Destructive palm oil imports in the spotlight

France's plans to impose an additional tax on palm oil used in food moved a step closer as its lower house of parliament approved the levy on 18 March 2016.

The National Assembly approved a tax of 30 euros per tonne starting in 2017 that will gradually rise to 90 euros per tonne in 2020, significantly less than the 300 euros per tonne that had initially been proposed.

The watering down of the tax, dubbed the ‘nutella tax’, was apparently a result of pressure from Indonesia and Malaysia, the two main producers of palm oil.

Sustainable palm oil will be exempted from the tax, but some have warned that no trustworthy certified sustainable palm oil supply chain exists yet. 

The French government now backs the tax, now that has been reduced and excludes oils that were produced sustainably. The new levy would be on top of an existing tax of 104 euros per tonne.

The levy, part of a wider biodiversity bill, still needs to be reviewed in the upper house, the Senate, probably in May or June.

"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," Barbara Pompili, junior Minister for the Environment in charge of biodiversity, told the National Assembly.

France says the tax respects World Trade Organization (WTO) rules because it only targets oils that that do not meet sustainable environmental criteria. This is been vehemently disputed by Indonesia and Malaysia, and Indonesia raised the issue at the WTO earlier this month.

The new tax would also apply to copra (coconut) and palm kernel oil, which are commonly used in commercial cooking, but would not affect vegetable oils used in cosmetics and biofuels. While French imports of palm oil are not large, producers are concerned the new tax could be taken up in other countries.

Proof that other European politicians are taking the issue of agricultural drivers of deforestation seriously arrived when a group of MEPs called for more robust action from the European Commission to tackle destructive palm oil imports.

At a public hearing at the European Parliament on 17 March called “Palm oil and rainforests: what can the EU do to stop deforestation?” MEPs urged the European Commission not to undertake further studies, but to come up with concrete policy proposals to stop deforestation.

According to just such an EU study, export-driven agriculture is the biggest driver of deforestation. Between 1990 and 2008 the deforestation embodied in agricultural imports by the then 27 EU Member States amounted to 7.4 million hectares. Of this, 12 per cent was attributable to palm oil and palm kernel oil, both produced mainly in Indonesia and Malaysia.

Options that MEPs identified to limit the imports of palm oil included higher EU import tariffs and a cap on EU imports of palm oil.

In response, the European Commission promised to draw up policy proposals emanating from its feasibility study for an EU Action Plan on Deforestation and Forest Degradation, expected in August.

Image: Oil palm fruits, Indonesia (CIFOR via Flickr)