China, Switzerland agree to new trade deal scrapping most levies

• Switzerland and China agreed on a new trade deal removing tariffs on 99.8 per cent of Swiss exports to China, enhancing market access for Swiss investors.
• The agreement benefits Swiss exports like watches, pharmaceuticals, and precision instruments, boosting trade worth 34 billion francs (S$54.03 billion) by 2025.
• China committed to stricter labour and environmental rules and included a reference to the Universal Declaration of Human Rights for the first time in an FTA.

BERN - Switzerland and China agreed on a new trade accord that almost entirely removes tariffs on Swiss exports, as Beijing tries to deepen ties in Europe amid its ongoing rivalry with the US for global influence.

The deal grants 99.8 per cent of Switzerland’s current exports to China tariff-free treatment, the Swiss government said in a statement on Aug 20.

Swiss investors will also get better access to the Chinese market.

The news lifted Swiss stocks including Swatch Group and Richemont SA.

The blue-chip SMI Index pared earlier losses to trade little changed as of 5.10pm Zurich time (11.10pm Singapore time).

The accord offers Switzerland some relief amid the continued risks the export-oriented economy faces from US trade policy.

The government secured a preliminary agreement with Washington that caps tariffs at 15 per cent, but doubts linger on that, as the US has shied away from signing a legally binding deal.

Last summer, the Trump administration initially hit Switzerland with a 39 per cent levy, at the time the steepest among developed nations.

Under the terms of the new agreement, signature exports including watches, pharmaceuticals and precision instruments can go to China fully duty-free.

China is Switzerland’s third-most important trade partner after the European Union and the US, with bilateral shipments amounting to some 34 billion francs (S$54.03 billion) in 2025. 

China’s Minister of Commerce Wang Wentao and Swiss President Guy Parmelin on Aug 20 shook hands on the new treaty.

It concludes years of negotiations on an update to a free-trade agreement in place since 2014.

It exempted almost all Chinese sales to Switzerland from tariffs, but only included about half of Swiss exports to China.

China also agreed to stricter rules on labour rights and environmental issues in a revised sustainability chapter of the deal, according to the statement.

The Swiss also said that China agreed for the first time in an FTA to include a reference to the Universal Declaration of Human Rights.

The formal signing of the new treaty is planned before the end of 2026, then domestic approval processes will follow, the Swiss said. BLOOMBERG