Rainforest Wars:
What the EU-Malaysia Palm Oil Dispute Reveals about Weaknesses in WTO Regulations
Rainforest Wars
What the EU-Malaysia Palm Oil Dispute Reveals about Weaknesses in WTO Regulations
Mark Godges 高勉正
Public Law with Global Perspective
April 11th, 2021
The late-industrial stage of human existence has increasingly made it clear that if we continue this path, soon this planet will not be able to sustain life. What some would consider a blatant example in this direction is the global deforestation crisis, much of it caused by the Palm Oil industry. Due to the fact the deforestation crisis originates in global south countries yet has global effects, it is a good example of testing the limits of global law and regulation. The response of Palm Oil producing countries such as Malaysia to EU Palm Oil regulations is based in perceived stigmatization and discrimination from the global north. What is unclear, however, is whether they wish to use WTO regulations to prove they are sustainable or use them to justify being unsustainable. This lack of clarity in both setting and enforcing standards illustrates the waning power of Inter-governmental organizations when it comes to enforcing binding regulations separate from domestic laws of member states.
Over the past couple years, some European countries have attempted to use their power within the World Trade Organization and World at large to set norms and standards of global environmental governance using enforcement of domestic trade laws or “soft law” within the WTO. Palm Oil states such as Malaysia and Indonesia have voiced objection to a European Union labelling requirement which aims to “indicate products which do not contain palm oil (“palm oil free”), which is seen by those members raising this issue as stigmatizing products that contain palm oil — in effect turning this into a so-called “negative labelling requirement.” The willingness of states producing Palm Oil to bring up complaints regarding the ways EU domestic law can hurt their top industries bottom line profit margins inherently shows the limits of global administrative law or global regulation as a tool for positive change in the first place. In this case, it is powerful domestic law actors implementing initiatives, only for Geneva to be a place where dreams of carbon reduction and progress on environmental sustainability go to die.
I would argue that traditional intergovernmental organizations, in this case the World Trade Organization, do not only can halt positive developments such as the preservation and restoration of forests, but play an active role in promoting profit over life in the name of “development”. This is due to the broadness of their scope, and thus making any issue brought up in the organization aimed to solve a problem bound to offend the people creating the problem to begin with. This became evident in a May 2019 meeting on the committee on trade and environment where committee members discussed sustainability concerns regarding the Palm Oil industry. The disconnect between the European Union, as well as s Switzerland, daring to examine the environmental accountability of their purchases, with Malaysia, could not be clearer.
While Switzerland’s delegation was clear that “trade policy can be used to address sustainability concerns. For example, there are provisions in the Indonesia-European Free Trade Association Comprehensive Economic Partnership Agreement that condition preferential tariffs for palm oil on compliance with labor and environmental requirements,” Malaysia’s delegation was clear to say that there was no problem to begin with saying that “more than half of its land mass as forest cover and said that its palm oil industry is well regulated. Export certifications have helped strengthen compliance with environment regulations,” and “by January 2020 all Malaysian palm oil will be required to be certified.” This left the EU unable to fully propose improved methods as Malaysia implicitly stated that they have gone as far as they would go. The problem with these so-called discussions at the WTO is that when an organization expresses the sense of its members on a particular topic without providing specific directives to back up that sense, then platitudes are useless. The inability to use international organizations to establish norms creates a barrier to set standards of global regulation.
This dynamic is part of a larger issue plaguing international organizations and the implementation of their rules and regulations, where if a specific state actor is the source of a problem, they will object to international organizations they are a part of acting on that problem. One example is where Hungary objected to the European Union enforcing democracy regulations on Poland, because Hungary itself is a budding authoritarian regime. Another example is Russia blocking UN condemnation of Myanmar’s military beating up protestors, because Russia also uses its military to beat up protestors. And we once again see this dynamic at the World Trade Organization with Malaysia blocking sustainability or pollution provisions on Palm Oil exports, as Malaysia is the largest producer of unsustainable Palm Oil.
However, because of this not only do intergovernmental organizations like the WTO create barriers to establishing norms and setting standards, but when regulations are unilaterally enforced, the WTO gets in the way. During the discussions, the EU was clear that they understood Malaysia’s progress on the issue, but recognized the environmental risks outweighed the economic development, saying that they “welcomed the exporting countries’ commitment to strengthening sustainability in palm oil production. The issue is complex, the EU said, noting that palm oil production is a source of growth and employment but also faces challenges concerning deforestation, biodiversity loss, greenhouse gas emissions, and water management. The EU said it stands ready to work with producing countries on the issue.”
Although, when the European Union then implemented domestic directives to combat the lack of enforceability of the WTO in making sure conflict Palm Oil products are regulated or taxed, there was then a complaint lodged at the WTO towards the European Union by Palm Oil producing states. “Malaysia, Thailand, Indonesia, Colombia, Costa Rica and Guatemala expressed concern with proposed amendments to an EU directive that affects their exports of palm oil to EU markets. They believe that this directive is discriminatory and is in favor of other vegetable oil producers, those in the European Union.” Here lies the contradiction: the Malaysian delegation is willing to brag about how environmentally sustainable it is in WTO discussions to avoid enforcement, but when regulation or tax enforcement is enacted unilaterally, the Malaysian delegation is willing to raise a stink and play hardball. This unresolved dispute within the WTO shows the difficulty of enforcement when receiving states of regulation or pollution taxes can use the WTO as a crutch. “Malaysia claimed that certain measures imposed by the EU (the EU renewable energy target, the criteria for determining the high ILUC-risk feedstock, and the sustainability and GHG emission savings criteria) appear to be inconsistent with: Articles 2.1, 2.2, 2.4, 2.5, 2.8, 2.9, 5.1.1, 5.1.2, 5.2, 5.6, 5.8, 12.1 and 12.3 of the TBT Agreement”; and “ claimed that certain measures imposed by France (the French General Tax on Polluting Activities — Fuel Tax) and Lithuania (the Law No XI-1375 on renewable energy) appear to be inconsistent with: Articles 3, 3.1(b), 3.2, 5 and 5(c) of the SCM Agreement; and Articles I: 1 and III: 2 of the GATT 1994.”
What the issue of Malaysia-EU Palm Oil disputes, and the larger issue of addressing issues within International Organizations which apply to specific states illustrates is that global administrative law and global regulation has very little to do with the words, clauses or provisions themselves within bills, treaties, or other pieces of domestic or international legislation — and much more to do with raw power politics and the savviness or ability of states to get other states or prominent industries to bend to their will within the arena of global regulation.
In this case, the will is the will of the European Union to combat deforestation and the other recipient of action is the politically influential Palm Oil industry titans of Malaysia. When seeing how disputes have trouble being solved within the WTO on this issue, like with other issues within the EU or United Nations, one cannot help but think that global public administration regarding both laws and regulations will continue to evolve to adapt to unresolved disputes in the era of globalization.
Works Cited:
https://www.wto.org/english/news_e/news19_e/envir_15may19_e.htm
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds600_e.htm
https://www.wto.org/english/tratop_e/dispu_e/cases_e/ds593_e.htm
https://www.wto.org/english/news_e/news18_e/tbt_20mar18_e.htm
