UK set to recognise Malaysian Sustainable Palm Oil certification, says DPM

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

He said this transpired in meetings with Minister of State for International Trade Nigel Huddleston and Minister of State for International Development Andrew Mitchell on Thursday (May 30).

“They were very positive and they gave their commitment that MSPO would be among the documents recognised in their due diligence process,” he told Malaysian media at the end of his official visit to the United Kingdom on Friday (May 31).

“They also said what they plan for their guidelines is that products originating from a different country 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 United Kingdom,” he said, adding that it would open up more business opportunities between Malaysia and the United Kingdom.

The United Kingdom’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 United Kingdom.

Malaysia has negotiated with the United Kingdom to eliminate tariffs on Malaysian palm oil from the current 12% to zero upon its entry into the trade pact.

Bilateral trade between the two countries exceeded US$7.3bil (RM33.4bil) in 2022, with the United Kingdom recording a trade surplus of some US$786mil (RM3.5bil).

For 2023, the Malaysian Palm Oil Board anticipates palm oil exports to increase by 3.7% to 16.3 million tonnes 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 United Kingdom, 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 centre of the Malaysian Rubber Board.

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 United Kingdom, 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 emphasised 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 engagement. Most importantly, there is a need to follow up to ensure the points raised and discussed are being addressed and reciprocated,” he said.

Malaysia and Indonesia contribute more than 80% 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 Labour 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.”

Tags: palm oil, tariffs, Malaysian Palm Oil Board, United Kingdom, CPOPC, demand, MSPO, certification, UK, Malaysian Sustainable Palm Oil, European Union, Malaysia