MARKET DEVELOPMENT
Palm Oil Group Asks Government to Lobby Russia Over New Rule
Palm Oil Group Asks Government to Lobby Russia Over New Rule
11/12/2014 (Jakarta Post) - Domestic palm oil producers are urging the government to lobby Russia, which recently imposed a policy affecting the shipment of the commodity from Indonesia to the country.
Russia, a fast-surging export market of the commodity, along with Belarus and Kazakhstan started last month to enforce its new sanitary and epidemiological control regulations, which effectively prohibit entry of refined palm oil.
Under the new rule, Russia limits peroxide value for palm oil to 0.9 milliequivalents per kilogram (meq/kg), stricter than the 10 meq/kg in the international standard set by the Codex Alimentarius.
The Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan said Saturday Indonesia needs to soon lobby Russia to review its new arrangement, which could erode palm oil shipment to the rising market.
“The government must act quickly by lobbying the Russian government to revise the rule. It will badly impact our palm oil export,” he told The Jakarta Post in a telephone interview.
The majority of Indonesian producers might not be able to meet such a stringent requirement, thereby directly halting shipment to Russia, Fadhil added.
Indonesia saw its palm oil shipment to Russia grow significantly in recent years, rising from a low level of US$24.82 million in 2009 to $306.57 million last year, according to figure from United Nations Commodity Trade Statistics Database (UN Comtrade).
Indonesia, the world’s biggest palm oil producer, repeatedly faces a set of trade barriers, both tariff and non-tariff, in marketing its products to Europe, especially members of the European Union.
In November 2012, French Senate proposed a four-fold increase of import tax on palm oil, a key ingredient in its food industry, including in Europe’s favorite chocolate hazelnut spread, Nutella. As a challenge to the proposal, Indonesian trade officials intensively lobbied the French lawmakers and as a result, the senate rejected the measure, popularly known as “Nutella tax”.
The government now must adopt a similar advocacy approach to defend the interest of its domestic palm oil industry in dealing with Russia, according to Fadhil.
In response to this issue, Trade Ministry’s trade defense director Oke Nurwan said that the Indonesian government acknowledged the negative effect of the Russian rule to exports and would take a follow up measure to meet a satisfying result on the case.
Earlier, Indonesia raised its concern at the meeting of the Technical Barrier to Trade (TBT) Committee of the World Trade Organization (WTO) in October, but still did not obtain an adequate response from Russia.
“We further question Russia’s measure that creates a barrier to our exports,” he said, adding that so far Russia did not provide scientific evidence on its explanation about the ground for its new rule.
In addition to Indonesia, Malaysia, the world’s second biggest palm oil producer, has also brought the same complaint to the WTO, saying that apart from lack of scientific justification, the strict peroxide requirement is impossible to achieve in some climates, according to the WTO website.
Russia, a fast-surging export market of the commodity, along with Belarus and Kazakhstan started last month to enforce its new sanitary and epidemiological control regulations, which effectively prohibit entry of refined palm oil.
Under the new rule, Russia limits peroxide value for palm oil to 0.9 milliequivalents per kilogram (meq/kg), stricter than the 10 meq/kg in the international standard set by the Codex Alimentarius.
The Indonesian Palm Oil Producers Association (Gapki) executive director Fadhil Hasan said Saturday Indonesia needs to soon lobby Russia to review its new arrangement, which could erode palm oil shipment to the rising market.
“The government must act quickly by lobbying the Russian government to revise the rule. It will badly impact our palm oil export,” he told The Jakarta Post in a telephone interview.
The majority of Indonesian producers might not be able to meet such a stringent requirement, thereby directly halting shipment to Russia, Fadhil added.
Indonesia saw its palm oil shipment to Russia grow significantly in recent years, rising from a low level of US$24.82 million in 2009 to $306.57 million last year, according to figure from United Nations Commodity Trade Statistics Database (UN Comtrade).
Indonesia, the world’s biggest palm oil producer, repeatedly faces a set of trade barriers, both tariff and non-tariff, in marketing its products to Europe, especially members of the European Union.
In November 2012, French Senate proposed a four-fold increase of import tax on palm oil, a key ingredient in its food industry, including in Europe’s favorite chocolate hazelnut spread, Nutella. As a challenge to the proposal, Indonesian trade officials intensively lobbied the French lawmakers and as a result, the senate rejected the measure, popularly known as “Nutella tax”.
The government now must adopt a similar advocacy approach to defend the interest of its domestic palm oil industry in dealing with Russia, according to Fadhil.
In response to this issue, Trade Ministry’s trade defense director Oke Nurwan said that the Indonesian government acknowledged the negative effect of the Russian rule to exports and would take a follow up measure to meet a satisfying result on the case.
Earlier, Indonesia raised its concern at the meeting of the Technical Barrier to Trade (TBT) Committee of the World Trade Organization (WTO) in October, but still did not obtain an adequate response from Russia.
“We further question Russia’s measure that creates a barrier to our exports,” he said, adding that so far Russia did not provide scientific evidence on its explanation about the ground for its new rule.
In addition to Indonesia, Malaysia, the world’s second biggest palm oil producer, has also brought the same complaint to the WTO, saying that apart from lack of scientific justification, the strict peroxide requirement is impossible to achieve in some climates, according to the WTO website.