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CHINA and Switzerland signed in July 2013 the Free Trade Agreement （FTA） in Beijing， so marking the culmination of more than two years of negotiations and legal processes. The first free trade pact between China and a country in continental Europe， the agreement came officially into effect on July 1， 2014. China Today held an exclusive interview with David Braun， head of the Economic， Financial and Commercial Section of the Embassy of Switzerland in China， to discuss the FTA in greater depth.
China Today： What is the significance of the FTA for China and Switzerland？
David Braun： The FTA， which came into effect on July 1， epitomizes the excellent relationship between China and Switzerland that commenced in the 1950s， when Switzerland became one of the first Western countries to recognize the People’s Republic of China， so predating by decades the agreement negotiations. The two countries’ friendly relations have intensified and deepened over the years. It is notable that Switzerland was also one of the first European countries to recognize China’s market economy status in 2007， and that it initiated FTA talks with Beijing.
The FTA negotiations were finalized last year， when newly appointed Chinese Premier Li Keqiang honored Switzerland by making it the first destination of his trip to Europe. This FTA could be said to represent the apex of our bilateral relations. It is important economically and even more so politically， because the FTA not only reduces tariffs， but also greatly enhances the framework of our bilateral relations.
China Today： What progress have the two countries made since the signing last year of the Sino-Swiss FTA？
David Braun： From the institutional angle， since signing the FTA last July， both countries have completed the necessary internal ratification procedures. On April 29， 2014， both countries exchanged notes specifying the coming into effect on July 1 of the China-Switzerland FTA， so successfully concluding the two countries’ internal ratification procedures.
From the economic perspective， our trade last year expanded. Swiss statistics show a total trade volume with China of CHF 20.2 billion， a year-on-year growth of more than 11 percent. Chinese figures on trade volume with Swit- zerland are even more impressive. China is an important market for Switzerland – third largest worldwide and the biggest in Asia.
China Today： What specific benefits will the two nations’ citizens enjoy？ David Braun： There will be substantial tariff reductions. This means that Chinese people will be able to buy Swiss products for less. The same applies to the Swiss， who are already in the habit of buying Chinese commodities. About 99.7 percent of China’s exports to Switzerland and 84.2 percent of Swiss exports to China will be tax exempt. There will also be a 99.99 percent tax-reduction on Swiss products and a 96.5 percent tax reduction on those from China. Both nations’ citizens hence stand to reap considerable benefits.
China Today： What influence does the FTA have as regards promoting China-Europe economic ties？
David Braun： Although not a member of the European Union （EU）， Switzerland， at the center of Europe， is an excellent location for business operations. The FTA between China and Switzerland constitutes China’s first step towards markets on the European continent. Switzerland’s FTA with the EU will give Chinese businesses greater access to them. Switzerland is consequently the perfect choice for Chinese enterprises looking to expand their business to Europe.
China Today： What is the FTA’s role in bilateral investment？
David Braun： That of enhancing security in both sides’ economic activities. We already have an investment agreement， referred to in the FTA， which affords greater security for both Chinese and Swiss companies. Also of importance is the FTA’s substantial chapter on intellectual property – a matter of growing significance for the investment decisions of companies in both Switzerland and China.
China Today： What is the FTA’s role in promoting technical and service trades？
David Braun： Among the FTA’s chapters are those dealing with technical barriers to trade （TBT）， and also sanitary and phytosanitary measures （SPS）. Although technical， these barriers are nonetheless extremely important， as many consist not of tariffs but rather regulations. Our FTA will enable us to streamline cooperation and facilitate trade unhampered by regulations that Switzerland and China respectively impose on imports. Besides the FTA， the two countries have concluded four additional agreements， namely on telecommunications equipment， certification/ accreditation， SPS， and measuring equipment and apparatus. Resolving technical details will enable smoother conduct of the relevant trades. These auxiliary agreements are consequently of great importance to Chinese and Swiss companies.
As to service trades， the agreement provisions are based on the General Agreement on Trade in Services （GATS） of the World Trade Organization （WTO）. The rules of the agreement apply to all measures affecting trade in services taken at central， regional or local government levels， and by non-governmental bodies enacting these roles. China and Switzerland use this multilateral WTO agreement as a basis， but have gone beyond even those stipulated in their bilateral FTA in making commitments on specific issues. China， for example， now has improved access to environmental services， financial services， air transport services， logistic services and short-term contractual services. Switzerland， meanwhile， has greater access to Chinese providers of financial services， private sector training services （Chinese language in particular）， air transport services， and to highly qualified providers of short-term contractual services.
China Today： What is the significance of the FTA for China and Switzerland？
David Braun： The FTA， which came into effect on July 1， epitomizes the excellent relationship between China and Switzerland that commenced in the 1950s， when Switzerland became one of the first Western countries to recognize the People’s Republic of China， so predating by decades the agreement negotiations. The two countries’ friendly relations have intensified and deepened over the years. It is notable that Switzerland was also one of the first European countries to recognize China’s market economy status in 2007， and that it initiated FTA talks with Beijing.
The FTA negotiations were finalized last year， when newly appointed Chinese Premier Li Keqiang honored Switzerland by making it the first destination of his trip to Europe. This FTA could be said to represent the apex of our bilateral relations. It is important economically and even more so politically， because the FTA not only reduces tariffs， but also greatly enhances the framework of our bilateral relations.
China Today： What progress have the two countries made since the signing last year of the Sino-Swiss FTA？
David Braun： From the institutional angle， since signing the FTA last July， both countries have completed the necessary internal ratification procedures. On April 29， 2014， both countries exchanged notes specifying the coming into effect on July 1 of the China-Switzerland FTA， so successfully concluding the two countries’ internal ratification procedures.
From the economic perspective， our trade last year expanded. Swiss statistics show a total trade volume with China of CHF 20.2 billion， a year-on-year growth of more than 11 percent. Chinese figures on trade volume with Swit- zerland are even more impressive. China is an important market for Switzerland – third largest worldwide and the biggest in Asia.
China Today： What specific benefits will the two nations’ citizens enjoy？ David Braun： There will be substantial tariff reductions. This means that Chinese people will be able to buy Swiss products for less. The same applies to the Swiss， who are already in the habit of buying Chinese commodities. About 99.7 percent of China’s exports to Switzerland and 84.2 percent of Swiss exports to China will be tax exempt. There will also be a 99.99 percent tax-reduction on Swiss products and a 96.5 percent tax reduction on those from China. Both nations’ citizens hence stand to reap considerable benefits.
China Today： What influence does the FTA have as regards promoting China-Europe economic ties？
David Braun： Although not a member of the European Union （EU）， Switzerland， at the center of Europe， is an excellent location for business operations. The FTA between China and Switzerland constitutes China’s first step towards markets on the European continent. Switzerland’s FTA with the EU will give Chinese businesses greater access to them. Switzerland is consequently the perfect choice for Chinese enterprises looking to expand their business to Europe.
China Today： What is the FTA’s role in bilateral investment？
David Braun： That of enhancing security in both sides’ economic activities. We already have an investment agreement， referred to in the FTA， which affords greater security for both Chinese and Swiss companies. Also of importance is the FTA’s substantial chapter on intellectual property – a matter of growing significance for the investment decisions of companies in both Switzerland and China.
China Today： What is the FTA’s role in promoting technical and service trades？
David Braun： Among the FTA’s chapters are those dealing with technical barriers to trade （TBT）， and also sanitary and phytosanitary measures （SPS）. Although technical， these barriers are nonetheless extremely important， as many consist not of tariffs but rather regulations. Our FTA will enable us to streamline cooperation and facilitate trade unhampered by regulations that Switzerland and China respectively impose on imports. Besides the FTA， the two countries have concluded four additional agreements， namely on telecommunications equipment， certification/ accreditation， SPS， and measuring equipment and apparatus. Resolving technical details will enable smoother conduct of the relevant trades. These auxiliary agreements are consequently of great importance to Chinese and Swiss companies.
As to service trades， the agreement provisions are based on the General Agreement on Trade in Services （GATS） of the World Trade Organization （WTO）. The rules of the agreement apply to all measures affecting trade in services taken at central， regional or local government levels， and by non-governmental bodies enacting these roles. China and Switzerland use this multilateral WTO agreement as a basis， but have gone beyond even those stipulated in their bilateral FTA in making commitments on specific issues. China， for example， now has improved access to environmental services， financial services， air transport services， logistic services and short-term contractual services. Switzerland， meanwhile， has greater access to Chinese providers of financial services， private sector training services （Chinese language in particular）， air transport services， and to highly qualified providers of short-term contractual services.