Norway and Indonesia Talk about Trade & Protectionism
On Wednesday (18/04) Indonesian Industry Minister Airlangga Hartarto met Norwegian Minister of Fisheries Per Sandberg to discuss trade. In the meeting Hartarto requested easier access for several Indonesian products on the Norwegian market. For example, lower tariffs for textiles and footwear. Meanwhile, Indonesia also wants to keep access to Norway for products that are derived from palm oil. Recently, Norway's parliament voted to ban the public procurement and use of palm oil-based biofuel.
In June 2017, a majority in Norwegian parliament voted to ban domestic use of palm oil-based biodiesel in a bid to protect the climate and rain-forests. The parliament urged the Norwegian government to seek environmentally friendly alternatives to fossil fuels. This desire emerged after a report, released by Rainforest Foundation Norway, showed that palm oil-based biofuel is actually worse for the global climate than the use of fossil fuels, perhaps even several times worse. Although the government of Norway is yet to agree on parliament's request to ban the public procurement and use of palm oil-based biofuel, it had stated one year before that the government's public procurement policy would become fully deforestation-free to ensure that the nation does not contribute to global deforestation.
Indonesian Trade Minister Enggartiasto Lukita has already threatened Norway with retaliation if the Norwegian government goes ahead with parliament's vote to ban the public procurement and use of palm oil-based biofuel. Retaliation would involve the full stop of Norwegian salmon imports into Indonesia. Currently, about 60 percent of total salmon imports into Indonesia originate from Norway. Lukita also met Sandberg on Wednesday. Based on local media Sandberg stated that the Norwegian government emphasizes the importance of fair trade between both countries. He added that the urge to block the use of palm oil actually comes from opposition in parliament. The government still objects to opposition's wishes in this matter and therefore there are no obstacles for palm oil-based biodiesel shipments from Indonesia into Norway.
Regarding exports of Indonesian clothes and footwear into Norway, Hartarto requested lower tariffs. Currently, import tariffs on these items range between 10-20 percent and therefore make Indonesian products less competitive. In turn, Norway requests zero tariffs for its fish products (cod and salmon).
Based on data from the Trade Ministry, Indonesia exported USD $64.5 million worth of goods to Norway in 2017. Meanwhile, Indonesia imported USD $237.7 million worth of goods from Norway that year, implying that Norway has the upper hand (trade surplus) in trade between both countries.
Norway is member of the European Free Trade Association (EFTA). The EFTA, which was established in 1960, is a trade-bloc alternative for those European countries that were unwilling or unable to join the European Economic Community (now the European Union, or EU). Besides Norway, it consists of non-EU countries Iceland, Switzerland, and Liechtenstein. If Indonesia could manage to arrange a free trade deal with this block it should benefit Indonesia's textile and footwear industries. Although the population size of these four EFTA countries is small, their per capita incomes are relatively high. In 2017 Indonesia exported USD $1.3 billion worth of products to EFTA countries, while Indonesia imported USD $1.1 billion from the block.
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