Jakarta, Kuala Lumpur to end issue over palm oil export surge

JAKARTA and Kuala Lumpur have agreed to settle Manila’s concerns over the surge in palm oil imports from the Southeast Asian neighbors, with the Philippines proposing that they restrict their exports to a level not detrimental to Filipino copra farmers.

Agriculture Secretary Emmanuel F. Piñol announced on Thursday that Malaysia and Indonesia have agreed to form a tripartite technical working group (TWG) to address the reported dumping and smuggling of palm oil from them over the recent years.

The agreement was reached on Wednesday during the courtesy call of Malaysian and Indonesian officials at the office of Piñol.

The TWG will discuss the proposals of the Philippine government on the “rationalization” of Malaysian and Indonesian palm oil exports to Manila, Piñol said.

One of the proposals of the Philippines is for Malaysia and Indonesia to “keep” their palm exports “at levels which would not hurt” Filipino coconut oil and local palm oil industries.

Piñol also recommended that Malaysia and Indonesia verify reports that some of their palm oil products are being smuggled to the Philippines.

Furthermore, the agriculture chief also appealed to Malaysia and Indonesia to open up their markets to Philippine coconut-based products “to correct” the trade imbalances between the countries that have been in favor of Jakarta and Kuala Lumpur.

The Department of Agriculture (DA) earlier recommended the temporary ban on Malaysian and Indonesian palm oil imports through the imposition of quantitative restrictions.

However, it was discovered that, after the rice trade liberalization (RTL) law was enacted, the country has lost its authority to impose QR during times when import surges harm domestic industries.

Piñol told the BusinessMirror that the only hope that the DA could reimpose QR is through legislation, which some lawmakers at the House of Representatives are already pushing for.

At present, the government may only increase tariffs to deter the entry of more palm oil imports in the domestic market.

Palm oil imports from Asean nations are tariff-free.

Under the WTO Agreement on Safeguards Article 12, a member-country must notify the body if it initiates a special safeguard investigation, or imposed safeguards related to import surge.

The WTO allows the reimposition of QRs and increase of tariffs given that the import surge was proven harmful to a country’s domestic sector.

“A WTO member may take a safeguard action [i.e., restrict imports of a product temporarily] only if the increased imports of the product are found to be causing, or threatening to cause, serious injury,” according to the WTO.

The country’s palm oil imports in 2018 reached an all-time high of 278,384.039 metric tons), or 176.33 percent over the 100,743.864 MT recorded in 2017, Philippine Statistics Authority (PSA) data showed.

Likewise, value of imports expanded by 134.1 percent to $176.234 million from $75.274 million recorded in 2017, PSA data showed.

Malaysia accounted for more than half or nearly 55 percent of the total palm oil shipments to the Philippines in 2018.

The country’s palm oil imports from Malaysia reached 159,825.39 MT—or 169.34 percent higher than the 59,339.561 MT recorded in 2017. Likewise, value of imports rose by 134.2 percent to $96.763 million, from $41.323 million in 2017.

Also in 2018, Indonesian palm oil exports to the Philippines ballooned by 136 percent to $78.97 million, from $33.466 million in 2017.

The Philippines imported 117,903.737 MT of palm oil from Jakarta during the reference period, which was 188.01 percent over 40,937.191 MT recorded volume in 2017.


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