- BREAKING: The EU has delayed its vote on the Deforestation Regulation
- Indonesia’s Foreign Minister Retno Marsudi has pushed back on the EUDR with a video showing an EU boot crushing Indonesian Palm
- Malaysia’s Smallholders protested directly to the EU embassy in KL
- The EU has said there will be no ‘direct costs’ for smallholders
BREAKING: The EU has delayed its vote on the Deforestation Regulation. Word has come through from Brussels that the plenary vote on the EUDR scheduled for the end of this month has been delayed until at least mid-April. This prompts the question: Is the process unravelling?
The EU Ambassador to Malaysia also publicly stated that the EUDR won’t affect palm oil exports or result in ‘extra costs’ to smallholders. The EU is being disingenuous. Of course there won’t be direct costs to smallholders. The EU also said that the regulation only applies to European companies and therefore won’t affect palm exports. Instead, the costs of compliance will be passed down the supply chain. This is precisely what non-tariff measures do — making imports less competitive – and EU officials know it. Costs of compliance, information gathering and disruptions from audits and customs checks all mount. This is like arguing that existing EU regulations make no difference to a company exporting to the EU.
The clincher also is that the EU hasn’t given any indication it will consider palm oil producing countries as anything but ‘high risk’ – despite reductions in deforestation and mandatory certification systems. So is the Ambassador saying that the risk designations are meaningless?
Malaysia’s smallholders delivered a petition to the EU decrying the EU Deforestation Regulation. The demonstration took place in Kuala Lumpur, culminating with a march to the EU embassy, where smallholders handed a petition to EU officials. EU officials – rather than listening to the protesters and their concerns – then spun the protest into a series of tweets where they claimed solidarity with the protesters.
The Financial Times reported on the ongoing tensions being created by the EUDR. The paper’s trade columnist Alan Beattie wrote:
“For Indonesia and Malaysia, the world’s two main palm oil producers and both former European imperial possessions, this is rich-world neo-colonialism destroying the livelihoods of smallholders,” and that the EU “always has some kind of trade restriction” on palm oil and palm products.
Indonesia’s Foreign Minister Retno Marsudi’s video of an EU boot crushing Indonesian palm trees is causing a stir. Within the FT reporting was a note on a video from the foreign minister’s speech in January, where there is a short image effectively describing how EU regulations are crushing Indonesia’s largest export crop (skip to minute 38 here).
The Minister’s speech states that Indonesia will be seeking to push back against discriminatory trade rules. The boot and the speech underline how angry Indonesia is – and how much angrier things will the longer Brussels ignores Jakarta. The sentiments in the video aren’t new; President Jokowi said as much in his speech to the ASEAN-EU summit in Brussels in December.
The mood in the region is being exacerbated by the place of FLEGT in the agreement, and how the EUDR undoes a decade of cooperation on forestry. There’s a sense among palm producers that they won’t let this happen again.
The UK’s CPTPP negotiations hit an impasse on palm oil. The FT also reported on the UK’s clumsy attempt to maintain tariffs on palm oil as it enters the CPTPP (Comprehensive and Progressive Trans Pacific Partnership). The UK sought to maintain tariffs on palm oil (with an eventual phase out), despite offering tariff free entry to competing vegetable oils. Malaysia, rightly, pushed back and threatened to scuttle the agreement, prompting a backdown.
The UK’s backdown caused a stir on tariffs. The most notable was a letter from Chester Zoo, which argued that sustainable palm oil – certified under the RSPO — should be part of an agreement with lower tariffs. Although not mentioned, this is a feature of the Indonesia-EFTA agreement, where the main party is Switzerland. However, the debate has moved on significantly since then. Mandatory sustainability standards in Indonesia and Malaysia are now the national and domestic benchmark for production in those countries. It would be a very brave negotiating partner that would attempt to argue for a voluntary certification standard – against national standards – with the very governments that produced the standards.
This is prompting questions on the relevance of RSPO. Similar to a point we’ve made on several occasions, a representative from Wilmar has called into question the relevance of voluntary certification (i.e., RSPO) if meeting regulatory requirements such as the EUDR is all that matters. Perpetua George of Wilmar said, “If people are being told that [voluntary certification schemes] are not going to help you meet regulatory requirements, then they are going to drop it.”
National standards are also key to labour issues. It was also noted through the week that the standards of Indonesia and Malaysia will go some way to satisfying increasing global demands on labour rights. Malaysian Deputy Prime Minister Deputy Prime Minister Datuk Seri Fadillah Yusof noted that the MSPO standard now appears stronger than the RSPO standard on labour, and that “My Indonesian counterpart, Coordinating Minister for Economic Affairs Airlangga Hartarto and I will meet with our European counterparts to explain the standards we have developed.”