Australian Labelling Bill on Palm Oil Against WTO Provisions

If palm oil has to be labelled for all food products marketed in Australia, it is likely to disrupt trade. Imports of food products will be affected as the palm oil content of food manufactured overseas is not labelled specifically as required by the proposed bill. Local manufacturers will need to have new and specific labels to be used whenever palm oil is contained in a product. This will be a costly exercise for manufacturers.

One claim for justifying the palm oil labelling bill is to inform consumers on the presence of palm oil which has 50 % saturated fatty acids even though the total saturated fatty acid contents of the fats used would already be indicated in the nutrition panel of the food label. If palm kernel oil or coconut oil which has much higher (over 90 %) saturated fatty acid content is used, separate labelling for these oils is not required. The ‘vegetable oil’ label can continue to be used. This will be a discriminatory use of the labelling law against the interest of palm oil, and will violate the WTO provisions. Malaysia and Indonesia will be compelled to complain to the WTO to ask Australia to remove the discriminatory treatment on palm oil afforded by the palm oil labelling bill.

The bill also implies that a product derived from legitimate agricultural land that was previously forest has to be labelled to inform consumers on environmental impact such as deforestation and population of iconic animals such as orang utans. The koala bears and the Kasowari birds are iconic and lovable animals that once roamed the forested land of Australia. These forests have been converted into sheep and cattle farms or sugarcane plantations. Consumers in Malaysia and Indonesia will need to know which of our beef, sheep and sugar products come from the land of the koalas and kasowaris. These products need to be labelled to respect consumers right to know.

If Malaysia and Indonesia were to follow the labelling bill example of Australia, the trade barrier game will become very messy, and probably printing of labels will emerge as a new business opportunity for Malaysia and Indonesia to replace the loss of trade in the export of palm oil to Australia.