Food Standards Amendment (Truth In Labeling Laws Palm Oil) Bill - Assignment Example

A BRIEFING PAPER ON “FOOD STANDARDS AMENDMENT (TRUTH IN LABELING LAWS – PALM OIL) BILL” by Student’s Name Professor Course Date “Food Standards Amendment Bill” The “Food Standards Amendment (Truth in Labeling Laws – Palm Oil) Bill,” as introduced by Australia sought to limit the extensive deforestation occurring because of palm oil use in most food ingredients. Following its use as a major ingredient in foodstuffs, most of the rainforests in Malaysia and Indonesia have been cleared to create space for the establishment of palm oil plantations. This has become a major concern to other partners in the WTO agreement, necessitating them to seek some legal amendments that would restrict Palm oil use, thus averting the dangers it is likely to cause in terms of deforestation. However, the nature of the requirements introduced by the proposed amendments, notably the “Food Standards Amendment (Truth in Labeling Laws – Palm Oil) Bill” could be against the provisions of the WTO agreement. According to the Bill, any food product containing palm oil as an ingredient, regardless of the quantity, should indicate as such (Australia & Moore 2011, p. 11). More to this, the bill seeks to have the food products labelled as CS palm oil, to indicate that they originate from countries that have adhered to palm oil sustainable regulations. There are various issues that arise from the proposed measures, which needs to be carefully considered, to establish the suitability or the inappropriateness of the “Food Standards Amendment (Truth in Labeling Laws – Palm Oil) Bill.” First, according to the “Article XI, section 1 of the WTO agreement,” it requires that no restrictions should be applied by a member state, which is party to the agreement, towards another country, whose nature is not that of the taxes, duties, or any other charge (Bown 2009, p. 13). Thus, according to this requirement, no member country should restrict the importation of another member country’s products, with any other basis. Following this provision, the restrictions sought by the Bill on the food products emanating from Malaysia and Indonesia regarded as the unsustainable origins, is contrary. This is because the nature of the proposed restriction is not based on the tax, duties, or any other charge (Charwat 2011, p. 15). Citing the inconsistency on this bill with the provisions of Article XI, section 1 of the WTO agreement, then, there are higher chances that it would threaten the relationship between the countries, which are party to this agreement. This in turn may hamper the smooth trade relations between the member states, causing major challenges for the already existing trade among the member states. Therefore, the bill is deemed inappropriate, citing the possible challenges it is likely to cause, which might end up bringing the trade between the member countries to a halt. However, there are certain exceptions to these requirements, which may justify the need to apply restrictions on the products deemed unfit because of various reasons. Under the GATT Exceptions: Art XX of the WTO agreement, member states are allowed to apply certain prohibitions on the importation of products from member countries, which have violated certain key provisions (Kerr 2010, p. 19). A restriction on trade can be applied to products from a member state on the basis that such restrictions are meant to protect public morals. Additionally, the restrictions can be applied in order to protect the health of humans, plants, or animals, on the event that such products are deemed unfit for them. It is also within the provisions of the GATT Exceptions: Art XX to restrict products from member countries, in an effort to apply measures, which seek to conserve any natural resource on the verge of exhaustion (Perdikis & Read 2007, p. 24). Therefore, concerning these provisions, the motive of the “Food Standards Amendment (Truth in Labeling Laws – Palm Oil) Bill” is admissible in that it seeks to prevent the continuous deforestation and endangering of forests in Malaysia and Indonesia, which are caused by clearing the forests to plant palm oil trees. Considering this practice of cultivating palm oil plantations at the expense of preserving forests has extremely negative effects on the Orang-utan habitat, the measures to preserve such plant species are justified (Australia & Moore 2011, p. 9). Therefore, the Bill has some benefits concerning environmental conservation and should therefore be adopted. This clearly indicates that the bill should have satisfied the obligations laid down in the WTO Agreement, which is to conserve the environment and the endangered natural resources, in the course of trade between the member states. Main Problems with the Proposed Measures Even though the measures proposed by Australia would have applied, under the provisions of the Environmental sustainability and Natural resource clause of the WTO Agreement, there are various weaknesses associated with the measures. To begin with, for the exceptions to apply, certain thresholds must be upheld. Under the g Art XX Exceptions, the WTO Agreement provides that the sole reason for the application of the restriction should fall within the relevant measures, to protect health, protect against the exhaustion of natural resources or to protect public morals (Bown 2009, p. 50). In the application of the restriction, it is required that it does not seem to perpetrate arbitrary or unjustifiable discrimination against any member state. More to the provisions, even when measures are taken in light of the above exceptions, without any discriminatory motive, they should not end up discriminating against other member states and their products (Charwat 2011, p. 28). Therefore, because the requirements of the “Food Standards Amendment (Truth in Labelling Laws – Palm Oil) Bill” appear to be discriminating against the products arising from Malaysia and Indonesia, it would be deemed inadmissible under the WTO Agreement. Therefore, it follows that the measures sought by Australia would not have satisfied their obligation under the agreement (Kerr 2010, p. 24). The Bill also seeks to change the description of the palm oil as an ingredient in foodstuffs from the usual reference as a vegetable oil to palm oil. This description is meant to portray the products that contain this ingredient, more so, if considered to arise from the unsustainable origins as inappropriate (Charwat 2011, p. 33). However, according to article 2 of the WTO Agreement, on the Obligations under the TBT Agreement, this would be illegal. The article provides that no member country should establish technical regulations that would treat any imported product less favourably than the domestically produced goods (Franklin 2011, P. 1). Therefore, this being the case and considering the fact that the Bill sought to present the products imported from Malaysia and Indonesia as among those from the unsustainable origins, it would have failed the technical restriction requirements tests. The technical article two, section 1 requires that all like products, whether domestically produced or imported from any member country, should be subjected to the same trade rules (Mehta 2004, p. 75). On the contrary, the Bill sought to make the products imported from the unsustainable origin rank unpopular compared to those branded as emanating from the sustainable origins. In such a case, the products imported from Malaysia and Indonesia with palm oil as one of their ingredients would be considered as having breached the environmental protection and natural resources preservation clause of the WTO Agreement (Pryles, Waincymer & Davies 2004, p. 40). Consequently, the consumers would avoid purchasing such products because they cannot be branded as CS palm oil. This practice would serve to favour those products either manufactured in Australia or imported from USA or the rest of Europe. This indicates that the “Food Standards Amendment (Truth in Labelling Laws – Palm Oil) Bill” would have violated the provisions of article 2 on technical regulations, making the Bill unsuitable to fulfil the obligations of the WTO Agreement. Under the Non-Tariff Barriers to Trade (NTB) Agreement, it is required that any technical restrictions applied towards the member countries should not create unnecessary restrictions to trade (Charwat 2011, p. 47). In assessing the suitability of the restrictions to be applied towards the member countries, the scientific as well as technical data regarding the risks should be measured in advance. This is meant to allow the restriction be geared towards a legitimate objective (Kerr 2010, p. 30). In reference to the proposed Bill by Australia, there are some weaknesses to the fulfilment of the above WTO Agreement obligation. One weakness is that through enacting such a bill, there will be great restrictions to trade applied between Malaysia, Indonesia and the rest of the WTO Agreement member states, in that the products emanating from these two countries with palm oil as one of their ingredients would not sell in the other member states’ markets (Perdikis & Read 2007, p. 20). Considering that, such products will miss the CS palm oil branding, which is meant to indicate that the exporting country has adhered to sustainability regulations; chances are that the consumers will avoid the products (Australia & Moore 2011, p. 22). These restrictions to trade will in turn damage the trade relations between the member countries to the WTO agreement. More to this is the requirement to consider all the technical as well as scientific data before embarking on applying a technical restriction to trade does not appear to be fulfilled. While Australia, USA, and other member countries are of the opinion that the mass cultivation of palm oil trees in Malaysia and Indonesia contributes to deforestation of rainforests and to the endangerment of the Orang-utan habitat, which is on the verge of extinct, the information given by these countries is dissimilar (Perdikis & Read 2007, p, 31). According to the Malaysian Palm Oil Council, “for every hectare of palm oil cultivated, four hectares of permanent forests were preserved” (Bown 2009, p. 20). Therefore, there is a misconception of facts regarding the relationship between palm oil production and the extinction of the Orang-utan habitat. Lack of material fact regarding such a case has the danger of seeing an amendment established, not because of legitimate and justifiable objectives to preserve to environment, but based on discrimination against the importation of products from some member states. Such objectives are illegal and inadmissible under the WTO Agreement making the measures proposed under the “Food Standards Amendment (Truth in Labeling Laws – Palm Oil) Bill” unsatisfactory according to the obligations of the agreement (Mehta 2004, p. 47). The WTO Agreement, on Obligations under the TBT Agreement requires that in case International technical standards exists, member states are obliged to apply them when establishing technical restrictions. However, the member states are granted the option to establish such standards for use; on the event, that the same do not exist internationally or if the ones existing are inappropriate or ineffective for various legitimate reasons (Franklin 2011, P. 1). In this case, there exist international standards, which provides for the classification of palm oil, when used as an ingredient in food products as a vegetable oil. Additionally, standards applicable in the determination of the sustainability and environmental threat posed by the production of a certain product by any member state also exist (Charwat 2011, p. 51). Therefore, the establishment of a national domestic Bill that would create trade restrictions against the member states to the WTO Agreement is unnecessary. Because the existence of palm oil as ingredient in food products does not cause any harm to the health of humans, animals or plants, there lacks a proper basis of branding it; otherwise, while under the international standards, it is branded as a vegetable oil (Kerr 2010, p. 27). Under the GATT, article 3, section IV, the WTO Agreement provides for equal treatment of all products in trade, whether domestic or imported. According to this provision, any internal laws or regulations established by a member state to the Agreement should not accord a less favourable treatment to products that are imported (Johnson 2011, P. 3). This provision is meant to guard against any event where a country, which is a member state to the WTO agreement would establish and enact laws that would create trade restrictions for some of the products imported from other member countries, while allowing easy trade for those domestically produced or those imported from some member counties. Thus, the “Food Standards Amendment (Truth in Labelling Laws – Palm Oil) Bill” is inconsistent with this provision. This is because the provision seeks to brand those products, which are imported from Malaysia and Indonesia having failed the sustainability test, while making those domestically produced as well as those imported from the USA and other European countries suitable (Bown 2009, p. 16). The failure to brand the food products imported from Malaysia and Indonesia CS palm oil would mean that the consumers would deem them unfit. This gives other similar products, which are manufactured and exported by other countries an upper hand, as they would be considered to have observed the required regulations. This serves to indicate that there would be no more equality in trade opportunities between the member states to this agreement, in that while some products from some countries will be acceptable to the consumers, others will not (Australia & Moore 2011, p. 14). It therefore follows that the Bill will create inequality in trade amongst the parties to the WTO Agreement, which is contrary to the provisions and obligations of the Agreement. In addition, under the GATT: Article I (1) Most Favoured Nation Obligation, all the member states to the WTO Agreement are obliged to extend any trade advantage or privilege extended on any product either originating in the country or from other countries to all contracting parties (Pryles, Waincymer & Davies 2004, p. 32). Under the provision, all like products, which emanates from any of the member states to the agreement, should always be accorded equal trade advantage, as well as any necessary trade immunity. However, the proposed Bill by Australia works contrary to this provision. This happens in that, the Bill grants the food products manufactured from other countries other than Malaysia and Indonesia, which contains palm oil as an ingredient a trade advantage (Charwat 2011, p. 20). Such food products would be branded CS palm oil according to the proposed Bill, indicating they have met all the sustainability regulations and are thus from sustainable origins. This in turn would influence the consumers to purchase such products at the expense of those lacking the label. The consequence is that while similar food products from other member countries will have a higher market in the region, those from Malaysia and Indonesia will have limited market (Mehta 2004, p. 69). This is contrary to the provisions and requirements of the WTO agreement, that there should be equal trade opportunities for all similar products in the WTO Agreement territory, regardless of the origin of such products. Applicable case A good case that is relevant to the above case is the USA marine mammal protection act, where the USA enacted a law that banned the importation of dolphin fish, unless the exporting country had enacted similar protection laws, requiring the importers to label their products “dolphin safe”. In regard to this, Mexico argued that such a law breached the provisions of the WTO Agreement article XI (Charwat 2011, p. 37). In response, the WTO panel held that enacting such laws was against the provisions of WTO agreements, and thus held unsuitable. Possible Ruling by the WTO panel on the measures proposed by the Australian Bill If by any chance the measures proposed by Australia were challenged before a WTO panel, there is a possibility the panel would find such measures as contravening the WTO provisions and regulations. Thus, the ruling given would be to abolish such measures. In determining this case, the panel would pay attention to the various provisions and requirements that the measures proposed would act against. First, the measures would work towards creating trade inequality between the member states, in that it would grant similar products, exported by other member countries an upper hand as compared to those exported by Malaysia and Indonesia (Johnson 2011, P. 3). The other reason is that through the establishment of such measures, there will be an unnecessary creation of trade restrictions towards the two countries, based on unfair backgrounds. Through branding some products, CS palm oil and leaving out others, to show compliance with sustainability regulations, the products exported by Malaysia and Indonesia would be deemed unfit by the consumers and thus lose in the markets (Charwat 2011, p. 38). This would serve as a medium for damaging the trade relations amid the two countries as well as the member states. Additionally, the measures would be observed as having undermined the existing international standards of trade. While the international standards of classifying palm oil as vegetable oil exist, any contrary provision would be in total disregard to the existing international standards (Kerr 2010, p. 21). The implication is that it violates the obligations of member countries towards observing the established international treaties. Finally, in ruling that the measures proposed by Australia are inappropriate, the panel would consider lack of adherence to the scientific and technical clause of the agreement, which requires member states to consider sufficient information of a scientific or technical nature, while establishing a trade restriction. The information given by the Malaysian Palm Oil Council to the effect that there is four hectare of permanent forest preservation to each hectare of palm oil cultivated indicates reasonable sustainability practices (Australia & Moore 2011, p. 24). Therefore, establishing such measures based on lack of sustainable palm oil practices would be inappropriate. Conclusion The proposed “Food Standards Amendment (Truth in Labelling Laws – Palm Oil) Bill” has a good motive, which is to enhance environmental and natural resource sustainability. However, its enactment is a contravention of Australia’s obligation under the WTO Agreement. Putting such measures in place would mean the creation of trade restrictions and inequality for Malaysia and Indonesia. This inequality would serve to damage the trade relations between the two countries and the rest WTO Agreement member states. Therefore, the measures are inappropriate and thus such a Bill should not be enacted. Reference List Australia, E & Moore, C 2011, Food Standards Amendment (Truth in Labelling - Palm Oil) Bill 2010, Canberra, Community Affairs Legislation Committee. Bown, C. P 2009 Self-enforcing trade developing countries and WTO dispute settlement, Washington, D.C., Brookings Institution Press. Charwat, N 2011 International trade law: course materials 2011, semester 2, Clayton, Vic: Monash University. Franklin, M 2011, Food retailing industry tackles Abbott on palm oil, The Australian, P1. Johnson, S 2011 Malaysian palm oil lobby fires at Xenophon, The Sydney Morning Herald. Kerr, W. A 2010, Conflict, chaos and confusion the crisis in the international trading system, Cheltenham, Edward Elgar. Mehta, P. S 2004, Essays on the international trading system: an unfinished journey, London, Cameron May. Perdikis, N & Read, R 2007, The WTO and the regulation of international trade: recent trade disputes between the European Union and the United States, Cheltenham, Edward Elgar Pryles, M. C., Waincymer, J & Davies, M 2004, International trade law: commentary and materials, North Ryde, N.S.W., LBC Information Services. Read More