The Effects of Global Trade Reform on the World Vegetable Oil Markets

Abstract

The purpose of this paper is to analyze the impacts of global trade reform on the world vegetable oil market.  For this purpose, this study developed a world spatial equilibrium model for vegetable oil that incorporates palm oil and soybean oil.  The model contained major palm and soybean oil importing and exporting countries and regions. The results show that free and fair agreement trade leads to an increase in vegetable oil trade. Malaysian producers and China consumers are the biggest beneficiaries. Trade liberalization improves the overall world welfare as world producer and consumer surpluses increase. This implies the importance of moving towards free and fair agreement trade in the global vegetable oil market.