'Tariffs skewed in favour of crude soyoil'

REPORTS FROM THE MPOB INTERNATIONAL PALM OIL CONGRESS (PIPOC) 2005

Sector initiatives for oils and fats at the World Trade Organisation, like in the case of textiles or G20 fighting against EU's sugar subsidies, will work better for net exporters, said Datuk M Suppermaniam, permanent representative of Malaysia to the WTO.

He, however, added that it will be very difficult to get consensus from the member states as oils and fats are included in the discussion on agriculture.

"Today, the discussion on agriculture is seemingly going nowhere. This is owing to agriculture being most distorted in terms of international trade, following political limitations of each member state."

Oils and fats market is highly distorted. Firstly, soybean farmers in the US and rapeseed farmers in the EU receive heavy subsidy, thereby creating a trade distortion in their favour when palm oils sector in Malaysia and Indonesia is under no subsidy, he said.

Secondly, the tariff duty agreement between soybean producers, led by US, Brazil and Argentina had signed a ceiling of 45 per cent for import of crude soyoil with India. Palm oil tariff duty on the other hand has a ceiling of 300 per cent. This has led to an undervaluation of palm oils internationally which are quite cheaper vis-à-vis other edible oils.

Suppermaniam feels Doha may negatively affect palm oils market if the oils are categorised as a special product in developing countries and major importers of the commodity such as India, Pakistan, China and Bangladesh, apart from few African and Latin American countries. This is to allow importing countries check market access of a product, whose entry would put domestic producers at a disadvantage.

"Under the recently held WTO discussion in July, the issue of special products was raised. We feel special products cannot be self-designated. The members will first need multilaterally agreed criteria to decide which commodities can be designated as special products," Suppermaniam said.

With respect to the upcoming WTO mini ministerial in Hong Kong, he said, "I am not hopeful about progress in discussion. However, the failure or inconclusive end of this session is likely to put too much pressure on progress of discussion in 2006."

(The correspondent's trip was sponsored by Malaysian Palm Oil Promotion Council)