Malaysia mulls halting palm oil exports to EU to oppose new rule

Malaysia, the world’s second-biggest palm oil producer, will consider halting exports to the European Union in retaliation for the bloc’s new deforestation regulation, according to the country’s deputy prime minister.

The regulation is an act to block market access for palm oil and Malaysia will discuss with Indonesia — the top producer and exporter — about the option of stopping shipments to the EU, Fadillah Yusof, who is also Malaysia’s Minister of Plantation and Commodities, said at a media briefing. 

“That is one of the options for us but we have to discuss with Indonesia,” he said on Thursday, adding that stronger cooperation between the two nations is important to overcome trade barriers and negative campaigns against palm oil. “We would have one stronger voice if we join hands with Indonesia.”

Countries within the EU agreed to a historic law in December that will stop products causing forest destruction from being sold in European shops and supermarkets. Products like wood, rubber, beef, leather, cocoa, coffee, palm oil and soy won’t make it past the port unless proven to be deforestation-free. 

Palm oil producers have said the move could isolate and cut off market access for millions of small farmers across Southeast Asia, Latin America and Africa who do not have the means to meet the stricter traceability requirements. Indonesia and Malaysia together account for more than 80% of global supply. 

Fadillah will visit Indonesia as early as this month to follow up on Prime Minister Anwar Ibrahim’s recent trip. Malaysia will focus on showing that its palm oil adheres to international environmental standards, Fadillah said.