The Oil Palm The Oil Palm

The EU’s Inconsistency Towards Malaysia and Palm Oil

A new EU document commenting on Malaysia’s record on ‘human rights and democracy’ exposes the inconsistency in EU policy towards Malaysia, and specifically Malaysia’s major export commodity, palm oil.

The European External Action Service (EEAS) – the EU’s top diplomats – released a statement about the latest EU Annual Report on Human Rights and Democracy in the World for 2018, which includes a section on Malaysia. The EU report praises the changes taking place in Malaysia since Prime Minister Dr Mahathir Mohamad was sworn in mid 2018.

The EU Report praises Malaysian policies that have led to a freer media and notes that 90% of charges previously levelled against human rights defenders and political opposition figures have either been dropped, or acquitted.

Yet, despite welcoming those important developments and encouraging them, the EU has spent the past 18 months undermining Malaysia’s economy by attacking palm oil via the Renewable Energy Directive (RED) and its Delegated Act. The recently published Delegated Act, which will enter into force on 10thJune, will phase out palm oil biofuels completely by 2030. Other oilseeds – such as rapeseed and sunflower (both grown in Europe) will continue to be allowed. Only palm oil is targeted.

Why is this inconsistent from the EU?

The EEAS is the EU’s diplomatic service. Its mandate is to make sure the EU’s voice is heard. It is supposed to support the EU’s key international missions on human rights, democracy and sustainable development.

But it seems it will only support development if EU interests aren’t compromised.

Support for human rights, democracy, and other core values is based on, and runs concurrent to, economic development. Economic freedom is crucial for a country’s broader development. Palm oil has given economic freedom to millions across Malaysia: it has allowed property right to flourish, reduced poverty massively in rural communities, and built local supply chains and industrial clusters that employ 3 million Malaysians.

The EU ban on palm oil biofuel undermines this economic progress.

This EU Report is a positive and realistic portrait of Malaysia. It should also point out that Malaysia is a recognized leader in environmental protection and sustainability as attested by the UN FAO and the World Bank. EU Ambassadors also used this opportunity to re-assess that the Delegated Act was not a discriminatory measure tackling palm oil, but the Malaysian Government has not budged from its stance.

Instead of promoting Reports on Human Rights and other EU public statements aimed at trying to appease Malaysia, if the EU really wanted to support the Malaysian society and democracy, the easiest path to provide such encouragement would be to recognize and embrace Malaysia’s environmental leadership – including with the world-leading sustainability standard MSPO. EU endorsement of MSPO would be real-world support for Prime Minister Dr Mahathir Mohamad and his Government’s approach to palm oil (rather than simply kind words in a report).

The EU – in particular EU Ambassadors – have an important role to play, here. Recent statements from European Ambassadors in Kuala Lumpur and Jakarta, essentially denying the fact that the Delegated Act is a protectionist discrimination against palm oil, are not helpful. Instead of covering up the truth, EU representatives would be better served working with Malaysia to tell the truth about the country’s environmental leadership and track record.

The Malaysian Government and the Malaysian people know the truth about Delegated Act. Continued attempts to deny reality are not helpful or constructive.

The EU’s discriminatory Delegated Act will have consequences for European trade policy, as Malaysian Minister of Primary Industries Ms Teresa Kok recently evoked in meetings with government officials across Europe. Foreign Affairs Ministers Datuk Saifuddin Abdullah echoed this by announcing that the ASEAN Strategic Partnership won’t be signed until the situation around palm oil is resolved, and that no ASEAN trade agreements would be finalised until palm oil discrimination ends. This is a major blow for the EU, given that the Commission has been trying for years to finalise trade agreements with ASEAN.

What is the way forward out of this inconsistency?

First, the Human Rights and Democracy Report is welcome, and accurate. However, flattering Malaysia with such words while continuing to undermine and attack palm oil experts is not a good strategy. Instead, the EU’s trade and foreign policy establishment must realize that their anti-palm oil approach has harmed their image in Malaysia and South-East Asia as a whole.

If the EU wants to make amends with Malaysia and other palm oil producing countries, reverse the course of action on palm oil. That will be the only way for trade agreements, and the ASEAN Strategic Partnership. It will also have the benefit of allowing palm oil to support the economic and social development that the EU has praised in its recent Report – and it will avoid trade retaliation against EU exports. In other words, a win-win.