PETALING JAYA: Malaysia and Indonesia will delay trade talks with the European Union while they seek fairer treatment for small palm oil producers hit by the EU’s “punitive” new rules to prevent deforestation, the Financial Times reported.
It said it was told by deputy prime minister Fadillah Yusof during a visit to Brussels on Wednesday the EU’s recently adopted law banning the import of products that come from land cleared of forests was “punitive and unfair treatment towards us and to smallholders in particular”.
According to FT, Fadillah, who is also the plantation and commodities minister, said overtures from EU officials to progress talks on a trade deal with Malaysia would depend on what action the EU took to improve the treatment of its smallholders.
The report also quoted Indonesia’s coordinating minister for economic affairs, Airlangga Hartarto, as saying the policy favoured “large corporations or multinationals” which could afford the level of bureaucracy that the regulation will demand.
It said Indonesia, which has been negotiating with the EU over a free trade agreement for seven years, would delay those talks until more leniency was given to palm oil producers under the new EU Deforestation Regulation (EUDR).
“We can wait an additional seven years,” it quoted Airlangga as saying.
Indonesia and Malaysia are the world’s biggest palm oil producers, accounting for about 80% of global palm oil exports. The EU is their third-largest market.
The EUDR, announced on Dec 6, 2022, will ban commodities ranging from palm oil to cocoa, as well as some manufactured products, like furniture, if they come from deforested land.
Fadillah and Airlangga had held talks with EU officials in Brussels earlier in the week.