Bangkok Federal Minister of Agriculture Cem Özdemir is celebrating the project as a milestone, and it is causing outrage in Southeast Asia: The European Union’s anti-deforestation regulation, which according to the federal government is expected to come into force in the middle of the year, is intended to slow down the deforestation of forests around the world.
However, the governments of Malaysia and Indonesia – two countries that feel particularly affected by the plans – view the rule primarily as trade discrimination. They see the livelihoods of hundreds of thousands of farmers at risk.
The core of the EU regulation is that certain raw materials and products may only be imported in the future if they can be proven not to have been produced in connection with deforestation. It’s about soy, beef, coffee, cocoa, rubber, wood – and also palm oil. According to environmentalists, its production has been the main driver of rainforest destruction in Southeast Asia in recent decades.
However, Indonesia and Malaysia, which together account for more than 80 percent of global palm oil production, feel the new rule is unfair to Europe. And they are now threatening a harsh reaction: in protest, the government in Kuala Lumpur is considering a complete halt to deliveries to Europe.
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“If the EU makes it too difficult for us, then we can simply stop exporting and concentrate on other countries,” warns Malaysia’s Deputy Prime Minister Fadillah Yusof.
“Europe needs us and we need Europe”
The politician, who is also Malaysia’s minister of raw materials, criticizes the fact that the EU regulation’s documentation requirements for his country’s palm oil industry are becoming a massive additional burden that is undermining the industry’s competitiveness.
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Fadillah complained that the regulation was a deliberate attempt by Europe to block market access for palm oil and in return to protect competing products such as rapeseed oil produced in the EU. He plans to travel to Indonesia in February to discuss a joint strategy with his counterpart in Jakarta. “Europe needs us and we need Europe,” he says. “But everything has to be fair, we can’t discriminate against each other.”
The EU ambassador to Malaysia, Michalis Rokas, rejects the accusation of discrimination. The EU regulation affects all countries equally. Earlier this month, Indonesia’s President Joko Widodo and Malaysia’s Prime Minister Anwar Ibrahim pledged to work together “to combat discrimination against palm oil” at a meeting earlier this month.
There have been conflicts for years about the raw material, which is used in many products such as ice cream, frozen pizzas, shampoos, candles and biodiesel. The environmental organization Greenpeace assumes that several million hectares of rainforest have been destroyed in Southeast Asia in recent decades in order to set up palm oil plantations.
“We cannot afford for forests to continue to be cleared or damaged elsewhere in the world for our consumption,” emphasizes Federal Minister of Agriculture Özdemir with a view to the EU plans. Making supply chains free of deforestation is therefore a real milestone.
In addition to the planned import ban, which is to apply to palm oil from areas cleared since 2021, the EU also wants to phase out the use of palm oil in biofuels by 2030 due to environmental concerns.
This plan also creates controversy and strains relations with the main producing countries. In the case of Indonesia, which produces around 60 percent of the palm oil used worldwide, the provisions are also a major hurdle for concluding a free trade agreement, which the EU has been negotiating with Southeast Asia’s largest economy since 2016.
Countries do not find their efforts adequately recognized
Both Indonesia and Malaysia point out that they have introduced measures themselves to stop the deforestation of the rainforests. In fact, according to the Indonesian research institution Center for International Forestry Research, the problem has decreased noticeably in recent years after record deforestation in 2016.
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The governments in Jakarta and Kuala Lumpur feel that progress is not being sufficiently appreciated. Indonesia’s President Widodo made it clear in December at the summit meeting between the Southeast Asian community of states Asean and the EU states that he considers the pressure from the Europeans to be unjustified. “It can’t be that one side always dictates the rules to the other and assumes that their standards are always better,” he lamented.
Environmentalists are critical of the resistance to the EU directive. “The EU deforestation law poses no threat to trade if the governments of Indonesia and Malaysia commit to stopping deforestation for palm oil,” says Kiki Taufik, who oversees Greenpeace’s forest protection campaign in Indonesia.
The Indonesian organization Madani, which works to strengthen civil society, warns of the danger that the EU regulation could exclude small farmers in the future. A survey by the NGO showed that only a small fraction of them could provide the required evidence.
Affected are millions of people who grow oil palms on comparatively small areas in Indonesia and sell the fruit through a network of middlemen. The Indonesian environmental organization Kaoem Telapak also fears that the required traceability may not be guaranteed at all or only with great effort.
Achmad Surambo, head of the palm oil-critical organization Sawit Watch, sees the danger that the EU will ultimately only shift trade flows instead of really solving the environmental problems. “Indonesia can easily shift its market to China, India or Pakistan, which have more lax sustainability regulations compared to the EU,” he warns. “If that happens, there will be no improvements in palm oil management – and deforestation will continue.”
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