The Oil Palm

Growing Opposition to the Palm Oil Labelling Bill

A leading member of the Australian Federal Parliament and a Member of the Australian Labor Party Government has come out strongly opposing the effort to label palm oil and discriminate against Australia’s neighbors and leading producers of palm oil.

In an editorial by Federal Member for Isaacs, The Hon Mark Dreyfus QC, MP, Parliamentary Secretary for Climate Change and Energy Efficiency, called the legislation deeply flawed and puts Australian farmers and business at risk of trade retaliation.

The comments by Rep Dreyfus reflect a growing view that the effort to label palm oil is bad government, economic and foreign policy, and without redeemable benefits. To the contrary, the effect would likely result in significant harm to Australia’s long-standing position as a regional supporter of trade and economic growth, even putting the country at odds with its most integrated partner New Zealand.

Similar criticism was reflected recently during an inquiry into the Bill in Australia’s Lower House that saw a myriad of concerns raised by a number of interested stakeholders, including government and business.

Notable among these participants were key Australian government departments, alarmed by the legislation’s myriad of flaws that submitted comments, including the Ministry for Foreign Affairs, Defence and Trade, the Department of Health and Ageing, The Department of Innovation, Industry, Science and Research, and the Treasury.

The Minister for Foreign Affairs, Defence and Trade, Mr Craig Emerson, expressed serious concern over the trade implications of the legislation, including its incompatibility with WTO rules and the country’s free trade agreement with New Zealand. In fact, Mr. Emerson assessed the full cost of the legislation at no less than AUD 150 million to Australian businesses, reflecting only one aspect of industry that stands to be affected by the legislation.

Other government departments that have commented on the inquiry, as well as the New Zealand Government, are concerned with the process under which this new labelling standard has been developed, believing that it undermines the collaborative nature of the regulatory system that ensures participation from Australian States and Territories as well as New Zealand in developing standards.

According to the New Zealand High Commission, the legislation is in breach of the Food Treaty between Australia and New Zealand, undermining the bi-national food regulatory system that has ensured unfettered trade between the two countries.

These comments, as well as comments by the New Zealand Food and Grocery Council, Sucrogen Foods, Unilever Australasia, Kraft Foods Australia and the Australian Oilseeds Federation, demonstrate the full extent of the legislation’s impact on Australian businesses, and consumers.

Representing producers, the Indonesian Palm Oil Commission and the Malaysian Ministry of Plantation Industries and Commodities submitted comments emphasizing the damage that a regulatory trade barrier would have on the countries palm oil industries and communities. While the legislation would undoubtedly violate WTO rules, according to the Malaysian Ministry, it would also have the unintended consequence of undermining the very industry which is ensuring the preservation of orangutan habitats and virgin rainforests. As a result, environmental NGOs that portray the palm oil industry as a threat to the environment are in fact contributing to a much more uncertain future to Malaysia’s environment and ecosystem.

And comments by Malaysia’s National Association of Small Holders (NASH), representing over 240,000 producers, illustrates the detrimental impact discriminatory regulations against palm oil will have for small holder producers who account for 39% of land under oil palm cultivation.

As MPOC CEO, Tan Sri Dr Yusof Basiron, said during his testimony before the Australian House Standing Committee on Economics:

The bill will punish our farmers with an indirect trade barrier, even though the alleged deforestation or orang-utan habitat destruction – the mitigation of which is the prime objective of this bill – are nothing but NGO myths

I respectfully call on the Committee to reject the legislation currently being considered as being contrary to the spirit of open and free collaboration between regional partners, and in recognition of the role the industry plays in supporting sustainable development.