With a recent Swiss referendum agreeing to continue a trade agreement between Indonesia and the European Free Trade Association (EFTA) within the Comprehensive Economic Partnership Agreement (Indonesia-EFTA CEPA), Indonesia needed to seriously step up its efforts to achieve sustainability in its crops, especially palm oil, the Center for Indonesian policy Studies (CIPS) said.
The referendum on March 7, 2021, showed a slight win of 51.6 percent of the total 2,7 registered votes in Switzerland that was in favor of continuing the IE-CEPA negotiations. An agreement would include the dropping of duties on industrial products, including palm oil. Switzerland, along with Liechtenstein, Norway and Iceland are the four members of EFTA.
“This indicates that there were still many Swiss citizens who were concerned over sustainability issues in Indonesia, despites of the majority vote in the referendum. If Indonesia wanted to optimize the advantages of the IE CEPA and boost exports to the EFTA market, then Indonesia needs to continue to show improvement in its sustainability practices, especially in the implementation of the economic agreement,” CIPS said in a press release.
Efforts to boost sustainability includes environmentally friendly crop growing methods, and also economic activities that considers sustainability elements and are not exploitative, are important to support the smooth entry of Indonesian commodities into the European market and their competitiveness, CIPS said.
The annex of the agreement stipulates a cooperation commitment related to trade and capacity building activities which also target palm oil products, providing room for EFTA countries and Indonesia to implement a national action plan in Indonesia to cut down on deforestation and to assure that biodiversity remains in line with Indonesia’s international obligations.
“The issue of sustainability in agriculture that has been put under the spotlight for a while by European countries relates to the palm oil commodity and its derivative products such as palm oil. Indonesia is deemed to be engaging in unsustainable agricultural and economic practices without consideration for the conservation of the environment. This should become a input to be accorded serious consideration by the government” CIPS Researcher Pingkan Audrine Kosijungan said in the release.
“If we all think about the fate of oil palm farmers and of those whose life depend on this industri, such inputs is really worth to consider to safeguard the continuity of this commodity and expand its market coverage,” Kosijungan added.
In the IE-CEPA agreement, there was a specific clause that stressed the importance of efforts by all sides bound by the agreement, to give an emphasize on information, education and training on sustainability at all levels to contribute to a sustainable social development.
The IE CEPA agreement is hoped to be able to open access to market, strengthen the transfer of technology, knowledge and capacity and boost investment in Indonesia. With this agreement, Indonesia would be able to sell the products of its industries in the EFTA market and enjoy lower tariff for certain agricultural products, especially palm oil which is one of Indonesia’s main export commodities.
Indonesia is encouraged to continue to raise its sustainability standards and practices as already required under the Indonesia Sustainable Palm Oil (ISPO) scheme. This has been of great concerns for Switzerland and one of the main factors behind the recent referendum, If Indonesia wants to optimize the benefits of IE-CEPA and boost its exports to the EFTA market, then it needed to continue to show its commitment in raising its sustainable practices and attention to environmental aspects.
The IE-CEPA began to be negotiated in January 2011 and was signed in 2018 and ratified by the Swiss parliament the following year. Opponents to reducing duties on palm oil, managed to seek and obtain that a referendum be held on whether the country would go ahead with the agreement.
The IE CEPA agreement covers 12 aspects — trade in goods and services, investment, government procurements, economic cooperation and capacity building, product origin and trade facilities, trade technical barriers and sanitary and phytosanitary actions, trade security instruments, intellectual property rights, business competition, legality issues, up to trade and sustainable development, the latter being the issues drawing the most attention in Switzerland.
“The government also needs to evaluate various trade policies it has so far implemented, to see whether those policies could support various economic partnership between Indonesia and a number of countries and regions. The agreed partnership should of course be backed by the appropriate policies, that is oriented towards reaching the aims of the partnership,” Kosijungan said.