Vegetable Oil vs Vegetable Oil: Trade Barriers Over Palm Oil.

TRADE POLICY ISSUES. Palm oil is undoubtedly one of the commodities that has been developed to improve the economic and social fabric of palm producing nations. The comparative advantage that palm oil has over rapeseed, amongst others, that is largely produced in Europe, has created unprecedented challenges to the industries in developed nations.

Indonesia, the biggest palm oil producer, for instance, has faced several anti-dumping and subsidies cases brought by industries in the European Union (EU) and the United States of America in the bio-fuel sector. While the use of instrument of trade defense forms part of the rule based system, the rejection of raw material costs by the EU in a recent anti-dumping case underlies efforts to undermine the comparative benefits that developing nations possess.

This is likely to breach the Uruguay Round where developing countries were generally informed that commitment to the trade process would deliver “win-win” solutions for all countries developed and developing alike as countries would be able to take advantage of each-others respective comparative advantages.

At the trade policy level in multilateral negotiations, there is also a need to protect the interests of palm oil producing countries or at least be willing to exchange views towards the possibility of adopting common positions in the framework of the WTO on trade policy issues.  Unity of purpose will help defend the trade interest of palm oil and products well into the future.