Looking at the EU’s ongoing trade negotiations with Asian trade powerhouse, EU Trade Commissioner Dombrovkis has stated that “With elections due in Indonesia in February, it might be difficult to make seizable progress in coming months”, adding also that “negotiations with India are progressing at a slower pace than anticipated”. In Summer, both Indonesia and Malaysia decided to freeze trade talks with the European Union over tensions related to the EU’s refusal to recognise their standards to prevent deforestation, following new EU deforestation rules.
The EU refuses to recognise the “Malaysian Sustainable Palm Oil (MSPO)” certification programme in particular, unlike for example the UK, which made sure it was able to enter the CPTPP trade arrangement, the biggest UK trade win so far. Arguments that NGOs like Global Forest Watch considered Malaysia to have secured great progress in reducing deforestation did not convince EU negotiators so far, even if Dutch PM Mark Rutte has pledged to support Malaysia’s point of view at the EU level.
#EU #FTA State of play on #Indonesia and #India by commissioner Dombrovskis in EP INTA today. “With elections due in 🇮🇩 in February, it might be difficult to make seizable progress in coming months.” .. “Negotiations with 🇮🇳 are progressing at a slower pace than anticipated”
— Frans Köster (@franskoster070) November 28, 2023
More progress is on the way. The Malaysian Sustainable Palm Oil (MSPO) certification is constantly receiving recognition globally and has been perceived to be at par with the Roundtable on Sustainable Palm Oil (RSPO), Malaysia’s Deputy Prime Minister Datuk Seri Fadillah Yusof, who is also Plantation and Commodities minister, has revealed, stating:
“For Malaysia, the MSPO is more comprehensive, encompassing greater perspective when compared to the RSPO.”
He thereby specified how comprehensive the scheme is, noting that it covered “not only in terms of palm oil, but the entire chain of palm oil production from the production of seeds to the production of downstream products from the oil palm itself”.
According to the Malaysian Palm Oil Board, nearly 500,000 smallholder farmers in Malaysia will need to become compliant with a traceability platform that records and tracks transaction details of palm oil products, to comply with the new EU rules.
Already 83% of palm oil refining capacity are operating under a ‘No Deforestation, Peat and Exploitation (NDPE)’ commitment and around 96% of Malaysian palm oil plantations—are now MSPO-certified. Many of those are small farmers, which has triggered concerns about whether they can cope with the new EU bureaucracy.
Leading Financial Times trade commentator Alan Beattie commented on the EU’s regulatory approach, has looked into the issue, commenting:
“The EU’s trying to use trade policy to stop climate change and save the forests. By and large it means well. But the formidable Brussels red tape industry risks smothering developing countries in bureaucracy.”
“Jodie Keane of the UK Overseas Development Institute think-tank .. calls this part of the “green squeeze”. The deforestation initiative, for example, requires geolocation satellite imagery to prove products aren’t grown or raised on deforested land, and the produce to be tracked through the supply chain. A group of 17 low and middle-income countries including Brazil, Indonesia, Nigeria and Mexico complained to the EU in September (see the following clip) that compliance was too complicated and their own measurement and certification schemes were ignored.
The deforestation ban. which has big potential fines for transgressors, starts coming in at the end of 2024. There will be fierce agitation from producers abroad to tweak the schemes and potentially WTO cases that might loosen the restrictions.”
He thereby concludes however that for now, “the EU’s not going to give way on the principle here, but there’s a lot to be gained from lobbying it hard on the process.”
My Trade Secrets today.
The EU's trying to use trade policy to stop climate change and save the forests.
By and large it means well. But the formidable Brussels red tape industry risks smothering developing countries in bureaucracy.https://t.co/JkPGrQmUtP
— Alan Beattie (@alanbeattie) November 27, 2023
Copyright: EU Trade Commissioner Valdis Dombrovskis. Copyright: By Saeima – https://www.flickr.com/photos/saeima/53179736295/, CC BY-SA 2.0, https://commons.wikimedia.org/w/index.php?curid=137452690