Switzerland examines sustainable trade options with Indonesia

Switzerland wants Indonesia to protect workers on palm oil plantations. Keystone / Dedi Sinuhaji

Swiss trade officials have held talks with Indonesia and the World bank to promote a sustainable means of implementing a controversial free trade agreement.

The State Secretariat for Economic Affairs (SECO) laid the foundations for a roadmap that includes sustainable palm oil production and fair working conditions in the industry.

Switzerland agreed a free trade agreement with Indonesia in 2018 as part of the European Free Trade Association (EFTA) block that also includes Norway, Iceland and Liechtenstein.

Opposition to the FTA in Switzerland forced a nationwide vote that narrowly approved the deal last year.

Under the terms of the FTA, 98% of Swiss exports to the island nation will eventually be exempt from customs duty. In return, among other commodities, Indonesia would be able to export 10,000 tonnes of palm oil annually (and up to 12,500 tonnes at the end of five years) and related products with reduced tariffs. 

Sustainability clauses incorporated in the deal, which allow only sustainable palm oil to be eligible for tariff reductions – a first for any free trade agreement concluded by Switzerland. 

But opponents of the FTA have complained that there are no effective verification mechanisms and that sanctions for violations are too weak.

The stated purpose of the SECO visit was to lay the foundations for sustainable trade between the two countries.

During its trip to Indonesia, Swiss officials also signed an agreement for further cooperation with the Indonesia Sustainable Urbanization Trust Fund, which is designed to bankroll urban development.