Highly visible FTA leads to wave of 2-way trade
In the seven months since the free trade agreement between Switzerland and China came into force, it has greatly helped to accelerate business collaboration between the two countries.
The agreement calls for zero tariffs on 99.7 percent of Chinese exports to Switzerland, and 84.2 percent of Swiss goods sent to China.
“The high public awareness created in Switzerland by the agreement has led to more visibility for business opportunities for Swiss companies in China,” said Alain Graf, director of Swiss Business Hub in China, a government organization charged with the promotion of exports and investments in China.
Increasing numbers of Swiss companies have been turning to China, a trend that is expected to continue as many smaller companies begin to make full use of the new regulations, Graf said.
“That a lot of enterprises have been starting to do so is shown by the ever growing number of requests we receive from Swiss companies about the agreement,” he said.
Switzerland is the second European state and the third member of the Organization of Economic Cooperation and Development to sign a free trade agreement with China. Iceland signed a deal in 2013; New Zealand signed one six years earlier.
When products on which tariffs have been reduced are taken into account, the China-Switzerland agreement covers nearly all Chinese exports to Switzerland and 96.5 percent of goods flowing the other way.
The agreement also covers such matters as collaboration on tackling environmental issues, labor and employment issues and intellectual property protection.
Erik Jandrasits, trade affairs manager of Scienceindustries, a business association for the Swiss chemical, pharmaceutical and biotech industries, said the association’s member companies consider the agreement an important step in liberalizing trade and improving intellectual property protection.
Sonja Wollkopf Walt, CEO of GreaterZurich Area AG, said the free trade agreement also goes far beyond dismantling tariffs by fostering collaboration in fields including science, technology, research, education and culture.
Indicators from last year show the first positive effects, Walt said. The value of Swiss machinery exported to China rose 9.1 percent in the first 10 months, to 2.3 billion Swiss francs ($2.6 billion) — strong growth compared with other sectors.
Overall exports from Swiss companies to China rose 11.2 percent to 7.5 billion Swiss francs in the same period, and imports from China to Switzerland rose 7.7 percent to 10 billion Swiss francs, official figures show.
Despite the great opportunities the free trade agreement presents for both countries, challenges still exist.
Walt said one possible problem is that Switzerland’s increased exports of professional mechanicals, watches, medicines and chemical products to China will put pressure on those industries in China — and vice versa for labor-intensive products from China.
“However, the transitional agreements of the China- Switzerland free trade agreement on sensitive areas will provide space for Chinese and Swiss companies to adapt to market competition,” she said.
Xu Jinghu, China’s ambassador to Switzerland, said earlier that the agreement started to have an impact on bilateral trade relations even before it came into effect.
The agreement will not only help improve ChinaSwitzerland relations but will establish a model of collaboration that could encourage better relations with other European countries, Xu said.
Ties between China and Switzerland — political, economic and cultural — are now better than ever, and both sides are searching for new areas of cooperation, particularly in science and finance, she said.
More than 30 Swiss secondary schools have started teaching Chinese. Last year, more than 800,000 Chinese tourists visited Switzerland, while about 80,000 Swiss visited China, Xu said.
Walt, the CEO in Zurich, said the China-Switzerland free trade agreement is highly significant for her country because of the complementary nature of their economies.
The agreement offers many advantages for Swiss and Chinese multinationals, as well as small and medium-sized enterprises, she said.