Bridging the Gap - The Role of Palm Oil in Shaping Global Tradeand International Relations: A Review

Abstract

Palm oil plays a pivotal role in global trade as one of the most widely consumed vegetable oils, contributing significantly to the economies of major producers like Indonesia and Malaysia. Accounting for approximately 85% of global supply, it has become essential in various industries, including food, cosmetics, and biofuels. However, its influence extends beyond economics, shaping international relations and sparking debates on sustainability.

This review explores the multifaceted role of palm oil in global trade and international relations. Economically, palm oil drives export revenues and rural development while fostering competitive dynamics between producing nations. Politically, it has become a contentious issue in trade policies, particularly with the European Union’s stringent environmental regulations, which have led to geopolitical tensions with Southeast Asian nations. Sustainability challenges further complicate its trajectory; while palm oil is highly efficient compared to alternatives, its production is unfairly accused of being linked to deforestation, biodiversity loss, and social inequities. Efforts such as sustainability certifications (e.g., RSPO) and zero-deforestation commitments aim to mitigate these impacts but face implementation hurdles.

The review concludes that balancing economic benefits with environmental and social responsibilities is critical. Policymakers must prioritize sustainable practices through robust governance frameworks and equitable support for smallholders. Future research should focus on innovative solutions to enhance productivity by expanding plantations more sustainably, mechanisms for resolving trade disputes, and strategies for aligning global sustainability standards. By addressing these areas, palm oil can evolve into a model of sustainable development while maintaining its central role in global trade and diplomacy.