The Oil Palm The Oil Palm

EU’s Top Diplomat Travelling to Jakarta to Discuss Palm Oil, WTO and Sustainability

Ahead of the 52nd ASEAN Foreign Ministers’ Meeting/Post Ministerial Conferences in Bangkok this week, the EU’s High Representative/Vice-President Federica Mogherini gave an interview setting out her vision for the future of the EU-ASEAN relationship.

Inevitably, VP Mogherini was asked about palm oil – the EU’s attempts to restrict palm have led to a rocky few years for the EU’s image in southeast Asia. Her responses to the question were telling, and gave an indication that the EU does not seem ready to give up its discriminatory approach.

First, she claimed that “The EU is not banning palm oil”. This is a tired, well-worn Brussels line that is inaccurate and has been debunked multiple times. H.E. EU Ambassador to Malaysia Maria Castillo Fernandez made similar remarks while visiting smallholders on a FELDA oil palm plantation earlier this year. The simple fact is that a withdrawal of the RED subsidy for palm oil biofuels is a de facto ban: any biofuels in Europe are uneconomic once that RED subsidy is removed. The EU knows this, which is why MEPs have regularly described the EU’s actions as a ban. It is disrespectful to the ASEAN audience to continue pushing this line, when the palm oil sector and the region’s government both know that it is not accurate.

Ambassador Castillo Fernandez made some additional comments during that FELDA visit. She argued that smallholders weren’t certified and so wouldn’t be affected by the EU’s ban on palm oil biofuels. The Ambassador is wrong. Many FELDA plantations are in fact certified and the EU ban on palm oil will affect the whole palm oil industry, smallholders being an integral part of that industry.

Returning to Vice President Mogherini’s intervention – the core of her response on the issue of palm oil was to highlight the EU’s determination to address the “climate urgency that our world faces” and to see any action on biofuels as part of that broader effort.

Now, it is true that the EU has been a global leader on climate regulation: that is a matter of record. But the question that needs to be asked is how does the EU now go about its current and future plans for sustainability and climate policy? Will the EU take a cooperative, international and collegiate approach – or will it go down the road of protectionist regulation, and putting up barriers? This is at the heart of the question on palm oil – and Mogherini did not address this strategic question.

The fact is that Malaysia shares Europe’s commitment to sustainability and fighting climate change. Malaysia’s track record is extremely clear on this point, with world-leading forest conservation commitments stretching all the way back to the Rio Earth Summit in 1992.

If the EU would take a cooperative approach to climate and sustainability action, then VP Mogherini and her colleagues would recognize these facts. The palm oil sector is a key part of Malaysia’s ongoing leadership on conservation and sustainability. Minister of Primary Industries Teresa Kok announced earlier this year that Malaysia will implement a cap on the expansion of oil palm plantations, effective immediately.

The Minister is also finalizing the mandatory introduction of MSPO, an internationally recognized sustainability scheme that will cover every palm producer in Malaysia, guaranteeing a palm oil sector that is tightly regulated and heavily monitored, with strict requirements for sustainability and best agricultural practices.

Shutting off market access for Malaysia’s small farmers under the RED’s Delegated Act is a clear example of such protectionism. It will not advance the EU’s climate objectives, nor will it help to build bilateral, or multilateral, cooperation. Earlier this week, the Malaysian Ministry of International Trade and Industry (MITI) called for the EU to accept MSPO and not discriminate against palm oil within the RED Delegated Act (revision in 2021). MITI described the DA is “a protectionist measure and a form of disguised trade”.

A third interesting comment in VP Mogherini’s recent interview was her assertion that the RED DA is “in line with WTO obligations”. This is disputed by independent experts, and both Malaysia and Indonesia have confirmed they will file a WTO complaint over the issue.

During the last ASEAN Ministerial meeting in January 2019, Malaysia’s Foreign Affairs Minister Saifuddin also confirmed that no ASEAN-EU Strategic Partnership would be signed, if the EU didn’t withdraw the palm oil ban.

How, then, can the EU make up for the recent missteps in ASEAN? VP Mogherini only has a few months left in office – her successor, likely to be Josep Borrell from Spain, will have to lead on the issue. He would be well advised to acknowledge environmental leadership where they find it, including in Malaysia. He should embrace a cooperative, international approach – not an approach of building up trade barriers and import restrictions. And he needs to accept that palm oil is part of the solution, and essential to the region’s leadership on poverty alleviation, economic growth and sustainable agriculture. If not, and if the EU persists with discrimination against palm oil, it is hard to see how the relationship can be rebuilt.