· Switzerland grants Indonesia tariff-free market access for industrial products as soon as the agreement comes into effect.
· The concessions made by Switzerland in agriculture are similar to those granted in other FTAs. The concessions are compatible with Switzerland’s agricultural policy and do not pose a risk to any sensitive sectors.
Concessions regarding palm oil
The Federal Council assumes that total Swiss import of palm oil will not increase as a result of the CEPA. Swiss palm oil imports from Indonesia are currently very low. In the years 2016-2018 they amounted to an average of 584 tonnes per year, or around 2% of total imports of 30,400 tonnes. It is possible that Indonesia will gain market share in the long term thanks to the agreement. However, this will only be the case if Indonesian palm oil producers are able to meet the conditions of the Swiss market. An essential prerequisite for this is compliance with the sustainability requirements for palm oil on the local market, which are high by international standards. Almost all palm oil intended for the Swiss food industry is already certified according to sustainability standards. To ensure that the sustainability requirements are met, the palm oil imported preferentially from Indonesia must have been produced sustainably. The details are regulated in the federal ordinance on the importation of sustainably produced palm oil from Indonesia at preferential rates of 18 August 2021 which entered into force at the same time as the CEPA.
In the negotiations, Switzerland granted the following concessions regarding palm oil from Indonesia:
· Five quotas with a total volume of 10,000 tonnes, rising to 12,500 tonnes over five years:
o Quota A: 1,000 tonnes for raw palm oil, 30% tariff reduction, annual growth of 50 t over five years to 1,250 tonnes.
o Quota B1: 5,000 tonnes for palm stearin, 40% tariff reduction, annual growth of 250 t over five years to 6,250 tonnes.
o Quota B2: 1,000 tonnes for palm stearin, 20% tariff reduction annual growth of 50 t over five years to 1,250 tonnes.
o Quota C1: 2,000 tonnes for palm nut oil, 40% tariff reduction, annual growth of 100 t over five years to 2,500 tonnes.
o Quota C2: 1,000 tonnes for palm nut oil, 20% tariff reduction, annual growth of 50 t over five years to 1,250 tonnes.
· Preferential imports which form part of these quotas must respect the provisions of the article in the FTA on the sustainable management of the vegetable oils sector.
· Furthermore, preferential imports which form part of these quotas must be delivered in 22-tonne tanks to ensure the traceability of the palm oil.
· Tariff-free quotas of 100 tonnes for Red Virgin palm oil in bottles of maximum two litres for direct consumption.
· Existing practices with Indonesia are now contractually formalised:
· Tariff-free market access for palm oil which is to be processed and re-exported (existing procedure in temporary importation for inward processing, which will continue).
· Tariff-free market access for palm oil intended for technical purposes or to produce soups and sauces.
· If Switzerland grants better market access concessions to other major palm oil producers (in particular Malaysia) at a later date, it must extend these concessions to Indonesia at the country’s request.
· The agreement contains a safeguard mechanism which allows Switzerland to take appropriate action regarding imports of Indonesian palm oil should these imports put pressure on the Swiss oil seed market.
Sustainability requirements for palm oil
· The concern with respect to palm oil production conditions is addressed in Article 8.10 of the CEPA on sustainable management of the vegetable oil sector.
· In order to ensure environmentally, economically and socially sustainable production of vegetable oil, Indonesia is committed to effectively implement laws to protect primary forests, peatlands and related ecosystems; to stop deforestation, peat drainage and slash-and-burn practices; and to respect the rights of indigenous communities and workers.
· Furthermore, Indonesia and the EFTA States support the establishment of sustainability standards in the vegetable oil sector and cooperate to raise existing standards. They also undertake to ensure the transparency of the rules applicable to the vegetable oil sector.
· Indonesia and the EFTA States commit themselves to ensuring that vegetable oils traded under the CEPA are produced under these framework conditions.
· If Swiss importers are to benefit from the partial tariff reductions for palm oil, they must ensure that the imported oil complies with the agreed sustainability principles.
· The details are regulated in the federal ordinance on the importation of sustainably produced palm oil from Indonesia at preferential rates of 18 August 2021 which entered into force at the same time as the CEPA.