Page 10 - AEI Insights 2018 Vol 4 Issue 1

Furuoka et al, 2018

Malaysia and Indonesia, ensuring fair wealth distribution is a major concern. These issues have
created an obstacle in ASEAN-EU negotiations, given the EU’s emphasis on human rights and
economic equitability in its trade policies (Morales 2017). Due to the lack of progress in
ASEM, some ASEAN countries have individually attempted to form bilateral FTAs with the
EU. Leading this initiative is Singapore, resulting in a Singapore-EU FTA agreed text in 2014,
followed closely by Vietnam in 2016.

Other ongoing trade issues between ASEAN and the EU include strict conditions imposed by
EU on certain export goods from ASEAN, such as palm oil from Malaysia and Indonesia. On
4 April 2017, the European Parliament adopted the Resolution on Palm Oil and Deforestation
of Rainforests, which aims to reduce the negative impact of deforestation due to unsustainable
or illegal palm oil production. There are two controversial proposals in the Resolution which
involves: first, the development of a new, single certification scheme for palm oil and palm oil
products by 2020; and second, the phasing out and replacement of palm oil used in biofuels
with EU-grown vegetable oils by 2020 (Singapore Institute of International Affairs, 2017). If
enforced, ASEAN palm oil producers, particularly Malaysia and Indonesia, will be
significantly affected. The EU palm oil market accounts for 17 percent (4.37 million tonnes)
of Indonesia’s and 13 percent (2.09 million tonnes) of Malaysia’s palm oil exports,
respectively, and affects the livelihood of various communities within ASEAN that depend on
palm oil production. These include migrant workers from Myanmar who work on palm oil
plantations, as well as Indonesian and Malaysian smallholders who contribute about 40 percent
of global palm oil production (Singapore Institute of International Affairs, 2017). In response,
Malaysia has sent a delegate to the European Parliament to negotiate its position with respect
to the Resolution and affirmed its commitment to sustainable practices in palm oil production.
The Malaysian government’s decision to make it mandatory for local palm oil producers and
processors to adopt the Malaysia Sustainable Palm Oil (MSPO) certification was welcomed by
the European Parliament (Mah, 2017).

Singapore’s Exports to China and the EU

Figure 1 depicts trends in Singapore’s exports to China and the EU from 1975 to 2017. As the
figure clearly indicates, its exports to China were relatively low in the 1970s. The total value
amounted to only US$4 million in 1975, gradually increasing to US$54 million in 1979. By
contrast, Singapore’s exports to the EU amounted to US$199 million in 1975 and increased to
US$652 million in 1979.

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