The EU-Palm Oil Disputes: A Turning Point in Trade and Climate Jurisprudence

Abstract

This article critically analyses the panel reports of the World Trade Organisation (WTO) in the EU–Palm Oil disputes, which challenge key elements of the European Union’s Renewable Energy Directive II and its accompanying Delegated Regulation. These disputes raise foundational questions at the intersection of international trade law and climate governance, including the treatment of non-product-related process and production methods (NPR-PPMs), the extraterritorial reach of trade-related climate measures, the role of international standards under the Agreement on Technical Barriers to Trade (TBT Agreement), the degree of deference granted to WTO Members in adopting (alleged) climate measures, and the extent to which equity concerns for developing countries are accommodated within WTO disciplines. While the panel upheld the EU’s regulatory autonomy to pursue climate objectives and accepted the permissibility of climate measures with extraterritorial effects, it also found that aspects of the measures’ design and implementation resulted in discriminatory treatment of palm oil-based biofuels. The article argues that, notwithstanding these findings, the panel reports ultimately failed to move the needle on several critical aspects of WTO climate jurisprudence. In particular, the panel avoided clarifying the applicability of the TBT Agreement to NPR-PPMs, adopted a restrictive understanding of the relevance of international standards, and raised the evidentiary threshold for identifying less trade-restrictive alternatives under the TBT Agreement. Most critically, the panel treated the obligation to consider the needs of developing countries as largely procedural, thereby failing to meaningfully integrate the principles of common but differentiated responsibilities and respective capabilities and the duty to cooperate into the assessment of trade-related climate measures