Efforts to push for open markets between Switzerland and India are meeting opposition from India’s industry association and Swiss non-governmental organisations.
They warn that moves to do away with customs duties and to boost patent protection could endanger the existence of small and medium-sized enterprises in India.
“Switzerland primarily seeks to improve access to the Indian market for its chemical and pharmaceutical products, machines and watches,” says Marie-Gabrielle Ineichen-Fleisch of the State Secretariat for Economic Affairs (Seco).
Since 2008 Switzerland, as a member of the European Free Trade Association (Efta), has been negotiating a free trade agreement. The talks hit a snag over the deregulation of the market for industrial goods.
“India is still reticent. It resists a lowering of customs duties for a number of products, including those important for Switzerland’s export industry,” says Ineichen-Fleisch, the government’s delegate for multinational trade agreements.
The umbrella organisation of Indian industry is concerned that small businesses active in the labour-intensive chemical and machine building sectors as well as in agriculture could be at risk.
“They could be hit hard by joblessness because many small businesses cannot compete on an international level,” says Isolda Agazzi of the Swiss NGO Alliance Sud.
India must not be pushed to open up its markets too hastily, according to development aid organisations.
“Emerging countries depend on customs tariffs. In the case of India they make up 11.4 per cent of its finances,” Agazzi adds.
Switzerland, the seat of some of the world’s most important pharmaceutical companies, including Novartis and Roche, is also seeking to bolster intellectual property rights.
“We want to extend patent protection for pharmaceutical products to prevent local producers of cheap generic drugs from using clinical tests developed by other companies,” explains Ineichen-Fleisch.
She dismisses allegations by development aid groups that tighter patent protection would jeopardise the production of generics in India.
Numerous Indian companies can’t wait to have access to an open market to benefit from research by other firms without contributing to the costs, she says.
Ineichen-Fleisch adds that improved patent protection is also in the interest of Indian companies in general.
“There is not only the industry of generic drug producers.”
For Agazzi of Alliance Sud the issue is not the abolition of intellectual property rights.
“We ask the Swiss government to make sure that the rules are in line with the World Health Organization.
“The health conditions of the poor are at stake,” Agazzi cautions.
India is a leading producer of cheap medication. It provides about 90 per cent of anti HIV drugs for developing countries.
Alliance Sud and the Berne Declaration call for a similarly cautious approach by Switzerland and the European Union - which is in separate negotiations with India over a free trade agreement - for a liberalisation of the financial sector.
“We need clear international regulations, before the financial services sector is opened to global competition,” says Agazzi.
“In the case of India this is of particular importance. The country escaped the global financial crisis because of its protectionist laws,” she adds.
However, Seco’s Ineichen-Fleisch argues that Switzerland is only seeking an opening of the asset management sector.
“We aim for simpler and clearer procedures for obtaining banking licences,” she says. Ineichen-Fleisch dimisses concerns that India would face a massive influx of Swiss banks as a result of such a liberalisation.
India’s main interest is to obtain greater access to the Swiss market for its export services, including information technology, and fewer immigration restrictions.
Switzerland’s labour market has been opened for citizens from the EU and Efta countries, while permits for those from other countries are limited to highly skilled labour.
“India would like to be able to send people from the health and tourism sector, such as nurses or guides, to work in Switzerland, not just scientists and engineers,” says Ineichen-Fleisch.
For the time being Switzerland has to offer better conditions for sectors India is particularly interested in while trying to maintain the official immigration policy, she says.
As negotiations between Switzerland and India appear to be getting nowhere, the NGOs insist on considering the possible social impact of free trade agreements.
Studies carried out in Thailand, Costa Rica and Ghana found that such agreements led to human rights abuses, according to Alliance Sud.
The accords are based on standards of the International Labour Organization and include clauses on environmental protection.
“This is certainly positive. However, these rules are not legally binding,” says Thomas Braunschweig of the Berne Declaration group.
He insists that any free trade accord must be based on the respect of human rights.
“Switzerland has ratified international human rights conventions. As part of its duties it has to make sure that basic rights are upheld in partner countries,” Braunschweig says.
Luigi Jorio, swissinfo.ch (Adapted from Italian by Urs Geiser)
Swiss-Indian economic ties
The government made India a focal point of Swiss foreign economic strategy in 2007. The trading volume stands at more than SFr3 billion ($2.9 billion).
India is Switzerland’s fourth-largest trading partner in Asia.
Swiss exports include machines, pharmaceutical and chemical products as well as precision instruments.
Textiles, agricultural products and components for the airline industry are among imports from India.
There are about 170 Swiss companies doing business in India.
Swiss investment in India stands at SFr2.36 billion (2008).
Promoting free trade is one of the goals of Switzerland’s foreign policy.
The aim is to ensure access to international markets for Swiss companies.
The deals are negotiated as part of the European Free Trade Association (Efta), which includes Switzerland, Norway, Iceland and Liechtenstein.
Switzerland’s most important trading partner is the EU.
Switzerland has concluded such accords with about 20 countries, including Canada, Mexico, Singapore and Turkey.
Earlier this year, Switzerland launched negotiations with Indonesia and sought trade talks with China.
Visit to India
Foreign Minister Micheline Calmy-Rey paid an official visit to India in August aimed at boosting bilateral relations.
She opened a consulate-general in Bangalore – the fourth of its kind in India.
Calmy-Rey also signed a protocol to revise a double taxation agreement granting an exchange of information on bank accounts in Switzerland.