Malaysian Palm Oil Ready for EUDR But is The EU Ready?
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Update January 20, 2025
Malaysia and the EU have resumed free trade negotiations
Malaysia and the European Union have announced the resumption of negotiations for a free trade deal, 12 years after talks were put on hold over a disagreement related to the Southeast Asian country's palm oil industry.
The decision was made following Prime Minister Anwar Ibrahim's working visit to Brussels on Sunday.
"The free trade agreement is expected to unlock immense benefits across multiple sectors of Malaysia's economy while strengthening the global supply chain in critical sectors," Anwar's office said in a statement on Monday. Reuters
The sticky point in free trade negotiations between Malaysia and the EU will remain palm oil but much has transpired in the last twelve years that supports a successful deal this time around.
The main point being that Malaysia and the EU share a common goal in sustainability.
However, these visions of green economies have been battered by global realities where the EU is losing relevance among global powers. According to POLITICO:
A new inconvenient truth: Europe’s global plans all require money no one has
A competitive, green Europe will require trillions in investments. No one has a good answer on where that money will come from.
To make matters worse, Donald Trump's return as President of the US has forced the EU to place its economies before its green dreams in anticipation of a trade fight where climate change is a non-issue.
Pressured on all sides including the influence of China on the EU's trade partners in South America, the EU has rushed to shore up its economy with an updated trade deal with Mexico.
But more relevant to the Malaysia and EU negotiations is the EU-Mercosur trade deal where the EU Deforestation Regulations became a non-issue. This was fiercely criticized as a derailing of the EU's ambitions to protect the world's forests and too weak for labour rights.
The press statement from the EU confirmed that:
In the agreement, the EU and Mercosur commit to effectively implement the Paris Climate Agreement and to cooperate on the climate aspects of trade.
Furthermore, the Paris Agreement on Climate Change becomes an 'essential element' of the agreement, which means that a party can suspend the agreement if it considers that there is a serious breach of the Paris Agreement or if a party leaves the Paris Agreement.
Whether the EU extends the same concession of merely meeting the Paris Agreement to Malaysia in its trade negotiations is unforeseeable at this time. One thing for sure is that Malaysia will not need a weakening of the EU's green ambitions to meet compliance with the EU's undiluted green demands of imports.
According to the Malaysian Palm Oil Council, Malaysian palm oil is ready to meet the EUDR requirements in being deforestation free, legally produced and fully traceable.
Malaysia and the EU have resumed free trade negotiations
Malaysia and the European Union have announced the resumption of negotiations for a free trade deal, 12 years after talks were put on hold over a disagreement related to the Southeast Asian country's palm oil industry.
The decision was made following Prime Minister Anwar Ibrahim's working visit to Brussels on Sunday.
"The free trade agreement is expected to unlock immense benefits across multiple sectors of Malaysia's economy while strengthening the global supply chain in critical sectors," Anwar's office said in a statement on Monday. Reuters
The sticky point in free trade negotiations between Malaysia and the EU will remain palm oil but much has transpired in the last twelve years that supports a successful deal this time around.
The main point being that Malaysia and the EU share a common goal in sustainability.
However, these visions of green economies have been battered by global realities where the EU is losing relevance among global powers. According to POLITICO:
A new inconvenient truth: Europe’s global plans all require money no one has
A competitive, green Europe will require trillions in investments. No one has a good answer on where that money will come from.
To make matters worse, Donald Trump's return as President of the US has forced the EU to place its economies before its green dreams in anticipation of a trade fight where climate change is a non-issue.
Pressured on all sides including the influence of China on the EU's trade partners in South America, the EU has rushed to shore up its economy with an updated trade deal with Mexico.
But more relevant to the Malaysia and EU negotiations is the EU-Mercosur trade deal where the EU Deforestation Regulations became a non-issue. This was fiercely criticized as a derailing of the EU's ambitions to protect the world's forests and too weak for labour rights.
The press statement from the EU confirmed that:
In the agreement, the EU and Mercosur commit to effectively implement the Paris Climate Agreement and to cooperate on the climate aspects of trade.
Furthermore, the Paris Agreement on Climate Change becomes an 'essential element' of the agreement, which means that a party can suspend the agreement if it considers that there is a serious breach of the Paris Agreement or if a party leaves the Paris Agreement.
Whether the EU extends the same concession of merely meeting the Paris Agreement to Malaysia in its trade negotiations is unforeseeable at this time. One thing for sure is that Malaysia will not need a weakening of the EU's green ambitions to meet compliance with the EU's undiluted green demands of imports.
According to the Malaysian Palm Oil Council, Malaysian palm oil is ready to meet the EUDR requirements in being deforestation free, legally produced and fully traceable.
The niggling problem as far as Malaysia's palm oil production and the EU is concerned, is the issue of palm based biofuels.
The WTO may have ruled in favour of the EU in Malaysia's complaint but times have changed.
The global shift to used cooking oils which Malaysia is pushing can provide the EU with traceable supplies of green energy.
The EU can further reduce the emissions of Malaysia's palm oil production with a continued support for waste-based palm oil productions in POME and sludge oils as advanced biofuel feedstocks for the EU's energy needs.
A net-zero palm oil which starts with no deforestation palm oil supplies as Malaysia has committed to will serve both producer and consumer with a truly green product. The Malaysian palm oil industry's effort to achieve net-zero will largely depend on market demands like those of the EU.
The WTO may have ruled in favour of the EU in Malaysia's complaint but times have changed.
The global shift to used cooking oils which Malaysia is pushing can provide the EU with traceable supplies of green energy.
The EU can further reduce the emissions of Malaysia's palm oil production with a continued support for waste-based palm oil productions in POME and sludge oils as advanced biofuel feedstocks for the EU's energy needs.
A net-zero palm oil which starts with no deforestation palm oil supplies as Malaysia has committed to will serve both producer and consumer with a truly green product. The Malaysian palm oil industry's effort to achieve net-zero will largely depend on market demands like those of the EU.
Update September 19, 2024
Malaysia's SD Guthrie delivers first shipment of EUDR-compliant palm oil to Europe ahead of new rules
Using satellite imagery, SD Guthrie partnered with a third-party verifier to assess a forest baseline covering six (6) billion ha, and analysed around 600,000 ha of its plantations for deforestation risks. Having established a No Deforestation, No Peat and No Exploitation policy in 2016, SD Guthrie also employs Crosscheck, an online tool that maps its palm oil from source to supply and allows traders and buyers to establish a chain of traceability. SD Guthrie
Malaysia's SD Guthrie delivers first shipment of EUDR-compliant palm oil to Europe ahead of new rules
- A total of 40,250 metric tons delivered to its refineries in the Netherlands and UK
- Shipment sourced from 102,337 ha of oil palm plantations and smallholder farms
Using satellite imagery, SD Guthrie partnered with a third-party verifier to assess a forest baseline covering six (6) billion ha, and analysed around 600,000 ha of its plantations for deforestation risks. Having established a No Deforestation, No Peat and No Exploitation policy in 2016, SD Guthrie also employs Crosscheck, an online tool that maps its palm oil from source to supply and allows traders and buyers to establish a chain of traceability. SD Guthrie
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Update September 11 2o24 on Malaysian preparedness for EUDR
Newsflash from ROTTERDAM (Sept 11): The European Union (EU) Commission is still preparing the guidelines on its deforestation-free products regulation (EUDR), which is scheduled to come into effect on December 30 this year.
Henriette Faergemann, first counsellor for environment, climate action, and digital cooperation at the EU Delegation to Indonesia, said an updated Frequently Asked Questions (FAQs) document will be released next week to help operators and traders comply with the regulation. The Edge Malaysia
This is not enough time for import export industries from the EU and all its trade partners to comply with the EU Deforestation Regulations.
As the EU stares at the double barreled challenges of wanting to complete an EU-MERCOSUR trade deal and Brazil's demand for a delay in implementing the EUDR, the Malaysian palm oil industry is the only exception in being ready for the EUDR.
The big question for Malaysia on the EUDR is will its investments into the Malaysian Sustainable Palm Oil (MSPO) certification be accepted by the EU? The UK, a major trade partner for the EU and Malaysia has decided that the MSPO is a credible authority to rubber stamp deforestation-free imports.
Stay tuned for updates on the developing situations on EUDR and how it affects the palm oil industry
Original article below.
Newsflash from ROTTERDAM (Sept 11): The European Union (EU) Commission is still preparing the guidelines on its deforestation-free products regulation (EUDR), which is scheduled to come into effect on December 30 this year.
Henriette Faergemann, first counsellor for environment, climate action, and digital cooperation at the EU Delegation to Indonesia, said an updated Frequently Asked Questions (FAQs) document will be released next week to help operators and traders comply with the regulation. The Edge Malaysia
This is not enough time for import export industries from the EU and all its trade partners to comply with the EU Deforestation Regulations.
As the EU stares at the double barreled challenges of wanting to complete an EU-MERCOSUR trade deal and Brazil's demand for a delay in implementing the EUDR, the Malaysian palm oil industry is the only exception in being ready for the EUDR.
The big question for Malaysia on the EUDR is will its investments into the Malaysian Sustainable Palm Oil (MSPO) certification be accepted by the EU? The UK, a major trade partner for the EU and Malaysia has decided that the MSPO is a credible authority to rubber stamp deforestation-free imports.
Stay tuned for updates on the developing situations on EUDR and how it affects the palm oil industry
Original article below.
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- Global challenges to the EU’s Deforestation Regulations could derail the ambitions of the EU to prevent its citizens from consuming products blamed for climate change in deforestation
- The EU could be punishing the world’s poorest countries, whose exports to the EU are an important source of revenue.
- Palm oil producing countries led by Indonesia are demanding fair treatment for developing countries under the EU’s green ambitions.
There’s hope yet for a conflict-free introduction of the EUDR if the signals from EU officials to Malaysia are any indication.
In a joint press release by the EU and Malaysia, Malaysian media jumped on the press statement and declared EU, Malaysia to work closely on forest protection & sustainable commodity production.
“The EU and Malaysia will continue to work closely together on the implementation of the forthcoming EUDR and how the MSPO certification provides readiness and assurances for supply chain partners and regulators in the EU,” they said in a statement.
It may be presumptuous to claim that the Malaysian Sustainable Palm Oil (MSPO) standards will be accepted by the EU. This is not the fault of the MSPO but rather that of the EUDR which has only published its ambition with no information for precise rules and regulations.
With the implementation of the EUDR set to take place at the end of this year, EU industries affected by EUDR have raised the alarm once again, that lawmakers need to be precise. The Joint cross-commodity call to EU Commission and Member States to provide urgent clarifications and workable solutions for EUDR implementation by European industries can be read here.
With what little is known of the EU Deforestation Regulations, a tickbox works best to check if Malaysian palm oil is ready for the EUDR.
Meeting EUDR demands for No Deforestation
An expert in the development of Malaysia’s palm oil industry, Khor Yu Leng, wrote back in 2015 on the EU’s demand for no-deforestation palm oil.
“Such hectarage is not hard to find. Mid-sized states like Kedah and Kelantan have about half a million hectares each of no-deforestation areas since 2000 that can be reviewed. A more detailed geo-economic study for Johor points to large no-deforestation plantation areas since 1985”
Khor Yu Leng’s data can now be confirmed with the Malaysian Palm Oil Board (MPOB) Sawit Intelligent Management System (SIMS) which is driven by the principle of traceability with a detailed capture and documenting of each phase of the supply chain journey from plantation to the eventual products.
The signals from the EU to Malaysia can therefore be seen as an acknowledgement of the importance of national certifications towards a mutually beneficial trade which places climate change and conservation as shared ambitions.
This would help to negate the accusations of the punitive character of the EUDR towards poorer countries as expressed in The colonialist overtones of EU’s green trade crusade or how it’s a green squeeze on the poor global south.
The EU as Green Bully?
While the EU market is important for exporting countries for palm oil, soy and coffee, the EU may not have the clout that Brussels imagined.
Back in 2015, The Foundation for Research and Strategy concluded that:
A study of the European Union’s characteristic demographic, economic and strategic parameters shows that its status as a global player is diminishing compared with its great planetary peers. The EU’s slow-motion disappearing act is becoming increasingly hard to ignore, but are Europeans and their leaders really gauging the extent of the trend?
European leaders have clearly ignored the trend. Economic sanctions against Russia’s war against Ukraine would have stopped Russia’s aggression if the EU had any clout. Yet Russia is benefitting from the war as Europe’s relations with Africa and Asia are on the brink of collapse.
Europe's economic, financial and political relevance in Asia is in rapid retreat, according to William Bratton, the author of "China's Rise, Asia's Decline."
The EU may claim victory over Indonesia at the WTO on nickel and palm oil biofuels but these issues are looking like schoolyard bullying of Indonesia with little impact on Indonesia.
Foreign investment potential from non-EU players in nickel resources and EV battery manufacturing is out pacing EU companies according to ASEAN Briefing.
As for palm oil, the incoming Indonesian government has brushed off the EU in saying:
"Don't worry, EUDR is about palm oil. If oil palm doesn't want to be bought by the EU, why are we bothered?"
Minister Zulkifli Hasan can afford to dismiss the EU as he knows, there are other kids in the schoolyard who have dismissed the EU’s green demands. But the ultimate say on EUDR may come from the US.
US Soy Could Define or Derail EUDR
The US which has been relatively quiet for the most part on the EUDR, unlike SE Asian or African and Latin American countries, is likely to be a decisive factor in fine tuning the EUDR.
The EU bowed to US soy a few years back to avoid a trade war. Since then, Europe has become a key market for the U.S. soy industry in both whole soybeans and soymeal exports according to the US Soybean Export Council. Trade data shows the US has surpassed Brazil as the biggest supplier of soy to the EU market but what of sustainability requirements?
To meet EU requirements for sustainability, the University of Arkansas reported that:
The challenge for U.S. soy producers is that the EU is expanding sustainability reporting requirements for eligibility for import to the EU market. The United States Soybean Export Council (USSEC) developed the Soy Sustainability Assurance Protocol (SSAP) in 2014 in anticipation of these challenges. For market year 2023 (September to August), 70% of US soy exports globally were verified sustainable with the SSAP.
It is unlikely that the US would develop a model of certification for the sustainability of its soy as Malaysia has for palm oil. The question then becomes, would an industry led voluntary certification like the SSAP be accepted under EUDR?
What would that say to Brazil, a much sought after trade partner for the EU which has only offered up its Forest Code as quality assurance?
These are clearly, questions to be answered by the next crop of EU politicians after the June elections.
Published April 2024 CSPO Watch
In a joint press release by the EU and Malaysia, Malaysian media jumped on the press statement and declared EU, Malaysia to work closely on forest protection & sustainable commodity production.
“The EU and Malaysia will continue to work closely together on the implementation of the forthcoming EUDR and how the MSPO certification provides readiness and assurances for supply chain partners and regulators in the EU,” they said in a statement.
It may be presumptuous to claim that the Malaysian Sustainable Palm Oil (MSPO) standards will be accepted by the EU. This is not the fault of the MSPO but rather that of the EUDR which has only published its ambition with no information for precise rules and regulations.
With the implementation of the EUDR set to take place at the end of this year, EU industries affected by EUDR have raised the alarm once again, that lawmakers need to be precise. The Joint cross-commodity call to EU Commission and Member States to provide urgent clarifications and workable solutions for EUDR implementation by European industries can be read here.
With what little is known of the EU Deforestation Regulations, a tickbox works best to check if Malaysian palm oil is ready for the EUDR.
- No Deforestation since December 31, 2020 CHECKED
- Traceability to Farm CHECKED
Meeting EUDR demands for No Deforestation
An expert in the development of Malaysia’s palm oil industry, Khor Yu Leng, wrote back in 2015 on the EU’s demand for no-deforestation palm oil.
“Such hectarage is not hard to find. Mid-sized states like Kedah and Kelantan have about half a million hectares each of no-deforestation areas since 2000 that can be reviewed. A more detailed geo-economic study for Johor points to large no-deforestation plantation areas since 1985”
Khor Yu Leng’s data can now be confirmed with the Malaysian Palm Oil Board (MPOB) Sawit Intelligent Management System (SIMS) which is driven by the principle of traceability with a detailed capture and documenting of each phase of the supply chain journey from plantation to the eventual products.
The signals from the EU to Malaysia can therefore be seen as an acknowledgement of the importance of national certifications towards a mutually beneficial trade which places climate change and conservation as shared ambitions.
This would help to negate the accusations of the punitive character of the EUDR towards poorer countries as expressed in The colonialist overtones of EU’s green trade crusade or how it’s a green squeeze on the poor global south.
The EU as Green Bully?
While the EU market is important for exporting countries for palm oil, soy and coffee, the EU may not have the clout that Brussels imagined.
Back in 2015, The Foundation for Research and Strategy concluded that:
A study of the European Union’s characteristic demographic, economic and strategic parameters shows that its status as a global player is diminishing compared with its great planetary peers. The EU’s slow-motion disappearing act is becoming increasingly hard to ignore, but are Europeans and their leaders really gauging the extent of the trend?
European leaders have clearly ignored the trend. Economic sanctions against Russia’s war against Ukraine would have stopped Russia’s aggression if the EU had any clout. Yet Russia is benefitting from the war as Europe’s relations with Africa and Asia are on the brink of collapse.
Europe's economic, financial and political relevance in Asia is in rapid retreat, according to William Bratton, the author of "China's Rise, Asia's Decline."
The EU may claim victory over Indonesia at the WTO on nickel and palm oil biofuels but these issues are looking like schoolyard bullying of Indonesia with little impact on Indonesia.
Foreign investment potential from non-EU players in nickel resources and EV battery manufacturing is out pacing EU companies according to ASEAN Briefing.
As for palm oil, the incoming Indonesian government has brushed off the EU in saying:
"Don't worry, EUDR is about palm oil. If oil palm doesn't want to be bought by the EU, why are we bothered?"
Minister Zulkifli Hasan can afford to dismiss the EU as he knows, there are other kids in the schoolyard who have dismissed the EU’s green demands. But the ultimate say on EUDR may come from the US.
US Soy Could Define or Derail EUDR
The US which has been relatively quiet for the most part on the EUDR, unlike SE Asian or African and Latin American countries, is likely to be a decisive factor in fine tuning the EUDR.
The EU bowed to US soy a few years back to avoid a trade war. Since then, Europe has become a key market for the U.S. soy industry in both whole soybeans and soymeal exports according to the US Soybean Export Council. Trade data shows the US has surpassed Brazil as the biggest supplier of soy to the EU market but what of sustainability requirements?
To meet EU requirements for sustainability, the University of Arkansas reported that:
The challenge for U.S. soy producers is that the EU is expanding sustainability reporting requirements for eligibility for import to the EU market. The United States Soybean Export Council (USSEC) developed the Soy Sustainability Assurance Protocol (SSAP) in 2014 in anticipation of these challenges. For market year 2023 (September to August), 70% of US soy exports globally were verified sustainable with the SSAP.
It is unlikely that the US would develop a model of certification for the sustainability of its soy as Malaysia has for palm oil. The question then becomes, would an industry led voluntary certification like the SSAP be accepted under EUDR?
What would that say to Brazil, a much sought after trade partner for the EU which has only offered up its Forest Code as quality assurance?
These are clearly, questions to be answered by the next crop of EU politicians after the June elections.
Published April 2024 CSPO Watch
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