In January this year, the French Senate proposed a new tax on palm oil and soon gained the support of some Ministers. In July, though, the government withdrew the proposal.
This was not the first act in this particular drama: such a tax had been proposed – dubbed the ‘Nutella Tax’ – in 2012, before being dropped. In the upcoming autumn parliamentary session, Deputy Environment Minister Barbara Pompili has pledged to launch yet another attempt. The aim is essentially to tax palm oil out of existence.
Malaysia is a major producer of palm oil. The continuous attempts by some French politicians to actively harm one of Malaysia’s signature exports can only be read one way: as a negative and disrespectful approach to the France-Malaysia relationship.
This is highly regrettable because relations between the two countries should be on an upward curve. Bilateral trade is certainly growing: French exports to Malaysia are worth well over 2 billion Euros annually, while Malaysian exports to France account for about 1 billion Euros.
These figures spell out clearly how trade with Malaysia benefits French companies and workers. Value comes not only in the many French companies who successfully export to Malaysia, but from imports as well. A recent study by the Europe Economics consultancy showed that French palm oil imports support over 5,000 jobs and contribute 443 million Euros to the economy.
The fact that France benefits handsomely from palm oil imports speaks to a wider truth: trade is not a zero-sum game, but rather a two-way street where everyone benefits as long as they commit to fair and equitable treatment, and respect the rules.
A positive trade relationship cannot work if there is good faith on one side – Malaysia and other palm oil producers buying electronics, aircraft, defence equipment, luxury foods and other French goods – but bad faith on the other side, when a major export is unfairly targeted for tax or some capricious regulation. It is no secret that Malaysia opposes a palm oil tax – in any form – by France.
Unilateral decisions will be resisted
Yet, the French government is moving again to introduce a ‘differential tax’ on palm oil. How would this work? First, politicians will unilaterally decide the definition of the ‘sustainability’ of palm oil. Second, all palm oil producers left outside that definition would face a tax rise. This is a back-door effort by a minority of radical activists to impose a tax on palm oil.
The earlier parliamentary debate on the palm oil tax indicates that there are many politicians who see this as a way to protect French industry, not the environment. This is illustrated by the fact that environmental arguments against palm oil are misplaced and weak.
Malaysia currently protects over 67% of its land area as forest, and is recognised as a global leader in this respect by the United Nations. France, on the other hand, protects a paltry 31% of forest.
True progress in sustainability comes about not through unilateral taxes or punitive restrictions, but rather through leadership and the pursuit of excellence in producer countries.
Definitions of Malaysian palm oil’s sustainability should not be decided in the backrooms of the French Parliament. Any such decision must fully include producer countries, and include the recognition of the Malaysian government’s own sustainability work, such as the Malaysian Sustainable Palm Oil standard.
Let’s be clear: this tax will not be accepted by palm oil producers and we will actively oppose any nefarious effort to impose it upon us.
Trade is bilateral, not unilateral, in concept. The European Union has made no secret of its need to grow its trade relationships in the ASEAN region. This would have positive benefits for many in both France and Malaysia.
However, French politicians must beware. Proposing new taxes or barriers to palm oil – one of the region’s largest exports – is not the way to propagate a successful trade relationship.
Instead of spending time and energy on negative, harmful processes such as a differential tax on palm oil, we should focus instead on how to make both Malaysia and France more prosperous and successful by expanding trade and cooperation.
French Parliamentarians and Ministers have a choice: build on the growing France-Malaysia relationship; or continue to undermine it with yet another unwise palm oil tax plan. I fervently hope they will choose the former.