Switzerland and China have signed the modernised free trade agreement (FTA) in Beijing. Swissmem Chairman Martin Hirzel attended the signing ceremony. For the Swiss tech industry, the modernisation marks a major step forward. While the existing agreement, which has been in force since 2014, has provided important tariff advantages, substantial barriers have remained, particularly in the case of high-technology products. Their removal will improve access to a key market and eliminate a disadvantage vis-Ă -vis competitors that benefit from more advanced free trade agreements, such as Singapore and South Korea.
“For the Swiss tech industry, China is not only a market, but also a litmus test for its own competitiveness. Those wishing to succeed in China must be able to match Chinese firms in terms of speed, scale and technology. We will not outperform China by adopting Chinese recipes, but rather by combining our own strengths in quality and innovation with greater speed, customer proximity and service excellence,” says Swissmem Chairman Martin Hirzel.
Substantial tariff elimination for machinery and precision products
Upon the modernised agreement coming into force, 99.8% of Swiss exports will, over time, be able to enter China tariff-free, compared with 53.6% today. Machinery and precision instruments will benefit in particular. For the Swiss tech industry, the remaining tariff barriers carry considerable weight: the 5% of tariff lines that are currently not exempt from duties account for 14% of the sector’s exports to China. Beyond tariff elimination, the modernised agreement introduces updated rules of origin, trade facilitation measures and improved conditions for investment. Together, these provisions enhance the framework for Swiss companies seeking to successfully hold their own in the demanding Chinese market. Export-oriented SMEs, in particular, stand to benefit.
Strong commitment to labour and environmental standards
The agreement also strengthens sustainability commitments in a binding manner: for the first time in an FTA, China undertakes to respect fundamental labour rights, including the prohibition of forced labour and child labour. The environmental provisions are the most ambitious China has ever agreed to in a free trade agreement and include commitments related to the implementation of the Paris Agreement. In addition, the agreement contains provisions on responsible business conduct, drawing on the UN Guiding Principles on Business and Human Rights. Expert panels will be able to review disputes concerning environmental and labour matters and issue recommendations.
Seizing opportunities through swift ratification
China is a major engine of economic growth and an important market for Swiss products and services. Companies wishing to participate in this economic and technological dynamism require reliable access to the market. The modernised free trade agreement strengthens this access. At the same time, it is important to make prudent use of these opportunities. Competition is intense, and the playing field is not always level. The protection of know-how and technology therefore remains important. As part of a broad network of free trade agreements, the agreement opens up additional market opportunities and helps reduce one-sided dependencies. With the strengthening of labour and environmental standards as well, all parties should welcome the outcome of the negotiations and join Swissmem in supporting the swift ratification of the agreement.
For further information please contact:
Noé Blancpain, Member of Management and Head of Communications & Public Affairs
Tel. +41 44 384 48 65 / mobile +41 78 748 61 63
E-mail n.blancpainnoSpam@swissmem.ch
Philippe Cordonier, Member of Management and Head of Swissmem Romandie
Tel. +41 44 384 42 30 / mobile +41 79 644 46 77
E-mail p.cordoniernoSpam@swissmem.ch