20 Aug 2019 (Financial Times) The UK will have a “historic opportunity” to strike a trade deal with Malaysia, the Asian country’s prime minister has suggested — provided it relaxes restrictions on imports of palm oil imposed by the EU because of the crop’s environmental impact.
Mahathir Mohamad said in an opinion piece published by Bloomberg that the UK should “shed European red tape and protectionism” to seal a trade agreement with one of the world’s fastest-growing regions. He added: “The key is to rethink the European Union’s misguided policy on palm oil.
” His intervention underlines the UK’s diplomatic predicament as it seeks to forge new trading relationships to offset Brexit’s impact on its established European ties.
A promise that the UK would be “first in line” for a partial, sector-specific trade deal with the US came last week from John Bolton, the US national security adviser — suggesting that the UK’s future economic ties may depend on it complying with the geopolitical stance of more powerful allies.
Malaysia is also seeking to exploit the UK’s need for new trade partners to advance its own diplomatic goals.
Palm oil has been a significant source of friction in the EU’s relations with Malaysia and Indonesia, the world’s largest producers. The European Commission concluded this year that its cultivation causes excessive deforestation and its use in transport fuels should not count towards renewable energy goals.
Malaysia has accused the EU of double standards and threatened to boycott European goods — including by scrapping a deal to purchase EU-made fighter jets and buying from China instead.
Mr Mahathir wants Britain to “break with Europe” on palm oil to bolster Malaysia’s argument that the crop is no more damaging to climate and biodiversity than alternatives such as rapeseed and sunflower oils, which are cultivated in the EU.
The UK’s Department for International Trade did not respond when asked if the government would wish to take a different approach from the EU.
Any such move by the UK would risk provoking a consumer outcry and creating further complexities in any future trade talks with Brussels.
A consumer backlash against palm oil gained momentum last year when a Christmas advert from the supermarket group Iceland, showing a cartoon orang-utan and footage of devastated rainforest, went viral on YouTube.
“It’s no surprise that vested interests like the Malaysian palm oil industry are using Brexit as justification in an attempt to weaken the UK’s environmental protections,” said Richard George, head of forests at campaign group Greenpeace UK.
UK exports to Malaysia totalled a mere £1.4bn in 2018, less than half a per cent of total goods exports, and any move away from the EU policy on palm oil could have much bigger repercussions.
Ursula Johnston, head of customs at the law firm Gowling WLG, said: “Should the UK move away from the current environmental policies of the EU in a bid to secure trade agreements with the US, and potentially Malaysia, this would likely make negotiating a UK — EU free trade agreement further down the line a much more complex process.”