What you need to know about Switzerland’s ‘palm oil’ referendum

The Swiss will cast their votes on March 7th on three different issues. One of them involves free trade agreement with Indonesia.

What you need to know about Switzerland's 'palm oil' referendum
A palm oil farmer loading palm oil seeds onto a truck in Indonesia. Photo by WAHYUDI / AFP

What interest does Switzerland have in an Asian country more than 11,000 km away?

Indonesia is the world’s largest producer of palm oil, a raw material that is much in demand in Switzerland, as it is elsewhere.

It is commonly used in food and other products.

However, “high customs duties and other barriers make it difficult to trade with Indonesia”, the Federal Council said.

Therefore, Switzerland has negotiated a trade agreement with Indonesia, providing that all Swiss goods can be exported duty-free to that country, “placing Swiss companies on a par with their foreign competitors in the growing Indonesian market”, the government noted.

“In return, Switzerland has abolished duties on Indonesian industrial products” — mostly, but not only, palm oil.

As Switzerland’s economy relies heavily on exports, the agreement would facilitate access to the growing Indonesian market, in particular for small and medium-sized enterprises, opening up new opportunities for Swiss companies.

Besides the government and the parliament, the centrist and right-of-centre parties support this trade pact, as does the group representing Swiss businesses, Economiesuisse.

But those who oppose the agreement have called for a referendum, which is why the Swiss will weigh in on this issue on Sunday.

READ MORE: EXPLAINED: What is Switzerland’s ‘anti-burqa’ initiative all about?

Who is against the free trade agreement and on what grounds?

The Social Democrats, the Green Party, agricultural union Uniterre, as well as environmental groups like Greenpeace and Pro Natura oppose this treaty and have launched the referendum.

They claim that to increase palm oil production, native forests in Indonesia are cleared and replaced by palms. There are also issues of child labour and the violation of human rights.

In cultivating palm oil, “destruction of biodiversity, displacement of indigenous and agricultural communities, the use of toxic pesticides, exploitation and child labour remain the rule”, Uniterre wrote on its website. 

In all, palm oil production accelerates “the overexploitation of nature” and would only benefit businesses and not the local population, opponents point out.

However, the supporters of the trade agreement counter these arguments.

In the agreement it signed with Switzerland, Indonesia pledged “to effectively enforce laws, policies and practices aimed at preserving primary forests, peatlands and their ecosystems, halting deforestation, peat drainage and burning to gain land, reduce air and water pollution, and respect the rights of local and indigenous communities and workers ”.

For its part, Swiss government vouched that “anyone who wishes to import palm oil must prove that the oil has been produced in compliance with the agreed environmental and social requirements”. 

READ MORE: EXPLAINED: What you need to know about Switzerland’s digital ID vote


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How is Denmark’s economy handling inflation and rate rises?

Denmark's economy is now expected to avoid a recession in the coming years, with fewer people losing their jobs than expected, despite high levels of inflation and rising interest rates, The Danish Economic Council has said in a new report.

How is Denmark's economy handling inflation and rate rises?

The council, led by four university economics professors commonly referred to as “the wise men” or vismænd in Denmark, gave a much rosier picture of Denmark’s economy in its spring report, published on Tuesday, than it did in its autumn report last year. 

“We, like many others, are surprised by how employment continues to rise despite inflation and higher interest rates,” the chair or ‘chief wise man’,  Carl-Johan Dalgaard, said in a press release.

“A significant drop in energy prices and a very positive development in exports mean that things have gone better than feared, and as it looks now, the slowdown will therefore be more subdued than we estimated in the autumn.”

In the English summary of its report, the council noted that in the autumn, market expectations were that energy prices would remain at a high level, with “a real concern for energy supply shortages in the winter of 2022/23”.

That the slowdown has been more subdued, it continued was largely due to a significant drop in energy prices compared to the levels seen in late summer 2022, and compared to the market expectations for 2023.  

The council now expects Denmark’s GDP growth to slow to 1 percent in 2023 rather than for the economy to shrink by 0.2 percent, as it predicted in the autumn. 

In 2024, it expects the growth rate to remain the same as in 2003, with another year of 1 percent GDP growth. In its autumn report it expected weaker growth of 0.6 percent in 2024.

What is the outlook for employment? 

In the autumn, the expert group estimated that employment in Denmark would decrease by 100,000 people towards the end of the 2023, with employment in 2024  about 1 percent below the estimated structural level. 

Now, instead, it expects employment will fall by just 50,000 people by 2025.

What does the expert group’s outlook mean for interest rates and government spending? 

Denmark’s finance minister Nikolai Wammen came in for some gentle criticism, with the experts judging that “the 2023 Finance Act, which was adopted in May, should have been tighter”.  The current government’s fiscal policy, it concludes “has not contributed to countering domestic inflationary pressures”. 

The experts expect inflation to stay above 2 percent in 2023 and 2024 and not to fall below 2 percent until 2025. 

If the government decides to follow the council’s advice, the budget in 2024 will have to be at least as tight, if not tighter than that of 2023. 

“Fiscal policy in 2024 should not contribute to increasing demand pressure, rather the opposite,” they write. 

The council also questioned the evidence justifying abolishing the Great Prayer Day holiday, which Denmark’s government has claimed will permanently increase the labour supply by 8,500 full time workers. 

“The council assumes that the abolition of Great Prayer Day will have a short-term positive effect on the labour supply, while there is no evidence of a long-term effect.”