Malaysia to block unfair EU resolutions on palm oil

• Nov 27, 2017

PETALING JAYA: Malaysia is currently hot on its heels to block the discriminatory European Union (EU) resolutions on palm oil prior to its full enforcement.

This year, the EU Parliament passed two resolutions – to impose single certified sustainable palm oil (CSPO) scheme for Europe-bound palm oil exports after 2020 and to phase out palm oil from the EU biofuel programme by 2020.

To put into perspective, the EU is the second biggest importer of Malaysian palm oil at 2.06 million tonnes last year after India.

Hence, should the EU resolutions be enforced, they will bear grave repercussion on Malaysia’s exports to Europe, possibly dampening crude palm oil (CPO) prices and more importantly, affect the livelihood of 650,000 local smallholders whose income are mainly generated from planting and selling palm fruits.

In a recent exclusive interview with StarBiz, Plantation Industries and Commodities Datuk Seri Mah Siew Keong expressed his deep concern over the negative developments surrounding palm oil at the EU parliament.

“Europe is a big market, it is also a trend setter. The resolutions in the EU parliament could strongly affect consumers’ perception on the brand (palm oil).

“What more if the resolutions turn into legislation?”

The unfair measures imposed by EU, which accused oil palm development as the culprit to deforestation and climate, change can be viewed as a trade barrier, which is actually aimed at restricting palm oil market access to Europe, he added.

According to Mah, any trade should be a two-way relationship.

“Malaysia will retaliate if there is unfair discriminatory practice against our palm oil.

“We can even stop buying their products. Of course we hope it will not reach to that point as Malaysia prefer to settle things through negotiations.”

Mah has also urged members of the EU parliament to re-evaluate their stance on the oil palm sector.

By discriminating against oil palm, it would go against the EU commitment to the World Trade Organisation’s (WTO) free trade principle and also threatens the relationship between EU and palm oil producing countries, especially Malaysia and Indonesia.

He also said the growing negative perceptions towards oil palm from the EU resolutions would affect the producing countries.

Towards this, a Special Oil Palm Economic and Technical Committee between Malaysia and the EU has also been set up this month.

This committee will act to establish a clearer understanding on issues surrounding palm oil, and would be joined by special representatives of the EU ambassadors in Malaysia.

Another timely stance was also made during the 12th Annual Roundtable (RT) Discussion between Malaysia and Indonesia in Kuching last week (Nov 22) in Sarawak whereby Prime Minister Datuk Seri Mohd Najib Razak had raised the issue regarding the palm oil trade barrier by the EU.

More importantly, Malaysia and Indonesia at the RT have pledged commitment to use all available platforms to ensure the action of the EU parliament would be constrained.

“We have to retaliate because palm oil forms the backbone of both Malaysia and Indonesia’s economy.

“More so to safeguard the income of the million farmers dependent on the crop for their livelihood.

“The producing countries will have to take action.

“Between now and the implementation, I believe we will be able to come out with win-win negotiations that will benefit both sides,” he explained.

Malaysia and Indonesia account for 85% of the total world’s palm oil trade.

Meanwhile, the Malaysian Sustainable Palm Oil (MSPO) certification compliance will be made compulsory to all stakeholders by the end of 2019.

According to Mah, this will help elevate the local palm oil industry to attain the global standard of producing CSPO.

He said some RM140mil was allocated to finance the cost of MSPO certification among local smallholders nationwide.

While the EU parliament resolution on deforestation of rainforest seeks for a single European certification, Mah said it would not be suitable for local planters to adopt such certification due to the expensive cost of certification in euros.

Furthermore, the European standards and law may not be applicable to Malaysia.

“If you want to have a sustainable certificate, it has to be home-based sustainable palm oil certificate which includes Malaysian laws and environment.

“At the same time, my ministry is also working hard for MSPO to be recognised by the EU.

“My sincere wish is for Malaysian palm oil to command a premium so that it will not be subjected to price competition.”

On the flip side, despite the challenges from the recent EU resolutions, Mah is optimistic that the exports value of palm oil would exceed more than RM70bil this year from RM67bil last year.

This is attributed to the intensive export promotions abroad as well as the higher average price of CPO.

Since his appointment as minister in over a year, Mah has undertaken 20 economic missions and also explored new export markets including Iran, Vietnam and the Philippines.

Mah also expects the country’s CPO production will bounce back to over 19 million tonnes this year as the dry weather El-Nino phenomenon dissipated.

Source: https://www.thestar.com.my/business/business-news/2017/11/27/malaysia-to-block-unfair-eu-resolutions-on-palm-oil/#TUXdAqxswlB2oO5u.99