Trade accord signed with South Korea

Switzerland mainly imports cars from South Korea Keystone

Swiss Economics Minister Joseph Deiss has signed a free trade accord with South Korea on behalf of the European Free Trade Association (Efta).

Deiss said the agreement, which includes Switzerland, would stimulate Swiss competitiveness in the South Korean market.

The signing ceremony took place at South Korea’s consulate general in Hong Kong on the sidelines of the World Trade Organization (WTO) ministerial summit.

The accord is the fourth that Efta has signed with countries outside Europe and the Mediterranean region after Mexico (2001), Singapore (2003) and Chile (2004).

Apart from Switzerland, the Efta members are Norway, Iceland and Liechtenstein.

Deiss gave assurances that the deal was not designed to undermine the WTO’s multilateralism.

“What we are doing is more the result of our contacts inside the WTO,” he explained. “When it comes to such treaties, we go beyond the WTO. As a result, this approach is complementary.”

Deiss stressed that multilateralism was the Swiss delegation’s “number one priority”.

Big potential

The economics ministry said the accord with Seoul would come into force on July 1 next year. As the 11th largest economic power worldwide, South Korea offered big potential for the development of trade, it added.

The agreement would give Switzerland preferential access which its main competitors – the European Union, the United States and Japan – did not have, the ministry explained.

“The hardline attitude of certain WTO members can be dangerous,” Deiss said. “While they reject any flexibility on finding a compromise, those countries that do manage to sign bilateral treaties become increasingly connected.”

South Korea is among Switzerland’s five largest trading partners in Asia. Swiss exports to the country totalled SFr1.3 billion ($1 billion) in 2004, representing 2.5 per cent of its exports outside the EU.

These include machine tools, chemical and pharmaceutical products, precision instruments and products from the watch industry.

Direct investments from Switzerland in South Korea exceed SFr1 billion.

Imports from South Korea are mainly cars, electronic appliances, synthetic materials and chemical products.

The free trade agreement concerns industrial products, including processed agricultural goods, services, intellectual property, public markets and competition, as well as protection of investments.

swissinfo with agencies

Key facts

Efta was founded in 1960 and is an intergovernmental organisation promoting free trade and strengthening economic relations.
It is not a customs union.
Efta members Iceland, Liechtenstein and Norway are also members of the European Economic Area. Switzerland is not.
Since the 1990s Efta states have jointly concluded free trade agreements with a number of countries worldwide.

In brief

The accord with South Korea is the fourth that Efta has made with countries outside the EU and the Mediterranean region.

The three others were concluded with Mexico (2001), Singapore (2003) and Chile (2004).

As Switzerland is not a member of the European Union, it uses Efta as a vehicle to improve its free trade position with other countries.