Palm Oil Producing Countries Fight Back Against European Union
- Indonesia and Malaysia are gearing up to fight what they perceive as ‘regulatory imperialism.’
- The description of the European Union’s Deforestation Regulation (UNDR) by Indonesian Minister, Airlangga Hartono, is no less inflammatory than what the previous Malaysian minister, Mah Siew Kong, labelled the EU’s approach to palm oil. That it was ‘crop apartheid.’
- Indonesia and Malaysia which produce over 80% of the global supply for palm oil, have knuckled down as they settled an old territorial conflict to prepare to fight a common enemy in the European Union.
Palm oil plantation
The European Union has long been perceived by Indonesia and Malaysia, as taking unfair advantage of palm oil to protect its domestic oilseed crops in rapeseed. In banning palm oil from biofuel use under the EU’s Renewable Energy Directive (RED), the accusation of ‘crop apartheid’ was justified when the IUCN published a report on what is worse than palm oil for the environment.
Since the banning of palm oil from biofuels use in the EU, the Union is looking to exert its influence by introducing a new set of rules under what is commonly known as the Deforestation Regulations (EUDR). The EUDR targets imports in soy, cattle, palm oil, wood, coffee, cocoa and rubber.
This has raised the concerns of major exporting countries like Canada, which was accused of putting its timber industry ahead of global concerns.
Major exporting countries like Brazil, the world’s biggest exporter of soy, have chosen to brush off the demands of the EUDR by quoting national laws as being compliant with global commitments. Brazil’s confidence in maintaining its exports is bolstered by China. It is worth noting at this point, that the expansion of soy plantations is the second largest direct driver of deforestation and conversion, after the expansion of pasture for cattle farming and land speculation.
As a further disregard of what the EU is demanding in terms of deforestation, Brazil and China made a joint commitment to end illegal deforestation. Ending illegal deforestation for Brazilian soy, is very different from what the EU is demanding. That all imported commodities must be free of deforestation, whether legal or illegal.
Indonesia, as the world’s biggest producer of palm oil, has taken a more engaged approach to the EU. In its latest edition of presenting facts against myths, KEMLU argues that:
"Palm oil production is a strategic industry in the Indonesian economy both at present and in the future. It is called a strategic industry because of its considerable contribution to Indonesia’s non-oil and gas exports, employment creation, rural development and poverty reduction.
In addition, the palm oil industry has also become an important part of Indonesia's energy-sovereignty system. Not many sectors of the economy, especially in the commodity sector in which its contribution to the economy is so large, is as inclusive and broad as the palm oil industry."
Crop Apartheid?
There is no doubt, that palm oil fits squarely into the United Nations Sustainable Development Goals for both producer and consumer countries.
As much sense as the Indonesian government makes, in its case for the sustainability of palm oil, what is happening now may not be a case of ‘regulatory imperialism’ or ‘crop apartheid.’ It may be a simple case of white vs brown.
As the EU stretches out to foreign powers to regain some political influence, the Union is being increasingly challenged to compromise its position on climate change in favor of geopolitics. While the big three markets in the EU, US and China wrestle over economic factors, the “champion of climate change” in the EU, looks like it is willing to accept collateral damage just to stay in the game. To achieve this, the EU is reaching out to friendlier foreign countries with an European presence.
EU Trading Economics Over Climate Change
Environmentalists worried about biodiversity in Southeast Asia should realise that EU consumers could well power extinctions in other parts of the world where Brussels is pushing free trade deals.
Reuters reported that “The European Commission has said it is a priority to conclude a deal, more than 20 years in the making, with the Mercosur bloc of Brazil, Argentina, Uruguay and Paraguay, as the European Union seeks new allies to reduce its dependence on China and the United States.”
This might be due to the EU’s weakening influence in Latin America, where China has proven to be dominant but China’s influence in trade is a serious threat to biodiversity in Latin America.
The same threat to global biodiversity is happening in Australia which owns the dubious distinctions of being the world leader in mammal extinctions and the only developed country among top deforesting nations. Yet Australian beef, identified as a major contributor to the country’s deforestation crisis, may get preferential import treatment as what happened to the UK-Australia free trade deal.
While Australia has the luxury of calling off the trade deal with the EU over “names and emotional issues”, palm oil producing countries have delayed trade talks with the EU over what they see as a threat to millions of jobs in the palm oil industry .
The ILUC threat to Southeast Asian Economies
This is a long standing obstacle in free trade between Indonesia and Malaysia over which peaked when the EU singled out palm oil as an unsustainable feedstock for the EU’s renewable energy requirements.
At the centre of the disagreements is an assumption on the part of the EU, that any increased use of palm oil, would lead to increased deforestation for palm oil. This is based on the theory of Indirect Land Use Change (ILUC) which presumes that increased usage of palm oil will automatically lead to increased deforestation.
The Council for Palm Oil Producing Countries (CPOPC) wrote in 2021:
"The ILUC scheme is not consistent with the actual business model and operational practice of palm oil companies; the criteria are not implementable and potential impacts on smallholders is not yet assessed."
Their argument has been proven by independent groups whichhave reported a consistent decrease in deforestation for palm oil even as global palm oil consumption increased.
The EUDR has been set in stone with its publication in the Official Journal of the EU. Importers have 18 months or less, to find a way to comply with this new legislation. The only sure way for EU importers to meet this target, is if the EU acknowledges certification programs for targeted commodities. For the palm oil industries, national programs like the MSPO for Malaysia and the ISPO for Indonesia, must be counted in as credible enablers towards meeting the EUDR deadline.
Conservation minded readers should be concerned. If the EU refuses to acknowledge national sustainability efforts like the MSPO and ISPO, Indonesia and Malaysia may turn their backs on the EU market as they seek less discriminating trade partners in Africa and Asia.
In the meantime, CPOPC announced that a Joint Task Force will be created to “strengthen the cooperation for the EUDR.” Malaysia has drawn the lines clearly for the EU. That it cannot be rated as a high risk country and for the acceptance of the MSPO.
The ball is now in the EU’s court, which can choose to either play fairly, or continue to make lop-sided rules on sustainable commodities.
Published June 2023. CSPO Watch
Since the banning of palm oil from biofuels use in the EU, the Union is looking to exert its influence by introducing a new set of rules under what is commonly known as the Deforestation Regulations (EUDR). The EUDR targets imports in soy, cattle, palm oil, wood, coffee, cocoa and rubber.
This has raised the concerns of major exporting countries like Canada, which was accused of putting its timber industry ahead of global concerns.
Major exporting countries like Brazil, the world’s biggest exporter of soy, have chosen to brush off the demands of the EUDR by quoting national laws as being compliant with global commitments. Brazil’s confidence in maintaining its exports is bolstered by China. It is worth noting at this point, that the expansion of soy plantations is the second largest direct driver of deforestation and conversion, after the expansion of pasture for cattle farming and land speculation.
As a further disregard of what the EU is demanding in terms of deforestation, Brazil and China made a joint commitment to end illegal deforestation. Ending illegal deforestation for Brazilian soy, is very different from what the EU is demanding. That all imported commodities must be free of deforestation, whether legal or illegal.
Indonesia, as the world’s biggest producer of palm oil, has taken a more engaged approach to the EU. In its latest edition of presenting facts against myths, KEMLU argues that:
"Palm oil production is a strategic industry in the Indonesian economy both at present and in the future. It is called a strategic industry because of its considerable contribution to Indonesia’s non-oil and gas exports, employment creation, rural development and poverty reduction.
In addition, the palm oil industry has also become an important part of Indonesia's energy-sovereignty system. Not many sectors of the economy, especially in the commodity sector in which its contribution to the economy is so large, is as inclusive and broad as the palm oil industry."
Crop Apartheid?
There is no doubt, that palm oil fits squarely into the United Nations Sustainable Development Goals for both producer and consumer countries.
As much sense as the Indonesian government makes, in its case for the sustainability of palm oil, what is happening now may not be a case of ‘regulatory imperialism’ or ‘crop apartheid.’ It may be a simple case of white vs brown.
As the EU stretches out to foreign powers to regain some political influence, the Union is being increasingly challenged to compromise its position on climate change in favor of geopolitics. While the big three markets in the EU, US and China wrestle over economic factors, the “champion of climate change” in the EU, looks like it is willing to accept collateral damage just to stay in the game. To achieve this, the EU is reaching out to friendlier foreign countries with an European presence.
EU Trading Economics Over Climate Change
Environmentalists worried about biodiversity in Southeast Asia should realise that EU consumers could well power extinctions in other parts of the world where Brussels is pushing free trade deals.
Reuters reported that “The European Commission has said it is a priority to conclude a deal, more than 20 years in the making, with the Mercosur bloc of Brazil, Argentina, Uruguay and Paraguay, as the European Union seeks new allies to reduce its dependence on China and the United States.”
This might be due to the EU’s weakening influence in Latin America, where China has proven to be dominant but China’s influence in trade is a serious threat to biodiversity in Latin America.
The same threat to global biodiversity is happening in Australia which owns the dubious distinctions of being the world leader in mammal extinctions and the only developed country among top deforesting nations. Yet Australian beef, identified as a major contributor to the country’s deforestation crisis, may get preferential import treatment as what happened to the UK-Australia free trade deal.
While Australia has the luxury of calling off the trade deal with the EU over “names and emotional issues”, palm oil producing countries have delayed trade talks with the EU over what they see as a threat to millions of jobs in the palm oil industry .
The ILUC threat to Southeast Asian Economies
This is a long standing obstacle in free trade between Indonesia and Malaysia over which peaked when the EU singled out palm oil as an unsustainable feedstock for the EU’s renewable energy requirements.
At the centre of the disagreements is an assumption on the part of the EU, that any increased use of palm oil, would lead to increased deforestation for palm oil. This is based on the theory of Indirect Land Use Change (ILUC) which presumes that increased usage of palm oil will automatically lead to increased deforestation.
The Council for Palm Oil Producing Countries (CPOPC) wrote in 2021:
"The ILUC scheme is not consistent with the actual business model and operational practice of palm oil companies; the criteria are not implementable and potential impacts on smallholders is not yet assessed."
Their argument has been proven by independent groups which
The EUDR has been set in stone with its publication in the Official Journal of the EU. Importers have 18 months or less, to find a way to comply with this new legislation. The only sure way for EU importers to meet this target, is if the EU acknowledges certification programs for targeted commodities. For the palm oil industries, national programs like the MSPO for Malaysia and the ISPO for Indonesia, must be counted in as credible enablers towards meeting the EUDR deadline.
Conservation minded readers should be concerned. If the EU refuses to acknowledge national sustainability efforts like the MSPO and ISPO, Indonesia and Malaysia may turn their backs on the EU market as they seek less discriminating trade partners in Africa and Asia.
In the meantime, CPOPC announced that a Joint Task Force will be created to “strengthen the cooperation for the EUDR.” Malaysia has drawn the lines clearly for the EU. That it cannot be rated as a high risk country and for the acceptance of the MSPO.
The ball is now in the EU’s court, which can choose to either play fairly, or continue to make lop-sided rules on sustainable commodities.
Published June 2023. CSPO Watch
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