Trump’s Tariffs A Boost to Complete EU Malaysia Free Trade Talks
Robert Stehrer from The Vienna Institute for International Economic Studies warned the EU about Trump 2.0
Donald Trump is likely to aggressively continue his ‘America First’ policy – with higher tariffs, subsidies and fierce competition with Europe. The EU urgently needs to restore its competitiveness through innovation and industrial policy
His trade policy back then was characterised by unilateral measures, aggressive negotiating tactics, and a focus on reducing the trade deficit and protecting US industry.
It is ironic that the European Union finds unilateral measures distasteful as the EU itself has imposed multiple unilateral measures on its trade partners including the Deforestation Regulations. It did not seem to matter to the EU that its environmental demands of trade partners including CBAM, were seen to be protectionist of EU industries.
Stehrer made the right call when he said “Multilateral cooperation and environmental issues are again likely to play a subordinate role.”
Donald Trump is likely to aggressively continue his ‘America First’ policy – with higher tariffs, subsidies and fierce competition with Europe. The EU urgently needs to restore its competitiveness through innovation and industrial policy
His trade policy back then was characterised by unilateral measures, aggressive negotiating tactics, and a focus on reducing the trade deficit and protecting US industry.
It is ironic that the European Union finds unilateral measures distasteful as the EU itself has imposed multiple unilateral measures on its trade partners including the Deforestation Regulations. It did not seem to matter to the EU that its environmental demands of trade partners including CBAM, were seen to be protectionist of EU industries.
Stehrer made the right call when he said “Multilateral cooperation and environmental issues are again likely to play a subordinate role.”
EU Back pedaling on environmental issues for trade's sake
Head honcho for the EU’s green demands Ursula von der Leyen barely had time to put down her champagne glass in celebrating an EU-Mercosur trade before Greenpeace accused her of giving up on green demands.
A preliminary legal analysis of the trade deal by Greenpeace EU suggests that the Mercosur countries indeed got what they wanted, and that the trade deal will “consider trade interests before enacting environmental measures.”
The same back pedaling took place in a revamp of the EU Mexico Global Agreement which was cheered by Kaja Kallas, vice president of the European Commission
“We have entered a new era in our strategic partnership with Mexico today. Our upgraded agreement shows the EU and Mexico united for freer trade and an open global economy,"
It is unclear whether the new EU Mexico Global Agreement will address the six problems with the Agreement as outlined by the Transnational Institute.
EU-Malaysia Free Trade and Palm Oil
With these in place the EU looks like it is ready to gain more support from lesser trade partners like Malaysia which shares a common distaste for Trump’s protectionist policies.
Malaysia will weather the storm of US tariff threat, bolster trade with Brics and FTAs according to a bold statement from Malaysian Prime Minister Anwar Ibrahim.
Malaysia has sixteen FTAs not counting the recent Comprehensive Economic Partnershipment Agreement with the UAE.
The biggest trade agreement Malaysia could sign to counter Trump’s tariffs is a trade deal with the EU in the MEUFTA. It is a deal that benefits both Malaysia and the EU if the EU breaks down its barriers on palm oil.
Malaysian ambassador to Belgium, Luxembourg, and the EU, Datuk Mohd Khalid Abbasi Abdul Razak, said on Sunday that the negotiations for the FTA started in 2010 but stalled in 2012 following Malaysia’s reservations over the EU’s palm oil procurement policies, subsidies and sustainability clauses.
“One of the reasons for the breakdown is discrimination over palm oil, particularly claims regarding open burning and labour practices.
“We have been doing well in clearing a number of issues that have stalled the FTA negotiations, including the introduction of Malaysian Sustainable Palm Oil (MSPO) standard,” Mohd Khalid said in a press conference in conjunction with the Prime Minister’s working visit to Brussels, Belgium on Jan 19-20, 2025.
MSPO to bridge divide on palm oil with EU?
Prime Minister Anwar Ibrahim stated that an EU official, specifically Jessika Roswall, EU Commissioner for Environment, Water Resilience and a Competitive Circular Economy has acknowledged the significant strides Malaysia has taken to ensure the sustainability of Malaysian palm oil.
“Her Excellency Roswall acknowledged the efforts of Malaysia’s palm oil industry in enhancing the overall sustainability of the sector, particularly the MSPO certification scheme, which ensures sustainable palm oil production,”
Roswall’s acknowledgement of the MSPO is a good start but getting the EU Commission to accept the MSPO as a credible authority to undersign Malaysia’s commitments to sustainable palm oil production will require more actions.
According to the Malaysian Palm Oil Council’s CEO Belvinder Sron
"MSPO 2.0 introduces stricter measures to prevent deforestation, safeguard high conservation value areas, and address key environmental concerns. By incorporating smallholders into sustainable supply chains and improving traceability, the standard creates a more inclusive and resilient framework"
This should be more than enough of a starter for the EU Commission chief Ursula von der Leyen who tweeted on the renewed EU Malaysia free trade talks:
"We will aim to build our partnership on robust commitments on labour rights and climate and environmental protection,"
Silencing the Critics of MSPO
Malaysia may find it annoying that the opinions of a few is allowed to influence major policy decisions but thems the bricks.
Right wing MEPs are similarly annoyed as they look to address the issue of funding for NGOs which influence policymaking at Brussels.
Malaysia does not have the clout to silence foreign critics with the threat of cutting off funding but it does have the power of action as exemplified by the Chini-Beras deforestation case.
Actions like these will silence critics of the MSPO like FERN who are unaware of how much effort and economic losses has been put into making Malaysian palm oil sustainable.
Better public communications is clearly needed on the part of Malaysia to inform critics of its forest management mandate.
According to the study, "when managed properly, these agricultural systems can be a powerful tool for biodiversity conservation, climate change mitigation, and rural poverty alleviation, in addition to producing around 1,000 million metric tons of food annually.”
The latest report on Malaysia by the Global Environment Facility provides more insights into the steps taken by Malaysia to protect and preserve natural environments.
Raja Musa was first developed as a pilot under a GEF-funded ASEAN peatland forest project and is now serving as a demonstration site for what peatland restoration and protection can achieve, particularly when the work happens hand-in-hand.
More of these hands on dirt work by NGOs is needed and less of the hands on keyboard needs to be supported by Malaysia and the EU if a proper understanding of what sustainable Malaysian commodities is about.
EU Indiscriminatory Policies Against Palm Oil Biofuels and Self Harm
The EU’s indiscrimintary policies against Malaysian palm oil which ignored everything that Malaysia has done to distinguish its palm oil production has left the EU miles behind other countries.
Thorny issues for a trade deal like the WTO’s split decision on Malaysia’s complaint against the EU’s biofuels policies is becoming a non-issue as other countries have jumped in early to take advantage of Malaysia’s commitment to sustainable palm oil products. Malaysia’s palm oil based biofuels programme stands to benefit enormously from the biofuels demands of its ASEAN neighbors Japan and Korea.
China in particular poses a great challenge to von der Leyen’s wish for more geopolitical influence while harping on climate and labour rights, both of which had been addressed by Malaysia already. Her shortsightedness needs to be corrected with proper lenses for Malaysia’s views on sustainable palm oil before the EU Malaysia free trade talks.
It maybe a good idea for von der Leyen to ignore the lobbying of European NGOs like Transport & Environment against palm-based biodiesel for cars and trucks which led to this day where the EU has lost influence on Malaysia.
Take for example the tired argument of food vs fuel as presented by Transport & Environment against palm oil.
This report by Bain & Co., shows the EU is set to fail its commitment to sustainable aviation fuels.
"By 2030, the local supply gap is expected to equal roughly 10 million acres of oilseed-bearing over-winter crops - the kinds that are used as feedstock for biofuels like SAF.
To put this into perspective, this acreage is equivalent to the annual US cotton crop. What's more, these crops can only be planted once every three years, which pulls the size of the problem into sharp focus."
The question for Transport & Environment is would these 10 million acres of "not palm oil" farms in Europe be better left for growing food instead of fuel for Europeans? The group has fantastical ideas about making aviation sustainable worthy of a TV movie plot. These ideas maybe worthy of fiction novels and movies but have no place in their unsubstantiated claims against palm-based SAFs from Malaysia
EU policymakers should note this ING Bank report on SAFs and biodiesel presents the real challenges faced by the European Union to reduce transport emissions.
Europe will not be able to fully meet its own SAF demand and will need to rely on imports from North America or Asia, with this deficit expected to grow over time.
Time is a luxury the EU does not have. As for EU Malaysia relationships, it will take a lot of charm and money for the EU to loosen China’s grip on the greenest of green biofuels in Malaysia from palm wastes and used cooking oils as Eco Ceres has done.
Palm oil in MEUFTA and Green Energy
An analysis by the KSI Strategic Institute for Asia Pacific (KSI) and Economic Club of Kuala Lumpur (ECKL) reported that Malaysia stands to benefit from Trump’s policies.
"It is poised to bolster exports from sectors such as electrical and electronic products, palm oil and its derivatives, as well as optical and scientific equipment to the EU market, among others
Furthermore, the MEUFTA will catalyze significant investments from the EU in cutting-edge sectors such as green energy and advanced manufacturing,"
Green energy from palm oil wastes to feed the EU demand for sustainable transport fuels aside, the EU can soften the impact of China’s legacy on chip production as Malaysia has emerged as a global leader in chip production with around five decades of experience in the ‘back end’ of the semiconductor manufacturing process.
However, the production of semi conductors which are fundamental in the development and deployment of renewable energy infrastructure comes with its own cost to climate change due to energy use.
Chip manufacturers could mitigate some of their climate impact by using renewable energy — and they may even get preferential access to green power according to this report by Politico.
In this case, palm oil biomass can obviously feed EU energy plants better than virgin Swedish wood. Palm oil wastes to feed the Malaysian grid to reduce the impact of its semiconductor industry will definitely lower the carbon footprint of Malaysian chips.
The soundest argument for the EU to quickly sign a free trade agreement with Malaysia comes from Interface EU which wrote:
The world depends on semiconductor technologies from European companies, and just as Europe depends on front- and back-end manufacturing in Asia, Asian fabrication plants (fabs) depend on manufacturing equipment and chemicals from European suppliers.
Transposed to palm oil and the MEUFTA this simply says that the EU's ambitions for sustainable imports absolutely requires the cooperation of countries like Malaysia.
Published January 2025 CSPO Watch
Head honcho for the EU’s green demands Ursula von der Leyen barely had time to put down her champagne glass in celebrating an EU-Mercosur trade before Greenpeace accused her of giving up on green demands.
A preliminary legal analysis of the trade deal by Greenpeace EU suggests that the Mercosur countries indeed got what they wanted, and that the trade deal will “consider trade interests before enacting environmental measures.”
The same back pedaling took place in a revamp of the EU Mexico Global Agreement which was cheered by Kaja Kallas, vice president of the European Commission
“We have entered a new era in our strategic partnership with Mexico today. Our upgraded agreement shows the EU and Mexico united for freer trade and an open global economy,"
It is unclear whether the new EU Mexico Global Agreement will address the six problems with the Agreement as outlined by the Transnational Institute.
EU-Malaysia Free Trade and Palm Oil
With these in place the EU looks like it is ready to gain more support from lesser trade partners like Malaysia which shares a common distaste for Trump’s protectionist policies.
Malaysia will weather the storm of US tariff threat, bolster trade with Brics and FTAs according to a bold statement from Malaysian Prime Minister Anwar Ibrahim.
Malaysia has sixteen FTAs not counting the recent Comprehensive Economic Partnershipment Agreement with the UAE.
The biggest trade agreement Malaysia could sign to counter Trump’s tariffs is a trade deal with the EU in the MEUFTA. It is a deal that benefits both Malaysia and the EU if the EU breaks down its barriers on palm oil.
Malaysian ambassador to Belgium, Luxembourg, and the EU, Datuk Mohd Khalid Abbasi Abdul Razak, said on Sunday that the negotiations for the FTA started in 2010 but stalled in 2012 following Malaysia’s reservations over the EU’s palm oil procurement policies, subsidies and sustainability clauses.
“One of the reasons for the breakdown is discrimination over palm oil, particularly claims regarding open burning and labour practices.
“We have been doing well in clearing a number of issues that have stalled the FTA negotiations, including the introduction of Malaysian Sustainable Palm Oil (MSPO) standard,” Mohd Khalid said in a press conference in conjunction with the Prime Minister’s working visit to Brussels, Belgium on Jan 19-20, 2025.
MSPO to bridge divide on palm oil with EU?
Prime Minister Anwar Ibrahim stated that an EU official, specifically Jessika Roswall, EU Commissioner for Environment, Water Resilience and a Competitive Circular Economy has acknowledged the significant strides Malaysia has taken to ensure the sustainability of Malaysian palm oil.
“Her Excellency Roswall acknowledged the efforts of Malaysia’s palm oil industry in enhancing the overall sustainability of the sector, particularly the MSPO certification scheme, which ensures sustainable palm oil production,”
Roswall’s acknowledgement of the MSPO is a good start but getting the EU Commission to accept the MSPO as a credible authority to undersign Malaysia’s commitments to sustainable palm oil production will require more actions.
- This has to start with a steadfast commitment to sustainability regardless of what happens with the EU-Mercosur trade deal. The EU-Mercosur deal may not be realized as Mercosur countries like Argentina mull withdrawal from the Paris agreement to match Trump’s executive orders.
- Regardless of the results of protests by EU farmers against “greener agriculture” and the new demands of France for an indefinite delay of the CSDDD and CSRD, Malaysia should show the EU it is ready to work together towards compliance.
- Aberrations from the MSPO standards in the case of deforesting the Chini-Bera forests for palm oil that cannot sell due to Malaysia’s commitment to forests must be stopped with the introduction of MSPO 2.0.
According to the Malaysian Palm Oil Council’s CEO Belvinder Sron
"MSPO 2.0 introduces stricter measures to prevent deforestation, safeguard high conservation value areas, and address key environmental concerns. By incorporating smallholders into sustainable supply chains and improving traceability, the standard creates a more inclusive and resilient framework"
This should be more than enough of a starter for the EU Commission chief Ursula von der Leyen who tweeted on the renewed EU Malaysia free trade talks:
"We will aim to build our partnership on robust commitments on labour rights and climate and environmental protection,"
Silencing the Critics of MSPO
Malaysia may find it annoying that the opinions of a few is allowed to influence major policy decisions but thems the bricks.
Right wing MEPs are similarly annoyed as they look to address the issue of funding for NGOs which influence policymaking at Brussels.
Malaysia does not have the clout to silence foreign critics with the threat of cutting off funding but it does have the power of action as exemplified by the Chini-Beras deforestation case.
Actions like these will silence critics of the MSPO like FERN who are unaware of how much effort and economic losses has been put into making Malaysian palm oil sustainable.
Better public communications is clearly needed on the part of Malaysia to inform critics of its forest management mandate.
- The renewed pledge of Malaysia to protect its forests and biodiversity as made by Minister Johari Ghani should be taken seriously by the EU.
- The cap on Malaysian palm oil acreage is important as new studies show the importance of tree crops as a tool for mitigating climate change.
According to the study, "when managed properly, these agricultural systems can be a powerful tool for biodiversity conservation, climate change mitigation, and rural poverty alleviation, in addition to producing around 1,000 million metric tons of food annually.”
The latest report on Malaysia by the Global Environment Facility provides more insights into the steps taken by Malaysia to protect and preserve natural environments.
Raja Musa was first developed as a pilot under a GEF-funded ASEAN peatland forest project and is now serving as a demonstration site for what peatland restoration and protection can achieve, particularly when the work happens hand-in-hand.
More of these hands on dirt work by NGOs is needed and less of the hands on keyboard needs to be supported by Malaysia and the EU if a proper understanding of what sustainable Malaysian commodities is about.
EU Indiscriminatory Policies Against Palm Oil Biofuels and Self Harm
The EU’s indiscrimintary policies against Malaysian palm oil which ignored everything that Malaysia has done to distinguish its palm oil production has left the EU miles behind other countries.
Thorny issues for a trade deal like the WTO’s split decision on Malaysia’s complaint against the EU’s biofuels policies is becoming a non-issue as other countries have jumped in early to take advantage of Malaysia’s commitment to sustainable palm oil products. Malaysia’s palm oil based biofuels programme stands to benefit enormously from the biofuels demands of its ASEAN neighbors Japan and Korea.
China in particular poses a great challenge to von der Leyen’s wish for more geopolitical influence while harping on climate and labour rights, both of which had been addressed by Malaysia already. Her shortsightedness needs to be corrected with proper lenses for Malaysia’s views on sustainable palm oil before the EU Malaysia free trade talks.
It maybe a good idea for von der Leyen to ignore the lobbying of European NGOs like Transport & Environment against palm-based biodiesel for cars and trucks which led to this day where the EU has lost influence on Malaysia.
Take for example the tired argument of food vs fuel as presented by Transport & Environment against palm oil.
This report by Bain & Co., shows the EU is set to fail its commitment to sustainable aviation fuels.
"By 2030, the local supply gap is expected to equal roughly 10 million acres of oilseed-bearing over-winter crops - the kinds that are used as feedstock for biofuels like SAF.
To put this into perspective, this acreage is equivalent to the annual US cotton crop. What's more, these crops can only be planted once every three years, which pulls the size of the problem into sharp focus."
The question for Transport & Environment is would these 10 million acres of "not palm oil" farms in Europe be better left for growing food instead of fuel for Europeans? The group has fantastical ideas about making aviation sustainable worthy of a TV movie plot. These ideas maybe worthy of fiction novels and movies but have no place in their unsubstantiated claims against palm-based SAFs from Malaysia
EU policymakers should note this ING Bank report on SAFs and biodiesel presents the real challenges faced by the European Union to reduce transport emissions.
Europe will not be able to fully meet its own SAF demand and will need to rely on imports from North America or Asia, with this deficit expected to grow over time.
Time is a luxury the EU does not have. As for EU Malaysia relationships, it will take a lot of charm and money for the EU to loosen China’s grip on the greenest of green biofuels in Malaysia from palm wastes and used cooking oils as Eco Ceres has done.
Palm oil in MEUFTA and Green Energy
An analysis by the KSI Strategic Institute for Asia Pacific (KSI) and Economic Club of Kuala Lumpur (ECKL) reported that Malaysia stands to benefit from Trump’s policies.
"It is poised to bolster exports from sectors such as electrical and electronic products, palm oil and its derivatives, as well as optical and scientific equipment to the EU market, among others
Furthermore, the MEUFTA will catalyze significant investments from the EU in cutting-edge sectors such as green energy and advanced manufacturing,"
Green energy from palm oil wastes to feed the EU demand for sustainable transport fuels aside, the EU can soften the impact of China’s legacy on chip production as Malaysia has emerged as a global leader in chip production with around five decades of experience in the ‘back end’ of the semiconductor manufacturing process.
However, the production of semi conductors which are fundamental in the development and deployment of renewable energy infrastructure comes with its own cost to climate change due to energy use.
Chip manufacturers could mitigate some of their climate impact by using renewable energy — and they may even get preferential access to green power according to this report by Politico.
In this case, palm oil biomass can obviously feed EU energy plants better than virgin Swedish wood. Palm oil wastes to feed the Malaysian grid to reduce the impact of its semiconductor industry will definitely lower the carbon footprint of Malaysian chips.
The soundest argument for the EU to quickly sign a free trade agreement with Malaysia comes from Interface EU which wrote:
The world depends on semiconductor technologies from European companies, and just as Europe depends on front- and back-end manufacturing in Asia, Asian fabrication plants (fabs) depend on manufacturing equipment and chemicals from European suppliers.
Transposed to palm oil and the MEUFTA this simply says that the EU's ambitions for sustainable imports absolutely requires the cooperation of countries like Malaysia.
Published January 2025 CSPO Watch