Research - 13.10.2023 - 17:00 

10 years free trade agreement between Switzerland and China

Researchers of the University of St.Gallen and the University of International Business and Economics (UIBE) in Beijing in cooperation with the Shanghai Customs College (SCC) have evaluated the effects of the Sino-Swiss free trade agreement (Sino-Swiss Free Trade Agreement Report – 2023 Evaluation Report).

Now that the agreement has been in force for ten years, the tariff dismantling process has been almost completely concluded in China as well, which means that Swiss companies can now enjoy a great deal of leeway for customs savings. Whether they also exploit this leeway has been examined by the Sino-Swiss research project.

On 6 July 2013, the Sino-Swiss Free Trade Agreement (SSFTA) was concluded and signed by Federal Councillor Johann Schneider-Ammann and the Chinese Minister of Commerce, Gao Hucheng. It entered into force on 1 July 2014. For the Swiss export industry, the free trade agreement with China is by far the most important one outside Europe.     

Swiss utilisation rate of 71%

On the basis of customs data, the Sino-Swiss Free Trade Agreement Report – 2023 Evaluation Report has examined the impact of the free trade agreement on the economy in Switzerland and China for the second time after 2018. The most recent report reveals that Swiss exporters have made successful use of the SSFTA – with a utilisation rate which has risen by 13% to 71% in the last five years. In 2022, Swiss companies thus achieved actual savings of USD 220m as compared to USD 70m in 2018.

  • Thanks to the SSFTA, many Swiss products reach China 100% duty-free, among them wristwatches, coffee and coffee machines, baked goods and confectionery, as well as cheese. 
  • With savings of more than USD 130m, the watchmaking industry profits most from the free trade agreement, followed by the MEM industry, which saves more than USD 60m. The agreement also benefits the chemical, textile and foodstuffs industries.
  • Swiss chocolate exports to China have experienced a strong growth over the last ten years, having more than tripled to more than 3,000 tonnes a year with a value of over CHF 30m. Two thirds of these exports are duty-free thanks to the use of the SSFTA.
  • Swiss producers who export pigs’ trotters and ears to China save annual costs of approx. USD 1m.

Unexploited potential

However, it is not always possible to avoid all the customs duties completely. This may occur on account of shipping instructions, complex forms, limited knowledge and experience, as well as time lags. The estimated annual sum-total of the customs duties that still have to be paid to Swiss products amounts to approx. USD 200m. There is unexploited potential here.

For their part, Chinese exporters reported a stable, slightly decreasing utilisation of the SSFTA from 42.2% to 39.3% in the last few years. As a consequence, Chinese exporters and Swiss importers of Chinese goods continue to pay more than CHF 400m a year in customs duties.

The results of the survey was presented today in the presence of the Chinese ambassador to Switzerland, Mr WANG Shihting, in the SQUARE of the University of St.Gallen and subsequently discussed by representatives of Swiss industry.

Image: Adobe Stock / Oleksii

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