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Palm Oil Mission Concludes on High Note with UK Set to Recognize MSPO

Deputy Prime Minister Datuk Seri Fadillah Yusof's official visit to the United Kingdom ended on a high note as policymakers here have given their commitment to recognize the Malaysian Sustainable Palm Oil (MSPO) certification in the due diligence guidelines for ensuring that commodities entering the country are sustainable.

He said this transpired in the meetings with Minister of State for International Trade Nigel Huddleston and Minister of State for International Development Andrew Mitchell on Thursday.

"They were very positive, as they gave their commitment that MSPO will be among the documents recognized in the due diligence process," he told the Malaysian media at the end of his official visit to the UK on Friday.

"In fact, they also said what they plan in terms of guidelines is that products originating from a different country that are not covered by UK laws will be bound by the producing countries' laws," he said.

Their statement is good news for Malaysia, said Fadillah, who is also the Plantation and Commodities Minister.

"Obviously, we would like to see this put down in black and white, but that is their initial statement and we look forward to working closely with the UK," he said, adding that it would open up more business opportunities between Malaysia and the UK.

The UK's accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), of which Malaysia is a member, is expected in a few months. This will be Malaysia's first trade deal with the UK.

Malaysia has negotiated with the UK to eliminate tariffs on Malaysian palm oil from the current 12 per cent to zero upon entry into the trade pact.

Bilateral trade between the two countries exceeded US$7.3 billion in 2022, with the UK recording a trade surplus of some US$786 million. (US$1=RM4.57)

For 2023, the Malaysian Palm Oil Board anticipates palm oil exports to increase by 3.7 per cent to 16.3 million tones due to continuous demand from importing countries.

Fadillah said Malaysia will also need to work together with the UK government to introduce a law to prevent negative labelling of products from Malaysia.

As part of his official visit to the UK, the Deputy Prime Minister also had a first-hand briefing at the Tun Abdul Razak Research Centre (TARRC), which is the UK-based research and development center of the Malaysian Rubber Board.

He also took time to interact with Malaysian students here.

Positive developments, challenges remain

As for the European Union (EU), he said although Malaysia and Indonesia's joint mission to convey concerns over and objection to the newly legislated EU Deforestation Regulation (EUDR) is a success, challenges with the bloc remains.

Before coming to the UK, Fadillah was in Brussels, Belgium, for the joint mission under the Council of Palm Oil Producing Countries (CPOPC). Indonesia was represented by its coordinating minister for Economic Affairs, Dr Airlangga Hartarto.

The leaders had meetings with Frans Timmermans, European Commission executive vice-president for the European Green Deal and Commissioner for Climate Action Policy; Josep Borrell-Fontelles, High Representative of the EU for Foreign Affairs and Security Policy; and Virginijus Sinkevičius, Commissioner for the Environment, Oceans and Fisheries.

They also met Heidi Hautala, European Parliament vice-president and a member of the European Parliament (MEP) in the Greens/European Free Alliance group, as well as Bernd Lange, MEP and chair of the International Trade Committee.

During the meetings, the Jakarta and Putrajaya leaders highlighted the impacts of the EU's supply chain law and consistently emphasized the need for the EU to engage with the producing countries at the working and technical levels.

According to the CPOPC, the meetings were conducted in a cordial, frank and open manner.

The feedback has been positive as the EU is open to engagement, while the CPOPC has proposed a task force involving all stakeholders.

"What needs to be done now is more engagements. Most importantly, there is a need to follow up in ensuring the points raised and discussed are being addressed and reciprocated," he said.

Malaysia and Indonesia contribute more than 80 per cent to global palm oil exports.

At the same time, Fadillah said Malaysia needs to be prepared for more laws and regulations to be introduced by the EU.

For instance, under the EU Renewable Energy Directive III (EU RED III), palm oil is still singled out by the EU regulators as the only biofuel feedstock having a high indirect land-use change (ILUC) risk, and therefore it will be phased out for the purpose of being counted towards the EU's renewable energy target by 2030.

In addition, the proposed Corporate Sustainability Due Diligence Directive, as well as the Regulation Prohibiting Products Made with Forced Labor are also potential trade barriers and burden to operators along the supply chain, especially smallholders.

In addition, the proposed Green Claims Directive compels companies to provide scientific evidence for their green labels.

"However, this regulation on generic and unsubstantiated environmental claims could be an important ground to challenge 'palm oil-free' and 'no palm oil' claims made by products placed in the EU market that imply that the ingredient used as a palm oil replacement has less of a negative impact on the environment," he said.

"Overall, this mission to Brussels, Belgium, has been a success, especially as this was the first joint mission to the EU, and I believe the EU has heard us."


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