China, Switzerland Agree to New Trade Deal Scrapping Most Levies

(Bloomberg) — 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% of Switzerland’s current exports to China tariff-free treatment, the Swiss government said in a statement Thursday. 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 5:10 pm. Zurich 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%, 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% 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 ($43 billion) last year.

China’s Minister of Commerce Wang Wentao and Swiss President Guy Parmelin on Thursday 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 labor 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 this year, then domestic approval processes will follow, the Swiss said.

–With assistance from Levin Stamm.

(Updates with stock market reaction in third paragraph)

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