Switzerland and China have concluded negotiations on an upgraded trade agreement that would remove tariffs on almost all Swiss exports to China.
Guy Parmelin, Switzerland’s economy minister, and Wang Wentao, his Chinese counterpart, announced the deal on Thursday. Under the revised agreement, 99.8% of current Swiss exports to China would eventually be exempt from customs duties, the Swiss government said.
Bern estimates that Swiss exporters could save around CHF 244m a year. Roughly three-quarters of the new tariff exemptions would take effect as soon as the agreement entered into force. Mr Parmelin and Mr Wang signed a memorandum of understanding in Bern on Thursday.
Ten-year phase-in for cheese
The agreement is expected to be formally signed this year. Cutting the remaining tariffs on Swiss exports had been the main objective of negotiations, which began two years ago.
Switzerland was the first European country to conclude a free-trade agreement with China. The deal, in force since 2014, has often been portrayed as a success and helped deepen economic ties with what is now Switzerland’s third-largest trading partner.
But the existing agreement left substantial gaps. At present only 53.8% of Swiss goods exports to China enter duty-free. Switzerland, by contrast, no longer levies tariffs on imports of industrial goods from China.
Swiss watches have benefited from few tariff exemptions, while pharmaceutical products have received only partial relief. Cheese and coffee have also faced barriers.
The revised agreement would extend concessions to these products, although some reductions, including those affecting cheese, would be phased in over as long as ten years.
Labour and environmental provisions
Switzerland also sought stronger provisions on forced labour and environmental protection. The government said the two countries had agreed to implement conventions of the International Labour Organisation and to uphold fundamental labour rights. According to the economics ministry, this is the first time China has accepted such provisions in one of its free-trade agreements.
The environmental chapter is also unusually extensive. Switzerland described it as one of the most ambitious it or China has included in a trade agreement. The two countries have made commitments covering, among other things, the transition to cleaner energy and the circular economy.
Parliament gets the final say
The agreement must still be approved by Parliament. Earlier discussions in parliamentary committees were broadly favourable, though labour rights and environmental safeguards had proved contentious.
The breakthrough also comes as international trade is being reshaped by American tariffs and growing geopolitical uncertainty. China, despite traditionally protecting large parts of its domestic market, has recently sought to present itself as a defender of multilateral trade, including at the World Economic Forum in Davos earlier this year.
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