The world is finally waking up to the realization that the Coronavirus pandemic could result in a global death toll in the millions – if not higher. Hopefully, that won’t be the case, and a cure or at least a prophylactic medicine can be found soon to end “World War V” (as many are calling the Coronavirus pandemic, with the V standing for Virus)
COVID-19 is already projected to cost the global economy up to $2 trillion according to UNCTAD. Indeed, even before the crisis, the status of the global economy was pretty dire. UNCTAD issued a similar warning in September of last year that 2020 would likely see a global recession.
Contributing to UNCTAD’s outlook in 2019 were a plethora of trade wars around the world. Most notably between China and the United States and of course, the United Kingdom’s exit from the European Union is also tied to similar concerns.
Those issues may have stolen the headlines but, plenty of minor skirmishes also involved the EU and the United States and even the United States and Turkey have played out of the past view years. Thus, prior to “World War V” the world had seen a plethora of protectionist battles being rage. And now, protectionist tensions are already beginning to impact “World War V” too – with the US recently hitting out at Germany, Russia and Turkey for introducing emergency export controls on medical supplies.
Though it is not a headline stealer, the plight of my own country Malaysia is worth reviewing. A similar trade war is brewing between the EU and ASEAN. One that will impact millions of lives in a global economy that is already on the ropes given the impact of the Coronavirus. It wasn’t supposed to be this way. The European Union’s 2016 Global Europe Strategy hinted that an EU-ASEAN free trade deal was around the corner.
Yet, nearly four years later (despite some progress such as the recently signed EU-Singapore trade deal) such an historic agreement seems farther than ever. This year an EU blanket ban on palm oil importation is to be implemented. This will adversely impact Malaysia and many countries in the Global South. The ban comes over deforestation concerns. Yet, Malaysia has passed several landmark bills to ensure the sustainability of Palm Oil in recent years. The globe’s first government-backed mandatory certification standards for making palm oil sustainable were passed in Malaysia in November 2018. We need no push from the European Union for that to happen -it was something the government had long been working on in line with demand from consumers.
More importantly, an authoritative study from the International Union for the Conservation of Nature found that if done correctly, palm oil uses fewer resources (in this case land, fertilizer, and other chemicals) than a similar amount of oil produced from rapeseed, soy beans or other conventional equivalents. The overall findings of that report were verified in a second scientific study published in Nature this month by researchers at the University of Bath in the United Kingdom.
The current EU ban on palm oil makes no exemption for sustainable palm oil and has been a veritable economic death sentence in the current climate. Malaysia’s agriculture sector, of which palm oil is the biggest cash crop, employs over 1.5 million workers in Malaysia or 10 percent of our overall work force.
Since 40% of palm oil is grown by small holder farmers (farmers who have already been hard hit by the Corona onslaught), this regulation will hurt the most vulnerable communities in our nation hardest.
Malaysia, with over 1600 cases now has the worst Corona virus problem in Asia after South Korea and of course, China. Four people have died it what is already the worst outbreak of the virus in all of South East Asia. The economic impact of this is hard to foresee but, already the government of Malaysia has already issued a stimulus package for the economy, and we are set to see a spike in unemployment in our country over the Coronavirus. After all, the Palm oil industry was one of the first in Malaysia (the largest producer of the crop in the world) to respond to the crisis by telling members to go into a lockdown mode over concerns of spreading the virus.
However, coronavirus may ironically, be the trigger that finally compels both parties’ to compromise and agree on an historic trade deal that takes into consideration the needs of both the EU and ASEAN. After all, the EU also cannot afford to persist in a trade stand-off with ASEAN at a time of potential economic catastrophe.
For a trade deal to become a reality, steps must be taken by both parties. Malaysia must renew its commitment towards sustainable palm oil cultivation, something it has already shown a tangible commitment towards. And the EU must accept a longer implementation timeframe given the current global turmoil brought on by Covid-19. Such a deal can be a win-win for both trading blocs as sustainable palm oil could help power the EU’s push for a “Green New Deal” to power a 21st century infrastructure grid.
The alternative – curtailing global trade at a time when it will plunge the world into the most significant recession in living memory and jeopardize millions of lives – in Malaysia and beyond, is simply not an option.
In the aftermath of “World War V” hopefully we can bury protectionism and trade wars in the interest of global recovery. The sooner we act, hopefully, there will be much less to bury.
