Malaysia ready to hit EU with sanctions over palm oil

Malaysia says it will look to take retaliation against exports from the European Union if the bloc phases out palm biodiesel.

“Malaysia will combat the EU’s aggressive protectionist measure,” said Primary Industries Minister Teresa Kok.

Malaysian Prime Minister Mahathir Mohamad’s recently warned French President Emmanuel Macron that he would consider restrictions on French imports if Paris did not withdraw plans to ban palm biodiesel.

The Mahathir and Kok made no reference to the ruinous environmental impact of palm oil production, which is the driving force behind European legislation, rather than political motivation, as Kok claimed.

In December the French parliament voted to remove palm oil from the country’s biofuel scheme from January 2020.

Rather than addressing the damage caused by palm oil production, Mahathir reverted to his customary nationalist approach.

The 93-year-old in January said if France persisted in banning palm oil, Malaysia would suspend free-trade talks with the EU and impose reciprocal sanctions on French goods.

Unfortunately for Malaysia, the global palm oil benchmark, the Bursa Malaysia Derivatives Exchange, fell 1.1 per cent to US$499 per tonne after earlier hitting a four-month low last week over concerns about demand from top markets, India and China.

Meanwhile, the EU Delegated Bill is due to be tabled before the European Parliament next month, supplementing the EU Renewable Energy Directive II to ban palm oil biofuel by 2030.

The versatile oil is an important cash crop for Indonesia and Malaysia, which together account for more than 80 per cent of the global production. Palm oil is used in soap, cake, transport fuel and elsewhere.

Kok said the Delegated Act was discriminatory against the developing nations which produced palm oil and designed to hurt millions of small farmers.

“The entire Delegated Act process has been based on the politics of protectionism. I oppose entirely the European Commission classifying palm oil as ‘high risk’.

“Palm oil producing countries, including Malaysia, have consistently outlined the facts that demonstrate that the EU Delegated Act is inaccurate and discriminatory,” she said.

The production of palm oil is one of the leading global causes of deforestation, along with being blamed for other environmental and socioeconomic damage.

Some plantations have been accused of using forced or child labour, with workers receiving little or no pay.

There is an 85-per-cent loss of biodiversity in an ecosystem when plantations are created from the world’s most biodiverse ecosystems. Orangutans, tigers, rhinos and elephants are losing their habitats and becoming increasingly endangered or extinct.

Rainforest and peatland are cut and burned to create plantations. Peat is extremely rich in carbon so when it is burned stored carbon is released into the atmosphere. Indonesia produces the third-highest greenhouse-gas emissions after China and the US.

But Kok said palm oil produced eight times more oil than the US soybean oil per hectare which the European Commission, the EU’s executive branch, labelled as “low risk”.

Elephants in Malaysia and Indonesia have been affected by palm oil production. Picture credit: Wikimedia