Where is The EU Headed on Palm Oil?

The European Commission has published a draft report assessing measures that the EU can take to combat global deforestation. The report, entitled ‘Feasibility study on options to step up EU Action against Deforestation’ was drafted by the Danish consultancy COWI.

This is the first of a series of blogs that will analyse the actions proposed within the COWI Report; and also examine the political motivations and the history behind the EU’s concern with global deforestation and its objections to Palm Oil.

In June of this year, the European Commission released a report that assessed how the European Union should best respond to global deforestation. No, not European deforestation, but deforestation in other parts of the world.

Similarly, the Commission also just released its response to the recent outlandish EU Parliamentary Resolution on palm oil. The Commission took issue with parts of the Resolution such as a Single Certification Scheme, but stayed silent on some of the egregious errors in the report. It was largely sympathetic to the perspective of Europe on sustainability and Palm Oil.

For those who are new to the global environmental debate, this may seem unusual. But this pattern of European antipathy towards forestry and agriculture in developing countries is nothing new.

As far back as 1989, European policymakers were examining ways in which development assistance (i.e. aid) and trade instruments could be used to assist in the conservation of tropical forests.

This was mandated by law in 1991, with direct European Commission budget items for the ‘promotion of tropical forests’ in 1993. This included funding for NGO activities.

Unsurprisingly European activists launched broadsides against the Malaysian timber industry at around that time.  NGOs and importers of tropical timber in the UK and Netherlands went so far to suggest tariffs and levies on imported tropical timber. Does this all sound familiar?

EU policymakers subsequently took aim at the Malaysian and Indonesian plywood industries and Indonesian pulp and paper. European pulp and paper producers in particular found themselves under significant pressure from low-cost Indonesian imports. The ‘promotion of tropical forests’ worked as a perfect cover for protectionism to prop up uncompetitive domestic European industries. Again, does this sound familiar?

Fast forward to the late-2000s and EU NGOs set their sights on agriculture, particularly palm oil. Why palm oil? The key political driver here was not actual forest loss, but the fortunes of European oilseed producers. Changes to European agricultural policy around this time encouraged the production of oilseeds, particularly for biodiesel. But subsequent imports of better-value and higher-quality palm oil for both food and biodiesel were putting a strain on EU oilseed farmers. Not only were they unable to take advantage of new demand, they were losing existing market share.

Again, tropical forests were the perfect justification for EU policymakers, industry and NGOs to target palm oil. Note that the angle taken by EU Parliamentarians is not to address the problem of deforestation or biodiversity loss, but to address palm oil itself.

Against this decades-long background came a large piece of research that was published by the EU in 2012.  It found that between 1990 and 2008:

In other words, Palm Oil is a very small contributor to global deforestation. Beef and livestock are around ten times larger; soy is more than double; and maize is also larger.

In addition, the study says that:

In other words, palm oil isn’t a big risk for global deforestation or even the EU’s contribution to deforestation.

The follow-up to this 2012 report has come in the form of a new assessment looking at possible EU policy measures to address global deforestation.

Should oil palm growers be concerned? Yes.

Despite palm oil being a small contributor to both global deforestation and EU ‘imported deforestation’, palm oil is still on the table. Palm oil may be small compared with beef and soybean in terms of deforestation, but taking measures against palm oil is more politically feasible.

Why? The EU produces soybean and beef; it doesn’t produce palm oil. Palm oil only really comes from two countries, Malaysia and Indonesia. Both soybean and beef come from some of the EU’s largest trading partners, including the US, Brazil and Canada.

So, while the facts on deforestation may stack against beef and soy, the politics stack against palm oil. And politics, not facts, rule in the EU. This is the context in which the COWI Report must be read – and the context in which the EU’s entire approach to deforestation and commodities must be understood.

In our next blogs, we’ll look at the concepts and assessments in the COWI report.

#Policy News