Swiss Referendum: an example for facilitating more sustainable palm oil trade in Europe?

Stefan Kausch

Representative of the Swiss Palm Oil Network

For the first time in history, a regulatory mechanism will be introduced for the promotion of sustainability through trade preferences. In a public referendum in March, voters in Switzerland ratified the Comprehensive Economic Partnership Agreement (CEPA) between EFTA states (Switzerland, Liechtenstein, Norway and Iceland)  and Indonesia. As palm oil was at the heart of this referendum, we asked Stefan Kausch from the Swiss Palm Oil Network to share his view on these developments in his country.

Green light to the free trade deal with Indonesia

It’s rare that people get to decide about a free trade deal. Swiss voters did so in March 2021. A small majority of 51.6% of the voters agreed on a free trade deal with Indonesia. This close decision is surprising. Only few other countries benefit as much from global trade and an extensive network of 32 trade agreements.

The reasons for this result are manifold. But first a brief look back: At the end of 2018, Switzerland together with Norway, Iceland and Liechtenstein (EFTA states) signed a free trade deal with Indonesia. Under the terms agreed, eventually 98% of Swiss exports to the island nation would be exempt from customs duty. In return, among other commodities, Indonesia would be able to export 10,000 tonnes of certified palm oil annually (and up to 12,500 tonnes at the end of five years) at reduced tariffs. 

In reaction to this, a civil society and farmers’ alliance, initiated by the organic winegrower Willy Cretegny from Geneva, launched a referendum against the free trade agreement. The opponents argued that the ecological and social impact of palm oil production in Indonesia are disastrous and that certification systems such as RSPO can’t do anything about it. On 22 June 2020, the referendum committee submitted 61,719 signatures against the Federal Decree for the economic partnership between the EFTA States and Indonesia.

Corona’s influence

The vote took place on 7 March 2021. The voter participation was above average. This effect has been observed since Corona has determined everyday life. The population is politicised by the pandemic and Corona has an augmented influence on the voters’ decisions. Criticism is easier to mobilise and the confidence in the Federal Council is diminished by the crisis as longer as the dispute over the pandemic strategy is taking place. This trend played into the opponents’ cards. Even more because a high voter participation favours progressive-left cities.

Green is in

The green wave continues to have an effect. The population votes greener, more women and young people go to the polls. Votes on environmental and human rights issues benefit from this drift, while economic issues have a hard time. Without the fact that imported palm oil will have to meet environmental standards, the deal would most definitely have failed. Swiss voters all over the country want ecology and human rights to be given more weight in cooperation with other countries. On the other hand there is a growing scepticism towards international trade and globalization. Particularly, in the French-speaking part of Switzerland, market scepticism is widespread and sustainability has a high priority.

Negative image of palm oil

What was foreseeable: the debate revolved more around palm oil and less about trade. In the public opinion palm oil has become synonymous with deforestation and the decimation of wildlife like the Orangutan. It seems that it is firmly cemented in people’s mind that anything to do with palm oil is bad. In addition the opponents had their deep doubts about the credibility and control mechanism of sustainable palm oil certificates. One of the main arguments used by the referendum committee for rejecting the “nefarious” free trade deal is that the sustainability criteria for palm oil imports are a mere fig leaf.

No free trade without sustainability

To summarize we can say that this narrow ‘Yes’ to the free trade agreement with Indonesia came about both thanks to and despite environmental aspects. Despite all the prophecies of doom, the result of the vote is path breaking. For the first time, sustainability preferences are anchored in a free trade agreement. Besides this, it is unique that certification systems such as RSPO or ISCC are playing an important role in a regulation implementing the agreement. Therefore the agreement between the EFTA states and Indonesia could serve as a model for other trade agreements, such as the one between the EU and Indonesia. For Switzerland the result of the vote means “no new free trade agreements without sustainability”. Swiss President and economics minister Guy Parmelin already hinted that similar clauses could be included in deals under discussion such as that with the Mercosur region (Argentina, Brazil, Paraguay, Uruguay), where the clearing of forests for soy and beef production won’t go unnoticed.