What to Know: Southeast Asian anger and frustration towards Brussels is growing in the lead-up to today’s Committee vote in the European Parliament on the EU Deforestation Regulation.
Malaysian Deputy Prime Minister Fadillah Yusof has said Malaysia may “stop exporting to Europe, and focus on other countries, if they keep making it difficult for us.”
At the same time Indonesia’s Coordinating Minister for Economic Affairs Airlangga Hartarto called out the EU’s ‘sneaky’ approach on palm oil, pointing to the bloc’s ban on palm biofuels, but protestations when Indonesia’s CPO export limits were introduced.
ASEAN Cooperation Grows: Both countries looking at a crisis meeting in the weeks ahead.
This follows a meeting between Indonesian President Jokowi and Foreign Minister Retno Marsudi and their Malaysian counterparts in Jakarta to form a united front against Europe to combat the most harmful components of the EU Deforestation Regulation.
EU Businesses, Consumers at Risk: Further trade disruptions to exports from Malaysia and Indonesia could prove detrimental to EU businesses and consumers. Vegetable oil prices are still high, driving up food prices and adding to inflation levels.
Sunflower oil prices remain particularly high because of the Russia-Ukraine conflict, and this has forced European companies that have had ‘no palm oil’ marketing strategies to switch to palm.
Import restrictions – such as the EU’s Deforestation Regulation – combined with any additional export restrictions from Southeast Asia mean European businesses will struggle keep costs down and consumers will face prices hikes.
This begs the question: why would the EU risk a no-win outcome of a damaged relationship with ASEAN and higher prices at home?
Council Holds the Key: After the Parliamentary vote this week, it is the Council of the EU that holds the key to halting the potential decimation of the ASEAN-EU partnership.
It has the opportunity to address the worst aspects of the legislation and convince their EU counterparts in the Commission and Parliament to save their relationships in the region. But will they?