Malaysia Mulls Ban On Palm Oil Exports To EU

Malaysia, the world's second-largest palm oil producer has said it might stop palm exports to the European Union (EU) after the bloc imposed import restrictions on the edible oil due to concerns over deforestation, Mei Mei Chu reported for Reuters.

Photo Insert: Malaysia and Indonesia have for years been at loggerheads with the EU over curbs on imports of palm oil.

Malaysia and Indonesia have for years been at loggerheads with the EU over curbs on imports of palm oil, which the two countries say are trade barriers and protectionist measures for the bloc's domestic oilseed industries.

The EU deforestation regulation is in addition to an EU renewable-energy directive, announced in 2018, that requires the phasing out of palm-based transportation fuels by 2030.

The bloc has also set a separate safety limit on food contaminant 3-MCPD esters for palm oil compared to soft oils derived from soybean, canola, and sunflower. Indonesia and Malaysia, which account for 85% of the world's palm oil exports, have filed separate World Trade Organization (WTO) suits against the EU over the renewable-energy directive.

The palm oil producers say they have taken steps to meet EU requirements, including stepping up their national sustainable palm oil certification standards and improving environmental protection and food safety standards, but that the bloc keeps imposing new restrictions.

EU officials say their regulations do not target any one country and are aimed at ensuring that commodity production does not further drive deforestation and forest degradation.

The EU accounts for 9.4% of Malaysia's export volume in 2022. Malaysian Palm Oil Board data indicates that exports to the 27-member bloc have been declining since 2015. In 2022, Malaysia’s exports to the EU fell 10% from the previous year to 1.47 million tons.

That is a 40% plunge from 2.43 million tons in 2015. The Malaysian Biodiesel Association last year urged industry officials to come to terms with a steady decline in shipments of palm-based biofuels to the EU.

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