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Swiss-China trade accord

July 1, 2014

A trade accord between China and Switzerland has taken effect, cutting tariffs on bilaterial trade. Switzerland is expected to receive a competitive advantage in the EU, which still lacks such a pact with China.

Signing of the Chinese-Swiss free trade agreement
Image: Wang Zhao/AFP/Getty Images

After three years of negotiations, a trade accord between China and Switzerland took effect on Tuesday.

Within the next five to ten years, the free trade agreement (FTA) will slash or dismantle tariffs “on the vast majority of bilateral trade,” according to Switzerland’s economic office, with some reductions on industrial exports taking place immediately. It will also bolster intellectual property rights and the legal security for economic exchange.

The FTA, say analysts, will give a boost to company profits and offset losses from the strong Swiss franc that has long led customers to seek cheaper products in countries such as Germany.

China is expected to overtake Germany as Switzerland’s largest export market by 2035, according to a Credit Suisse Group survey of small and medium-sized companies.

Ahead of the game

Switzerland is the second European country after Iceland to have signed an FTA with China, the world’s second largest economy.

China's Move Towards a Free Market Economy

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"When Swiss companies can position themselves ahead of the EU in China, they have a clear competitive advantage," said Daniel Kueng, head of Switzerland Global Enterprise (SGE).

rs/hg (dpa, Swiss Federal Department of Economic Affairs, Bloomberg)

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