A BRAWL over food labelling for products containing palm oil threatens to test Australia's relationship with major palm oil producer Malaysia, which has offered to take some of Australia's asylum seekers.
Proposed legislation to introduce mandatory labelling of palm oil in food products is expected to be passed in the Senate today after securing crucial Coalition support. It was sponsored by the Greens and independent senator Nick Xenophon, reports The Australian Financial Review .
Environmental and health groups have campaigned for the labelling, citing that palm oil is unhealthy and that its plantations have displaced native forests in Malaysia and Indonesia, destroying the habitat of orang-utans.
Palm oil is labelled as "vegetable oil" even though it is a fruit plant and contains 50 per cent saturated fat, many times more saturated fat than found in other vegetable oils, according to Senator Xenophon.
"Australians consume 10 kilograms of palm oil every year and don't know it," Senator Xenophon said.
The South Australian said he was "quietly confident" the bill would pass the House of Representatives with the support of fellow independents Andrew Wilkie and Bob Katter.
But trade experts warn that if the proposed legislation becomes law, Australia's relationship with Malaysia could be harmed at a time Prime Minister Julia Gillard is trying to complete her asylum seeker deal with Malaysia.
Palm oil is Malaysia's biggest export and its production supports more than 500,000 workers.
The Malaysian government says the "truth in labelling" could cause economic harm to low-income workers.
The Australian Food and Grocery Council also opposed the proposed labelling laws because it circumvented the rights of states and territories and there were doubts that it could ever be enforced.
