Parliament rubber stamps free trade deal with Indonesia

The Swiss Senate sitting in Bern earlier this week. Keystone / Anthony Anex

The Swiss parliament has given the go-ahead for a free trade deal with Indonesia, although not without debates about sustainability and the Asian country’s production of palm oil.

Almost exactly a year after the deal was signed between the European Free Trade Association (EFTA) and Indonesia, the Swiss parliament gave its green light on Thursday.

Switzerland and EFTA members Liechtenstein, Iceland and Norway will become Indonesia’s first free trade partners in Europe in a deal that will initially apply to 78% of Swiss exports, before rising to 98% after a period of 12 years.

Watches and watch parts will become immediately tariff-free. Cheese and dairy products will become so within the first five years, while rates on chocolate will decline gradually over the 12 years.

Environment concerns

Though the approval of the Swiss Senate on Thursday was overwhelming (34 votes to 6), debates continued around the contentious issue of Indonesian palm oil exports, which critics see as environmentally harmful and a threat to Swiss products like rapeseed oil.

Defending the agreement, Social Democrat senator Christian Levrat said that a chapter was dedicated to sustainable development standards, which would be monitored once the agreement enters force.

As for palm oil, it will only be imported from Indonesia in tanks of maximum 22 tonnes, a stipulation to allow for better tracking and oversight.

Indonesia is the world’s largest producer and exporter of palm oil, an industry linked to deforestation, habitat degradation – especially for orangutans – climate change, animal cruelty and indigenous rights abuses. Land and forests must be cleared for the development of the oil palm plantations in Indonesia and other countries where it is produced.

Switzerland imports between 30,000 and 40,000 tonnes of palm oil every year. Between 80% to 90% of these imports are destined for the food industry.

Indonesia, with 265 million inhabitants, is already an important partner in south-east Asia for Switzerland. The volume of trade between the two countries last year was estimated at around CHF1.4 billion ($1.43 billion).