KUALA LUMPUR (REUTERS) - Malaysia is reviewing its trade with the European Union following the bloc's move to back a ban on using palm oil to make biofuels, the Deputy Prime Minister was reported as saying on Sunday (Jan 28).

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

Indonesia and Malaysia, which produce nearly 90 per cent of the world's palm oil, called the move discriminatory and said there should be fair treatment for all vegetable oils.

Datuk Seri Ahmad Zahid Hamidi said Malaysia was reviewing the purchase of products from EU nations, state news agency Bernama reported.

The matter was decided during a Cabinet meeting last week chaired by Prime Minister Najib Razak, he was quoted as saying in his speech given to community members in the northwestern state of Perak.

"If we import trade products from any country, and if that country makes the decision to boycott palm oil, then our government will also stop buying from that country," Datuk Seri Zahid said.

"They carried out various marketing efforts so that we buy their products, but (they) don't want to buy our products. Malaysia is not a country that can be manipulated."

A large portion of European palm oil imports is used to make biofuels, giving Malaysia and Indonesia cause for concern.

Malaysia, the world's second-largest palm producer, said last week that it would work with other producing countries to voice "strong concerns" to the World Trade Organisation.

Mr Zahid said the EU proposal threatens the income of some 500,000 planters across the country.