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Palm Oil Is at the Heart of the Next Trade War

  • Producers have threatened response to ‘discriminatory’ measure
  • Environmental groups pressed to exclude palm oil from fuels
A researcher measures the height of a dwarf palm oil tree at the Malaysian Palm Oil Board research plantation in Kluang, Johor, Malaysia.
Photographer: Joshua Paul/Bloomberg
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Palm oil emerged as a flashpoint in a potential trade war between the European Union and some of the world’s largest developing nations after the bloc imposed stricter limits on how the crop can be used in green fuels.

The European Commission on Wednesday restricted the types of biofuels from palm oil that may be counted toward the EU’s renewable-energy goals and introduced a certification system. Indonesia and Malaysia, which supply 85 percent of the crop, have warned that they are ready to retaliate against what they see as “discriminatory” rules.