Passing of palm oil labelling Bill a grave concern

This is written by my colleague Rupa Damodaran.

Kuala Lumpur: Malaysia is deeply disappointed that Australia is going ahead with its discriminatory law against palm oil, a move that industry experts say could be challenged under the World Trade Organisation (WTO).

Plantation Industries and Commodities Minister Tan Sri Bernard Dompok expressed grave concern on the passing of the Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010 by the Australian Senate on Thursday.

"It is with great regret and disappointment that the Australian Senate has not accorded the due attention contributed by the oil palm industry in Malaysia and the sustainable practices adopted," Dompok said in a  statement issued by his ministry yesterday.

If the Bill becomes law, it now needs to be passed by the Lower House of the Australian Parliament, it means food products with palm oil in Australia must be labelled to say it has the commodity as an ingredient.

Malaysia views this as discriminatory as competing vegetable oils are not required to do the same. Independent senator Nick Xenophon moved for the Bill in late 2009.

A week ago, the Malaysian palm oil industry rejoiced when the Community Affairs Legislative Committee of the Australian Senate in Canberra recommended the Bill not be passed, after hearing various submissions including from Malaysia.

It is clearly evident that facts and figures provided to the Senate Community Affairs Legislative Committee have been clearly ignored, said Dompok.

"This industry is currently an important pillar in Malaysia's economy and has contributed substantively towards addressing rural poverty and generating employment in the agricultural sector. In addition, the industry has contributed immensely towards meeting global demand for food products and a source of renewable energy which is environmentally friendly."

Melbourne-based think tank Institute of Public Affairs described it as a "bad law" which will be implemented because of political deals from Australia's hung Parliament arrangement. Its director Tim Wilson said the Australian Parliament has been ignoring WTO rules in its decision for various policies, including the palm oil Bill. "The capacity for it to be challenged in the WTO remains valid," he said.

Dompok said the Australian government should demonstrate its commitment to bilateral relations, including ensuring that legislation is supported by facts and figures. "The Malaysian government is deeply disappointed that the Liberal, National and Greens Parties, and Senator Xenophon have chosen to put politics ahead of the mutually advantageous relationship between Malaysia and Australia that could be further strengthened in the future."

Bilateral trade in 2010 was valued at US$10.63 billion (RM32.31 billion), with exports valued at US$7.46 billion (RM22.67 billion), while imports from Australia were valued at US$3.17 billion (RM9.63 billion).

Australia is Malaysia's eleventh largest trading partner. It is also Malaysia's eighth largest export destination and 12th largest import source.

Wilson also felt that the ongoing bilateral free trade agreement (FTA) talks between Malaysia and Australia are likely to be impacted because of this. "I suspect this Bill will inject bad faith into the negotiations on the Malaysian side and may become a key negotiating sticking point before any FTA can be finalised, and Australian officials will be aware of this reality."

Wilson also does not think that the Australian or New Zealand consumers would care whether palm oil is an ingredient in their food. "What they do care about is price. This Bill is designed to encourage consumer boycotts based on political attacks against the palm oil industry."

This was published in Food Magazine.

Palm oil bill could cost food industry jobs, warns AFGC .

A new bill that will require palm oil to be labelled in all Australian foods is one step closer to becoming law after it passed the Senate yesterday.

The bill, introduced by Independent Senator Nick Xenophon and the Greens party, secured the support of the Australian Opposition party this week.

The Australian Food and Grocery Council (AFGC) have criticised the bill, saying it would have significant impacts on Australia’s food manufacturers as well as compromise the country’s food labelling system. AFGC Chief Executive Kate Carnell said called the palm oil bill a “deal” between the Opposition and Senator Xenophon.

“Without any consultation with industry or consumers, the Opposition did a political ‘trade-off’ on this legislation, which will be a significant cost for an industry already under pressure,” Carnell said.

According to the AFGC, the cost of changing a single label will be between AU$10,000 to AU$19,000 per product. “This is at odds with the Opposition’s aggressive stance on a carbon tax, saying that any new cost on Australian manufacturing at this time would cost jobs and send companies offshore,” Carnell said.

“Food and grocery manufacturers – employing 288,000 Australians including half in rural and regional areas – are already under intense pressure from a ‘perfect storm’ of rising input costs across the supply chain, such as energy, wages and water, higher transport costs, record high global commodity prices and supermarkets forcing down retail prices which is seriously impacting margins.

“It now seems that when it suits them, the Opposition is happy is to do backroom political deals that will have a similar effect on industry as a carbon tax – increase costs and put more pressure on jobs.”

The AFGC is pushing Federal MPs to carry out further consultation with the food industry on the proposed palm oil labelling legislation.

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