Partnership on Sustainable Commodities

3. Are there other initiatives that may have an effect on the relationship between the EU and Malaysia?

An ongoing plurilateral agreement of relevance – negotiations for which are expected to conclude in 2016 – is the Environmental Goods Agreement (EGA). It aims at promoting green growth and sustainable development by liberalising trade in environmental goods.

Negotiations are being conducted by 17 WTO members – Australia, Canada, China, Chinese Taipei, Costa Rica, the EU, Hong Kong China, Iceland, Israel, Japan, New Zealand, Norway, Republic of Korea, Singapore, Switzerland, Turkey and the US.

Although the EGA will apply on a ‘most favoured nation’ basis (meaning that all WTO members will benefit from the agreed tariff reductions), participating in the negotiating process allows members to drive the liberalisation process, including deciding which products will be covered by EGA’s advantageous provisions.

The list of proposed goods to be covered by the EGA is not publicly available, but reports suggest that it focuses primarily on high-tech industrial products such as devices for air pollution control, waste management, cleaner renewable energy and noise abatement.

There are questions as to whether the proposed coverage includes traditional goods that are ‘green’ by definition, such as commodities (palm oil, soybean, sugarcane and rapeseed) that are available in nature and which can be used, inter alia, for renewable energy production and for a multitude of other sustainable applications in industry and trade.

Nonetheless, despite the significance of natural resources such as palm oil to Malaysia’s economy, the Malaysian government has so far chosen not to join the negotiations. This will limit Malaysia’s ability to play a direct role in the definition of the EGA’s product coverage or commitment levels at the plurilateral and multilateral level.

For this reason, the EU-Malaysia FTA must be seen as an opportunity for sustainable palm oil to achieve this degree of tariff preference and trade facilitation at least at the bilateral level, and to establish sustainable palm oil as a ‘green product’ within the EU. It is up to Malaysia to propose this and to negotiate accordingly.

4. What is the general ‘take-away’ from the JC on an enhanced strategic partnership between ASEAN and the EU?

At the bilateral level, the JC appears to pave the way for ASEAN member-states to secure, in the context of their bilateral FTAs with the EU, specific schemes concerning sustainable production of key commodities.

It is for this reason that it is imperative that the EU and Malaysia resume negotiations on an ambitious FTA. It could include dedicated chapters on key commodities, addressing, in relevant part, trade obstacles hindering access of such goods to the EU market.

Given Malaysia’s decision not to take part in the EGA, these chapters should provide the opportunity for product-specific certification schemes on the sustainable production of commodities (like palm oil and rubber), ideally centred on regionally-agreed criteria or on schemes that are already in place at the national level.

Such efforts should take place as soon as possible. The TPPA stands to have an enormous impact on trade flows throughout the world, and the EU is positioning itself to counter any negative effect that such agreement may have on its trade flows.

With the launch of the respective FTA negotiations between the EU and Australia, New Zealand, the Philippines and soon Indonesia, Malaysia cannot afford to lag behind. There are many issues and market access conditions that need to be tackled within the FTA with the EU, and this is an opportunity that should not be missed.

FratiniVergano

European Lawyers