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Norway's stance against palm oil will adversely bilateral EFTA trade relations

In Malaysia, the Minister of Primary Industries YB Teresa Kok "deeply regrets" the Norwegian Parliament’s vote earlier this month that will make Norway the first country in the world to ban biofuels based on palm oil adding that it "smacks of injustice and discrimination" against products from developing countries.

Commercial oil palm production in Malaysia celebrates its centenary in 2017 (photos courtesy Gustav Melin).

Commercial oil palm production in Malaysia celebrated its centenary in 2017 (photos courtesy Gustav Melin).

Minister Kok was responding to an announcement earlier this month that the Norwegian Parliament has adopted a resolution in the national budget for 2019 that seeks to limit and phase out the use of palm oil in biofuels in Norway from 2020. At the same time, the European Union (EU) has agreed on a phase-out of first-generation biofuels with a “high risk of indirect land use change” (ILUC).

In a statement December, 28, Minister Kok highlighted that the move “will adversely affect” bilateral trade relations between Malaysia and the European Free Trade Association (EFTA) that includes Norway, and would be a “major obstacle” towards a successful conclusion of the Malaysia EFTA partnership talks as Malaysia is not convinced that the evaluation of palm oil has been “fair and just”.

Apart from biofuels, palm oil and its derivatives are used in a wide range of consumer products and foodstuffs ranging from detergents and cosmetics to edible oils and snacks. Although native to tropical West Africa, the oil palm was introduced to both Indonesia and Malaysia just over a century ago. Together the duo accounts for around 85 percent of the global palm oil supply – Malaysia, the world’s second-largest producer, has around a 39 percent share.

As a sector, the palm oil industry value chain is increasingly under scrutiny as its expansion in recent years, not least in other tropical countries, has generic issues with deforestation, biodiversity and habitat loss, peatland drainage, fires and land tenure issues with indigenous populations.

However, as Minister Kok alluded to, there is a considerable difference between the best and worst performers in the sector and Malaysia’s concern is that Norway along with some other countries in Europe, will “generalize and lump together all palm oil producers as drivers of deforestation” thus deeming all palm oil as unsustainable.

Without clear and proper definitions and based on a decision not supported by validated facts this “sort of action smacks of injustice and discrimination” against products from developing countries like Malaysia.

As a responsible producer of palm oil, we have already set in motion various initiatives to ensure sustainable practices are the norm rather than the exception, throughout the palm oil value chain. Malaysia as a nation is, in fact, prescribing to the United Nations 2030 Agenda for Sustainable Development and its 17 Sustainable Development Goals, Minister Kok said.

In addition, Malaysia has undertaken to implement mandatory certification of its entire palm oil production and supply chain through its own Malaysian Sustainable Palm Oil (MSPO) scheme that further complements efforts that include Good Agriculture Practices, preserving forests by restricting oil palm plantations to designated agriculture areas and a global pledge to maintain forest cover by at least 50 percent.

But, it appears these efforts are not appreciated and largely ignored by Europe including Norway, which continues to label our palm oil as unsustainable. We view this as unfair and unjust, going against free and fair trade, and is certainly not something we will take lightly. The Malaysia EFTA partnership agreement must provide fair market access to all of the countries involved, including fair treatment of sustainable palm oil which is produced in Malaysia. Without this fair market access, it will not be in the interest of Malaysia to pursue what will be a bad deal for the country and its people, particularly our 650,000 oil palm smallholders whose livelihood is at stake, ended Minister Kok.

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