‘Political protectionism’: Palm oil producer nations hit back over EU deforestation regulations

By Pearly Neo

- Last updated on GMT

‘Political protectionism’: Palm oil producer nations hit back over EU deforestation regulations. ©Getty Images
‘Political protectionism’: Palm oil producer nations hit back over EU deforestation regulations. ©Getty Images

Related tags Palm oil Protectionism Eu deforestation

Palm oil producer nations have accused the European Union of deploying a ‘protectionist political ploy’ that will hit a raft of commodities in developing countries, amidst its highly controversial Deforestation Regulation being passed in parliament after almost a year of debate.

The Deforestation Regulation was initially proposed by the European commission in November 2021.

It seeks to mandate companies to ensure all goods sold inside the EU have ‘not been produced on deforested or degraded land’ and are therefore ‘deforestation-free’. All other products would be banned.

It was finally put to the vote in Parliament on September 13 2022, after almost a year of debate, and passed comfortably.

Strong opposition has been mounted by developing countries, particularly countries that produce commodities such as palm oil, because they would be designated as ‘High Risk’.

They claim the regulations are a ‘political protectionist tool’.

“This proposal is a protectionist ploy aimed at blocking palm oil imports and must be abandoned,”​ Indonesian Palm Oil Association (GAPKI) Chairman Joko Supriyono said via a formal statement.

“The European Union should pursue genuine cooperation with producing countries to ensure business and consumers have access to essential foods at low prices and high sustainability standards. The current regulation does not achieve this; in fact, it would increase prices.”

This opposition recently culminated in a formal letter of protest to the EU regarding the vote, which FoodNavigator-Asia ​has viewed. It was signed by a coalition of 14 developing countries including Indonesia, Brazil, Malaysia and covering multiple commodities in addition to palm oil such as cattle, soybeans, cocoa and coffee.

“This proposed regulation disregards the local conditions and national legislations of developing producer countries [and] their efforts to fight deforestation [and] encourage the EU to entertain further consultation with other countries [as some of the concerns we have expressed] in formal public consultations have, regrettable, been given scarce consideration.

“While we agree that the fight against climate change and conservation and sustainable forest management are urgent tasks, we regret that the EU has chosen the option towards unilateral legislation instead of international engagement.”

The 14 countries in the coalition were: Indonesia, Malaysia, Brazil, Nigeria, Argentina, Colombia, Ghana, Guatemala, Ivory Coast, Paraguay, Peru, Honduras, Bolivia and Ecuador.

The coalition also described how the proposed Deforestation Regulation and various aspects of its benchmarking system are biased against producer nations and their commodities, using the term ‘discriminatory’ multiple times throughout the letter.

“The country assessment criteria and benchmarking system are inherently discriminatory and punitive in nature - Its most likely effect will be to generate trade distortion and diplomatic tensions, without benefits to the environment,”​ they stated

“Furthermore, it imposes additional controls, entails reputational risks for companies and is likely to penalise producers in developing countries, especially smallholder farmers and SMEs. 

“Trade restrictions or the threat thereof cannot be a preferential means to achieve environmental ends. We firmly believe that trade restrictions are inadequate to address environmental concerns and will only lead to a downward spiral of trade distortion, reduced trade opportunities and increased impoverishment, with limited if not negative effects for the conservation of forests.” 

The letter also highlighted concerns over the ‘discriminatory nature of the scope of products’ included in the regulation – namely commodities such as palm oil – as well as the one-sided definitions of various terms such as ‘deforestation’ not agreed upon by all parties involved and various other demands which would be likely to increase costs for everyone involved.

Local support strong for deforestation - but is this the same?

Consumer support for deforestation appears to be very strong in the EU, as evidenced by a survey conducted by insights firm GlobeScan of 9,000 consumers across nine EU countries – Austria, Czech Republic, France, Italy, Portugal, Germany, Spain, Sweden and The Netherlands.

The survey highlighted deforestation as the ‘biggest environmental issue of concern’​ with 80% of Europeans saying this is a worry, and also that many consumers ‘strongly support a deforestation-free law that would require companies in the EU to stop selling products that destroy the world’s forests’​.

“Because of the public’s perception that large companies are failing in their responsibility to prevent deforestation, there is a strong appetite for regulation,”​ said the researchers.

“For businesses, consumer trust and loyalty is also at stake [so] businesses have more to gain by supporting this new regulation than opposing it.”

Unfortunately for the producer nations, the survey also claims that some 81% of Europeans support the enforcement of a deforestation-free law, and this is supported across various ages and demographics.

However, closer examination of the survey shows that consumers were only shown a very positive introduction of the new law – i.e. that it will ‘halt deforestation and minimise the EU’s impact on forests worldwide’​ by mandating ‘companies that sell commodities linked to deforestation and forest degradation to ensure they are ‘deforestation-free’ before placing them on the European market or exporting them from the EU’.

In the face of such an introductory statement with little explanation into the pros and cons, it would be difficult to imagine consumers saying no and thus saying they support deforestation – even if they are not aware how the Deforestation Regulation is likely to affect the economy, the local food supply, and international trade relations.

Given rising inflation rates in Europe (9.1% in August 2022 from 3.4% in September 2021) and how it is hitting new record highs across various areas from food prices to energy costs, this latest move means it could accelerate further when the regulation is enforced.

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