United Against EU Protectionism

A draft of the revised EU Renewable Energy Directive (RED II) is making its way through the legislative process in Brussels. The proposals present a huge issue for Malaysia, specifically for its palm oil exports. This is because the European Parliament intends to ban palm oil biofuels from 2021 – last year, its Environment Committee and the Industry, Research and Energy Committee had respectively voted for the ban.

Brussels is to use the RED II as its main tool in regulating the biofuels sector from 2021-30. The objective is to highlight the EU’s use of renewable energy to reduce greenhouse gas emissions, and contribute to the region’s strategy to mitigate climate change. As part of this effort, the use of biofuels and other renewable energy sources is being promoted.

The move to ban palm oil biofuels has been led by multiple protectionist Members of the European Parliament (MEPs), with Dutch Greens MEP Bas Eickhout and Spanish Socialist MEP José Blanco López at the forefront.

The European Parliament’s protectionist position was confirmed on Jan 17 with 492 MEPs voting in favour of banning palm oil biofuels, with 88 against and 107 abstentions. All other oilseeds will continue selling within the EU until at least 2030.

It has been heartening, however, to note that Malaysia received support from many quarters in Europe. The UK Conservative MEPs – part of the governing party of Prime Minister Theresa May – voted against the ban. In a statement confirming their stance, they said they ‘could not support an arbitrary ban on palm oil, which will have an inflationary effect on food prices and cause significant economic damage to developing countries’.

UK Conservative MEP Daniel Hannan, in a speech during the plenary, criticised other MEPs for wanting to ban palm oil: “The reality is that this is a vote driven by the interests of rapeseed producers here in Europe, specifically the biofuels industry at home.”

In addition, 57 MEPs from Europe’s largest political party – the centre-right European People’s Party – proposed an amendment to remove the provision on banning palm oil biofuels.

Following the vote, Malaysia’s International Trade and Industry Minister Dato’ Sri Mustapa Mohamed said the ban is a “potential violation of World Trade Organisation rules”. Plantation Industries and Commodities Minister Datuk Seri Mah Siew Keong referred to it as “akin to crop apartheid”.