Forget US-China, the Malaysia-Indonesia-EU trade war may be upon us
The European Union’s proposal to no longer recognise biofuel as a renewable energy source puts it on collision course with Malaysia and Indonesia, the two biggest players in the US$39 billion palm oil industry
A trade war is looming between the European Union and the world’s biggest producers of palm oil, Indonesia and Malaysia, over proposals to strip biofuel off the menu of renewable energy sources member states may use to reduce their greenhouse gas emissions.
At issue is the US$39 billion palm oil industry. Indonesia and Malaysia are the world’s two biggest producers of the crop, used in everything from fuel to cosmetics to cookies.
Last month Luhut Pandjaitan, coordinating minister for maritime affairs and a close lieutenant of President Joko Widodo, warned of retaliation if the government sensed the EU, the second-largest importer of palm oil, was cracking down on the commodity in favour of its own crops.
The stand-off pits environmentalists against big emerging economies who argue worries over deforestation and carbon emissions are exaggerated and are a fig leaf for protectionism that deny small scale farmers reliable income. Environmentalists say cultivating palm oil contributes to deforestation and carbon emissions.
Palm oil is cheap, but it’s also an eco-disaster
“Palm oil is still a leading cause of deforestation,” said Kiki Taufik, global head of Greenpeace’s Indonesia forest campaign. “This is a direct response to the industry’s failure to address the problem.”
