Palm Oil & Trade: Fact-Checking the European Parliament Report

Ahead of the vote on Palm Oil & Deforestation in the European Parliament on April 4th, The Oil Palm is fact-checking the Environment Committee’s Report.

Here are the Facts.

#2 – Customs

Claim

In Paragraph 47, the Report states –

Calls on the Commission to consider applying different customs duty schemes reflecting the real costs associated with environmental burden; consider the introduction and application of non-discriminatory tariff and non-tariff barriers based on the carbon footprint of this product.

Truth

Differential tariffs or taxes for how Palm Oil is cultivated would clearly infringe WTO rules. This proposal has been rejected on multiple occasions – including in France and the Netherlands – as it is discriminatory and is an unjustified trade restriction. The EU is being challenged at the WTO by Argentina for discrimination against imported biofuels based on carbon footprint claims.

Tariff and non-tariff barriers are not the solution – and would harm the EU’s trade relationships. Instead, the EU should be open to a comprehensive G2G approach with Palm Oil producing countries, based on mutually agreed standards and recognising producer country certification schemes.  Anything less should be flatly rejected.

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#3 – Trade Agreements

Claim

In Paragraph 50, the Report states –

Calls on the Commission to include binding commitments in sustainable development chapters of its trade and development cooperation agreements with a view to preventing deforestation, in particular, an anti-deforestation guarantee in trade agreements with palm oil producing countries.

Truth

The only way in which EU trade agreements should address Palm Oil is with careful and considered bilateral or multilateral engagement that covers national standards of producer countries. Any attempt by the EU to use a trade agreement to erode sovereignty, undermine Malaysia’s national development goals and dictate Malaysian land-use policy will be unlikely to facilitate a trade agreement. If EU trade policy was to discriminate against Malaysia’s national goals, this would have clear negative implications for broader relations.

A broader government-to-government approach on Palm Oil is possible. Malaysia could work with the EU on a G2G arrangement for Palm Oil. Such a G2G agreement would be a pioneering development, and would resolve both trade and environmental questions. The framework for this agreement to commence is MSPO, which is meanwhile being made mandatory for Malaysian producers and industry.

If the EU is serious about such a path and securing trade agreements in the ASEAN region, it will need to negotiate in good faith.