Multiplicity of sustainability standards and potential trade costs in the palm oil industry

Laura M.G. Hidalgo, Rosane N. de Faria, Roberta Souza Piao, Christine Wieck

2022

The growing impact of the global production of agricultural commodities has created new regulations that aim at a more sustainable trade. Sustainability standards (SS) are essential tools for transnational trade governance because they increase the possibility of recognizing products from sustainable sources. However, there is currently a proliferation of SS in almost every industry. This paper proposes a conceptual framework to establish how standard interactions such as competition, cooperation, and overlap shape the impact of multiplicity on trade costs. We apply the framework to the palm oil industry by using the information on three aspects of SS schemes: the requirements, the institutional design, and the cooperation strategies. Our results indicate that the North–South multiplicity in the palm oil market is characterized by high overlap, but there exists a balanced co-opetition in the standard market. As the cooperation strategies between the SS schemes are very shallow, there might be potential trade costs associated with the SS multiplicity in the palm oil industry. [EconLit Citations: Q01 Sustainable Development, Q17 Agriculture in International Trade, Q18 Agricultural PolicyFood Policy]

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