Malaysia, Indonesia consider trade curbs against EU

Malaysia, the world's second biggest palm oil producer, is considering trade curbs to strike back against what it calls unfair policies from the European Union that block market access for tropical oil.

Southeast Asian country will coordinate its response with Indonesia, the largest edible oil supplier in the world. According to Malaysia's Deputy Prime Minister Fadillah Yusof, strategies being considered include slowing commodities trade with Europe and reviewing imports from the bloc.

In December of this year, the EU agreed to a historic law that would stop products that cause forest destruction from being sold in European shops and supermarkets. Wood, rubber, beef, leather, cocoa, coffee, palm oil and soy won't make it past the port unless proven to be deforestation-free. Malaysia and Indonesia have been the subject of international criticism of the policy.

If they are too firm on their decision and do not want to listen to us, I think one of the areas that we should look at together with Indonesia is how we should look at Europe, Fadillah, who is also Malaysia's Minister for Plantation and Commodities, said in an interview Tuesday. If we are not fairly treated, I think there should be some counteraction by us. The rule is discriminatory, according to the two countries, which together make up more than 80% of the world s palm oil supply. It will cut off market access for millions of small farmers in the region, including Latin America and Africa, who don't have the means to meet the stricter traceability requirements. Palm oil is used to make everything from chocolate to soap, soaps and detergents.

Fadillah said from his office in Putrajaya that the EU is trying to remove smallholders from the system. He said that the bloc keeps introducing new requirements despite compliance from larger plantations on international sustainability standards, as well as the Malaysian government's commitment to a greener economy and limiting new plantation areas.

Fadillah will be in Jakarta Wednesday to discuss strategies with Indonesia. The two countries will hold a joint ministerial press conference on Thursday.

On the possible trade measures, he didn't want to go into details of what Malaysia and Indonesia might do, but he said it would be part of the discussion.

He said that he and Indonesia want to make the European Union realize that their action is a one-sided, unilateral decision.

The ministry is not in favor of increasing its biodiesel mandate, but this will require further discussion with other ministries.

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