Malaysia has sharply criticized the European Union’s decision to classify it as a “standard risk” country under the EU’s new anti-deforestation regulation, arguing that the designation is based on outdated data and reflects a broader pattern of the EU using environmental policy to exert control over trade.
Speaking at an event in Singapore, Malaysian Commodities Minister Johari Abdul Ghani said the risk label stems from 2020 data by the UN Food and Agriculture Organization, and fails to account for Malaysia’s recent progress in curbing deforestation. “We’ve taken substantial steps to ensure sustainable palm oil production,” said Johari. “The classification ignores the stronger regulations we’ve implemented, including our national MSPO standard, which is now stricter than the EU’s own criteria.”
Malaysia, the world’s second-largest palm oil exporter, is not alone in its objections. Indonesia has also raised concerns over the EU’s approach, which both countries view as a form of green protectionism. Despite earning praise from international NGOs for reducing deforestation, neither Malaysia nor Indonesia has seen its domestic sustainability standards recognized as equivalent to the EU’s.
Adding to the controversy is the European Commission’s recent decision to automatically classify all 27 EU member states as “low risk” under the same law—exempting them from the more burdensome compliance requirements applied to external trading partners. Malaysia has questioned the objectivity of this move, pointing out that some EU countries have performed worse on key deforestation indicators. “The Commission knows we’ve achieved better results than several European countries,” said Johari.
The methodology behind the EU’s classification has also come under fire. Malaysia argues that the bloc relies on “total forest cover” data, rather than distinguishing between primary and secondary forest. This allows EU countries that replace ancient forests with monocultures to retain a “low risk” status—while countries preserving significant tracts of primary forest remain penalized.
Malaysia’s commodities minister expressed concern over the European Union classifying the country as ‘standard risk’ under the new anti-deforestation law, saying the designation was based on old data.https://t.co/LwxFwjG04C#Malaysia #palmoil #deforestation #EU
— European Supermarket Magazine (@esm_magazine) May 29, 2025
The pushback against the EU’s anti-deforestation regulation has grown globally. Brazil, and even the United States under then-President Joe Biden, voiced objections that ultimately led the EU to delay the law’s implementation by a year. With Donald Trump now criticizing the regulations as well, there is speculation in Brussels that parts of the EU’s green agenda—formulated during Ursula von der Leyen’s first term as Commission President—could be used as bargaining chips. EU officials may consider offering regulatory concessions in exchange for tariff relief from Washington, particularly as political momentum in Europe shifts toward centre-right and right-wing populist blocs following last year’s European Parliament elections.
Even EU insiders have acknowledged that the bloc’s trade policy is increasingly being perceived as coercive. In 2024, Sabine Weyand, the European Commission’s top trade official, warned that the EU’s growing use of unilateral and extraterritorial trade measures has “alienated a number of our partners.” In a speech delivered at the Institute for International and European Affairs, Weyand noted that the EU must “reflect on our attractiveness to our trading partners.”
These concerns are not limited to deforestation rules. The EU’s broader climate strategy—most notably the introduction of the Carbon Border Adjustment Mechanism (CBAM)—has sparked fierce opposition from countries like India. Critics argue that CBAM, which imposes carbon tariffs on imports, violates World Trade Organization principles and is a thinly veiled form of economic protectionism.
For Malaysia, the debate over the EU’s deforestation regulation is not only about forest metrics, but about the broader issue of fairness in global trade. As Johari emphasized, “We want sustainable trade—not sustainability as a pretext for discrimination.”
Quite a compelling presentation by lawyers (linked to NGOs) that the EU deforestation regulation and CBAM will come under the EU-Mercosur 'rebalancing mechanism'. Could lead to a "network of rebalancing measures" in other EU trade agreements, says Andrea Carta from @GreenpeaceEU
— Rob Francis (@RobFrancisEU) June 10, 2025
Intra-EU wranglings
Also within the EU, the debate continues, with both national governments and members of the European Parliament calling for further delays and major revisions to the controversial law.
At a recent meeting of the EU Agriculture Council in late May, 11 Member States urged the European Commission to simplify the regulation, which aims to prevent products linked to deforestation from entering the European market. The group also recommended postponing the law’s implementation once again to allow time for these adjustments.
Among their proposals is the creation of a new risk category within the EUDR’s country benchmarking system: countries or regions with an insignificant risk of deforestation. Products sourced from these areas would be exempt from the strict geolocation and verification requirements currently foreseen under the law.
Meanwhile, a coalition of centrist and right-leaning Members of the European Parliament is intensifying efforts to weaken the regulation and shield EU producers from what they see as excessive compliance burdens.
In a letter sent on May 14 to European Commission President Ursula von der Leyen and Environment Commissioner Jessika Roswall, Czech MEP Veronika Vrecionová—chair of Parliament’s Agriculture Committee and a member of the right-wing European Conservatives and Reformists group—warned that the EUDR risks imposing “disproportionate burdens” on small businesses and could fail to achieve its core objectives.
The regulation, she wrote, “places technically unrealistic demands for tracing and verifying the origin of commodities,” and risks undermining the competitiveness of Europe’s agri-food and forestry sectors. “While we fully support the fight against deforestation, a framework with such systemic shortcomings may ultimately miss its target and penalize legitimate producers,” Vrecionová argued.
The letter also calls for an additional delay in the law’s enforcement. EU lawmakers had already agreed late last year to push back the EUDR’s start date from December 2024 to December 2025.
The latest appeal highlights an ongoing power struggle over the EUDR within the European Parliament. Late last year, the center-right European People’s Party (EPP)—the largest political group in the chamber and von der Leyen’s own political family—failed in its bid to secure an amendment labeling the EU itself a “no risk” zone. That change would have exempted smaller European farmers and foresters from many of the law’s compliance requirements.
Vrecionová’s recent letter renews that demand, signaling that opponents of the EUDR remain determined to soften the legislation ahead of its implementation.
The growing resistance underscores broader tensions over the EU’s green agenda, with several governments and lawmakers concerned that well-intentioned climate policies may inadvertently harm European industries and erode competitiveness—particularly at a time of rising global trade friction.
Picture copyright: Johari Abdul Ghani, Malaysia’s Minister of Plantation and Commodities Yusttw, CC BY-SA 4.0 <https://creativecommons.org/licenses/by-sa/4.0>, via Wikimedia Commons