Malaysia now has to wait for the Parliament to take the final vote against the Bill before it can celebrate.

The committee has released a majority report recommending the Bill not be allowed to proceed due to several reasons including the risk Australia may face should Malaysia and Indonesia take up the dispute to the World Trade Organisation (WTO).

The Bill evoked a strong response from Malaysia when it was first announced, upsetting the palm oil industry because the proposed legislation explicitly labelled palm oil and also blamed the industry for reducing the orang utan population.
It would also require makers or distributors of foods with palm oil as an ingredient to list palm oil on its contents label, instead of the general term, “vegetable oils”.

Malaysia sent two teams for the public hearings in April and August, appealing to the Australian legislators to consider the plight of the farmers due to this form of indirect trade barrier.

The hearing chaired by the Community Affairs Legislative Committee was successful but the Australian Senate chose to proceed and brought it to the House of Representatives.

Yesterday the committee, chaired by Julie Owens (member for Parramatta, New South Wales), provided reasons why the majority government members believed this Bill would be mostly ineffective in changing labelling laws and also in slowing deforestation.

The committee was concerned with the “legal effects” of the Bill, especially with neighbouring New Zealand with which it has joint treaties.

The Bill would have also required the Food Standards Australia New Zealand to draft a standard, but the states and territories which have powers to legislate on food labelling would not be required to comply.

“We understand the strong feelings in the community about palm oil and any link it may have to deforestation and the reduction of orang utan habitat,” she said in a statement.

“But the Bill will not fix the problem. It is not drafted around the laws that already exist and will have no useful effect.

“Instead, it will harm our international relationships with New Zealand, expose us to a WTO dispute, and threaten national uniform laws that annually save billions of dollars in costs for consumers and businesses.”

But the Council of Australian Governments (COAG), Owens said, is already looking into this.

The Coalition and Green members of the committee have also produced dissenting reports on the proposed legislation.

The government is already considering the Labelling Logic review, which recommended that, where sugars, fats or oils are added to a food, the source ingredients should also be listed.

The Australia and New Zealand Food Regulation Ministerial Council will consider its response to the review on December 9 2011.