France's National Assembly approved an additional tax on palm oil used in food on 17 March, a move that has been condemned by top producer Malaysia.
The tax – part of a wider Biodiversity Bill – was earlier approved by the French Senate on 21 January. It will start at €30/tonne (US$34) in 2017 and rise by €20 per year to €90 in 2020, and is on top of an existing tax of €104/tonne.
This is significantly lower than the levels passed by the Senate, which amounted to €300/tonne for 2017; €500/tonne for 2018; €700/tonne for 2019; and €900/tonne for 2020.
The new tax would exclude oils produced in a sustainable way but would also apply to copra (coconut) and palm kernel oil, Reuters said. It would not affect vegetable oils used in cosmetics and biofuels.
According to Reuters, the bill still needs to be reviewed in the upper house, likely in May or June.
Indonesia and Malaysia have both said the tax is discriminatory and Indonesia raised the issue at the World Trade Organisation (WTO) earlier in March. The Malaysian Palm Oil Council (MPOC) has condemned the move.
MPOC chief executive officer Tan Sri Dr Yusof Basiron, said:
“The vote in the National Assembly runs counter to all evidence, and instead supports a protectionist, partisan agenda that discriminates against palm oil from the developing world.
“The ‘differential’ tax proposal is a clear violation of both WTO and EU rules. The environmental arguments put forward by green activists have been clearly shown to be false. It is extremely disappointing that French MPs have chosen protectionism over evidence-based policy.”
France imports about 100,000 tonnes of Indonesian palm oil a year and imported 11,000 tonnes of Malaysian palm oil last year, Reuters said.