24/03/05 - In response to India's move to slap a high import duty on crudepalm oil (CPO), the world's top CPO producers -- Indonesia, Malaysia andThailand -- aim to form a trilateral cooperation pact that couldeventually affect global CPO prices.

"We must have a strong cooperation in production and marketing (of CPO),to eventually dominate the world market and set the course of the globalprice," Malaysian Minister of International Trade and Industry RafidahAziz said here.

A trilateral cooperation pact would result in the region, as the world'sworld's CPO production base, having more bargaining power to negotiatecases like the one in India.

"India's move is an act of discrimination against Indonesia, Malaysia andThailand, as it imposes far higher import duty on CPO compared to soybeanoil and other vegetable oil," Rafidah said after a meeting with IndonesianMinister of Trade Mari E. Pangestu on Tuesday.

However, Rafidah emphasized that cooperation between the three countrieswould not be in the form of a cartel -- as that would be against WorldTrade Organization regulations.

In the mean time, concerning India's high import duty on CPO, Malaysiawould also pursue further bilateral negotiations with India, she said.

The Indian government recently increased its CPO import duty from 65percent to 80 percent to protect its farmers who make a living growingsoybean and sunflower -- the edible oil of which are CPO substitutes.

With India currently imposing only 45 percent import duty on soybean, notonly will the country's move to raise CPO import duty help protect localsoybean and sunflower farmers, it will also encourage Indian importers toimport soybean oil instead of palm oil products due to the lower duty.

Separately, Ministry of Trade's director General for InternationalCooperation Pos M. Hutabarat suspected the lower import rate for soybeanoil was a result of lobbying by the U.S. and Brazil, as major soybeanproducers, at the Uruguay Round of trade talks in the mid 1990s.

"CPO is being discriminated against in favor of soybean oil," he said onWednesday.

Earlier, Indonesian Minister of Agriculture Anton Apriyantono said thegovernment would possibly join hands with other palm oil producers innegotiating for India to lower its committed ceiling duty rate through theWorld Trade Organization.

However, such a move would take time.

Anton met with his Indian counterpart last week to lobby for a lower CPOimport duty. But India said the decision was final, as it was aimed atprotecting its local edible oil producers.

After Malaysia, Indonesia is the world's second largest exporter of CPO --a raw material for, among other things, cooking oil, soap and detergent.

Output from the two countries makes up about 85 percent of this year'sglobal palm oil production.

CPO producing countries have been looking for ways to give them more swayin determining global CPO prices, as opposed to the current situation inwhich buyers are more influential than suppliers.