EUROPEAN UNION AND CERTAIN MEMBER STATES – CERTAIN MEASURES CONCERNING PALM OIL AND OIL PALM CROP-BASED BIOFUELS REPORT OF THE PANEL
Document: Addendum
Date: 5 March 2024
Document codes: WT/DS600/R/Add.1; WT/DS600/R.
Complainant: Malaysia
Respondent: EU, France, Lithuania
Third parties: Argentina, Australia, Brazil, Canada, China, Colombia, Costa Rica, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Japan, South Korea, Norway, Russia, Saudi Arabia, Singapore, Thailand, Turkey, Ukraine, United Kingdom, U.S.
Dispute stage: Panel
Agreements cited: Art. I:1, III:2, III:4, X:3(a), XI:1  GATT 1994Art. 3, 5  Subsidies and Countervailing Measures (SCM)Art. 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, 12.3  Technical Barriers to Trade (TBT)

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

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

ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel 4

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 parties 1 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 Panel 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
written 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 European 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.

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 request 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 submissions 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 cause.
(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 translation 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.

(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 again.
(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 Panel 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 request 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 Panel 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

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 closing 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 third-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 interpretation 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:

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 party'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 the 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 participation, 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

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 adopted 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 service 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 Descriptive 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 concerned

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 that 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 Secretary 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 paragraph 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.

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 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 fulfilling 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) certification. 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", Malaysian Palm Oil Board, available at
https://bepi.mpob.gov.my/images/area/2020/Area_summary.pdf.

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) (iii) 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 supplements 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, bioliquids, 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, bioliquids, 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 Regulation; 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 preamble to the RED II.
4 Article 36(1) of the RED II.

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. Introduction
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;

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 products 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 falling 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.

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 that 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 share 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 26(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 Article 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 directives 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.

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 relationship 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 biofuels 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 compensated 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, Emissions 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).

43. Notably, in light of technological developments in recent years, all oil crop 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 delivers 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 HVO 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. Malaysia notes that the EU standard EN 590 14 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, composition, 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.

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
carefully 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 expansion 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 applied 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.

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 submits 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 fulfil 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 are "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
intermediate 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.

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 toward 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 impossible
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

from non-fulfilment of the objective(s) pursued by the Member through the measure.20 This
balancing of factors constitutes the aforementioned "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, namely
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 effectiveness 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 for 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
considers 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 ILUC-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.

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 completion 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 objectives 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 are:
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 matter 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

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 technical 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 are 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 the 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 justification 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 Article
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 – Commercial 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.

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 regulations 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", Article 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
"suitable", 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 out 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.

H. The 7% limit, the high ILUC-risk cap and the high ILUC-risk phase out were
adopted without 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 cap, 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 conformity 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 certification 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 feedstocks 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
inconsistently 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 have been granted more favourable access;

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
comparable 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 and 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

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 underlying 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 technical 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 obtained 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, Malaysia 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, the 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 asserted by the EU, low ILUC-risk certification does not

26 Low ILUC-risk certification: Pilot report and recommendations Malaysia, Oil palm yield increase,
February 2021, 9 June 2021, available at
https://iluc.guidehouse.com/images/reports/Phase1_Pilot_Report_Malaysia.pdf.

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 procedure, 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 determine 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. Malaysia 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 Article 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.

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. Malaysia, 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
certification 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

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 certification 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 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 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 overwhelmingly 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 destination.
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

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 treatment 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 the 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 certification 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 "like".
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 already demonstrated that
this measure modifies 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 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 high 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 quantitative 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 be 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 restrictions 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 not 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
measures 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 redundant. 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 relevant 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 imported 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.

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 and 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 petrol 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

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 grants 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 originating 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 the 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 their 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 extent 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:

i) whether the measure at issue is an internal tax or other internal charge on products;
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 and, 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 inconsistent 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, petrol 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 interpretation 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.

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 Article 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 general 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 'citizens 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 inquiring 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

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 benefit; 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 otherwise 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. This 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 collect 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.

200. For all these 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 find 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 that 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 element 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 recipient 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 biofuels 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 financial 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 and, 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 palm 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.

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 Article 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 effect 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.

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 legal 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. Biofuels 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 demand 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 production 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).

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 set 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 formula 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 of 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 high 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 insufficient 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

crop into environmentally sensitive areas (high carbon stock/biodiverse) in parallel with
increasing global demand 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 of 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 holders.
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 potential 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 regulated 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 whether 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 fact 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 that a Panel must undertake when considering the claims under
the GATT 1994.

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 products' 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 biofuel products, which are partially substitutable and therefore should have been included.

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 biofuels, 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 market 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 eligibility 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 not 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 incentivise 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 comparative 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.

45. Malaysia essentially argues that there is no legitimate regulatory distinction between palm oil
and other oil crop-based biofuels because it disputes the validity 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 argues 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 for 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 objective 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 arbitrariness.
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 environmental 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 presence 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

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 breakdown 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 measures 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 plant 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.

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 production 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 clear 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 investments 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 the 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

undermining the integrity of that policy and that different crops present a different risk in terms
of increasing 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 address 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 nature 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 conduct 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

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 rest.

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 of 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 alternative 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 Annex 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

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 standards 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 Agreement
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 certification
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.

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 implementing 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 Malaysia'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 undermine 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
essentially 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.

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 incapable 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 products 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 opportunities 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 substantive 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.

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 tool 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, the 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 their 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 to 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 orientation.
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 the 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 legitimate
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 jurisdictional 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 atmosphere".
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.

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 when 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 -controversial. 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 explained 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 Biofuels 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.

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 limited.
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 handed, 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 biofuel 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 background
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

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 request 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 are 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 Malaysia 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
exclusion 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 formalistic "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 would 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 from 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

that incorporate renewable energy and their income are treated the same way, as they will not
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 not 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 that 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 could
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

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.

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

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 necessary 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 certain 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, to 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.

and evidence demonstrating the complete 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 2.1 6 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 indicate 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 contribution 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 scientific 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 provides 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 proposed 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, US – COOL (Article 21.5 – Canada and Mexico), para 5.338
13 Ibid.

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; Appellate Body
Report, Colombia – Textiles, paras. 5.71-5.74.
15 Appellate Body Reports, China – Rare Earths, para. 5.90.

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 purely 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 established 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 means

1 First Written Submission of the European Union, para. 748.
2 First Written Submission of Malaysia, para. 578.

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 Malaysia 5 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 elusive 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 in 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.

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 narrow 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 measures 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 Body 8, 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 finding 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).

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 must 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, enumerated 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 the subsidy.

9 Third Party Oral 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.

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 product 2. 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 Agreement 4. 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 objective 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 regulatory 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.

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
objectives 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 Article 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 OF 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 procedure (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 not 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 the 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. The 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 complete 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.

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 impact 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 internal 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 Biofuels 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 composite 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
Agreement 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.

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 individual 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 as 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 still
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 distinct 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 not 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 intensity 31.
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.

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.

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 restriction 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 with 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 obligations 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 breached 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

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 main 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 treatment 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 existence 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 are 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 Submission of Colombia, para. 3.13.
6 First Written Submission of the EU, paras. 707 – 708.

As to a potential difference 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 Submission 7, 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 exclusively 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 principle, 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 distinction 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 the
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 Colombia'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 treatment. 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,
adjudicators 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
rational, 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 between 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 international trade." Instead,
as interpreted by the Appellate Body, Article 2.1 "permit[s] detrimental impacts on competitive opportunities
for imports that stems exclusively from legitimate regulatory distinctions," while under the chapeau of Article
XX, discrimination 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.

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 complex 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 local 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 analysis 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 interpreted 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 inclusion 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.

was negotiated, and this implies a specific activity from the part of Members establishing TBT
measures.
Although the way to offer specific 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 own 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 particular 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 1994
- 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

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, which 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 lead 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 Article 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.

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 with 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 specific 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 independent 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 measure 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.

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 that 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 territory 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 protection 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
Agreements 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 Union.
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.

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 emerge 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 procedure, 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 regulation; 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 only
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, the 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 more
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 preservation 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)

whether the proposed measure will make at least an equivalent contribution to the objective that is
being pursued through the measure at issue; and 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 similar 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 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.
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.

In conclusion, Ecuador sustains that the European Union has failed to demonstrate that its measure
is based on an international standard, or that 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, but 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 product 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 Written Submission of Malaysia, Par. 103

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 existence 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 considered 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 protect 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 exceptionality of GATT Article XX must be observed
on a case-by-case basis.

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 actions
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 EXPLANATION
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 the 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 procedures 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 not 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 that 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 demand. 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,

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
separately, 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 should 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 cultivating 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 food 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

market without those 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 % limitation 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 phase-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 sufficient 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 made 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 procedure 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 AGREEMENT
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 the 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

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 competition 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 disagrees
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
domestically, 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 circumstances 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 relevant 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 more 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 measure 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 explain 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 "necessary 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

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 the 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 interpreted 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 recognise 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 demonstrated 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.

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 presented 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 production 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 allowed 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 test 2 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 to "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 could 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 disciplines 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.

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, that 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 which 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 between 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 the 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, architecture, 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.

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 OFFSET 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 measures, 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 assessed 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)

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 balancing 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 analysed 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 nexus 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
exemption, 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 three 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 alleged 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
scrutinizing 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 Appellate Body Report, Canada – Autos, para. 91. (footnotes omitted)
21 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), paras. 811-814.

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 meaning 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 subsidy 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 prejudice 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 effect.
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 sales 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.

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 the 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 determine,
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 EU 5 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.

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 provides 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
objective 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 have 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 measure; 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 legitimate 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.

III. Conclusion
16. This concludes Korea's oral statement. Thank you for your attention.

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 such 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" approach 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 defending 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 1994. 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) would 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.

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 seems 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 measure.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.

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
measure 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)", as 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. para. 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.

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 this 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. To 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 that 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.

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 "like" 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 feedstocks 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 issue 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 order 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 substantiated 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 territories 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 case-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.

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 territory 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, nature 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 element 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 Submission, para. 924.

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 agree 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 derived 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 whether 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 favourable 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 protect 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.

(g) relating to the conservation of exhaustible natural resources if such measures are
made effective in conjunction with restrictions on domestic production or
consumption; […].
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 environmental 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 moral
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 1994 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 regime 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.

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 Ukraine 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.

ANNEX C-12
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED 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 – "COMPOSITE" 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 been 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 – Retreaded Tyres, para. 178. See also Appellate Body Reports, US –
4 Appellate Body Report, Brazil – Retreaded Tyres, para. 178.
5 Appellate Body Report, US – Gasoline, p. 18.

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 afforded 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 importance 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 trade-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 measures" 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 objective 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 findings 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 immediately 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.
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 Reports, China – Rare Earths, para. 7.146, citing Appellate Body Report, Brazil – Retreaded
Tyres, para. 151.

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 CO2 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 and 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
highlights 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

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.

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 Kingdom 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://treaties.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 Parties 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 as the meeting of the
Parties to the Paris Agreement, paras. 20-22, available at: https://unfccc.int/documents/310497 (accessed 27
June 2022).

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 domestic
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 distinctions 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 treatment 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

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 actions
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
interpretations 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 and, 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
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 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 treatment 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 the 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. Malaysia 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"
"technical 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.

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
complainant—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 the 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 open 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 claims 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 products 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.

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 DS600, 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 European 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.

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 similar", 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.