Daily Management Review

Malaysia Stated It May Suspend Exporting Palm Oil To The EU As A Result Of New Restrictions


Malaysia Stated It May Suspend Exporting Palm Oil To The EU As A Result Of New Restrictions
Malaysia said on Thursday that it may stop exporting palm oil to the European Union in response to a new EU law that strictly regulates the product's sale in order to protect forests.
Malaysia and Indonesia, according to Commodities Minister Fadillah Yusof, will discuss the law, which prohibits the sale of palm oil and other commodities linked to deforestation unless importers can demonstrate that the production of their specific goods has not harmed forests.
The EU is a major importer of palm oil, and the law, agreed to in December, has sparked outrage in Indonesia and Malaysia, the top producers.
"If we need to engage experts from overseas to counter whatever move by EU, we have to do it," Fadillah told reporters on the sidelines of a seminar 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."
Environmental activists blame the palm oil industry for the widespread destruction of Southeast Asian rainforests, despite the fact that Indonesia and Malaysia have made sustainability certification mandatory for all plantations.
Fadillah, who is also the deputy prime minister, urged members of the Council of Palm Oil Producing Countries (CPOPC) to unite against the new law and to combat "baseless allegations" about the sustainability of palm oil made by the EU and the US.
CPOPC has previously accused the EU of unfairly targeting palm oil, which is led by Indonesia and Malaysia.
In response to Fadillah, the EU's ambassador to Malaysia stated that the country's palm oil imports were not prohibited and that the EU's deforestation law did not create 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 and forest degradation," EU Ambassador Michalis Rokas told Reuters.
Rokas went on to say that he was looking forward to meeting Fadillah and assuaging Malaysia's concerns.
Even before the new law was passed, EU demand for palm oil was expected to fall significantly over the next ten years. Because of their perceived link to deforestation, palm-based transportation fuels were required to be phased out by 2030 under an EU renewable-energy directive in 2018.
Separate cases have been filed with the WTO by Indonesia and Malaysia, claiming that the fuels measure is discriminatory and constitutes a trade barrier.
This week, Indonesian President Joko Widodo and Malaysian Prime Minister Anwar Ibrahim agreed to "fight palm oil discrimination" and strengthen cooperation through CPOPC.
According to Malaysian Palm Oil Board data, the EU is the world's third-largest consumer of palm oil. It accounts for 9.4% of Malaysian palm oil exports, taking 1.47 million tonnes in 2022, a 10.5% decrease from the previous year.