Highlight 7/2021 – The Swiss Referendum on EFTA-Indonesia Economic Partnership Agreement
Cerya Paramita, 5 March 2021
This 7th of March, the Swiss people will cast their vote in a referendum to determine whether the country will proceed with the Indonesia-EFTA Comprehensive Economic Partnership Agreement (CEPA).
The agreement was signed by Switzerland in 2018 as a member of the European Free Trade Association (EFTA) which also includes Norway, Iceland and Liechtenstein. The negotiation lasted for seven years, with Switzerland being a key player..
The Swiss parliament has issued a Federal Decree approving the agreement in 2019, but the decision was submitted to a referendum launched by a winegrower from Geneva who raised concern over the concession for palm oil and sustainability issue. With the agreement, palm oil imports from Indonesia will benefit from lower duties and this was seen as a threat for Switzerland’s sunflower and rapeseed oil industry.
In contrary, supporters of the agreement see the deal as a pioneer because it incorporates sustainability certification as a prerequisite to benefit from the low tariff. In other words, only imports that are sustainably certified could enjoy the preferential duty. Such provision will pave the way to a more sustainable trade between the two countries.
Indonesia has done a similar sustainable trade scheme before and has proven a good track record in the trade of timber products with the European Union. This is mainly because the country does not see sustainability provision as something that is enforced, but a part of its commitment towards a more sustainable and environmentally friendly production.
The EFTA CEPA with Indonesia will provide better access for Switzerland’s major exports: machinery and equipment, chemical-pharmaceutical products, watches and apparels, to the growing market of Indonesia’s nearly 280 million people. To Indonesia, the deal is equally important as the South-East Asian country does not only seek an improved access to European market but also expects to see more investments coming from Switzerland.
It is worth to note that the EU is also finalizing its CEPA negotiation with Indonesia. Looking at a bigger picture, Swiss companies may become less competitive compared to their competitors from the EU if the deal with Indonesia falls through. In the current situation where every country is struggling to keep their economy moving amidst the coronavirus pandemic, the agreement could set a more solid ground for recovery and stronger economic relations between the two countries.
Cerya PARAMITA, The Swiss Referendum on EFTA-Indonesia Economic Partnership Agreement, Highlight 7/2021, available at www.meig.ch
The views expressed in the MEIG Highlights are personal to the author and neither reflect the positions of the MEIG Programme nor those of the University of Geneva.