On September 23rd, Wang Wentao, Minister of Commerce, and Guy Parmelin, Swiss Federal Councillor and Head of the Federal Department of Economic Affairs, Education and Research, jointly announced via video conference the official launch of the China-Switzerland Free Trade Agreement (FTA) upgrade negotiations. Both parties agreed to work together diligently to expedite consultations and reach a high-level upgrade agreement on the basis of mutual benefit and win-win cooperation as soon as possible.
According to a synthesis of information from the Ministry of Commerce and the Ministry of Foreign Affairs, the China-Switzerland FTA was signed in July 2013 and represents the first bilateral free trade agreement signed by China with a European mainland country. The agreement officially came into effect on July 1, 2014. In January 2017, both parties announced the initiation of a joint feasibility study for the upgrade of the FTA. In January 2024, both parties announced the completion of the joint feasibility study and unanimously agreed to formally initiate the upgrade negotiations as soon as possible.
Advertisement
Wang Wentao stated that over the ten years since the China-Switzerland FTA came into effect, it has played a positive role in promoting bilateral trade growth, with tangible benefits for businesses in both countries. Upgrading the China-Switzerland FTA will be advantageous for further expanding bilateral trade and promoting two-way investment, driving the quality and upgrade of economic and trade cooperation between the two countries. Especially against the backdrop of economic globalization facing headwinds, it will send a positive signal to the outside world that both countries support free trade and open cooperation.
Yan Shiqiang, a researcher at the European Institute of the Research Institute of the Ministry of Commerce, told First Financial Daily that the China-Switzerland FTA is a high-quality, rich in content, and mutually beneficial agreement. Over the ten years since its implementation, it has played a positive role in promoting bilateral trade growth, with tangible benefits for businesses in both countries. Currently, the tariff reduction arrangements between China and Switzerland have been basically implemented, with about 90% of the product tariff lines between the two countries achieving zero tariffs, creating favorable conditions for businesses in both countries to expand mutual exports. "The official launch of the China-Switzerland FTA upgrade negotiations will further negotiate a higher level of upgrade agreement based on the existing FTA, which is of great significance to both countries," said Yan Shiqiang.
How have the results of the China-Switzerland FTA been over the past ten years?
According to data from the General Administration of Customs, in 2023, the total import and export trade volume between China and Switzerland was 416.93 billion yuan, a year-on-year increase of 9%. Among them, the main exports from China to Switzerland were mechanical and electrical products and chemical industry products. The main imports from Switzerland were "jewelry, precious metals and products; imitation jewelry; coins" and "optical, medical and other instruments; watches; musical instruments". From January to August this year, the bilateral trade volume between China and Switzerland reached 326 billion yuan, a year-on-year increase of 15.2%.
According to the "China-Switzerland Free Trade Agreement - 2023 Academic Evaluation Report (10th Anniversary Edition)" co-authored by the University of International Business and Economics and other institutions, the core of the China-Switzerland FTA is the reduction of product tariffs. During the evaluation period (2018-2022), the overall utilization rate of the China-Switzerland FTA increased by 13%, from 58% to 71%, and Swiss businesses saved a total of $220 million in 2022, far higher than the $70 million in 2018.
The report found that in Swiss exports to China, products with a total value of about $4 billion have already enjoyed zero tariffs, accounting for 25.1% of the total exports to China. The utilization rate of the agreement in many key industries has significantly increased. For example, the utilization rate of the China-Switzerland FTA in the Swiss watchmaking industry increased from 91% in 2018 to 93% in 2022, the machinery industry from 39% to 59%, the electrical equipment industry from 31% to 45%, and the jewelry industry quickly jumped to 67%.
In addition to trade in goods, the China-Switzerland FTA also covers trade in services, investment, and technical cooperation in various fields. The report stated that since the FTA came into effect, the scale and depth of China-Switzerland trade in services have been greatly enhanced, especially in the fields of financial services, intellectual property use fees, and information technology services.
In this context, Li Siqi, an associate professor at the China World Trade Organization (WTO) Research Institute of the University of International Business and Economics, told First Financial Daily that there is still a broad space for upgrading the China-Switzerland FTA, whether in trade in goods or investment. She said: "Although 90% of the tariff lines have now achieved zero tariffs, there is still a possibility to further expand the list of zero-tariff products. The trade structure between China and Switzerland is highly complementary, so expanding the scope of zero-tariff exemptions will be very beneficial. In terms of investment, the current China-Switzerland FTA adopts a positive list model, while China has introduced a negative list management model for foreign investment access. We can also incorporate this high-level open experience into the China-Switzerland FTA."Yan Shiqiang believes that the current initiation of the upgrade of the China-Switzerland Free Trade Agreement (FTA) demonstrates China's unwavering determination to expand its opening up to the outside world. "The launch of the upgrade negotiations of the China-Switzerland FTA is a concrete measure to implement the important arrangements of the third plenary session of the 20th Central Committee of the Communist Party. Through the upgrade of the FTA, both China and Switzerland will further expand mutual openness, creating more favorable and convenient conditions for enterprises of both countries to carry out trade and investment cooperation, fully leveraging the comparative advantages of both countries, and promoting the deep integration and development of industrial and supply chains," said Yan Shiqiang.
Li Siqi also believes that against the backdrop of current global economic challenges and the rise of protectionism, the upgrade negotiations of the China-Switzerland FTA between the two countries have sent a positive signal of actively promoting economic and trade cooperation and supporting free trade. This reflects the determination of both countries to build an open, transparent, and standardized international economic and trade cooperation system, which has multiple positive significances.
There is still a broad space for upgrading. Parmelin stated that China and Switzerland efficiently reached a win-win FTA in 2013, creating abundant benefits for both parties. In the current context of rising global trade protectionism, the initiation of FTA upgrade negotiations between China and Switzerland is of great significance, showing that both countries are always committed to building an open and standardized international economic and trade cooperation environment, and sending a positive signal to the outside world about deepening cooperation. He believes that through the joint efforts of both parties, the upgrade negotiations will definitely be successful.
At a press conference in July this year, Parmelin told reporters from First Financial Daily that there are many areas worth discussing and promoting in the upgrade negotiations of the China-Switzerland FTA, such as market access and e-commerce. "In these areas, we and the Chinese government have reached many consensuses, and we hope to further negotiate on this," he said.
"In the past decade, we have seen many tariff barriers and access obstacles gradually eliminated or improved, but there are still some barriers. I think we should further strive to reduce and eliminate these barriers, such as those related to the watchmaking and machinery industries," Parmelin explained. "Ten years ago, we rarely talked about e-commerce, but now its development is very rapid, especially under the framework of the WTO. We hope to reduce some barriers in the field of e-commerce. In this regard, we can facilitate business operations through negotiations."
Yan Shiqiang stated that through the FTA upgrade negotiations, China and Switzerland will further enhance the level of market openness for goods trade between the two countries, promote more products to be included in the zero-tariff list, and expand market access for service trade and investment. At the same time, both parties will also jointly formulate new high-standard economic and trade rules in areas such as the digital economy, green economy, and competition policy.
Li Siqi told reporters from First Financial Daily that from market access for service trade and investment to the current focus on the digital and green economies, all could be covered in the upgrade negotiations.
She believes: "After the China-Switzerland FTA, China has signed several high-level economic and trade agreements. For example, in the Regional Comprehensive Economic Partnership (RCEP), chapters on service trade and investment reflect content that aligns with international high-standard economic and trade rules. As a highly open economy, Switzerland has rich experience in signing FTAs, and the China-Switzerland FTA has a large space for openness in areas beyond goods trade, such as service trade, investment, digital economy, and green economy. This upgrade negotiation is an opportunity to incorporate the openness experience of both parties into the FTA."
Regarding the e-commerce mentioned by Parmelin, Li Siqi said that China has an open attitude and experience in the field of e-commerce. "We already have some experience in the field of e-commerce (rule-making). For example, the RCEP includes e-commerce content, and at the 13th Ministerial Conference of the WTO, China also agreed to continue the practice of temporarily exempting electronic transmissions from tariffs until the next Ministerial Conference. In addition, China is also an active participant in the joint statement initiative on e-commerce issued by the WTO."Please provide the text you would like me to translate into English.