Deal with Japanese a “bright spot” for exporters

swissinfo.ch

Economics Minister Doris Leuthard has signed a free-trade agreement during a visit to Japan, significantly strengthening business ties between the countries.

In an interview with swissinfo, Leuthard says the agreement – the first of its kind for a European country – is a big boost for Switzerland’s exporters, particularly its chemical, pharmaceutical and watch industries.

In return for lowering tariffs, Japan wants more favourable terms for placing agricultural goods and industrial items, like cars and machinery, on the Swiss market.

As for lowering prices of Japanese goods for Swiss consumers, the accord probably won’t have a noticeable impact since both countries produce high quality, expensive goods, Leuthard said. The prices of imported environmentally friendly cars, however, could stand to drop if Swiss parliament approves the deal.

swissinfo: You said at the signing that this accord with Japan is the most important one for Switzerland since the 1972 agreement with the European Union. Why?

Doris Leuthard: Because Japan is the second-biggest economy in the world and that volume consequently has a lot of significance for Switzerland. Moreover, we are the first European country to have concluded such an agreement with Japan. That is a bright spot for our export industry in a difficult economic time like this.

swissinfo: Why just Switzerland?

D.L.: For one, Switzerland and Japan have had trade and friendship treaties for 150 years and have always looked after that relationship. But above all Luzius Wasescha, a delegate for trade agreements, is to thank. He helped establish a Swiss-Japanese strategy as part of a group of ten countries within the World Trade Organization in which mutual agricultural interests were defended.

Another reason is that in other areas a realisation matured that we have much in common and have the same values. So why not also a bilateral path for a general opening of the market?

swissinfo: In the run-up to the agreement the accord was already called a “milestone” or a model accord. What is so different?

D.L.: It is a wide, modern accord that not only opens free-trade zones for industrial goods and special agricultural products, but also has elements in areas of services and a strengthening of intellectual property rights and e-commerce for the first time.

There are also many other elements that could be ideal for future accords.

swissinfo: What’s the price for Switzerland?

D.L.: Of course we’re lowering our existing tariffs. Since they’re already very low for industrial goods, that doesn’t particularly hurt us.

The tariff reduction for industrial goods will lead to maybe SFr13 million ($11 million) less a year for federal coffers. That is at a very low level. In this respect we’ve actually started at a very comfortable position for negotiations.

swissinfo: What is special about the Japanese market?

D.L.: The Japanese are still rather bureaucratic. They also have nationwide peculiarities in areas of permit procedures, licences and standards in order to protect the domestic population as well as possible.

That’s an honourable concept but it often isn’t compatible with European or American norms.

swissinfo: In the agricultural sector, sake and bonsai trees are supposed to be especially easier to import into Switzerland. Don’t the Japanese have other requests?

D.L.: So far we only import a small amount of Kobe beef and ornamental plants, too. But Japan, like us, is a country that basically imports its food. It is also a country that we don’t import a lot of food from.

For Switzerland that again isn’t particularly serious, because it’s the same for us, and we were glad that the demands in areas of agricultural products turned out to be relatively modest.

swissinfo: Was does the accord do for consumers in Switzerland?

D.L.: First of all it ensures jobs and improves competitiveness. It’s important for export companies, particularly chemical, pharmaceutical, watch and machine industries.

As for cheaper prices, I wouldn’t put that in the forefront because both states produce rather high-quality goods with higher costs. But we import environmentally friendly cars from Japan. This could definitely have a positive effect on their prices.

swissinfo: The accord is signed. What must happen politically now for it to be put into effect?

D.L.: I’ll ask my colleagues in the cabinet to approve this accord in March. When that happens, parliament committees will take it up.

My goal is that both chambers of parliament decide on it by the end of September. That way we can already get this accord into effect between August and October. Each month expenses would be saved and the export economy would have better conditions.

swissinfo: The Japanese must also sign off on this.

D.L.: Government ministers confirmed that a quick implementation is key. That’s why I hope so much that the road map sketched out comes about relatively congruently so that both states can benefit from it after summer.

swissinfo-interview: Christian Raaflaub in Tokyo

Key facts

Japan is the third-largest trading partner after the EU and the US.
Switzerland is eighth for Japanese foreign investors.
Exports to Japan (2008): SFr7.1 billion ($6 billion).
Japan imports pharmaceuticals, watches and machines.
Exports: cars, metals, jewellery, machines and chemicals.

The accord

The Free Trade and Economic Partnership Accord was signed on February 19, 2009.
In total the negotiations lasted for two years with eight rounds of talks – four in Switzerland, four in Japan. Luzius Wasescha led the Swiss delegation.
This is the first time that Japan has signed such an agreement with a European country.
The main accord consists of 94 pages with an additional 20 pages of translations and about 900 pages with various lists.
When exactly the accord will be put into place depends upon parliaments in both countries.
In October an economic delegation is slated to travel to Japan to strengthen contacts.

Other Asian visits

Along with signing the free-trade accord with Japanese Foreign Minister Hirofumi Nakasone in Tokyo, Economics Minister Doris Leuthard also met other Japanese ministers, including Economics Minister Toshihiro Nikai and Agriculture Minister Shigeru Ishiba.

On Friday Leuthard flies to Hong Kong, where she will meet Rita Lau Ng Wai-Lan, the minister for economics and economic development. Also on the day’s programme is a courtesy visit with Donald Tsang, a Hong Kong Special Administrative Region representative.