Malaysia labels ban on palm oil as riddled with ‘politics of protectionism’ and discrimination

By ALIFAH ZAINUDDIN & DASHVEENJIT KAUR / Pic By BERNAMA

Malaysia has threatened to stop the purchases of selected products from the European Union (EU), as the world’s second-largest producer of palm oil warns of the dire consequence of the latter’s proposed ban
of the commodity as a green fuel component.

The proposed boycott of the EU’s products puts Malaysia and the EU’s billions of trades in jeopardy as the latter is among Kuala Lumpur’s (KL) largest key trading partners, with exports and imports totalling RM183.37 billion last year.

Tun Dr Mahathir Mohamad said Malaysia will stop buying products from the 28-member bloc in response to the EU’s unfair treatments against the country’s palm oil.

“We (the government) think we will stop buying some European products, that is one of the things we can do,” the prime minister (PM) said at the Parliament lobby yesterday. The PM, however, did not elaborate on the products that could be ignored by the government from its procurements.

His latest statement to boycott products from the bloc was the harshest by KL after Malaysia repeatedly echoed threats of retaliatory actions against the EU over its insistence that palm oil is not “green” road fuel and will be banned from entering the world’s largest economy.

Dr Mahathir’s suggestion to reject products from the EU was reminiscent of his “Buy British Last” campaign in 1981 as a retaliatory actions against a few Great Britain actions that angered KL, including a threefold increase of tuition fees for foreign students.

At that time, the government-sponsored about 13,000 students in the UK. 

The EU’s plan to ban palm oil biofuel moves closer to realisation after the European Commission (EC)recently acknowledged in a delegated act that palm oil cultivation results in excessive deforestation and its use in transport fuel should be phased out.

The proposed EU delegated act — slated to be tabled in April — supplements the EU Renewable Energy Directive II to restrict and ban palm oil biofuel by 2030.

Malaysia’s Foreign Affairs Ministry had described the recommendation as a “calculated political ac” aimed at removing its palm oil exports from the EU market.

Malaysia had threatened to take the ban on palm oil to the World Trade Organisation (WTO), if the proposed ban goes ahead.

“Such an aggressive trade barrier targeted at Malaysia’s national interests, and our 650,000 small farmers, cannot pass without a strong response,” Wisma Putra said in a statement over the weekend.

Indonesia, which is the world’s largest palm oil producer, has voiced its intention to bring the dispute over the classification to the WTO.

On Tuesday, Dr Mahathir said the government will not hesitate on retaliatory moves against the EU if it persisted with its unfair actions against palm oil.

Dr Mahathir wrote to French President Emmanuel Macron earlier in January stating that Malaysia would consider imposing similar sanctions against French exports, if Paris did not withdraw plans to ban palm oil biofuel.

In his letter to Macron, Dr Mahathir threatened to suspend free-trade talks with the EU and impose similar sanctions against French exports, should France remain adamant to impose a ban on palm oil.

French lawmakers in December had voted to remove palm oil from the country’s biofuel scheme, beginning January 2020.

Malaysia and Indonesia, which account for 85% of the world’s production of palm oil, had been at odds with the EC since the suggestion that the edible vegetable oil is not a “green” fuel.

The EU is the world second-largest importer of palm oil, with imports about 6.5 million metric tonnes last year.

Malaysia had also labelled the EU’s action, a market of about 513 million people, as riddled with “politics of protectionism” and discrimination.

According to the International Trade and Industry Ministry, Malaysia’s trade with the EU was RM15.29 billion in January this year, including imports worth RM6.56 billion.

Among the goods imported by Malaysia from the EU countries are aircraft and spacecraft products, machinery, food products, clothing and footwear, skin care, optical, photo, technical, medical apparatus, vehicles, medical and pharmaceutical products, paper and paperboard, articles of pulp and dairy products.