KUALA LUMPUR. 6 March 2018:
Malaysia will respond with “might and tact” if the EU proceeds with a plan to limit use of palm oil in biodiesel, a cabinet minister said today.
“Malaysia does not want a trade war with Europe but if one is foisted on us, we will respond with might and tact,” said Minister for Plantation, Industries and Commodities Datuk Seri Mah Siew Keong at an industry conference here.
The EU approved in mid-January draft measures to reform its power market and reduce energy consumption to meet more ambitious climate goals. The draft includes banning the usage of palm oil in motor fuels from 2021.
Mah said Malaysia, the world’s second-biggest producer of the oil – used in everything from soap to foodstuffs – would withhold cooperation on trade talks if the EU move is confirmed.
A significant portion of the palm oil exported to the EU is used as feedstock to make biofuel, leaving Malaysia’s producers fearing overall demand will fall.
“There will be no trade negotiations until we solve the palm oil issue,” Mah said in a speech, describing the EU’s plan as “discrimination”.
The EU is the world’s second-largest palm oil importer after India, having bought 6.7 million tonnes in 2016/17, according to US Department of Agriculture data.
Commenting on India’s recent move to increase import duties on palm oil, Mah said the trend of increasing duties is a protectionist policy.
“We will write to our Indian counterparts to ask them to consider,” he told reporters at a news conference after his speech.
India has raised import tax on crude and refined palm oil to the highest level in more than a decade, the government said in a statement last Thursday, in a move designed to support local farmers.
– Reuters