Prime Minister Dr Mahathir Mohamad on Monday called on Britain to engage with palm oil growers to incentivise sustainable production, rather than pursuing boycotts after its scheduled exit from the European Union on Oct 31.
Mahathir's comments, carried in an opinion column for news agency Bloomberg, follow a move by the EU to phase out palm oil usage in biofuels.
Top growers Indonesia and Malaysia have said they would file a complaint to the World Trade Organization to challenge the move.
"A fresh attitude toward palm oil, unencumbered by influential special-interest groups, could lead to even better trade terms between the UK and the region than it currently enjoys," he wrote in the column.
"We hope to avoid a trade war with Europe... But if one transpires, that doesn't mean the UK has to get caught in the crossfire."
In March, the European Commission had determined that palm oil cultivation had resulted in excessive deforestation and it should no longer be considered a renewable transport fuel, albeit with some exemptions.
While Mahathir acknowledged the importance of environmental sustainability and deforestation in trade talks, he said, "The answer is not to single out one commodity and ban it" and called the EU's move "a form of modern colonialism that has no place in today's world."