The European Parliament approved its long-debated and highly controversial deforestation rules in September last year, despite widespread protests from countries producing several foodstuffs in regions from Asia to South America.

They claimed the move was a political ploy and experts warned it would most likely lead to further price hikes amid inflationary pressures.

This has led major palm oil producing markets such as Malaysia and Indonesia to consider retaliation, with talks about the possibility of cutting palm oil trade with the EU.

Most recently, the two countries met as part of the Ministerial Council of the intergovernmental organization Council of Palm Oil Producing Countries (CPOPC) in February 2023 and – despite their differences in the past – concluded that Malaysia and Indonesia would present a united front to protest deforestation. regulation on a global scale, before the World Trade Organization (WTO).

This was decided by Malaysian Deputy Prime Minister and Minister of Plantations and Commodities Dato’ Sri Fadillah bin Yusof and Indonesian Coordinating Minister for Economic Affairs Airlannga Hatarto.

“We are seriously concerned about the adoption of the No Deforestation Raw Materials Regulation [as this will have] significant negative impacts on global palm oil exports as well as other developing countries,” the two ministers said via an official CPOPC document after the meeting.

“This regulation is a protectionist instrument that will increase costs for palm oil exporters and reduce their competitiveness compared to other vegetable oils in the EU, [and] we are disappointed that the EU has not held consultations [for this] with its business partners in a meaningful way.​

“We will conduct a joint mission to the EU to communicate the unintended consequences of this regulation on the palm oil sector, in particular on the possible exclusion of smallholders from the supply chain, and seek an approach more collaborative between all parties concerned.​

“All parts of the palm oil sector, including government, the private sector and smallholders, must come together to address the current issues plaguing the industry for the benefit of palm oil producing countries. .​

According to industry experts, there are also clear signs that this whole fiasco is having clear impacts on the EU’s longstanding stellar reputation with Southeast Asia in terms of trade relations, including the signs are beginning to appear via a recent survey conducted by the Center for ASEAN Studies at the ISEAS-Yusof Ishak Institute in Singapore.

“There is no doubt that the EU’s approach to palm oil has contributed significantly to [increasingly negative] Indonesian and Malaysian attitudes towards it,” Khalil Manaf Hegarty, palm oil industry expert and senior policy advisor to the Indo-Pacific Association of America.

“[The ISEAS survey] The attitude of ASEAN countries has shown that confidence in the EU’s ability to defend the global trade agenda has plummeted over the past year in Malaysia and Indonesia, both now having greater trust in China.​

“In Indonesia, 30% of respondents believe that the EU [stance] could be used to threaten the interests and sovereignty of the country (an increase of 13% compared to 17% previously) and 48% have little or no confidence that the EU will “do the right thing” (an increase of 18% compared to 30% previously). ”​

The survey went so far as to ask respondents which ‘third party’ ASEAN should partner with to hedge against the uncertainties of the ongoing US-China rivalry, and although the EU still beats other nations closest such as Australia, India and Japan to obtain a total of 42.9% of the vote, the figures still clearly show a decline in several economically leading countries, including Malaysia (18.1% drop in 49.6% to 31.5%), Indonesia (down 1.7% from 40.5% to 38.8%), Singapore (down 0.3% from 39.2% to 38 .9%) and the Philippines (down 1.2%, from 34.5% to 33.3%).

This again highlights the importance the region places on its food products, including palm oil, and how the new EU law paints a black mark in the eyes of the ASEAN community.

“EU policy makers live in constant denial that palm oil is [a key export commodity] for the region [and instead] constantly stress that the law is “not a ban on any country or product entering the EU market”,” added Hegarty.

“It is precisely these types of statements where they act as if there is absolutely no reason for exporters to worry that infuriates developing countries like Indonesia and Malaysia.”​ (*)

Source: oltnews.com/FoodNavigator-Asia.com