Negatives of EU Ban on Palm Oil

The prestigious European think tank, the Konrad-Adenauer-Stiftung, has published a policy paper which has direct relevance to European strategy towards palm oil and broader European Union (EU) relations with Malaysia.

The paper entitled ‘Toward an EU-Asian Partnership on Deforestation: Restoring Sustainability in the Age of Pandemics’ is authored by Vicente Lopez Ibor Mayor, former National Energy Commissioner of Spain.

It appears in the Trust in Politics Panorama Special Issue – Insight into Asian and European Affairs. Published in December 2020, the special issue seeks to analyse and portray the varied roles that trust plays in states, societies and international relations in Asia and Europe.

The author argues that in the time of a global pandemic, ‘it is imperative for Europe and Asia to find new ways to work together. This requires rebuilding trade connections without compromising on sustainability goals’.

Mayor traces the background of Europe’s concerns over deforestation and its view that oil palm cultivation, mostly undertaken in Indonesia and Malaysia, has resulted in excessive deforestation – eventually leading to the European Commission banning palm oil for biodiesel in 2019.

However, the author stresses that ‘the scientific literature raises some questions as to whether solely limiting imports in tackling deforestation can be truly effective’.

Mayor argues that there are several reasons why a palm oil ban is harmful.

1. It will cause more harm to the environment
Quoting a landmark research report by the International Union for Conservation of Nature, the author states: ‘Banning palm oil would likely cause more harm to the environment only displacing the global biodiversity losses instead of stopping them. This is because a palm oil ban would increase the production of other oil crops, such as rapeseed, soy[bean] or sunflower, which require up to nine times as much land to produce than palm oil, in order to meet the global demand. These crops store less CO2 than palm oil, require more fertiliser and pesticides and have lower productivity and [a] shorter lifespan compared to oil palm.’

2. It will harm smallholders
The EU’s approach can penalise smallholder farmers, who make up some 50% of the oil palm land cultivators. Focusing purely on import restrictions will harm the most vulnerable households in developing countries.

The author notes that ‘the palm oil industry has played a key role in increasing incomes, generating employment and reducing poverty among local communities’.

Therefore, there is a risk that ‘an approach premised simply on reducing imports of palm oil could have a detrimental impact on the UN Sustainable Development Goals, endangering the livelihoods of hundreds of thousands of smallholder farmers and the local communities they are embedded in’.

3. It harms trust between ASEAN countries and EU
The confrontational approach taken by the EU does not encourage the needed environment of trust and cooperation needed to tackle the real challenges of deforestation.

Mayor argues: “Rather than seeing it as an environmental strategy to combat deforestation, ASEAN countries widely view the EU’s approach as a protectionist measure designed to favour domestic production of alternative vegetable oils, such as soy[bean], sunflower and rapeseed, that would unfairly penalise developing nation efforts to continue to lift themselves out of poverty. That in itself has undermined the possibility of the EU working more closely with these ASEAN countries in facilitating sustainability, instead increasing mistrust between the two regions.”

4. Focusing only on single commodity like palm oil is not the solution
Targeting just a single driver of deforestation opens room for other drivers of deforestation to operate more actively in the absence of a forest protection plan.

Mayor quotes an extensive modelling study in the Proceedings of the National Academy of Sciences which reports that ‘simply limiting palm oil production or consumption is unlikely to halt deforestation’. There needs to be cooperative and active forest conservation incentive plans. The key to tackling deforestation is not in targeting any particular commodity, but in incentivising forest conservation efforts.

Conclusions and recommendations
The author concludes that, instead of bans, the EU must find an alternative way forward to break the current impasse because ‘the EU’s insistence on a narrowly designed de facto ban on palm oil lacks robust scientific basis and is likely to contribute to increasing rates of deforestation’.

He also states that producer countries like Malaysia should not be left to ‘go it alone’. The national mandatory standards that Malaysia has established should be supported and developed with EU assistance.

‘The EU must remember its responsibility as an industrialised, developed bloc, which entails that it should provide both scientific expertise and financial support to regional producers, and be particularly attentive to the needs of smallholder farmers.’

Mayor recommends that:

• The EU must review its current approach and adapt it toward one focused more on working with producer countries like Malaysia to develop regulatory frameworks and incentives that would both limit imports of unsustainable palm oil, and simultaneously support and encourage sustainable production. There must be a joint approach in which the EU can work directly with regional producers, such as Malaysia.

• A joint commission of EU and Malaysian independent scientific experts should be set up to advise on the implementation of the palm oil sector’s transition to sustainability; and to assist in the development of joint research and monitoring standards to ensure the highest standards in the [Malaysian Sustainable Palm Oil] certification. The author notes that the ‘EU should be willing to help finance such an initiative’.

Konrad Adenauer Stiftung
Germany

Established in 1955, the KAS focuses on consolidating democracy, the unification of Europe and the strengthening of transatlantic relations, as well as on development cooperation. It produces soundly researched scientific papers and analysis to offer a basis for possible political action.