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NEWS ADMIN

Mahamad Rodzi Abdul Ghani

DATE

16/09/2003

NEWS PROVIDER

Mahamad Rodzi Abdul Ghani

NEWS SOURCE

Business Times

CATEGORY

HEADLINE

KL to ensure palm oil trade not hurt by WTO export
CANCUN, Fri: Malaysia wants to make sure that World Trade Organisation(WTO) rules on export competition do not impede the growth of the country’s palm oil industry.

The draft of the Cancun ministerial text, which forms the basis of whatmay eventually become the Cancun Declaration, calls for the elimination oftrade-distorting elements of export credit.

International Trade and Industry Minister Datuk Seri Rafidah Aziz hasinstructed officials to ensure that Malaysia’s Palm Oil Credit and PaymentArrangement (Pocpa) does not get roped into this definition.

Introduced in the early 1990s, Pocpa is a two-year credit facility forcountries to buy palm oil from Malaysia. The interest rate charged tobuyers is determined by the London Interbank Offered Rates (Libor).

Countries that have participated in the Pocpa scheme include India,Russia, Egypt, Cuba, Myanmar and Djibouti.

Malaysia is the largest palm oil producer in the world, accounting forabout half of the world’s output.

Last year, palm oil exports were worth RM20.84 billion, or 6 per cent ofthe country’s total exports. With crude palm oil prices expected to remainat about RM1,400 a tonne, the figures for this year could be stronger.

Developing countries must be allowed to use export credit, on reasonableterms, to promote their exports, Rafidah said in her address during theplenary session here yesterday.

Malaysia is also calling for a reduction of high bound tariffs to a morereasonable level and the elimination of trade-distorting domestic supportand export subsidies by rich countries.

In India, for example, the bound rate for palm oil is 300 per cent,compared with 45 per cent for soyaoil. Major exporters of soyaoil areArgentina, Brazil and the US.

These measures, if accepted, would maintain the attractiveness of Malaysia’s palm oil and Pocpa scheme, particularly to developing countries.

Lower tariffs in major markets could also spell improved earnings forMalaysian plantation companies.

In terms of non-agricultural market access, Rafidah said any formula mustaccommodate the needs of developing countries that may have high tariffsin selected strategic industries, and their participation should be on avoluntary basis.

She added that Malaysia also supports the WTO principle of progressiveliberalisation in the services sector, and will further liberalise sectorsas and when it is ready.

Developed countries should not pressure developing member countries tobind their services sector prematurely, she said.

She also said that developing countries need to be given more time forimplementation, less than full reciprocity in tariff reduction and thenecessary policy space to pursue developmental objectives, for example,the use of incentives to develop strategic industries that are key toeconomic development.

Rafidah pointed out that most WTO members are opposed to the inclusion ofnew issues of investment, competition, transparency in governmentprocurement and trade facilitation sometimes referred to as the Singaporeissues.

In Doha, we decided that negotiations on these issues can only commence ifthere is explicit consensus, and clearly, up to now, there is none. It isobvious that the proponents pushing to include these issues fornegotiation have not been able to convince other members of the utility ofWTO rules in these areas.

Under these circumstances, Malaysia will not agree to begin negotiation onany of these issues and suggests the clarification process be continuedbeyond Cancun, she said.

The approach of focusing on areas where there is agreement and deferringuntil later the issues over which members still disagree will helpachieve a positive outcome from the five-day Cancun meeting.

In Cancun, it is important that we work towards extracting realisticcommon denominators, and have pragmatic decisions which lend themselves tothe required consensus, and therefore, enable this Cancun MinisterialMeeting to be a success.

We have various options open to us, to enable the meeting to come up witha statement or text which can give clear guidance on the future workbeyond Cancun. The meeting should not be trivialised by any all-or-nothinghardline positions.

We must have the wisdom to extract from the menu of issues those which canexpeditiously lend themselves to consensus. We should be brave andpragmatic enough to defer till later issues on which a consensus cannot,as of now, be attained, she said.

Rafidah said the WTO should not take on more than it can accommodate, butrather should determine which issues can quickly be negotiated foragreement and come up with ministerial directives on what work needs to bedone after Cancun.