JAKARTA, Aug 29 (Reuters) - Indonesia is confident that an agreement can be reached with Asia-Pacific countries on listing crude palm oil as an “environmental good”, a move that would cut trade tariffs and boost exports, a trade ministry official said on Thursday.
Palm oil output in the world’s top producer is forecast to hit 28 million tonnes this year with exports of 18 million tonnes, but this could rise if Indonesia is successful in its talks with the 21-member Asia-Pacific Economic Cooperation (APEC).
Indonesia first raised the idea with APEC trade ministers in April, but received a lukewarm response, with ministers focused on implementing the 2013 list of environment goods, Iman Pambagyo, director general for international trade cooperation at the ministry of trade told Reuters.
But following talks at an APEC meeting in late June, Pambagyo is now confident an agreement can be struck within 16 months, with Indonesia’s hosting the APEC annual economic leaders meeting in October likely to boost the nation’s efforts.
“The way I see the response from APEC economies is that it is more about the process, rather than saying that CPO is not environmentally friendly,” said Pambagyo.
Palm oil is used mainly as an ingredient in food such as biscuits and ice cream, but also biofuel.
APEC approval to rebrand the edible oil as environmental goods would be controversial, as the industry is often attacked by green groups over forest clearing practices.
In another possible boost to palm oil trade, a preferential trade agreement (PTA) between Indonesia and Pakistan that was formally signed in February last year, could finally be implemented from Sept. 1, Pambagyo said.
The trade deal, which would result in Pakistan lowering its duty by 15 percent on crude palm oil from Indonesia, was put on hold after a dispute relating to restrictions on the trade and ports used for horticultural imports into Indonesia, he added.
Indonesian palm and palm kernal exports to Pakistan were 811,050 tonnes last year, according to industry data, behind top buyers India, Europe and China. (Additional reporting by Alister Doyle in Oslo and Yayat Supriatna in Jakarta; reporting by Michael Taylor; Editing by Michael Perry)