December 16, 2018 / 11:51 AM / a year ago

Indonesia, EFTA sign long delayed free trade deal

JAKARTA, Dec 16 (Reuters) - Indonesia on Sunday signed an economic agreement with the European Free Trade Association (EFTA) aimed at increasing trade and investment, concluding almost eight years of negotiations.

Under the deal, tariffs and non-tariff barriers would be eliminated for thousands of products traded between Indonesia and the EFTA countries - Switzerland, Liechtenstein, Norway and Iceland, according to government statements.

Among those products, Indonesian palm oil would get full market access in Iceland and Norway, with an exception of palm products for animal feed other than for fish, according to Jakarta’s statement.

Switzerland would also grant easier access for palm oil, but under certain quotas, its embassy in Jakarta said in a statement.

Enggartiasto Lukita, Indonesian Trade Minister, said discussion on market access for palm oil was the sticking point that dragged negotiations on for years. The first round of talks were held in early 2011.

“They held back our palm,” Lukita told reporters after the signing of the agreement.

“I said, we’ve gone a long way. You will benefit from this and I too. So if you don’t open up for our palm, let’s just forget about this,” adding that he had threatened to leave Norwegian salmon out of the deal.

Swiss Federal Councillor Johann N. Schneider-Ammann said the agreement was based on sustainable palm oil production.

“As far as palm oil is concerned, believe me, we had intensive discussions in Switzerland as well and we found a solution with our partners here in Indonesia, a solution to balance the interests and to stay at the same time very respectful as far as the palm oil concern,” he said at a news conference.

The world’s top palm oil producer and exporter Indonesia has often tried to reassure buyers that its palm oil is produced sustainably.

Lukita on Sunday repeated the government’s argument that palm oil production requires less land than other vegetable oils, making it unfair to blame deforestation on palm plantations.

Greenpeace said more than 74 million hectares of Indonesian rainforest - representing an area twice the size of Germany - have been logged, burned or degraded in the last half century, which the group blamed on palm oil and pulp and paper industries.

Other main Indonesian export products such as fish, coffee and textiles would also get preferential treatment under the deal, in exchange for greater access for the main products of the EFTA countries, such as gold, medicines and dairy products.

In 2017, Indonesia-EFTA trade was worth $2.4 billion, with Indonesia having a trade surplus of $212 million. EFTA countries put $621 million of foreign direct investment into Indonesia in 2017, according to Indonesian records. (Reporting by Tabita Diela and Gayatri Suroyo; Editing by Elaine Hardcastle)

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