What you need to know
The EU wants to champion “green agriculture” in Southeast Asia. But limited trade relations, regulatory nightmares, and distrust could stymie it.
By David Hutt
As manufacturing and tourism collapsed in the three years of the Covid-19 pandemic, several Southeast Asian governments realized that they needed to pump more money into their underfunded and underappreciated agriculture sector. That’s now paying off.
The sector in Cambodia grew by around 6% over each of the past two years compared to 2019, according to government data.
Last year, Vietnam’s agriculture exports climbed by 9.3% to a new record value of more than €49 billion (US$52.3 billion).
Despite the healthy growth in the sector, there are concerns. It is a key contributor to climate change in the region. The World Bank estimates that agriculture accounted for 19% of Vietnam’s total greenhouse gas emissions in 2020, the second-highest of any sector.
And export markets remain rather condensed. China, for instance, purchased around half of all agricultural exports from Cambodia, and around a quarter of Thailand’s, last year.
In 2022, the EU accounted for just 11% of Vietnam’s agricultural exports, according to Vietnamese government data.
Good for green
Now Hanoi and several other Southeast Asian governments are pursuing “green” or “sustainable” agriculture to boost exports to European states and attract the EU’s environment-centric investment opportunities.
In late 2021, the European Investment Bank offered a €15 million grant for sustainable agriculture in Cambodia. In August last year, the EU partnered with Bangkok and Chiang Mai in Thailand for sustainable food production. In the Philippines, the EU has a €60 million Team Europe Initiative on Green Economy.
The EU’s Just Transition Mechanism aims to raise around €55 billion between 2021 and 2027 to help other regions move towards a climate-neutral economy.
Vietnam’s Ministry of Agriculture and Rural Development has approved a national strategy on green growth, and reckons the sector will see up to 3% annual growth up until 2030. By that date, it wants organic fertilizers to account for around a third of national use, while also laying down targets on water-saving and forest cover.
Thailand and the Philippines, key agricultural economies, are also quickly moving in that direction. “Food security remains at the forefront of our national agenda. Anchored in our vision for a prosperous, resilient, and secure Philippines by the year 2040,” Ferdinand Marcos Jr, the Philippines president, said during a speech at Davos last month.
Ahead of leading a business delegation to Vietnam last year, EU commissioner for agriculture, Janusz Wojciechowski, noted that a major breakthrough in agricultural trade was made possible by the signing of the EU-Vietnam free trade agreement in 2020.
Through the trade pact, he wrote, ”EU citizens enjoy increased access to Vietnamese tea and coffee, along with an impressive range of nuts, spices, and tropical fruit.” Also because of it, several export goods are protected as “geographical indications,” such as Bao Lam seedless persimmon and Luc Ngan lychees.
Trade deals in the making?
An EU official told DW that they hope cooperation on green agriculture will develop as Brussels looks to sign new free trade agreements with several other Southeast Asian governments.
A trade deal could be agreed with Indonesia by the end of this year, after another round of talks earlier this month. Thailand and the Philippines have both expressed a desire to restart negotiations. A trade deal with the latter two Southeast Asian countries could significantly boost sectoral trade with the European Union.
“Many countries in ASEAN are striving hard to both increase agricultural production and the nutritional value of the food produced locally – all in the name of increasing food security, whilst also attempting to boost agricultural exports,” Chris Humphrey, executive director of the EU-ASEAN Business Council, said.
Although many European businesses are working closely with ASEAN governments in this area, and there’s much scope for increased exports of agricultural products from Southeast Asia to Europe, exporters face many hurdles, Humphrey added.
That includes distance and logistics involved in trade, but “also concerns around meeting the regulatory requirements of the EU which for many smallholders is a burden too far.”
Bureaucratic red tape
For the past two years, the EU and European business associations have funded seminars and workshops across Southeast Asia to better explain these regulatory changes. This is particularly a problem for Southeast Asia’s smaller and less developed economies.
An academic paper published last March on the potential of the EU becoming a market for Laos’ agri-food exports found that “a lack of technical support from relevant stakeholders, new EU rules, and regulatory enforcement on agri-food importing… are all important challenges facing Lao exporters.”
In addition, the study added, “obtaining an organic certificate on product standards and safety requirements is another big issue facing Lao exporters.”
Analysts in the region say that Brussels must step up its efforts to better educate Southeast Asian officials and businesses about what can be a bureaucratic headache.
Palm oil spats
Boosting relations on the sustainable agriculture front will be far more complex when it comes to Malaysia and Indonesia due to differences over palm oil.
Malaysia and Indonesia, the world’s two largest palm oil producers, have clashed with the EU for years over Brussels’ initiative to fight global deforestation, which would ban imports into EU markets of goods linked to deforestation or forest degradation.
Both countries have taken the EU to the World Trade Organization over the European Commission’s move to phase out palm oil-based biofuel by 2030.
“The Deforestation-Free Products Regulation is a deliberate act by Europe to block market access, hurt small farmers, and protect a domestic oilseeds market that is inefficient and cannot compete with the cost of palm oil,” Malaysia’s Deputy Prime Minister and Commodities Minister Fadillah Yusof said in late December, according to a Reuters report.
Almost a third of Indonesians and a fifth of Malaysians distrust the EU because they think its stance on the environment and climate change could threaten their countries’ interests, according to a recent survey of “elite” opinion by the ISEAS-Yusof Ishak Institute.
Nonetheless, the EU remains an active investor in conservation projects in both countries. Trade diversification has been the key message of German President Frank-Walter Steinmeier’s ongoing tour of Southeast Asia. He arrived in Malaysia on Thursday and will visit conservation projects in Sarawak in East Malaysia, whose rain forests are home to a wide and unique variety of species.
Edited by: Srinivas Mazumdaru
This article was originally published on Deutsche Welle. Read the original article here.
TNL Editor: Bryan Chou (@thenewslensintl)
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