As China and Switzerland celebrate the 10th anniversary of their free trade agreement (FTA), officials from both nations praised their economic collaboration and announced plans to begin talks on upgrading the deal to further enhance bilateral trade. The announcement was made during Swiss Federal Councilor Guy Parmelin's five-day visit to China from July 1 to 5, and followed an announcement by Chinese Premier Li Qiang and President of the Swiss Confederation Viola Amherd in January to "support the early launch of formal FTA upgrade negotiations."

The announcement was marked on July 1 by the signing of a memorandum of understanding (MoU) to officially recognize these intentions by Parmelin, who also heads the Federal Department of Economic Affairs, Education, and Research, and China's Commerce Minister Wang Wentao.

According to the Chinese Commerce Ministry, Wang and Parmelin also held talks that day, where they discussed development of Sino-Swiss economic and trade relations.

An important partner

According to the Swiss Embassy in China, the continuation of good cooperation in the areas of business and science was an important goal of Parmelin's visit, alongside "further developing the bilateral free trade agreement that entered into force 10 years ago."

Parmelin acknowledged China as one of Switzerland's most important trading partners and praised the positive impact of the Swiss-Sino FTA. He expressed the Swiss business community's anticipation for the agreement's upgrade.

As an advocate of an open economy, Parmelin stated that Switzerland has consistently opposed protectionism and trade restrictions, and emphasized Switzerland's willingness to strengthen cooperation with China in regulatory policies and intellectual property protection to create a fair and non-discriminatory business environment.

Switzerland established diplomatic ties with the People's Republic of China in 1950, shortly after its founding in 1949.

With stable bilateral relations, the two countries signed the FTA in 2013, making Switzerland the first country in Europe and the first among the world's top 20 economies to sign a comprehensive FTA with China.

Under the FTA, which took effect in 2014, 99.7 percent of Chinese exports to Switzerland and 84.2 percent of Swiss exports to China enjoy zero tariffs, significantly boosting bilateral trade.

Switzerland is China's sixth largest trading partner in Europe, while Beijing remains Bern's largest trading partner in Asia. In 2023, total imports and exports between China and Switzerland reached $57.34 billion, a year-on-year increase of 9 percent, Chinese customs data showed. Top Chinese exports to Switzerland include mechanical and electrical products, while top Swiss exports to China include jewelry and precious metals.

Major Chinese investors in Switzerland include tech firms Huawei and Neusoft, while Swiss investors in China include technology company ABB, food giant Nestlé, and healthcare company Roche.

Bilateral cooperation in the financial industry has also become a highlight in recent years. In 2022, the two countries launched the China-Switzerland Stock Connect. In 2023, Credit Suisse received approval from Chinese regulators to establish a wealth management business in China. Additionally, in 2023, Swiss banking group UBS and the Industrial and Commercial Bank of China agreed to explore collaboration opportunities both within China and internationally.

FTA upgrade

According to the Ministry of Commerce, during the meeting and MoU signing in Beijing, the two sides acknowledged the positive impact the FTA had had on their trade relations over the past decade and expressed the intention to begin negotiations to upgrade the agreement as soon as possible.

"China stands ready to work with Switzerland to implement the important economic and trade consensus reached by the leaders of the two countries, launch negotiations to upgrade the China-Switzerland FTA as soon as possible, and promote the improvement and upgrading of economic and trade cooperation between the two countries," Wang said.

Wang also said it is hoped that Switzerland will adhere to free trade, oppose protectionism and unilateralism, and continue to provide a fair and open investment environment for Chinese enterprises.

According to Xinhua News Agency on January 15, China and Switzerland had completed the joint feasibility study on upgrading the China-Switzerland FTA and had agreed to support the early launch of formal FTA upgrade negotiations. The announcement was made during talks between Chinese Premier Li Qiang and President of the Swiss Confederation Viola Amherd as Li opened his 2024 diplomatic calendar with an official visit to the Alpine nation.

According to Xinhua, the two sides will also hold a new round of foreign minister-level strategic dialogues, working group meetings on finance and energy, education policy dialogues, and consultations on UN Security Council affairs before the end of the year.

Both countries agreed to use the 75th anniversary of the establishment of diplomatic ties next year to strengthen people-to-people exchange.

During the press conference held for the MoU signing, Parmelin revealed that market access will be one of the topics in the negotiations to upgrade the FTA. He noted that while many customs barriers and market access difficulties have gradually disappeared or improved, various constraints still complicate commercial relations between the two countries.

Regarding e-commerce, Parmelin said the reduction or elimination of taxes on certain products, which was barely addressed in the 2014 agreement, will be on the agenda for the negotiations.

In April, the Swiss Embassy in China released the Sino-Swiss Free Trade Agreement—2023 Academic Evaluatuion Report (10th Anniversary Edition). This report was a joint effort by the Sino-Swiss Competence Center of the University of International Business and Economics, the University of St. Gallen and Shanghai Customs College.

A major finding of the report is that an increasing number of Swiss exporters are utilizing the FTA. The overall utilization rate has risen by 13 percent, from 58 percent to 71 percent over the last five years. Consequently, Swiss firms saved $220 million in 2022, up from $70 million in 2018.

On July 1, Wang and Parmelin participated in the Eighth China-Switzerland Economic Forum after signing the MoU. Held biennially in Beijing, this forum is the largest economic dialogue between the two countries to date.

The event attracted over 400 guests, including leaders from Swiss and Chinese multinational companies, as well as high-level government representatives from both nations. Discussions covered topics such as sustainability, talent retention, digitalization, life sciences, supply chain management, market access and regulation.

(Print Edition Title: A Step Forward)

Copyedited by G.P. Wilson

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