[2][3] The European Commission delegation office was established in Malaysia in 2003 and since then, policy interactions and co-operation between both federal and state authorities including the Malaysian and EU business communities have increased progressively.

[3][4] In March 2019, tensions arose between the European Union and Malaysia following the conclusion by the European Commission that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out by 2030.

Malaysia, the world's second biggest palm oil producer after Indonesia, relies on the crop for billions of dollars in foreign exchange earnings and hundreds of thousands of jobs.

Prime Minister Mahathir Mohamad said the European Union's increasingly hostile attitude towards palm oil was an attempt to protect alternatives that Europe produced itself, like rape seed oil.

He alleged that the European Union is at risk of starting a trade war with Malaysia regarding its "grossly unfair" policies geared towards decreasing the use of palm oil, which Mahathir stated was "unfair" and an example of “rich people…try to impoverish poor people.” [5] In 2011, Malaysia was the European Union's second largest trading partner in Southeast Asia after Singapore and the 23rd largest trading partner for the European Union in the world,[3][4] while the European Union was Malaysia's 4th largest trading partner.