Monitoring Desk
\nKarachi
\nIn December 2015, Denmark, France, UK, Germany, Netherlands, and Norway signed the Amsterdam Declaration declaring themselves supporters of 100 percent sustainable palm oil in Europe.
\nFollowing the declaration, a report was made to the European Parliament in 2017 that stated that deforestation causes climate change and brings social and economic problems. Palm oil was identified as a major driver of deforestation. This led to the EU Resolution of 2017 under which the trade bloc will be phasing out palm oil based bio-fuels completely by 2020.
\nAt $6.8 billion, India is the single largest importer of palm oil. As a trade bloc however, EU\u2019s imports of $7.5 billion in 2017 make it the most important consumer of palm oil. Of this about a third is used for biodiesel while the rest is used for the food and chemical industries. The ban therefore will not reduce EU\u2019s palm oil imports to zero.
\nHowever, since demand for biodiesel is growing and a large percentage of it is made from palm oil, the ban impacts the future increases in imports by EU.
\nSince Indonesia and Malaysia are the main suppliers, are intricately linked (read \u201cGlobal politics of palm oil\u201d published on October 30, 2018) and have invested heavily in increase in palm oil production, their exports are likely to be impacted.
\nEU\u2019s ban on palm oil for biodiesel production can impact Pakistan in two ways. Firstly, basic demand and supply dynamics indicate that prices of palm oil will decrease as EU phases out its imports. Since palm oil is a staple on the import bill, this is good news for the CAD. Of course it can be argued that volumetric increase will nullify price decrease but as the past few months import trends have shown, increase in quantity has not resulted in an increase in dollar amount spent. (Read \u201cPalm oil and ghee,\u201d published on December 7, 2018).
\nSecondly, decrease in EU\u2019s importance as a consumer allows Pakistan to be in a stronger buying position. Despite being an important importer and having trade agreements signed with both major palm oil producing countries, Pakistan has yet to leverage its buying power to increase exports to them. (Read \u201cLeveraging purchasing power,\u201d published on November 15, 2018) As EU\u2019s imports wane, Pakistan could use its increased significance as a market to negotiate higher allowance of crude palm oil imports as well as higher exports. The European Union\u2019s ban could work in Pakistan\u2019s favour if this opportunity is capitalised.<\/p>\n","protected":false},"excerpt":{"rendered":"
Monitoring Desk Karachi In December 2015, Denmark, France, UK, Germany, Netherlands, and Norway signed the Amsterdam Declaration declaring themselves supporters of 100 percent sustainable palm oil in Europe. Following the declaration, a report was made to the European Parliament in 2017 that stated that deforestation causes climate change and brings social and economic problems. Palm […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[],"class_list":["post-43606","post","type-post","status-publish","format-standard","category-business"],"yoast_head":"\n