Switzerland is to lift sanctions against Iraq a week after the United Nations Security Council voted to end the embargo imposed 13 years ago.
But the finance ministry said it would tighten restrictions on financial dealings with allies of the deposed Iraqi leader, Saddam Hussein.
The government is to end the embargo on trade and money transfers as well as flight restrictions.
"It's due to the fact that the UN under resolution 1483 lifted the trade embargo on Iraq," Othmar Wyss, head of Export and Sanction Control at the State Secretariat for Economic Affairs (Seco), told swissinfo.
End of Saddam
He said the end of the embargo was an "important step" which recognised the overthrow of the government of Saddam Hussein.
"A normalisation of trade with Iraq is necessary in order for the international community to build new relations with Iraq.
"It will take time before Swiss enterprises will be in a position to export again to Iraq, but it is a first important step," he added.
The lifting of sanctions is accompanied by tighter restrictions on financial dealings with people and firms linked to Saddam Hussein.
In April, Bern froze bank accounts linked to Saddam's regime until the UN decides where the money should go.
"The freezing of funds will now also apply to individuals with links to the former Iraqi government," Wyss said.
It is uncertain who or which enterprises are concerned, since Bern is waiting for the UN Sanctions Committee to publish a list of names.
Wyss would not specify how much money Switzerland has already frozen.
Switzerland also followed the UN's lead and issued a ban on acquiring and trading cultural goods that have been illegally taken from Iraq.
"This is part of UN Resolution 1483 which says that member states shall take appropriate steps to facilitate the safe return to Iraqi institutions of Iraqi cultural property," Wyss said.
Anyone who owns such goods must declare them to the Federal Office of Culture.
Huge quantities of artefacts representing thousands of years of Iraqi heritage have been plundered, leading to fears that they would end up on the illegal market.
Switzerland has in the past been criticised as a centre for illicit art.
swissinfo, Samantha Tonkin
Switzerland will lift sanctions on Iraq in line with the UN Security Council.
The finance ministry announced it would end the embargo on trade and money transfers as well as flight restrictions.
However, Bern will tighten restrictions on financial dealings with allies of the deposed Iraqi leader, Saddam Hussein.
Switzerland will also ban the trade in and acquisition of cultural goods that have been illegally taken from Iraq.
Sanctions were imposed on Iraq in 1990 when Saddam invaded Kuwait.