European Industry Proposes Zero-duty on Sustainable Palm Oil

Palm oil-based industries in the European Union (EU) are seeking to promote the removal of import duties on sustainable palm oil to encourage production in producing countries, a European industry group says.

Frans Claassen, the general manager of the Dutch product board for margarine, fats and oils, said that the region's industry had conveyed the proposal to the governments of EU member states for approval.

"It is now being discussed in different member states and the EU should discuss it together and later discuss it with Indonesia and Malaysia to put into trade agreements," he said Dec. 2, 2011 on the sidelines of the two-day seventh Indonesian Palm Oil Conference in Nusa Dua, Bali.

Indonesia is currently preparing for the commencing round of negotiations on a comprehensive economic partnership agreement (CEPA) with the EU.

Malaysia is reportedly discussing a free trade agreement (FTA) with the 27-member bloc.

Claassen, who also chairs the Dutch Task Force on Sustainable Palm Oil, which includes the Dutch Food Retail Association and the Dutch Food Industry Association, said that such an incentive in the form of the removal of duties would be necessary to effectively endorse principles of sustainability in palm oil production.

"I strongly believe if you have financial incentives for companies, such as lower export tax or import tariffs in the EU, it will help uphold sustainability. You should use financial incentives to change the market although it's not easy," he said, adding that in line with the zero-duty tariff for certified sustainable palm oil in the EU, producing countries, such as Indonesia and Malaysia, had to lower differential export taxes and cut tariffs for the sustainable product.

Indonesian palm oil businesses have welcomed the move, agreeing that the removal or lowering of the tariff would help spur the growth of sustainably produced palm oil.

Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan, however, warned that the so-called "sustainable palm oil" had to be translated in a "fair" manner.

"What is meant by sustainable palm oil? Is it confirmed by all kinds of certifications or just a certain certification? Should it be certified by a certain certification system, it can be counterproductive and discriminative against the efforts to encourage sustainable palm oil production and create a monopoly in palm oil certification," he told The Jakarta Post on Sunday via text message.

According to Fadhil, the EU had to hold a dialogue with related stakeholders, mainly producers in biggest palm oil producing countries.

The government is stepping up its efforts to implement its own version of sustainable palm oil certification called Indonesian Sustainable Palm Oil (ISPO) by preparing to collect applications for the mandatory program by early next year in hopes that all of the country's oil palm plantations will be certified by 2014.

The certification plan was announced in late 2009 after a number of consumer product giants suspended crude palm oil purchases from several major Indonesian suppliers over allegations of deforestation.