Why is Malaysia considering a ban on palm oil exports to the EU?


Malaysia, the world’s second-largest palm oil producer, said Thursday. may stop palm exports to the EU after the bloc imposed further restrictions on imports of edible oil due to concerns about deforestation.

What is the conflict about?

Malaysia and Indonesia have been at odds with the European Union for years over restrictions on palm oil imports. Both countries say they are trade barriers and barriers for the oilseeds industry in the bloc countries.

The EU Deforestation Regulation is an addition to the EU Renewable Energy Directive announced in 2018, which establishes Obsolete of palm transportation fuel by 2030

The group has also established separate safety limits for food-contaminated 3-MCPD esters for palm oil. Compared to soft oils derived from plants such as soybean, canola and sunflower.

What has Malaysia done about EU restrictions?

Indonesia and Malaysia, which account for 85% of the world’s palm oil exports. It filed a separate WTO lawsuit with the EU over its renewable energy directive.

Palm oil producers say they have taken steps to meet EU requirements. Including raising the country’s sustainable palm oil certification standards. and improve environmental protection and food safety standards. But the group continues to enforce new restrictions.

EU officials said their regulations It does not target any one country and aims to ensure that the production of the product does not encourage deforestation and forest degradation.

How did the market respond?

Bursa Malaysia’s benchmark crude palm oil futures contract has not yet responded to Malaysia’s offer. Although some traders said they saw it as a bearish signal.

Some in the palm industry saw the proposed ban as a knee-jerk reaction that would hurt the sector, and others praised Malaysia for stepping back.

Malaysia said it would Discuss with Indonesia Possible bans and other strategies to deal with EU measures Since both sides have agreed to increase cooperation to combat “Discrimination” against goods

How will Malaysia suspend exports to the EU?

It is not clear whether Malaysia is considering banning direct exports to the EU or imposing tariffs.

What about Malaysia’s palm oil exports to Europe?

The EU accounted for 9.4% of Malaysia’s export volume in 2022. Exports to the 27-member bloc have declined since 2015, according to Malaysian Palm Oil Board data.

In 2022, Malaysia’s exports to the EU fell 10% from the previous year to 1.47 million tonnes. That’s a 40% drop from 2.43 million tonnes in 2015.

last year The Malaysian Biodiesel Association has urged industry officials to come to terms with the continued decline in palm biofuel shipments to the EU.

Where else can Malaysian palm oil exports go?

The palm oil industry accounts for about 5% of the Malaysian economy. in the past few years Malaysia has explored new markets. actively to offset losses from Europe This includes food importing countries in the Middle East, Central Asia and North Africa.

However, several listed Malaysian palm oil companies have set up refineries in Europe. And the export ban will affect their operations.


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