International Trade

GC003C-17SBS: International Trade

Abstract:

Market access for palm oil and its related products has become highly debatable globally as food safety (including nutritional aspects) becomes growingly stringent. Anti-palm oil campaigns from non-governmental organizations (NGOs) in developed nations that call for bans on palm oil on health and environmental (extensive deforestation and loss of biodiversity) grounds, further add to the challenges faced by palm oil producers.  Following which, the palm oil producers are confronted with trade barriers from major importing countries. There has also been a proliferation of non-tariff measures (NTMs) in the form of certification and labelling schemes to support the production of certified sustainable palm oil (CSPO).  Though these schemes are inherently voluntary, the firms concerned face risks of reputation, business continuity and market access if they do not comply with these regulations. These requirements therefore have important implications for trade as they could potentially serve as indirect barriers to trade.  The countries that face market risks are the lead producers of palm oil in Southeast Asia, followed by Latin America. For this study, Malaysia and Colombia are selected as representative examples from both the Southeast Asia and Latin America tropical regions respectively. Given their dominance and lead in the palm oil industry, they are obvious choices to begin with. The research will delineate core market access issues and their implications for trade, identify firm-level response strategies to addressing global NTMs, and derive some policy lessons based on the experiences of Malaysia and Colombia.

Research Objectives:

1. To profile the regulatory landscape for trade in the oil-palm based industry in Southeast Asia and Latin America

2. To examine the direct impacts of core non-tariff measures on the global exports of Malaysia and Colombia in oil palm and its related products; and

3. To provide an outlook for expanding oil-palm exports to new (non-traditional) markets through product- and market diversification.

Methodology:

The research takes on a mixed-mode approach, involving both qualitative and quantitative analyses.

1. Desk review of literature.

2. Analysis of regulatory framework and trade data on palm oil (and its related products) in the Southeast Asia and Latin America regions.

3. Consultation and interviews with government agencies, industry/ trade associations, major exporting plantation companies and key exporters of palm oil and its related products.

4. Empirical investigation of export potentials for palm oil and its related products in Malaysia and Colombia within the Southeast Asia and Latin America regions respectively, applying a stochastic frontier approach to the gravity model.

Expected output:

I ISI and  I Scopus, 1 policy paper.