Malaysia on Thursday said it might stop exporting palm oil to the EU in response to a new EU law aimed at protecting forests by strictly regulating sale of the product.
Malaysian Minister of Plantation and Commodities Fadillah Yusof said Malaysia and Indonesia would discuss the law, which bans sale of palm oil and other commodities linked to deforestation, unless importers can show that production of their specific goods has not damaged forests.
The EU is a major palm oil importer, and the law, agreed to last month, has raised an outcry from Indonesia and Malaysia, the top producers.
Photo: Reuters
“If we need to engage experts from overseas to counter whatever move by EU, we have to do it,” Fadillah said on Thursday.
“Or the option could be we just stop exports to Europe, just focus on other countries if they [the EU] are giving us all a difficult time to export to them,” he added.
Environmental groups blame the palm oil industry for rampant clearing of Southeast Asian rainforests, although Indonesia and Malaysia have created sustainability certification standards that are mandatory for all plantations.
Fadillah, who is also Malaysian deputy prime minister, urged the members of the Council of Palm Oil Producing Countries to work together against the new law and to combat “baseless allegations” made by the EU and the US about the sustainability of palm oil.
The council, which is led by Indonesia and Malaysia, has previously accused the EU of unfairly targeting palm oil.
EU Ambassador to Malaysia Michalis Rokas said it was not banning any imports of palm oil from the country, and denied that its deforestation law created barriers to Malaysian exports.
“[The law] applies equally to commodities produced in any country, including EU member states, and aims to ensure that commodity production does not drive further deforestation,” Rokas said.
EU demand for palm oil was expected to decline significantly over the next 10 years, even before the new law was agreed to. In 2018, an EU renewable-energy directive required the phasing out of palm-based transportation fuels by 2030 because of their perceived link to deforestation.
Indonesia and Malaysia have launched separate cases with the WTO, saying the fuels measure is discriminatory and constitutes a trade barrier.
Indonesian President Joko Widodo and Malaysian Prime Minister Anwar Ibrahim this week agreed to “fight discrimination against palm oil” and strengthen cooperation through the palm oil council.
The EU accounts for 9.4 percent of palm oil exports from Malaysia, taking 1.47 million tonnes last year, down 10.5 percent from a year earlier.
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