The European Union’s pending anti-deforestation law presents both challenges and opportunities for Malaysia’s palm oil industry, Malaysia’s deputy commodities minister has stated at an industry conference. The country’s deputy Minister Chan Foong Hin explained it was crucial for the industry to understand the impact of the EU law so that domestic practices could be adapted and market access maintained.
Meanwhile, corporates continue to prepare for EUDR implementation.
Malaysia says EU deforestation law presents challenges, opportunities for palm industry https://t.co/bB8udtX13s pic.twitter.com/wocOQP27Hx
— Reuters (@Reuters) January 14, 2025
On its website, Brussels-based law firm White & Case warns that “although the European Commission has proposed a delay of 12 months to the implementation of the EUDR, Companies should consider now the impact of the EUDR on their supply chain due diligence to prepare for the new obligations that apply from 30 December 2025.”
It explains:
“On 29 June 2023, the European Union’s new regulation to curb the EU market’s impact on global deforestation and forest degradation (the “EU Deforestation Regulation” or “EUDR”) came into force1 and was set to take effect on 30 December 2024. On 2 October 2024, the European Commission proposed a 12-month delay to the application of the EUDR until December 2025. In an expedited legislative process, the co-legislators have agreed the delay and the adoption of the delay is on track to be final by the end of 2024. While the proposal finalises its progress through the EU’s legislative process, we update the obligations your business should be prepared for below.”
Amongst these obligations are, notably “Potential fines of up to 4% of the company’s EU turnover, confiscation or exclusion from public funding or contracts”.
The EU’s deforestation directive (EUDR) has deeply damaged relations between the EU and trading partners. First, Malaysia and Indonesia were complaining about this, as they found it unfair that the EU refuses to recognise their local deforestation standards for their palm oil exports, despite NGOs praising them for decreasing deforestation just last year. Malaysia has also introduced “carbon sequestration” in the palm oil industry as well as its tree planting programmes – stimulated by the Malaysian Palm Oil Green Conservation Foundation (MPOGCF).
EU lawmakers vote to delay EUDR implementation
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👉 Read the article here: https://t.co/fJaQEyCvAG #sustainability #deforestation #business #news pic.twitter.com/lCZjzjF8Bp— TC Trade Journal (@TCTradeJournal) November 18, 2024
The UK does recognise the country’s local standards on the contrary. It helped Britain to get access to the “trans-pacific” CPTPP trade bloc, which has a combined GDP of £12 trillion. This has been seen as a major win following Brexit, while in recent years, the EU has fail to agree almost any new trade deal.
Later, the likes of Australia, Brazil and also the United States joined the protest against EUDR. It led to a one-year postponement of the directive, but the legislation is still not off the table. Certainly Trump won’t be much milder on the issue than Biden, so EU governments will need to ask themselves the fundamental question of whether burdening trading partners with lots of extra bureaucracy is the right path to follow.
Last year, in a speech for the the Institute of International and European Affairs, Sabine Weyand (picture), the European Commission’s Director General for Trade, has remarked that trading partners are increasingly questioning EU’s use of trade policy to act as a “global regulator”. She thereby also questioned the EU’s handling of its deforestation directive, stating:
“We should learn some lessons from the opposition we are currently facing with respect to the deforestation regulation … we have to recognize that the means are extremely burdensome and very difficult to meet for developing countries and notably for small and medium sized businesses and smallholders in these countries.” (…)
“We have pushed away a number of partners we need through our increased use of autonomous trade measures; unilateral measures that other countries see as imposing on them extra-territorial effects of our legislation. And they resent that. (…) We hear that increasingly on measures like the deforestation regulation … there are huge concerns. So we need to think about our attractiveness for our trading partners.” (…) “The Global South and the emerging and developing economies, they do not simply want to copy our legislation and they say, who has appointed you world regulator? So I think we have to take on regulatory cooperation. We have to take a proper cooperative approach. (…) It is clear that we will not be able to have such an approach with India and Indonesia.”