Last week, the European Parliament voted to approve the Deforestation Regulation (EUDR). The vote was a formality and was pushed through as part of a sprawling mass of similar proposals, including a new carbon border tax. The result of these, especially in the case of the Deforestation Regulation, will be to impose new trade barriers and anger key trading partners.
To recap, the EUDR is unjust and serves primarily to protect a domestic EU oilseeds market that is inefficient and cannot compete with Malaysia’s efficient and productive palm oil exports. The Regulation will increase costs and barriers for Malaysia’s palm oil sector, including 500,000 small farmers. Blocking market access for these farmers would increase poverty, reduce household income and harm Malaysia’s rural communities. In doing so, the EUDR is directly and explicitly undermining the EU’s commitments outlined in the UN Sustainable Development Goals.
Following the vote, YAB Dato’ Sri Haji Fadillah Bin Haji Yusof, Deputy Prime Minister of Malaysia, released a statement decrying the EU’s decision, stating, “It is disappointing to witness the European Union withdrawing from the global marketplace and erecting protectionist barriers. This move is woefully misguided, especially as the ASEAN and CPTPP groupings are gaining in influence and attracting new partners from around the world.”
The controversy will simmer on, as there is still the key question of whether the EU will label either Malaysia, or some individual Malaysian states, as ‘high risk’ jurisdiction. There are no ‘high risk’ parts of Malaysia: those are the facts. Efforts to drive a wedge between different parts of Malaysia, or divide the country, under the guise of a “Jurisdictional Approach” already being discussed by the Commission is a red line, will not be successful and will spark serious questions about whether the EU is acting in bad faith towards Malaysia.
Brussels’ actions to restrict market access stand in stark contrast to those of the United Kingdom, a former Member State of the EU, which is instead seeking to open trade, grow partnerships and expand its economic and political influence in southeast Asia.
UK & Malaysia Secure Trade Deal
On 31st March, the United Kingdom struck a deal to enter into the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) joining Malaysia and other Pacific nations in a strategic move that has impressed leading experts, officials and trade voices from around the world.
The move reaffirms both the UK and Malaysia’s shared commitment to strengthening their relationship, working towards sustainable environmental practices, and promoting sustainable supply chains.
UK Prime Minister Rishi Sunak was among the first to praise the acceptance into the CPTPP, noting, “Joining the CPTPP trade bloc puts the UK at the centre of a dynamic and growing group of Pacific economies.”
The move to join the now 12-country Pacific trade pact is a win-win situation for all involved, including the palm oil sector. The deal is anticipated to strengthen trade ties between Malaysia and the UK, with the UK agreeing to remove their previous 12% tariff on Malaysian palm oil to 0%.
UK Welcomes Palm Oil, Europe Attacks Palm Oil
The move by the UK, of course, did not come free of criticism from the usual suspects claiming (without evidence) that the agreement will “result in more deforestation overseas, endanger animal welfare and “make a mockery” of the government’s environmental commitments.” Perhaps the authors have not read the UN’s latest official global forest data, which calculate that Malaysia’s deforestation rate is now zero. Or the World Bank’s online data resources showing that Malaysia protects 56% of land as forest, whereas the European Union protects only 36%. These are globally-recognised independent data sources.
These critics aim to undermine what is a vital trade deal for the future of the UK in the 21st Century, and they do so for the simple reason that they do not like trade openness.
Fortunately, some sane voices also entered the debate. Former MEP and Chairman of the Independent Business Network, John Longworth, stated, “If the anti-CPTPP campaign thinks that higher food prices are a good idea during a cost-of-living crisis, they have badly misread the room. It is a classic example of misrepresentation of the standards argument.”
UK Trade Secretary Kemi Badenoch also came to the defence of the deal – and of palm oil, noting “Palm oil is actually a great product, it’s in so many of the things we use.”
In Malaysia, YAB Deputy Prime Minister was delighted by the Trade Secretary’s remarks. He told reporters, “she rightly dispelled the myth of deforestation and the … untrue campaign regarding the commodity.”
Offering reassurance in the form of internationally recognized facts on Malaysia’s environmental record, YAB Deputy Prime Minister was also reminding those attacking the agreement that Malaysia “ recognises the importance of protecting the environment and conserving biodiversity, and … is committed to helping its sustainable palm oil sector become even more environmentally friendly.”
Often ignored by the EU and others trying to ban palm oil and promote protectionist policies is the fact that deforestation in Malaysia is now effectively zero. But these aren’t simply Malaysia’s facts, rather they’re supported by “the United Nations’ official data in its comprehensive Global Forests Resource Assessment.”
Two Roads Diverge
As the UK, Malaysia and other ASEAN countries look to deepen their economic and diplomatic relationships, trade deals like the CPTPP are essential to their success. The EU’s protectionist policies are an introspective tactic of yesterday that will prevent them from future growth, while others, including the U.K., move forward. This is an opportunity for the EU to recognize that their vote on the Deforestation Regulation is a strategic error.