This article first appeared in The Edge Financial Daily on January 23, 2018

KUALA LUMPUR: The European Parliament’s vote to phase out the use of palm oil after 2020 in the new European Union (EU) renewable energy directive is a regressive step which will fuel further uncertainty surrounding global trade, said International Trade and Industry Minister Datuk Seri Mustapa Mohamed.

“As more and more countries around the world embrace protectionism, many had hoped that the EU will provide the necessary leadership role to uphold the principles of free and fair trade,” Mustapa said in a statement yesterday.

Last Wednesday, members of the European Parliament voted for the resolution to phase out palm-based biofuels from the EU energy mix after 2020. Reports said the final decision will be made in a tripartite meeting along with the Council of the EU and the European Commission.

Mustapa said this development is a clear case of discrimination against palm oil-producing countries.

“For small trading nations such as Malaysia, this is a worrying development which together with the unfair labelling practices by the private sector in the EU member states will adversely affect the livelihood of over 650,000 Malaysian oil palm smallholders,” he said.

Malaysia is the world’s second-largest exporter of palm oil and in 2016, 15.2% of the country’s palm oil exports (worth RM10.3 billion) went to the EU.

“I urge the European private sector to be fair and not to be influenced by the vote in the European parliament and the negative sentiment against our palm oil. Facts must prevail above unsubstantiated claims in this matter,” said Mustapa.

The minister also said that the EU’s move is a potential violation of the World Trade Organization (WTO) rules as it is a deliberate attempt to block the access of palm oil to their market.

“More immediately, we will raise this issue at the Committee on Sanitary and Phytosanitary and Committee on Technical Barriers to Trade in March 2018 and Committee on Market Access in April 2018,” said Mustapa.

He said his ministry is currently chairing the meeting of technical experts of the Friends of Palm Oil in Geneva to assess the possible impact from this latest development and explore further counter measures and actions.

“Our outreach efforts will also be enhanced to clarify the misperception related to Malaysian palm oil and these will include various lecture series as well as WTO informal dialogue on this issue in the coming months,” he said.