Those documents —including an expert report, and portions of 
Indonesia's submission and a third -party submission —were to be treated as confidential per Article 
18.2 of the DSU. While these disputes both deal with the same EU measures, the two disputes are 
distinct. Further, the third parties in DS593 (the Indonesia/EU -Palm Oil case) and DS600 (the 
Malaysia/EU -Palm Oil case) are not identical, and thus, the disclosure of confidential documents from 
DS593 (the Indonesia/EU -Palm Oil case) in the present DS 600, Malaysia/EU -Palm Oil case, is more 
than theoretical.  
22. The United States takes its confidentiality obligations in WTO dispute settlement very 
seriously, and we rely on other Members to do the same. We caution Members to remain aware of, 
and abide by , their obligations, and to maintain strict confidentiality protocols at all times. This 
includes instances such as the present situation, where multiple disputes are ongoing that involve 
overlapping factual and legal issues.  
EXECUTIVE SUMMARY OF THE U.S.  RESPONSES TO PANEL QUESTIONS TO THIRD PARTIES  
23. Response to Question 3 : Article 2.1 of the TBT Agreement prohibits measures that accord less 
favorable treatment to imported products as compared to like domestic products  based on origin . 
Thus, the Europea n Union is correct that the proper exercise is not to compare the impact of the 
measure on imports from various countries. The proper exercise is to examine the measure at issue 
to determine if that measure affords less favorable treatment to like products  based on origin. 
Examination of the reasons for any distinctions made among a group of like products is particularly 
important in the context of technical regulations, where measures may necessarily draw distinctions 
between products based on "product cha racteristics or their related processes and production 
methods." Thus, if a panel determines that different and detrimental treatment is based on, for 
example, the environmental or public health aim pursued —and not the foreign origin of a product —
then the measure does not amount to less favorable treatment under Article 2.1.  
24. Response to Question 4 : We agree in part, and disagree in part, with the European Union's 
description of the proper analysis under Article 2.1, as quoted in Question 4 from the Pane l. We do 
not agree that it is the Panel's role to "examine the nature of the objectives pursued by the 
measures" to determine if they are "legitimate." The Panel's analysis in this respect should be limited 
to a determination of whether the detrimental imp act is based on the origin of the product in 
question. We agree with the European Union that a panel must examine "the relationship between 
the legitimate objectives of the measure and the detrimental effects." To complete this examination, 
a panel must ta ke all relevant facts into account. For example, if the regulatory purpose invoked 
bears a rational relationship to the measure at issue, this would be indicative of non -discrimination. 
Similarly, if the measure is apt to advance the regulatory purpose ide ntified by the regulating 
Member, this too would be indicative of non -discrimination.  
25. Response to Questions 8 and 9 : Article 2.2 does not require that a WTO Member must, as the 
Panel's questions suggest, continually update its regulations  to reflect t he most recent "scientific 
and technical information." The context provided by Article 2.3 also does not suggest such a 
requirement. Under Article 2.3, WTO Members must monitor existing measures, and may need to 
alter those measures if "circumstances or ob jectives giving rise to their adoption" change. While it 
may be the case that the "latest available" information on a given issue will affect the circumstances 
or objectives of a technical regulation, it does not follow that it always must.  
26. Response to  Question 16 : Article 12.3 of the TBT Agreement only requires that Members take 
account of the needs of developing country Members in the "preparation and application" of a 
measure, " with a view " to ensuring that these measures do not create unnecessary obstacles to 
trade. The ordinary meaning of the phrase "with a view" is "with the aim of attaining or 
accomplishing" or "with the hope or intention of." In this sense, Article 12.3 does not requir e the 
developed country Member to accept every recommendation presented by the developing country 
Member but rather to proceed with the aim of ensuring that its measure does not create an 
unnecessary obstacle to exports.  WT/DS600/R/Add.1  
 
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  27. Response to Question 17 : GATT Article XI:1 relates only to "prohibitions or restrictions" on 
the importation or exportation of products. Furthermore, Article XI:1 proscribes restrictions "on the 
importation" or "on the exportation" of any product, but not restrictions on the level of i mports or 
exports. Instead, the terms used — "importation" and "exportation" —reach the process  of importing 
or exporting.  
28. Response to Question 19 : The EU argues that the measures at issue are part of a 
comprehensive set of policies taken to address mul tiple objectives that are "within the framework 
of the values recognized as legitimate objectives by Article XX(a), (b) and (g) of the GATT 1994." It 
also suggests that, because the legal requirements of each of these subparagraphs are " in practice  
very si milar", the Panel may perform a single analysis whereby it assesses whether the measure is 
"rational and reasonable both in its design and in its application." While a respondent might 
characterize the objective of a measure as being comprehensive and fall ing under multiple 
subparagraphs, that does not mean the respondent is relieved of its burden to articulate and 
substantiate the relationship between the measure and the objective identified in each of the various 
subparagraphs in the manner required. That  the language at issue in those subparagraphs —i.e., 
"necessary to" versus "relating to" —differs, suggests that these provisions do articulate different 
requirements.  
__________