Palm oil remains a key issue in Malaysia-EU free trade negotiations

Malaysia aims to conclude negotiations on a free trade agreement with the European Union by the end of June 2027, but palm oil remains one of the main unresolved issues. According to Malaysia’s Minister of Investment, Trade and Industry, Johari Abdul Ghani, the two sides have already agreed on approximately 80% of the provisions of the future agreement. The main differences concern palm oil trade conditions and the automotive sector.

One of the key aspects of the negotiations is the EU Deforestation Regulation (EUDR), which restricts access to the EU market for products linked to deforestation. However, Malaysia does not consider compliance with these requirements an unacceptable condition for concluding the agreement. Major palm oil producers are already preparing to implement raw material traceability systems and demonstrate compliance with EU environmental standards.

According to the Malaysian government, six or seven major producers account for approximately 60% of the country’s total crude palm oil production, which stands at around 20 mln tons annually. Companies working toward EUDR compliance include United Plantations, Sime Darby, Kuala Lumpur Kepong and IOI Corporation. The European side has acknowledged Malaysia’s progress in preparing for the new environmental rules, although the final conditions for their implementation remain an important issue for exporters.

Negotiations between Malaysia and the EU began in 2010, were suspended in 2012 and resumed in January 2025. The fifth round took place in September 2026, while the next round is scheduled for January 2027 in Malaysia. In addition to palm oil, the two sides continue to discuss export duties, rules of origin, market access for services and investment. If successfully concluded, the deal will become Malaysia’s 18th free trade agreement.

The European Union remains an important trading partner for Malaysia. In 2025, bilateral trade in goods reached €48.9 bln, including €30.3 bln in Malaysian exports. In the first half of 2026, Malaysian shipments to the EU increased by 28%, while imports of European products rose by 12%. The agreement could create more favorable conditions for international trade, including palm oil, although its ultimate impact on the edible oil market will depend on the agreed tariff and environmental requirements.

Tags: EU, Malaysia, palm oil