Mongabay Series: Indonesian Palm Oil

France imposes new palm oil tax; Indonesia, Malaysia protest

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France imposes new palm oil tax; Indonesia, Malaysia protest
  • The tax is part of France's new biodiversity bill. It was imposed on environmental grounds.
  • The Indonesian and Malaysian governements, and industry associations in both countries, protest the tax.
  • The tax will eventually reach 90 euros per ton in 2020.

France has imposed a new levy on palm oil imports, amid protests from the governments of Indonesia and Malaysia, the two largest palm oil producers.

The tax, part of a wider biodiversity bill, was imposed in the name of protecting the environment. Rapid oil palm expansion is fueling deforestation and social conflict in the tropics even as it drives economic growth.

The two Southeast Asian countries say the tax is discriminatory under World Trade Organization rules, but France disputes that because the tax only targets palm oil that was not produced in a sustainable way.

“The introduction into France’s fiscal legislation of a tax on products whose impact on deforestation is recognized worldwide, gives a strong signal by France in terms of environmental protection,” said Barbara Pompili, France’s junior minister for the environment, according to Reuters.

Yusof Basiron, chairman of the Malaysian Palm Oil Council, condemned the tax.

“The vote in [France’s] National Assembly runs counter to all evidence, and instead supports a protectionist, partisan agenda that discriminates against palm oil from the developing world,” he said, according to the New Straits Times. “The ‘differential’ tax proposal is a clear violation of both WTO and EU rules.”

The canopy of an oil palm plantation in Indonesia's Aceh province. Photo by Rhett A. Butler
The canopy of an oil palm plantation in Indonesia’s Aceh province. Photo by Rhett A. Butler

Darmin Nasution, Indoneisa’s chief economics minister, recently criticized developed countries like France for imposing unrealistic standards on developing nations.

“Unfortunately not many European countries [are] willing to pay extra for sustainability. Being sustainable requires effort and funding – this cannot be borne by producers alone,” he said, according to Eco-Business.

The tax will start at 30 euros per ton in 2017 and gradually rise to 90 euros per ton in 2020.

 

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