Switzerland and China sign updated free trade agreement

Swiss President Guy Parmelin signed the updated version of the free trade agreement between Switzerland and China in Beijing on Friday, alongside Chinese President Xi Jinping. The text renews the 2014 agreement, the first Beijing had ever concluded with a European country.

The update removes tariffs on 99.8% of Switzerland's current exports to China. According to estimates from the federal government, released in August at the end of negotiations, Swiss companies should save around 244 million francs a year as a result. The agreement also eases mutual investment.

The Federal Department of Economic Affairs described the swift conclusion of the talks as a signal of support for the rules-based multilateral trading system centred on the World Trade Organization. Swissmem, which represents the machinery industry, urged parliament to ratify the text quickly.

Not every sector benefits equally. Watches remain subject to China's luxury goods tax, which applies to 95.5% of the value of Swiss watch exports to China, as confirmed by the Federation of the Swiss Watch Industry. Switzerland did win concessions on products such as pharmaceuticals, cheese and coffee, but these will only take effect after a ten-year transition period; three quarters of the planned reductions will nonetheless apply immediately.

Environmental clauses, enforcement unclear

Among the new features of the agreement is a binding chapter on trade and sustainable development. For the first time in a bilateral agreement, China commits to respecting environmental and labour protection standards. Some experts, however, voiced doubts about how enforceable these commitments actually are, asking who will monitor compliance.

The question is not a minor one: a chapter that remains on paper risks adding bureaucratic burden without producing concrete benefits, while the agreement's trade gains are already quantified and immediate.

Beyond the trade deal, Bern and Beijing signed other agreements, including one on cooperation in labour and research. Parmelin's visit to China continues until Saturday, with meetings at government level and with business representatives, as well as the opening of the ninth Swiss-Chinese Economic Forum. The agreement text must now be ratified by the federal parliament.