Is The UK Serious About ASEAN Trade Links?

The Malaysian Government is looking for allies against the EU Parliament’s plan to ban Palm Oil biofuels: will the UK support its South-East Asian friends?

On Wednesday 17th January, the EU Parliament voted through its position on the Renewable Energy Directive (RED). This included a provision to ban all Palm Oil biofuels in Europe, after 2021. Other oilseeds are allowed to continue operating: the ban is only aimed at Palm Oil, which (coincidentally, or not) is the only feedstock originating from the developing world.

The vote to ban Palm Oil was not unanimous. MEPs from the UK’s governing Conservative Party were among those supported Malaysia. MEP Daniel Dalton, Chief Whip of the UK Conservatives, released a statement arguing that:

“we could not support an arbitrary ban on palm oil, which will have an inflationary effect on food prices and cause significant economic damage to developing countries.”

Conservative MEP Daniel Hannan, in a speech in the EU Parliament, criticised other MEPs for voting to ban Palm Oil:

“the reality is that this is a vote driven by the interests of rapeseed producers here in Europe, specifically the biofuels industry at home”

This is the reality. Some MEPs have claimed that Palm Oil should be banned for environmental reasons, but these do not stack up against the facts. A few bulletpoints is all that is needed to expose these claims as baseless:

  • Malaysia protects over 50 per cent of land as forest area, as confirmed by the United Nations. This is more than almost every EU country. The claim that Malaysian Palm Oil causes deforestation is demonstrably untrue.
  • Palm Oil is 4 times more efficient that rapeseed – that means for every litre of rapeseed oil, four times more land must be cleared, compared to Palm Oil. The environmental benefits of Palm Oil biofuels are clear.
  • Malaysian Palm Oil biofuel exports are already certified as sustainable under the RED: by leading EU certification bodies, such as the ISCC (based in Germany) and the RSPO-RED (based in Switzerland). MEP claims that Palm Oil biofuel is not sustainable are untrue, as proven by the experts.

Conservative MEPs are correct: this is about protectionism, pure and simple.

650,000 Malaysian small farmers, and 3.2 million Malaysians in total, who depend on Palm Oil, will be grateful for the principled stance taken by these MEPs.

The UK MEPs also acted in their country’s economic interests. The UK Government has been vocal about its ambition to build new global trade links with Asia, after its exit from the European Union. Dr Liam Fox, the UK’s Secretary of State for International Trade, has visited the region to scope out potential trade deals. The actions of MEPs in Brussels, voting to support and maintain open trade in Palm Oil biofuels, is a positive step and illustrates Britain’s commitment to support and partner with Malaysia and her neighbours.

By contrast, other MEPs have voted to harm trade links with Malaysia. Malaysia’s Minister for International Trade, Dato’ Sri Mustapa Mohamed, has put the EU on notice that a WTO complaint will be forthcoming; and Minister of Plantations Industries and Commodities, Datuk Seri Mah Siew Keong, has stated clearly that retaliation will follow, from Malaysia, Indonesia and Thailand. The Minister noted to EU leaders that if the ban on Palm Oil is confirmed – “don’t expect us to continue buying European products”.

UK MEPs’ position to distance themselves from the EU’s Palm Oil ban may have given the UK a competitive advantage when it comes to future trade policy.

The next step in the process is the so-called ‘trilogue’ negotiations, between the Parliament, Council (made up of 28 EU Governments) and the EU Commission. The Parliament negotiators will press hard for a ban on Palm Oil. Surely, Malaysia can count on the UK Government to support Palm Oil within the Council?

That may not be the case. Not everyone in the UK Government is supportive of Palm Oil, and not everyone has received Minister Fox’s memo about the importance of trade links with Asia.

On December 18th, UK Energy Minister, Lord Henley, made a speech at a Council meeting in Brussels stating that the UK doesn’t want to use Palm Oil biofuels. Does this mean that Minister Henley, and the UK Energy Ministry (knows as BEIS), are planning to support the MEPs’ call for a ban on Palm Oil biofuels?

If so, this would clearly place Minister Henley at odds with the UK Government’s stated policy of improving trade links – and would place at risk Minister Fox’s trade goals in Asia. The retaliation and ill-feeling that would follow a vote to ban Palm Oil would have significant, and not short-term, negative effects on the UK’s trade relations with Indonesia, Malaysia and elsewhere.

The UK’s position on the RED will be an acid test of the Government’s seriousness about future trade links with Asian countries, and its commitment to support mutually-beneficial open trade. Palm Oil may seem like a minor issue in the Westminster tearooms, but in South-East Asia this RED vote is an existential threat, that will have life-and-death impacts.

The UK Government should take a lesson from their MEPs and support open trade with friends in Asia, and oppose vigorously any attempt to ban Palm Oil biofuels.

#Policy News