Free Trade Agreement between Switzerland and China: A new Silk Road from St.Gallen to Beijing – and back
13.11.2018

Free Trade Agreement between Switzerland and China: A new Silk Road from St.Gallen to Beijing – and back

On September 26th, the St.GallenBodenseeArea (SGBA) was turned into an important stage of international trade diplomacy: High ranking representatives from business, politics, administration and academia, among them Geng Wenbing, the Honorable Ambassador of China to Switzerland, and Marie-Gabrielle Ineichen-Fleisch, Head of the State Secretariat for Economic Affairs Seco, congregated in St.Gallen for the occasion of the „Sino-Swiss FTA Academic Evaluation“ Symposium, organized by the Sino-Swiss Competence Center of the University of St.Gallen. The main topic on the agenda: Five years after the ratification of the Free Trade Agreement (FTA) between China and Switzerland, the University of St.Gallen in conjunction with its Chinese partner institutions, the University of International Business and Economics and Nanjing University, for the first time presented a detailed analysis of the FTA’s economic impacts. Switzerland is the only country in continental Europe enjoying a comprehensive FTA with China.

 

The results of the analysis clearly demonstrate that the reduced tariff rates on exports and imports have benefitted the industry sectors of both countries. In 2017 alone, the savings on tariffs amounted to well over 100 million Swiss Francs on both countries. Chinese companies have enjoyed exemptions on duty for most of their exports since 2014 already; import tariffs on Swiss products are gradually being lowered during the first fifteen years of the FTA. With growing incentives for Swiss exporters, Swiss companies’ participation rates have steadily increased to a level of approximately 44% as of today.

 

China’s importance for the SGBA

 

The SGBA is an important beneficiary of the FTA. China is poised to become an ever more important player in the global trade relations network of companies based in the SGBA. From the canton St.Gallen alone, approximately 5% of all exported goods were shipped to China. At the same time, nearly 7% of imports originated in China. This is equivalent to a trade volume of more than 1,2 billion Swiss Francs. With roughly CHF 450 million, engineering and precision technology sectors had the largest share of total exports. Since the FTA’s ratification, St.Gallen’s exports to China increased by 40%, imports grew at a rate of 7%. Compared to Switzerland’s national average growth rates (exports: +30%, imports: +6 %) the canton St.Gallen, and with it the SGBA, are clearly above-average beneficiaries of the Sino-Swiss FTA.

 

A «Belt and Road Initiative» with China

 

The visionary part of the Sino-Swiss Evaluation Symposium was dedicated to the new «Belt and Road Initiative» from China. In the spirit of a new Silk Road, the initiative aims at significantly simplifying and intensifying trade relations between Asia and Europe. The discussion focused on the opportunities of this new conduit for Swiss and Chinese companies, especially with regards to trade, investments, and mutual transfer of technology and innovation along with trans-border e-commerce.

 

Another bright spot for the SGBA: From now on, Sino-Swiss FTA evaluation symposia will take place annually, alternating between St.Gallen and Beijing, in order to establish a regular exchange of political, entrepreneurial and academic experiences related to the FTA. Every other year, we’ll say “ni hao” in the SGBA.