Indonesian and Malaysian officials at the highest levels have lobbied hard for the tax to be scrapped.
French politicians said Indonesia had threatened the country with “economic retaliation.”
Palm oil is an engine of Indonesia’s economy but leads the way in damaging the environment.
In the wake of a vote by France’s lower house of parliament to scrap a proposed tax on palm oil imports, legislators said they were “blackmailed” into the decision by top producers Indonesia and Malaysia.
Union for a Popular Movement politician Nicolas Dhuicq said Indonesia had threatened France with “economic retaliation, particularly on the purchase of Airbus [aircraft] and satellites,” the French daily Le Dauphine reported. Indonesia has agreed to buy military transport planes from Airbus, one of France’s biggest companies.
Socialist Party politician Delphine Batho said, “We are legislating with a knife to our throats. The French parliament is being blackmailed.”
France’s lower National Assembly voted last week to drop the tax from the nation’s Biodiversity Bill, a decision that still must be confirmed by the upper Senate in July. Barbara Pompili, France’s junior minister for climate and biodiversity, said that it had been scrapped due to legal uncertainty and that the matter would be revisited in six months.
Indonesia and Malaysia, which produce 84% of the world’s palm oil and export much of it to the EU, have lobbied hard against the tax on the grounds that it is discriminatory under World Trade Organization rules. The Malaysian Palm Oil Council called it “an unjust and unfair campaign against palm oil.”
Palm oil is an engine of the Indonesian economy but leads the way in damaging the environment.