Meine eben erschienene rechtswissenschaftliche Fallstudie zu den Zollpräferenzen für nachhaltig produziertes Palmöl im Freihandelsabkommen mit Indonesien deckt Aspekte auf, die bisher nicht bekannt waren und im Abstimmungskampf von den Behörden kaum thematisiert wurden.
Wie die Studie zeigt, sind die potentiellen Zollersparnisse über den sogenannten Nachhaltigkeitsnachweis für Palmöl äusserst gering (zwischen 1-10 CHF/100kg). Zudem finden die für nachhaltig produziertes Palmöl gewährten Zollreduktionen keine Anwendung auf Palmöl, welches zu Futtermittelzwecken importiert wird. Basierend auf der Handelsstatistik der letzten Jahre entfallen darauf über 90% der Palmöl-Importe aus Indonesien, die somit vom Nachhaltigkeitsnachweis ausgenommen sind. Der Präferenzmechanismus hat demnach den Charakter eines Denkanstosses (englisch «nudge») und schützt damit primär die bereits bestehende Nachfrage nach nachhaltig produziertem Palmöl in der Lebensmittelindustrie.
Verletzung der Abstimmungsfreiheit?
Weil die behördliche Informationstätigkeit zu Palmöl im Freihandelsabkommen mit Indonesien den Abstimmungskampf dominiert hat und gleichzeitig auf eine Klärung der spezifischen Fakten z.B. zum Umfang der gewährten Präferenzen verzichtet hat, stellt die Studie Mängel in Bezug auf die Verhältnismässigkeit und die Sachlichkeit der Behördeninformation fest. Vor diesem Hintergrund liegt der Schluss nahe, dass eine Verletzung von Art. 34 Abs. 2 BV (Abstimmungsfreiheit) vorliegt.
Bei den Details des Präferenzmechanismus, die in den Behördeninformationen zu kurz kamen, handelt es sich um sog. «unechte Noven» (das heisst um eine Sachlage, wie sie im Zeitpunkt der Abstimmung zwar gegeben, für die Stimmberechtigten aber nicht bekannt war). Eine Stimmrechtsbeschwerde gegen das Referendum wäre demnach zulässig. Entscheidend ist, ob die Stimmberechtigten ihre Meinung in Kenntnis der richtigen Sachlage haben bilden können. Die zuvir unbekannte Tatsache, dass voraussichtlich über 90% der Palmöl-Importe aus Indonesien vom Nachhaltigkeitsnachweis ausgenommen sind, vermag Zweifel aufkommen lassen in Bezug auf diesen umfassenden Meinungsbildungsprozess. Gemäss VOX-Analyse waren für rund 12% der Ja-Stimmenden Überlegungen zur Umwelt ausschlaggebend. Bei dem relativ knappen Abstimmungsergebnis (51.65% Ja-Stimmen) ist deshalb denkbar, dass die festgestellten Details der Palmöl-Präferenzen einen Einfluss auf das Abstimmungsergebnis hätten haben können.
Klärungsbedarf mit Blick auf die Zukunft
Derselbe Präferenzmechanismus soll auch in das Freihandelsabkommen mit Malaysia aufgenommen werden. Um den umfassenden und unbehinderten Meinungsbildungsprozess in Zukunft besser zu gewährleisten, besteht Klärungsbedarf, wie weit vereinfachende behördliche Information mit den Grundsätzen der Sachlichkeit, Transparenz und Verhältnismässigkeit vereinbar ist.
Mehr dazu im Open Access publizierten Artikel auf sui generis.
This Sunday, 7 March 2021, Switzerland holds a popular referendum on the ratification of the Comprehensive Economic Partnership Agreement (CEPA) between EFTA states (Switzerland, Liechtenstein, Norway and Iceland) and Indonesia. It is the first time in the history of Switzerland that a popular vote will decide the fate of a non-European Free Trade Agreement (FTA). This is per se remarkable, given that Swiss citizens are asked to express their opinion in a popular vote on more or less anything up to four times a year, and that Switzerland is party to 32 FTAs worldwide already.
Ratification of FTAs and (Semi-)Direct Democracy
FTAs have not been subject to a popular vote since the ratification of the FTA between Switzerland and the EU in 1972 (mandatory referendum): until 2003, the Swiss constitution did not submit FTAs to the optional referendum, hence, their ratification was outside the scope of direct democratic participation. Following a partial revision of the Swiss constitution in the late 1990s, the scope of optional referenda was extended and meant to encompass FTAs as a general rule. However, shortly after introducing the new scope of optional referenda, the Federal Council adopted – with the support of the National Assembly – the so-called “general practice of standard agreements”: FTAs were not subject to the optional referendum after all as long as the agreement was more or less in line with the scope of previously ratified FTAs.
The practice remained undisputed until the FTA between Switzerland and China was not subjected to an optional referendum in 2014 despite considerable resistance in civil society and the fact that the agreement shared minimal similarities with previously ratified agreements (for more on this, see here). Subsequent political pressure finally led to the abandoning of the general practice of standard agreements in 2019; CEPA is the first FTA subject to the optional referendum, for which the required 50’000 signatures were collected. It is also only the second FTA to be ratified since the formal abandoning of the general practice of standard agreements.
Unholy Alliance
Typically, FTAs are considerably less disputed in Switzerland than Bilateral Market Integration Agreements with the EU. In part, this explains why CEPA is the first ever FTA which is subject to a public vote following the successful collection of the required number of signatures, while the same has happened in the ratification process of Bilateral Agreements with the EU several times over the past 20 years. The signatures were collected by various interest groups ranging from the conservative to the left wing of the political spectrum in Switzerland: They found common political ground in the protection of Swiss farmers against foreign competition, and in general concerns regarding implications of trade liberalisation for the protection of the environment, of the climate, and of core labour standards. As was recently confirmed in a popular vote on corporate responsibility, a razor thin majority of Swiss voters tends to favor protectionist and sustainable trade policy over presumably “unchecked” trade liberalisation.
New Regulatory Mechanism: Accelerating the Transition from Conventional to Sustainable Production Through Preferential Trade Liberalisation
In consequence, public discourse centers on one specific aspect of CEPA: The limitation of preferential treatment to RSPO-certified palm oil. EFTA successfully negotiated a trade agreement encompassing a regulatory distinction between conventional and sustainable production. While preferential treatment of sustainable production only applies to palm oil in CEPA, the regulatory mechanism deserves a closer look, since it could basically also be extended to other products and commodities in the future:
CEPA Chapter 8 (Trade and Sustainable Development), Article 8.10 (Sustainable Management of the Vegetable Oils Sector and Associated Trade), establishes that “all vegetable oils and their derivatives traded between the parties are traded in accordance with” (Article 8.10(2):e) “laws, policies and practices aiming at protecting primary forests, peatlands, and related ecosystems, halting deforestation, peat drainage and fire clearing in land preparation, reducing air and water pollution, and respecting rights of local and indigenous communities and workers” (Article 8.10(2):a). The provision is, however, excluded from the scope of CEPA dispute settlement, along with the rest of Chapter 8.
Instead of burdening Indonesia with the enforcement of CEPA Article 8.10, importing CEPA parties (i.e. the EFTA-states) establish domestic control-systems to ensure that only palm oil and its derivatives produced in line with Article 8.10 benefits from CEPA preferential treatment. In Switzerland, this means that importers of Indonesian palm oil and palm oil derivatives have to prove RSPO-certification, if they want to benefit from CEPA tariff-reductions. The domestic processes of import control and governance in Switzerland are established in a separate ordinance, de facto moving responsibility for enforcement to Swiss authorities.
The same regulatory mechanism could be extended to other goods and products in future trade agreements. Ideally, tying preferential treatment with a particular processing and production standard accelerates the transition from conventional to more sustainable trade: By rewarding “good” processing and production methods, international trade agreements are able to create economic and regulatory incentives for producers to meet sustainability goals. Such a re-orientation of FTAs would also fit nicely with more recent shifts in public opinion in Switzerland and elsewhere: Opening markets only for “good” products and commodities is both limiting foreign competition and taking into account more general concerns regarding implications of trade liberalisation for the environment, the climate, and labour.
Remaining Uncertainties
There are good reasons why other countries have to date been reluctant to introduce a comparable regulatory mechanism in their FTAs: First, it establishes heavy dependence on a particular (private) standard or “label” and on certification processes which are oftentimes not entirely transparent and fair. Unintended consequences cannot be excluded. Second, it is both patronising domestic consumers and foreign producers and therewith also revives outdated and failed policies of the Post-Washington Consensus. Hence, it is not entirely certain that preferential treatment limited to certified products and commodities will necessarily benefit the environment, the people and the climate the way it is intended to.
In the case of Indonesian palm oil, circumstances are quite unique: According to the Swiss State Secretariat for Economic Affairs, almost all of palm oil and palm oil derivatives imported to Switzerland 1) are already certified (due to consumer preferences), and 2) originate in Malaysia. Preferential treatment of RSPO-certified Indonesian palm oil is therefore unlikely to change the overall share of certified palm oil imported to Switzerland, but may perhaps lead to a shift from Malaysian to Indonesian origin. This may be the reason why Indonesia was prepared to agree to the CEPA regulatory mechanism for certified palm oil in the first place – Indonesia gains a competitive advantage vis-à-vis their main Malaysian competitor.
Finally, since only a small share of Indonesian palm oil is currently RSPO-certified, it is possible that – contrary to what is intended – new palm oil plantations will be established in Indonesia as a consequence of the CEPA regulatory mechanism: it is easier to achieve certification for a newly established plantation, than for an existing plantation for which the required documentation for the RSPO-standard is unavailable or difficult to attain.
Implications of the Popular Vote
CEPA is the first FTA in the history of Switzerland which is subject to a popular vote following the successful collection of 50’000 signatures. The focus of political campaigning on certified palm oil alone therefore misses the opportunity to address the more general – and more critical – underlying issue of Swiss voters with free trade: unless Switzerland engages in a public opinion-forming process on the benefits and desired orientation of international trade liberalisation, Swiss negotiators risk negotiating FTAs which are no longer able to secure a majority in a popular vote as they are misaligned with public opinion. Such a popular rejection of an FTA would be harmful for the reputation of Switzerland and leave its impact on future trade negotiations.
In the case of CEPA, polls suggest that the agreement will be accepted. The main argument which appears to convince a majority of Swiss voters is the preferential treatment of certified palm oil. Given that FTAs will continue to be subject to the optional referendum and remain disputed, it is to be expected that henceforth every EFTA or Swiss FTA will need to encompass at least one similar provision in order to meet the threshold of securing the support of a majority of Swiss voters. Implications for on-going and future trade negotiations involving Switzerland are therefore – alas mostly unintended – in any case considerable.
Finally, independent from the particularities of Swiss democracy, others are well-advised to observe how the new CEPA preferences for certified palm oil translate into practice. Potentially, EFTA is about to set a precedent for the future of extra-territorial consideration of sustainable processing and production standards in international trade relations.
The Swiss government has not yet signed the draft framework treaty complementing existing agreements with the EU. Instead it has initiated public consultations . The fate of the draft framework treaty in Switzerland is therefore rather uncertain: with heavy opposition from both ends of the political spectrum and a lack of commitment from the government, those supporting the treaty are currently in the minority.
Much like the British in the case of the Brexit withdrawal agreement, the Swiss are concerned over the role of the ECJ in the supervision of the bilateral relations. However, given sectoral integration of third states in the common market, the EU has a legitimate regulatory interest in securing uniform interpretation of applicable EU law. Needless to say that given the history of bilateral relations between Switzerland and the EU, some sort of dispute settlement mechanism is also in the interest of third states. Thus, those in support of the draft framework agreement focus on the fact that the suggested dispute resolution is likely to increase legal certainty and is therewith an improvement of the current situation.
Linked with this is the fact that sectoral integration is bound to collide with sectors not currently integrated in the bilateral agreements, which are most prominently services, state aid and competition. All of these are covered by EU law but remain outside of the scope of the treaties between Switzerland and the EU. Not having to play by EU-rules gives Swiss industries a sectoral competitive advantage in the common market and enables Switzerland to protect its internal market to a certain extent against EU competition. For example, trade in services is closely linked with free movement of persons. Regulating one but not the other may therefore likely result in regulatory incoherence. State aid and competition, on the other hand, are linked with all of the sectoral integration agreements: playing by the same rules can be considered a necessary prerequisite for the abolition of all barriers to trade between Switzerland and the EU in any given sector. The EU therefore insists on at least partial regulatory alignment in services, state aid and competition as a pre-condition to negotiate new market access agreements. Partial regulatory alignment, however, is considered a red line in Switzerland, given that it would bring Switzerland ever closer to being a de factomember of the EEA.
Squaring the Circle
The draft framework treaty, while resolving the issue of dispute resolution, fails to address the underlying regulatory discrepancies following the partial market integration of third states. As long as the EU is not prepared to further pursue the idea of a multi-speed Europe, partial market integration of third states is likely to continue to come at the price of constant renegotiation, power politics and a considerable level of legal uncertainty. Abandoning the idea of sectoral market integration of third states, on the other hand, will come at an economic price – for both sides.
In order to escape their dedicated role as suppliers of raw materials for the global market, developing countries need to engage in value-add production of goods. All value-add production requires some amount of services in order to manage the various steps in the production of goods: Think about managing teams in two different factories working on two different processes in the production, the transportation of raw materials to the production site and therefrom to the nearest airport or port. Although just one aspect of many, better quality and cheaper access to services may therefore increase opportunities for developing countries and LDCs to engage in value-add production.
Theory suggests that liberalisation of services markets can lead to better quality of and access to services at a cheaper prize. Nevertheless, services industries in developing countries and LDCs tend to be well-protected against competition from international suppliers. Regional or bilateral liberalisation between developing countries and LDCs, however, may reduce competition between service suppliers to a beneficial level and therewith benefit the domestic economy overall. This is particularly true if liberalisation focuses on business and professional services, construction, educational services and on mode 4 (temporary movement of persons). In addition, transportation, communication, and financial services, along with mode 3 (commercial presence) are considered key sectors for economic growth in general and are therewith also suitable for regional or bilateral liberalisation.
In my book “Developing Countries and Preferential Services Trade”, I analyse 289 preferential trade agreements in services with regard to their compatibility with the aforementioned theory. It soon becomes clear that South-South services trade liberalisation remains a vastly untapped source of economic opportunities. Furthermore, it is shown that developing countries and LDCs that have started to liberalise services trade on a regional or bilateral level do not necessarily focus on the key sectors for economic growth and South-South liberalisation.
One of the reasons may be that WTO law (GATS Article V) generally requires WTO members to liberalise “substantially all the trade in all of the sectors” in their preferential trade agreements in order to be exempted from the Most-Favoured Nation rule. However, as I argue in the book, the “substantially all the trade in all of the sectors”-requirement may not apply to South-South preferential trade agreements because of flexibilities provided in GATS Article V:3 lit. a.
The fact that there are a handful of trade agreements between developing countries in line with economic theory and with flexibilities granted by GATS Article V:3 lit. a proves that this book is not just another academic thought experiment: after all, new insights into economic integration may be critical in today’s world of global trade policy.
Consultancy work is a double-edged sword for a researcher and academic: On the one hand, it provides for the rare moments when research becomes directly relevant in practice and research results may indeed change aspects of our world. On the other hand, clients may have a clear idea of the expected outcome of their commission, which constitutes a challenge for the independence of the research and for the satisfaction of the customer.
I embrace and quite like this challenge of navigating between expectations, obligations and research freedom in the interest of happy customers, solid findings and a high level of relevance of the commissioned findings.
In addition, my studies and research are to a large extent funded by the public. I therefore consider it also part of my duties to engage in consultancy work in order to reach out beyond the purely academic world and to contribute my expertise to solving or moving ahead with questions relevant to a larger public.
I have little time at hand and am lucky to be regularly busy with consultancy work in any case. The decision to formally set up this consultancy is based on my curiosity – I am happy to extend my network and to consider new or different clients and research requests.
Sieber | Consulting & Legal Research 