Trade policy has become infused with intense geopolitical, social, and environmental overtones. As a result, we have moved towards a series of hyphenated policy approaches, including worker-centric-trade policy, environmental-trade policy and techno-trade policy. These policy measures have raised a new set of challenges that will complicate trade relations.

Sustainability has become an effective global trade movement to change the market norms of agricultural commodities such as vegetable oils. Many NGOs have constantly launched a campaign to create fear in the market and among investors that the production of some agricultural commodities in tropical countries has severely damaged the environment, violated worker rights and committed other social sins.

Take, for example, the international bashing of such an increasingly popular commodity as palm oil, which has now accounted for over 50 percent of global vegetable oil production of about 210 million tons in 2021. In the past, the edible oil market was dominated by soybean, canola oil, sunflower, cotton and rapeseed, and olive, which are grown mostly in the temperate zone. It is unfortunate that the noble platform of sustainability has been misused to belittle the unrivaled competitiveness of palm oil.

Many NGOs have consistently campaigned to bash the reputation of the industrial consumers of palm oil, especially those already with globally popular brand names, trumpeting that palm oil was produced at the expense of forests and underage laborers. Their vigorous campaign has been so massive that it succeeded in creating a market perception that companies that ban the use of palm oil as their ingredient would greatly help mitigate climate change.

The global scrutiny of palm oil started in 2004 with the establishment in Kuala Lumpur of the market-driven, multistakeholders forum of the Roundtable on Sustainable Palm Oil (RSPO) by European food businesses and NGOs to respond to alleged massive deforestation caused by the expansion of oil palm estate development. But the meeting in Kuala Lumpur never referred to any sustainability standards for other vegetable oils.

Palm oil falls victim to trade injustice in vegetable oils as it has been discriminated and vilified against deforestation allegations. The Indonesian Sustainable Palm Oil sustainability framework was set up in 2011, followed up by Malaysian Sustainable Palm Oil in 2013. But these two forums seem to lack credibility because they are controlled by governments.

The no-deforestation, no-peat and no-exploitation (NDPE) principles in palm oil were introduced in 2014 and gained popularity to become new norms for the palm oil market.  But if we look at the other vegetable oils, we knew only about the Roundtable on Responsible Soy (RTRS), which was established in 2006.

However, there has never been any vigorous campaign by NGOs to enforce the soy sustainability standards in Europe apparently due to the strong bargaining and lobbying power of the producers. There have never been any particular investigations or audits on the enforcement of sustainability standards by soybean producers

Therefore, all sustainability standards, including RSPO, ISPO, MSPO, RTRS and other forums must be overhauled. There is a need to build commonality and a platform among different sustainability standards. We need to agree on and adopt a common inclusive global sustainability goal and platform for sustainability standards for any commodity that conform to the Sustainable Development Goals (SDGs).

Unilaterally tying environmental sustainability to palm oil seems a cynical ploy by the developed countries to block commodities with comparative advantages from tropical countries. Such a trade policy is not environmental stewardship but green protectionism. The insistence on proactively addressing environmental issues through trade policy could deepen divisions between the developed and developing countries.

The negative campaign against palm oil has become even more utterly unfair because there seemed never to be any issue as to whether other vegetable oils such as soybean, cotton, rapeseed, sunflower oil, peanut, etc have also been subjected to equally tough standards of environmental and social sustainability.

Such negative campaigns, even though the allegations against palm oil production were rarely validated by scientifically-based empirical data and evidence, should be stopped. Using sustainability standards as a tool for non-tariff barriers and trade restrictions would damage fair trade.

Skepticism and criticism against the sustainability standard of a particular commodity, such as palm oil, must also be addressed by introducing a common standard applicable to all vegetable oils. An inclusive standard represents genuine stakeholders’ commitment to making sustainability and trade justice a norm.

The new norm will incorporate the transformation of sustainability standards to more inclusive and broad-based products beyond a single commodity. In the case of vegetable oil commodities, the exclusive sustainability standards of palm oil must be broadened to include all vegetable oils.

The current vegetable oil crisis requires a shift in international trade and market norm toward trade justice which also include the inclusive standard of sustainability. The crisis has unmasked the hypocrisy of the market and producers of competing vegetable oils in manipulating sustainability as a tool for market restrictions and introducing preferential trade for competing vegetable oils.

A just and fair trading system should be designed to correct and improve the principle of free trade by balancing the interest of labor, environmental, social, good governance and human rights. Put another way, the system must serve the interests of communities and sustainability. These principles should be strongly entrenched in all international trade agreements.

Within the near future, there needs to be an international initiative to set up an inclusive standard for trade justice and a sustainability platform for vegetable oils. Under this common sustainability platform, specific commodities, such as palm oil, soya, rapeseeds and sunflower will have to develop their own customized standards for their production and use.

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The author is a sustainable palm oil analyst. These views are personal.

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