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Switzerland Makes Progress In Free Trade Talks

by Ulrika Lomas, Tax-News.com, Brussels

23 January 2007


Switzerland and Japan agreed on Friday to take up bilateral negotiations regarding an economic partnership and free trade agreement. The Swiss government has also announced progress in negotiations regarding other free trade agreements, notably with Egypt and Canada.

The joint study group whose aim it is to strengthen economic relations between Switzerland and Japan has over the last twelve months undertaken a feasibility study at the official level of a comprehensive economic partnership and free trade agreement between Switzerland and Japan.

In its report, the study group concludes that such an agreement would significantly enhance bilateral economic relations (trade in goods, services, investment), and could strengthen the competitiveness of firms in both countries. The report therefore recommends the swift commencement of negotiations regarding an economic partnership and free trade agreement between Switzerland and Japan.

During a telephone conversation of 19 January 2007, Swiss President Micheline Calmy-Rey and Japanese Prime Minister Shinzo Abe acknowledged the report of the study group, and announced the opening of negotiations. The agreement sought between Switzerland and Japan would be the first preferential trade agreement between Japan and a European partner.

Japan is Switzerland's third most important trade partner (after the EU and the USA). Swiss exports of goods to Japan in 2005 were valued at CHF5.9 billion (US$4.7 billion), and imports from Japan at around CHF3 billion. In terms of services, Japanese statistics for 2005 show exports to Japan of CHF6.3 billion and imports from Japan of CHF2.7 billion. As of the end of 2005, Swiss direct investment in Japan was valued at CHF7.7 billion, that of Japanese direct investment in Switzerland at CHF1.1 billion.

The Swiss government has also announced that progress has been made in negotiations regarding other free trade agreements, and Federal Councillor Doris Leuthard is due to sign the EFTA Free Trade Agreement with Egypt on 27 January 2007. The other EFTA members include Iceland, Liechtenstein and Norway.

This free trade agreement liberalises in particular trade in goods, and will largely eliminate the discrimination against Swiss industrial exports on the Egyptian market that arose from Egypt's Association Agreement with the EU of 2004.

EFTA has already concluded free trade agreements with several countries from the Euro-Mediterranean area: Turkey, Israel, Morocco, Palestinian Authority, Jordan, Lebanon and Tunisia. These agreements enable the EFTA States to participate in the Euro-Mediterranean Free Trade Area, which is in the process of being established, following an EU initiative as part of the Barcelona Declaration.

The Swiss government also reports "considerable progress" in negotiations regarding a free trade agreement between the EFTA States and Canada. These talks had been suspended for some time, but were resumed last autumn. The Federal Department of Economic Affairs anticipates that these negotiations will be concluded in the near future. The agreement should offer Swiss industries, including the food industry, duty-free access to the large Canadian market and provide an institutional basis to further improve bilateral economic relations in future negotiations.


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