Free Trade Agreement between Switzerland and Indonesia

Reisfelder Indonesien

On 16 December 2018, Switzerland signed a Comprehensive Economic Partnership Agreement (CEPA) with Indonesia along with the other EFTA states Iceland, Liechtenstein and Norway. For the first time in history, a referendum was called against a free trade agreement; in the vote held on 7 March 2021, the agreement with Indonesia was approved by 51.7% of the voters.

Switzerland thus succeeded in concluding a free trade agreement with Indonesia before its main competitor, the EU. The agreement with Indonesia has a wide scope of application. Above all, it improves market access and legal certainty for trade in goods (industrial and agricultural products) and services. It also contains provisions on investment, the protection of intellectual property, the reduction of non-tariff barriers to trade, including sanitary and phytosanitary measures; on competition, trade, trade facilitation and public procurement; and on sustainable development and economic cooperation. 

The agreement also improves mutual market access for agricultural products. Switzerland receives considerable concessions from Indonesia for its agricultural export interests: for cheese and dairy products, baby food, energy drinks, coffee, chocolate and biscuits, tariffs will be completely dismantled over a period of twelve years.

The concessions made by Switzerland in agriculture are similar to those granted in other free trade agreements. They are compatible with Switzerland’s agricultural policy and do not pose a risk to any sensitive sectors. In particular, Indonesia receives preferential treatment for various types of beans, dried vegetable mixtures and bananas; for various frozen fruits, dried fruits, fruit mixtures and spices; and for rice flour and certain fruit and vegetable preparations.

At the centre of the negotiations with Indonesia was the country's main export product, palm oil, and this was the issue that sparked the referendum. Opponents to the free trade agreement expressed fears that additionally imported palm oil would displace domestic vegetable oils and criticised the environmentally damaging cultivation methods for the extraction of palm oil.

 Switzerland grants Indonesia only moderate palm oil tariff rebates of 20 to 40 per cent on five quotas totalling 10,000 tonnes, rising to 12,500 tonnes over five years. The tariff concessions for crude palm oil, which because of its properties could replace domestic oils such as rapeseed or sunflower oil, are designed to take account of Swiss oilseed production and so amount to just 1,250 tonnes. The quota for palm kernel oil is 3,750 tonnes, while stearin, which presents less of a threat for Swiss agriculture, has the largest quota at 7,500 tonnes.

The CEPA is the first free trade agreement in which Switzerland has managed to link the granting of concessions to issues of sustainability. Four sustainability standards have been defined, which are seen as sufficient evidence of CEPA's compliance with sustainability goals:

  • Roundtable on Sustainable Palm Oil (RSPO) Identity Preserved (IP)
  • RSPO Segregated (SG)
  • International Sustainability and Carbon Certification (ISCC) PLUS Segregated
  • Palm Oil Innovation Group (POIG) based on RSPO IP/SG

In order to ensure the traceability of Indonesian palm oil entering the country, in its concession list Switzerland has included the condition that palm oil may only be imported preferentially under CEPA in tanks of no more than 22 tonnes capacity.

Last modification 30.03.2022

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