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EU policies setting global benchmarks

The US considers the EU’s deforestation policy as an important benchmark and intends to ban products linked to deforestation.

In October 2021, the Forest Act of 2021 Bill was introduced in the US Congress. The Act has the objective to ban products linked to deforestation. Similar to the EU’s Deforestation-free Products Regulation, the Forest Act of 2021 would cover palm oil, soybeans, cocoa, cattle, rubber, and wood pulp.

Democratic US Congressman Earl Blumenauer, responsible for the Bill, stated that the US was “in the process of socialising the idea, and the recent development with the EU helps accelerate that”, making reference to the recent political agreement in the EU regarding the Deforestation-free Products Regulation.

On 11 January 2023, US Senator Brian Schatz stated that “the EU is shutting its borders to products of deforestation, and the United States needs to follow suit. If we do nothing, the US market will become a dumping ground for commodities that can no longer make their way into Europe”.

The EU is currently working on a number of legislative files aimed at addressing deforestation and ensuring the sustainability of products that will have an impact on many commodities, including palm oil. Further legislative and regulatory initiatives impacting forestry, including a new regulation aimed at improving nature restoration, a proposal for certifying carbon removals, and an EU Forest Monitoring Framework will be further discussed by EU stakeholders in the coming months.

Many of the various policies and legal instruments under discussion in the EU will have an impact on palm oil and are poised to set global benchmarks, as the example of the US Forest Act very well shows.

Possible Actions: EU regulatory and legislative instruments set global benchmarks and steer regulation around the world in a certain direction. Malaysia must continue to engage with the EU and EU stakeholders to ensure that perspectives from producing and exporting countries are taken into consideration and to possibly contribute to the shaping of future legal instruments that will serve as examples in other jurisdictions around the world.

Given the various regulatory developments around the world, Malaysia should underline in bilateral and multilateral contexts the following key elements: 1) The mutual recognition of key sustainability standards and frameworks; 2) Acceptance and recognition of the Malaysian Sustainable Palm Oil (MSPO) scheme; and 3) The inclusion of dedicated provisions on smallholders in any current or future regulation.

Prepared by MPOC Europe 

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