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Abstract
Oil palm is the major source of edible oil consumed in the world. It is also a major feedstock for biofuels and livestock and has several industrial uses. This study examined the determinants of global palm oil trade with particular attention to the effect of trade and environmental policies using a gravity model and data from 1988-2020. Palm oil’s dramatic trade growth in the past three decades can be attributed to the usual suspects, e.g., economic growth of hungry giants (China and India) and proximity, but trade and environmental policies have played an important role in recent years. Major trade agreements have been responsible for increasing palm oil trade by up to 8 percent of the global import value. Palm oil trade is also highly sensitive to current policy changes due to the Covid-19 pandemic and potential future non-tariff measures aimed at protecting the environment.