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Malaysia and EU Near Completion of Trade Pact, Palm Oil and Cars Remain Obstacles

Malaysia and the European Union have finished about 80% of negotiations on a free-trade agreement, with palm-oil rules and automotive issues still to settle.

Negotiations on a Malaysia-EU free-trade agreement are about 80% complete, according to Minister Datuk Seri Johari Abdul Ghani, who expects a signature by June 2027. The outstanding 20% centers on the EU Deforestation Regulation and automotive market access, issues the minister believes can be resolved. Malaysia exported RM124.9 billion of palm oil in 2025, with RM20.1 billion destined for the EU, its top market.

Johari highlighted the cost burden of repeated postponements of the regulation on Malaysian exporters. He called for sustainability rules that are realistic for smallholders and developing-economy firms. The agreement would become Malaysia’s 18th FTA, expanding market access and positioning the country as a gateway for European firms into ASEAN. EU officials, including Commissioner Jozef Síkela and Ambassador Rafael Daerr, expressed optimism about concluding the pact and noted recent growth in bilateral trade.

Why it matters

The deal could reshape trade flows, affecting key sectors like palm oil and automobiles for both Malaysia and the EU.

How the sides frame it

HIGH AGREEMENT

Centrist coverage highlights the signing timeline and the promise of open markets, while right-leaning coverage stresses the remaining obstacles such as the EU deforestation rule and automotive access and the cost impact on exporters.

CENTER

Centrist coverage frames the pact as a near-term milestone that will open markets and benefit Malaysia.

RIGHT

Right-leaning coverage frames the pact as still hindered by EU sustainability and automotive rules that pose costs.

The right emphasises

  • EU deforestation regulation and car market access remain obstacles
  • cost burden on Malaysian exporters from regulation delays
  • calls for realistic sustainability rules for smallholders

In this story

Malaysia EU free trade agreementpalm oilautomotive sectordeforestation regulationtrade surplussustainability standardsmarket accessinvestmentsemiconductor cooperation
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