The increase in demand and use for biofuels, a renewable energy that is a "clean" alternative to fossil fuel, have resulted in concerns about their impacts on sustainability and climate change. The European Union (EU) revised its Renewable Energy Directive (RED) to integrate sustanability and indirect land use change (ILUC) for biofuels. However, the EU Commission classified palm oil as the only biofuel feedstock crop with a high ILUC-risk, hence the EU Members may not attain their targets of renewables transport and it will have to phased out by 2030. Although palm oil is an effective source material to produce biofuels, it is linked to widespread deforestation and loss of biodiversity. The import of palm oil in the EU can have a significant impact on trade. This article analyses whether the ILUC policy as an environmental process and production method (PPM) measure with extraterritorial reach can amount to a breach of WTO rules of non-discrimination and/or justified under the General Agreement of Tariff and Trade (GATT).