Norway Pushes for Sustainable Palm Oil to Forge Malaysia Deal

(Bloomberg) -- Norway’s Trade Minister Torbjorn Roe Isaksen is this week touring parts of Asia to strengthen the country’s trade relationship with emerging economies, and to make strides in protracted trade negotiations with Malaysia.

On Tuesday, the minister met with Darell Leiking, the Malaysian minister of trade and industry, in Kuala Lumpur. Trade talks between Norway (through the European Free Trade Association) and Malaysia, which started in 2012, risk being derailed after Norway decided to ban imports of non-sustainable palm oil.

“I’m convinced that this can be solved in the coming round of trade negotiations,” Roe Isaksen said in a phone interview from Kuala Lumpur on Tuesday.

Norway, western Europe’s largest producer of oil and gas, has set a target of 20 percent biofuel within 2020. That has made Norway a large importer of palm oil, raising concerns among lawmakers about the risk of deforestation in countries such as Indonesia and Malaysia. In December, parliament decided to put a ban on imports of non-sustainable palm oil as feedstock to biofuels within 2020, driving a potential wedge into the ongoing trade talks.

The minister underscored that the decision was not a blanket ban on palm oil, but that imports must be from sustainable production. Malaysia is working systematically on this, the minister said.

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Malaysia’s last round of trade negotiations with EFTA was in May 2017. The Norwegian minister said that he’s now “hopeful and positive” that the next round of trade negotiations may start soon.

Trade between Norway and Malaysia reached 5.2 billion kroner ($600 million) in 2018, according to the Norwegian trade ministry. A trade deal could benefit companies such as Yara ASA, the world’s largest producer of ammonia and nitrates, with operations in Malaysia.

“The free trade agreement with Malaysia is an important step in the right direction,” a company spokeswoman said in an email.

In a period marked by rising trade tensions, “the need for trade deals become even clearer,” Roe Isaksen said. “It’s an important political signal at a time when protectionist forces are shouting the loudest,” he said.

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