Switzerland is set to upgrade its free trade agreement (FTA) with China as trade tensions rise with the United States and the European Union. The Swiss government wants to expand the existing FTA, which has been active since 2014, in response to new tariffs from Washington. The U.S. has announced tariffs of up to 12.5% on certain Swiss goods, which are higher than rates for many other European countries. At the same time, the European Union has raised duties on Swiss steel, making trade relations even more complex.
Key Details
The Swiss Business Federation, economiesuisse, said that the Swiss economy needs diverse trade relations to lessen reliance on any one market. "The Swiss economy needs broad-based trade relations with all major export markets. Diversification reduces one-sided dependencies," the federation stated. The planned upgrade to the FTA could exempt more Swiss products from tariffs, including watches and pharmaceuticals. If successful, this new agreement could raise the share of Swiss exports that are duty-free from 53.6% to 99.8% within ten years. This change could save Swiss companies about CHF244 million ($295 million) each year.
Background
However, some Swiss officials recognize the risks of deepening ties with China. The recent U.S. tariffs are seen as a warning against closer relations with Beijing. The Tages Anzeiger newspaper reported that the Swiss Federal Council is showing its intent to keep its trading independence. It stated that it will not let outside pressures dictate its trade partners.
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The proposed trade deal could greatly impact sectors like luxury goods and pharmaceuticals, possibly boosting exports to China. If it goes through, the lower tariffs may improve Swiss companies' competitiveness in the Chinese market. Keep an eye out for updates on the negotiations and any reactions from the U.S. regarding Swiss trade policies.
Based on reporting by: swissinfo.ch