RESTRICTED  
  
WT/TPR/G/ 425 
23 March  2022 
(22-2456) Page: 1/27 
Trade Policies Review Body  Original:  English /French  
 
TRADE POLICY REVIEW  
REPORTS BY  
SWITZERLAND AND LIECHTENSTEIN  
Pursuant to the Agreement establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement establishing the World Trade Organization), the policy statement by 
Switzerland and Liechtenstein is attached.  
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of the 
first session of the meeting of the Trade Policy Review Body on Switzerland and Liechtenstein.  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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Contents  
1  REPORT BY SWITZERLAND  ................................ ................................ ...........................  3 
1.1  Introduction  ................................ ................................ ................................ .................  3 
1.2  Economic Context  ................................ ................................ ................................ .........  4 
 Competitiveness and external environment  ................................ ................................ ... 4 
 Economic developments  ................................ ................................ .............................  5 
1.3  Economic Policy  ................................ ................................ ................................ ............  8 
 Foreign economic policy strategy  ................................ ................................ .................  8 
 Emerging from the COVID -19 crisis and long -term growth policy  ................................ ..... 9 
 Monetary policy  ................................ ................................ ................................ ....... 10 
 Fiscal policy  ................................ ................................ ................................ ............  11 
 Micro, small and medium -sized enterprises (MSMEs)  ................................ ....................  11 
 Innovation policy  ................................ ................................ ................................ ..... 12 
1.4  Trade Policy  ................................ ................................ ................................ ...............  13 
 Overview  ................................ ................................ ................................ ................  13 
 WTO ................................ ................................ ................................ ......................  13 
 Other multilateral and plurilateral initiatives  ................................ ................................  15 
 Preferential relations  ................................ ................................ ................................  15 
1.4.4.1   European Union  ................................ ................................ ................................ .... 15 
1.4.4.2   Free trade partners  ................................ ................................ ...............................  16 
 Trade and development  ................................ ................................ ............................  16 
 Trade and sustainability  ................................ ................................ ............................  17 
1.5  Outlook  ................................ ................................ ................................ .....................  18 
2  REPORT BY LIECHTENSTEIN ................................ ................................ .......................  19 
2.1  Introduction  ................................ ................................ ................................ ...............  19 
2.2  Trade and E conomic Policy Environment  ................................ ................................ ........  19 
 Economic growth  ................................ ................................ ................................ ..... 21 
 The economic sectors  ................................ ................................ ...............................  22 
 State activities  ................................ ................................ ................................ ........  25 
2.3  Trade Policy Developments and Future Policy Directions  ................................ ..................  26 
 The World Trade Organization (WTO)  ................................ ................................ .........  26 
 The European Economic Area (EEA)  ................................ ................................ ...........  26 
 The European Free Trade Association (EFTA)  ................................ ...............................  27 
 Customs Union/Economic Integration with Switzerland  ................................ .................  27 
 
  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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1  REPORT BY SWITZERLAND  
1.1  Introduction  
 Switzerland submits this general policy statement as part of the sixth joint Trade Policy Review 
of Switzerland and Liechtenstein.  
 The Swiss economy is among the most internationally integrated worldwide . Lacking natural 
resources, landlocked in Europe, Switzerland's prosperity depends on competitive businesses that 
succeed in international trade through innovative, high value -added goods and services.  
 Since the last Trade Policy Revie w in 2017, the Swiss economy has continued to perform well, 
in spite of adverse circumstances . Since 2020, the international economic environment has been 
characterized by a severe global economic and health crisis, triggered by the emergence of 
the COVID -19 pandemic . This has been followed by a strong economic recovery, albeit one that has 
been uneven across countries . At the end of 2021, a new wave of COVID -19, combined with global 
bottlenecks in the supply of raw materials and intermediate goods and a sh arp increase in inflation 
created a challenging environment.  
 The Swiss economy and trade proved to be relatively resilient by international standards during 
the COVID -19 crisis . This strong performance is due to a number of factors : a diversified economic 
structure, a high degree of international openness, a high -quality education system, a flexible labour 
market, a moderate tax burden, sound public finances, well -established cooperation between social 
partners, and political stability.  
 The Government ackno wledges that further sustained efforts are required in order to maintain 
and strengthen Switzerland's competitiveness in a fast -changing world . In 2021, it updated its 
foreign economic policy strategy, which provides a higher level of guidance for Switzerl and's foreign 
economic policy measures while respecting the country's international commitments . In the same 
year, the Federal Council adopted the COVID -19 transition strategy, which aims to strengthen the 
economy's long -term recovery and increase growth potential . The strategy aims to improve growth 
in gross domestic product ( GDP) per capita and labour productivity, as well as to strengthen 
competition in the domestic market.  
 As outlined in the new foreign economic policy strategy and the COVID -19 transition strategy 
for economic policy, creating and maintaining opportunities for Swiss -based businesses abroad 
through trade and investment remains a key policy objective for Switzerland, taking account of  
sustainability  considerations . 
 The rules -based multilateral trading system developed within the framework of  the WTO 
provides the institutional bases and regulatory framework for predictable, non -discriminatory global 
trade and is an essential bulwark against protectionism . For Switzerland, maintaining  the integrity 
and further strengthening the role and relevance of the WTO are essential for sustaining global 
economic development and growth, and thereby contributing to the economic recovery from 
the COVID -19 pandemic.  
 Switzerland's trade policy priorit y on multilateral, non -discriminatory rules is complemented by 
a goal of continuous expansion and deepening of trade relations through regional and bilateral 
approaches, both with the European Union ( EU) and with partners worldwide.  
 Switzerland attaches high importance to reducing gaps in the level of development between 
nations, to promoting the further integration of developing countries into the global economy, and 
to the need to make economic development more sustainable . The Gover nment also takes seriously 
public  concerns about the negative impact  of globalization and structural changes in the economy . 
In this context, Switzerland strongly supports the United Nations 2030 Agenda for Sustainable 
Development and measures that promote  socially and environmentally sustainable economic 
growth.  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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1.2  Economic Context  
 Competitiveness and external environment  
 As a medium -sized economy with few natural resources, Switzerland is highly dependent on 
foreign trade, whether it be imports of raw materials and intermediate goods or a dynamic export 
economy . In this context, the Swiss economy has been successful at product transformation and 
generation of a sizeable share of domestic value -added on export products . Around 75 % of Swiss 
exports of goo ds and services corresponds to domestic value creation . The remaining 25 % relates 
to imported inputs . Known for the export of specialist niche products and higher -end quality goods, 
Switzerland is firmly integrated into  global value chains . In terms of val ue-added, it is estimated 
that, over the past 15 years, the contribution of goods' exports to GDP was around 40 % on average . 
This strong outward orientation of the Swiss economy has been one of the pillars of Swiss growth 
for many years.  
 Switzerland is als o one of the most innovative and competitive economies in the world . For 
some time now, it has consistently ranked first in the Global Competitiveness Index compiled by the 
World Economic Forum (WEF) and partner institutions . Switzerland is also ranked fir st in the Global 
Innovation Index . In recent years, it has fallen a few places in the World Bank's ease of d oing 
business ranking  and is now ranked 36th out of 190 economies . A combination of factors 
underpinning these results has contributed to the resili ence of the Swiss economy in recent years, 
for example during the financial crisis or the coronavirus crisis.  
 For a small, land -locked country in Europe, Switzerland remains mor e susceptible than other, 
larger  economies to changing circumstances in the ext ernal environment . An important determinant 
for the Swiss economy generally is the economic performance of the European Union : around 
two thirds of Swiss imports of goods are from the EU (2021 : approx . CHF  135 billion ), while 
around  50% of Swiss exports (2021 : approx . CHF  130 billion ) go to the EU, making it by far 
Switzerland's most important trading partner.  
 Other major trading partners are the United States, China and Japan, followed by other 
countries in Asia, the Americas and the Mi ddle East.  
 In terms of Switzerland's foreign trade, the past few years have been characterized by 
increased specialization towards certain high value -added products, especially those produced by 
the chemical and pharmaceutical industries, but also by the w atchmaking, precision instrument, or 
metal and machinery industries . Chemicals and pharmaceuticals have been particularly successful, 
with markedly strong growth in exports and imports, accounting for  50% of exports 
and 27% of imports of goods in 2021 . As a result of this growing specialization, Switzerland's foreign 
trade, and thus the Swiss economy as a whole, ha ve become less sensitive to exchange rate 
fluctuations . Added to this is the fact that Switzerland has a large service sector that also specializ es 
in high value -added areas and is therefore less dependent on, for example, the hotel and restaurant 
industry and tourism.  
 Since 2020, the international economic environment has been characterized by a severe 
global economic crisis, triggered by the emer gence of the COVID -19 pandemic in early 2020, which 
has hit world trade and the economies of Switzerland's main trading partners hard . To combat the 
spread of the virus, governments shut down entire sectors of the economy, leading to a collapse in 
demand a nd trade . At the same time, different governments introduced massive public aid 
programmes to support the affected sectors and the economy as a whole . Subsequently, further 
waves of the coronavirus  occurred , trigger ing similar responses, particularly in Eu rope, although  on 
a smaller scale than in the spring of 2020.  
 This was followed by a strong economic recovery, albeit one that has been uneven across 
countries, while in the third quarter of 2021 the GDP of the United States and China was at a higher 
level than before the crisis (see table below) . At the end of 2021, economic recovery was h ampered  
by a new wave of COVID -19, combined with global bottlenecks in the supply of raw materials and 
intermediate goods and an increase in inflation . However, there are many signs that the situation is 
expected to normalize and recovery will continue over the next two years . The recovery may be 
somewhat more hesitant in China, which has been pursuing a "zero -COVID" strategy since the start 
of the pandemic.  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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Table  1.1 International comparison of gross domestic product (GDP)  
 2020  2021  Change from 2019 Q4  
 Q4 Q1 Q2 Q3 Q2 Q3 
United States  1.1 1.5 1.6 0.6 0.9 1.4 
United Kingdom  1.5 -1.3 5.4 1.1 -2.6 -1.5 
Japan  2.3 -0.7 0.5 -0.9 -1.1 -1.9 
Euro zone  -0.3 -0.2 2.2 2.3 -2.5 -0.3 
Germany  0.7 -1.7 2.2 1.7 -2.4 -0.8 
France  -1.1 0.1 1.3 3.1 -2.9 0.2 
Italy -1.6 0.3 2.7 2.6 -3.8 -1.3 
Spain  0.2 -0.7 1.2 2.6 -8.3 -5.9 
Switzerland  -0.1 -0.1 1.6 1.5 -0.4 1.1 
Note:  Seasonally adjusted real values, change compared to the previous quarter, in  %. 
Source:  National statistical offices, State Secretariat for Economic Affairs (SECO).  
 Economic developments  
 Over the past two years, the Swiss economy has evolved in response to  the coronavirus 
pandemic and associated  containment measures . In the first half of 2020, economic activity 
collapsed in the wake of the first wave of COVID -19 and the accompanying restrictive measures, 
both in Switzerland and abroad . This was followed by a strong economic recovery by the winter 
of 2020/2021, when the recovery was severely hampered by a new outbreak of the COVID -19 
pandemic and the introduction of new containment measures . By the summer of 2021, however, 
most of the restrictive health measu res had been lifted or significantly relaxed . This led to a strong 
recovery in economic activity in the second and third quarters, driven mainly by private consumption 
and the recovery of the service sectors that had been affected by the health restriction s (see graph 
below, left panel) . As a result, GDP exceeded its pre -crisis level in the third quarter of 2021 . With 
the arrival of the Omicron variant and increased containment measures at the end of 2021, the 
economic recovery slowed down somewhat, but wit hout leading to a large -scale collapse in economic 
activity, as had been the case in previous waves (see graph below, right panel).  
Chart 1.1 GDP growth and weekly economic index (WEI)  
 
Note:  Left panel : seasonally adjusted real values ; sector input : percentage change from previous quarter.  
 Right panel : WEI – difference compared to the level of the fourth quarter of 2019, in %; 
 GDP: real values seasonally adjusted and corrected for sporting events.  
Source:  State Secretariat for Economic Affairs (SECO).  
-8-6-4-202468
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
2019 2020 2021
secondary sector
tertiary sectorGraph 1.1 GDP growth and weekly economic index (WEI) hebdomadaire 
-12,0-10,0-8,0-6,0-4,0-2,00,02,04,0
Jan. 20
Jul. 20
Jan. 21
Jul. 21
Jan. 22
GDP WEIWT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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 Thus, the Swiss economy has weathered the crisis relatively well by international standards , 
especially in comparison to many European countries . There may be a number of reasons for this 
positive deve lopment : First, the containment measures were more targeted and lasted for a shorter 
period than in many countries ; second, the structural composition of the economy was beneficial to 
Switzerland, in particular thanks to the relatively lower importance of the tourism sector, or the 
higher importance of the chemical and pharmaceutical sectors, which had a stabilizing effect during 
the crisis ; third, government support policies were introduced in a swift and very targeted manner, 
which prevented a large numbe r of bankruptcies and job losses.  
 The stabilizing effect of business support measures during the crisis, in particular measures 
introduced for partial unemployment , is reflected in the change in the unemployment rate in 
Switzerland . The unemployment rate r ose suddenly during the first wave of COVID -19 in the spring 
of 2020 . In the summer of 2020, the situation stabilized in the labour market . The unemployment 
rate then fell sharply from February  2021 to 2.3 % in January  2022. At the same time, there has 
been a significant increase in employment . Several indicators point to a further improvement in the 
labour market situation in the coming months.  
Chart 1.2 Unemployment rate  
 
Note:  Seasonally adjusted values,  in %. 
Source:  State Secretariat for Economic Affairs (SECO).  
 The strong global economic recovery, which boosted demand for industrial goods, coupled 
with limited production capacity in some countries during the pandemic, created significant 
bottlenecks al ong global value chains . From the second half of 2021, a large proportion of industrial 
enterprises in Switzerland reported that their production had been  limited by a lack of raw materials 
and intermediate goods . The metal products industry, the machinery  sector and the production of 
electronic products have been  particularly affected by these challenges . Although the supply 
problems are expected to ease slowly, they could persist for several more quarters.  
 The strong economic recovery, industrial bottlene cks and the healthy labour market , among 
other factors,  are increasing upward pressure on prices and raising inflation risks internationally . 
While at the end of 2021 inflation reached historically high levels in the United States and the euro 
zone, it rem ained relatively low in Switzerland (see graph  1.3 below) . As most of the factors 
underlying the international price surge are due to the pandemic and are expected to be temporary, 
inflationary pressures are likely to recede over time . In Switzerland, ther e is currently no sign of an 
inflationary spiral, with inflation expectations remaining below the Swiss National Bank's inflation 
target in both the medium and long term.  
2.02.53.03.54.04.5
08 09 10 11 12 13 14 15 16 17 18 19 20 21 22
TotalGraphique 1.3 Taux de chômageWT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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Chart 1.3 Inflation, international comparison, 2017 –2022  
 
Note:  Year-on-year change, in  %. 
Sources:  Swiss Federal Statistical Office ; Eurostat ; United States Bureau of Labor Statistics . 
 Despite supply difficulties and increased containment measures in the winter o f 2021/2022, 
the Swiss federal group of experts expects Switzerland's GDP growth – adjusted for the impact of 
sporting events – to reach 3.0 % in 2022 (see table below) . During 2022, the slowdown factors are 
expected to gradually dis appear . Economic growth is expected to accelerate significantly, driven by 
the catch -up effects of private consumption and investments, but also by exports . For 2023, growth 
of 2.0 % is expected because of economic normalization . After 2021 (3.3 %), the Swiss economy 
would thus exp erience two further  years of above -average growth.  
Table 1.2 Forecasts for Switzerland, December 2021  
 2021  2022  2023  
GDP adjusted for sporting events  3.3 3.0 2.0 
GDP 3.5 3.2 1.7 
Private consumption  2.6 3.8 2.0 
Government consumption  6.3 -1.5 -1.9 
Investments in construction  1.3 0.0 0.2 
Investments in capital goods  3.7 4.0 4.0 
Export s 7.9 5.6 4.6 
Imports  5.1 5.8 5.2 
Employment in full -time equivalent  0.5 1.5 0.9 
Unemployment rate in %  3.0 2.4 2.3 
Consumer price index  0.6 1.1 0.7 
Note:  Unless otherwise stated, change  in %. GDP and components : seasonally adjusted real values ; 
foreign trade : without objects of value.  
Source:  Swiss federal group of experts on forecasting.  
 In general, the economic risks for the next few years are on the decline . Uncertainty remains 
very high, particularly in relation to how the pandemic might develop . Although there are increasing 
signs that the coronavirus is becoming endemic, which would mean the end of the pandemic, further 
waves of infection cannot be ruled out in the near future . Possible highly restrictive health measures 
would then have a serious impact on the recovery.  
WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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 Negative impacts on the economic recovery would also be expected if global bottlenecks were 
to persist longer than expected and if inflation rises were to result in continued pressure on prices 
with a significantly higher interest rate level . In this event, the existing risks associated with 
government and c orporate debt would also increase significantly . This is all the more true as public 
debt has risen sharply in many countries in connection with the economic support measures 
introduced during the crisis . Further consolidation of public debt would hamper t he recovery . In 
addition, financial market turbulence might also occur if investors were no longer to view debt levels 
as sustainable.  
 Risks in the Swiss real estate sector would also increase in the event of a sharp rise in interest 
rates. This is because  property prices have risen more than incomes in recent years, particularly 
in 2021. The housing vacancy rate is also currently relatively high.  
 In addition, there are global risks emanating from the real estate sector in China . A real estate 
crisis with a  strong impact on demand in China could have a significant impact on the global 
economy.  
 Conversely, it is also possible that the recovery in Switzerland and other advanced economies 
will be stronger than antic ipated in the group of expert's forecast s. Faced with limited consumption 
opportunities, some households have accumulated considerable additional savings since the spring 
of 2020, some of which could be used for consumer spending.  
1.3  Economic Policy  
 Foreign economic policy strategy  
 Given the size of its economy and its limited domestic market, foreign economic activities are 
essential for Switzerland . The Confederation's foreign economic policy aims to maintain and increase 
prosperity in Switzerland, while respecting the Sustainable Development  Goals . The strategic 
objectives of this policy are an international regulatory framework with wide participation, 
non-discriminatory access to international markets , and economic relations that contribute to 
sustainable development in Switzerland and abroad.  
 In recent years, the global economic, geostrategic, technological and social environment has 
changed significantly . Rivalry between the major economic powers or the trend towards the 
formation of regional blocs are on the rise . The COVID -19 pandemic has also re inforced underlying 
protectionist tendencies and accentuated the challenges related to the resilience of global production 
and supply chains . Lastly, foreign economic policy issues are increasingly diverse : on the one hand, 
growing digitali sation is creating new opportunities and calls for new regulatory approaches . On the 
other hand, Switzerland is committed to achieving climate neutrality by 2050, with the goal of 
sustainability requiring a "horizontal" integration of environmental and social issues.  
 As these developments have clear implications for Switzerland's foreign economic policy, the 
Federal Council adopted an updated foreign economic policy strategy on 2 4 November  2021.1 
 By replacing the 2004 strategy, it is provid ing a higher level of guidance for Switzerland's 
foreign economic policy measures while respecting the country's international commitments . The 
strategy takes into account the current external economic situation  to ensure that objectives are set 
transparently  and that the concerns of stakeholders are taken into account at an early stage.  
 Thanks to its policy of openness, Switzerland has been able to integrate into the global 
economy and take advantage of international value chains over the past few decades . The foreign 
economic policy strategy builds on this achievement and sets out nine priority areas for action:  
• Focusing on Switzerland's interests – To ensure prosperity and employment, 
Switzerland aims to provide its businesses, especially its SMEs, with broa d, 
non-discriminatory access with legal guarantees to well -functioning international 
 
1 Available at: 
https://www.seco.admin.ch/seco/fr/home/Aussenwirtschaftspolitik_Wirtschaftliche_Zusammenarbeit/aussenwir
tschaftsp olitik/aws.html . WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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markets . Switzerland defends its foreign economic policy interests through multilateral, 
plurilateral and bilateral international economic law instruments and economic and trade 
diplomacy instruments;  
• Actively shaping multilateralism – In order to address global challenges, Switzerland is 
committed to international, ideally multilateral, solutions . It actively participates in 
relevant forums and promotes interna tional rules and standards, particularly in the 
multilateral context;  
• Promoting open and rule s-based trade – Switzerland is committed, under its legislation, 
to open, barrier -free and rule s-based trade in order to maintain  Swiss standards;  
• Prioritizing key  partners – The EU remains Switzerland's most important economic 
partner . In addition, Switzerland is continuously reviewing how to deepen economic 
relations with its key trading partners and is committed to the effective integration of 
developing and emer ging countries into the global economy;  
• Building resilience through diversification – Switzerland is creating the best possible 
conditions  for diversifying supply chains, and explor ing the potential for regional and 
plurilateral economic agreements . It see ks opportunities to strengthen international 
cooperation in the area of critical goods from a supply perspective . In principle, it does 
not envisage adopting state measures to repatriate production processes to 
Switzerland;  
• Contributing to environmental an d social sustainability – Switzerland promotes 
sustainable trade and international standards for the protection of the environment, 
human rights and workers' rights . It is also committed to corporate social responsibility;  
• Integrating the digital economy – Given its high economic and scientific ranking , 
Switzerland is committed to the creation of international rules for digital trade and the 
free flow of data . In various international organizations, it promotes its interests in the 
development of sustainabl e and widely supported solutions for the digital economy;  
• Increasing transparency and participation – Switzerland pursues a foreign economic 
policy that is transparent, clear and open to the concerns of stakeholders . It 
systematically informs the general p ublic about its activities in this area and 
continuously seeks dialogue with the stakeholders concerned;  
• Taking into account interactions with domestic policy – Switzerland carefully considers 
any new regulations and explores the approaches already adopted  by its main economic 
partners . Thus, it understands the impact of regulations on both foreign and domestic 
economic policy . In doing so, its focus is on the benefit to the economy as a whole.  
 Emerging from the COVID -19 crisis and long -term growth policy  
 As a result of COVID -19, in 2020 Switzerland experienced its most severe economic downturn 
since 1975 . As in many other countries, an unprecedented level of restrictions had to be imposed 
on the Swiss economy to protect the population from the pandemic . Thanks to state support 
measures such as COVID -19 loans, extended partial unemployment compensation , loss-of-earnings 
allowances for the self -employed, parents and persons in quarantine, as well as comprehensive  aid 
for severely affected businesses, waves of  bankruptcies were avoided and people's incomes secured.  
 With its COVID -19 transition strategy for economic policy, adopted on 1 8 June 2021, the 
Federal Council aims to support the normalization of the economy and strengthen the long -term 
recovery . It has adopted various temporary measures for the recovery phase, such as the tourism 
recovery programme or the "Swiss Innovation Power" impulse programme, which facilitates access 
for SMEs to financing for innovation projects.  
 In order to ensure the long -term re covery of the economy as a whole and to increase growth 
potential, the Federal Council's priority must be  to sustainably improve economic conditions . In 
principle, Switzerland already offers excellent conditions such as a high -quality education system, a WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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high degree of international openness, a flexible labour market, a moderate tax burden and sound 
public finances . However, a progress report in 2019 drew attention to the fact that Switzerland lost 
ground in the years leading up to the COVID -19 crisis . GDP per capita growth and labour productivity 
growth were at best average compared to other Organi zation for Economic Co -operation and 
Development ( OECD ) countries . In recent years, Switzerland has fallen behind in several areas of 
international comparisons (for example in the OECD's Product Market Regulation (PMR) indicators 
or in the WEF's Global Competitiveness Report) . A further potential for improvement lies in particular 
in strengthening competition in the domestic market in order to overcom e the rather slow 
productivity growth of domestic -market -oriented sectors compared to the highly productive export 
sector.  
 In addition, the Swiss economy will face various challenges in the coming years . Due to 
changing demographics, the proportion of pers ons reaching retirement age is expected to rise from 
around 19 % in 2022 to around 25 % in 2045, which will be accompanied by a decrease in the share 
of the working population in the total population . Demographic changes will also lead to additional 
expendit ure on health care and retirement provision, which will increase the pressure on ensuring 
sound public finances . Two other major challenges are the outstanding questions over  future 
economic integration into the EU internal market and the implementation of  a cost -effective climate 
policy.  
 In view of these challenges, action is needed in a number of  areas . In its growth policy to 
date, the Federal Council has consistently emphasized : (i) the importance of a high degree of 
openness to foreign trade ; and (ii) the importance of high -quality education and a high level of 
labour -market participation in order to address the shortage of skilled workers and enhance the 
potential of the labour force . Furthermore, it emphasized that : (iii) effective and timely regulati ons 
and a pro-innovation environment ; coupled with (iv) dynamic competition, are essential for 
innovative businesses to thrive . The pandemic has also shown that : (v) sound public finances make 
a decisive contribution to the State's ability to act in a cris is. The prerequisites for such sound public 
finances are efficient public services and a tax system that avoids distorting effects while remaining  
attractive by international standards . Finally, (vi) an effective and efficient environmental and 
climate pol icy is essential for sustainable growth.  
 Monetary policy  
 Between 2017 and 2019, the Swiss National Bank (SNB) maintained an expansionary 
monetary policy . It continued to rely on the negative policy rate and the negative interest rate that 
banks and other f inancial market players pay on their SNB sight assets, as well as on the willingness 
of the SNB to intervene in the foreign exchange market where necessary . Both these measures 
remained essential to ensure appropriate monetary conditions . Annual inflation remained low and 
the inflation outlook moderate . By December  2017, the Swiss franc had returned, in real 
trade -weighted terms, to roughly the same level as before the abandonment of the minimum 
exchange rate against the euro in January  2015, whic h was followed by a significant appreciation of 
the franc . Nevertheless, the Swiss franc remained highly valued and the situation on the foreign 
exchange market fragile.  
 In 2020, the coronavirus crisis posed a significant challenge to monetary policy . Inflation has 
moved into negative territory . At the same time, the Swiss franc came under strong upward pressure 
due to its safe haven status . In these circumstances, an expansionary monetary policy remained 
necessary . The SNB's willingness to increase its int ervention in the foreign exchange market and 
the SNB's negative policy rate were key to countering the upward pressure on the Swiss franc . In 
addition, the SNB took measures to ensure the supply of credit and liquidity to the economy . In 
particular, it cre ated the COVID -19 refinancing facility (FDR), which allows banks to refinance their 
corporate lending under the State -guaranteed COVID -19 loan programme at the SNB's policy rate ; 
it raised the threshold for exemption from the negative interest rate on sigh t assets held with 
the SNB; and it recommended to the Federal Council, after consultation with the Swiss Financial 
Market Supervisory Authority (FINMA), that the anti -cyclical capital buffer be deactivated . The SNB 
also offered USD liquidity in consultatio n with the Federal Reserve.  
 In 2021, the expansionary monetary policy remained unchanged and thus contributed to 
further recovery from the recession triggered by the coronavirus pandemic and the associated 
containment measures . The Swiss franc remained hig hly valued and occasionally came under 
pressure to appreciate . In view of the rise in inflation abroad and in Switzerland, the SNB has allowed WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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some nominal appreciation of the Swiss franc . This helped to offset rising prices in Switzerland, as 
appreciation  of the franc made imports cheaper, thereby helping to stabilize prices in Switzerland.  
 Fiscal policy  
 Switzerland's fiscal policy is, to a large extent, determined by the so -called debt brake rule, 
established in 2003 and amended in 2010 . This rule calls f or balanced federal budgets . However, a 
budget balance must be achieved over the economic cycle in order that automatic stabili zers can 
perform their function in cyclical upturns and downswings . Spending overruns are therefore expected 
to be redressed when  the economy recovers.  
 Following the introduction of the debt brake, structural surpluses have been consistently 
achieved, reducing the public debt . The strong initial financial situation thus afforded the Federal 
Council the flexibility to act swiftly and  extensively to support the economy and households during 
the COVID -19 pandemic . Consequently, the federal budget was in deficit in 2020 and 2021 . The 
pandemic -related debt must be wholly reduced . This will ensure that the federal budget remains 
strong in the future and is prepared for future challenges and crises.  
 While the debt brake is an efficient fiscal rule for management of the budget in the short and 
medium term, it will not be sufficient to solve long -term structural problems, such as an ageing 
population and its implication for social security . Challenges of this kind need to be tackled with 
dedicated reforms . In December  2021, the Parliament passed the AVS 21 reform . The reform seeks 
to ensure the financial equilibrium of the Old Age and Survivors Insurance (AVS) and to safeguard 
the level of benefits in the AVS . Essentially, it involves standardizing the retirement age by raising 
the age for women by one year to 65, in line with that for men . Extra funding is to be provided 
through VAT, w hich is to be increased by 0.4 percentage points . The referendum deadline is 
April 2022. 
 In 2019, the Tax Reform and Financing of the AVS (RFFA) was accepted by a popular vote . 
Corporate tax reform was necessary, as some tax advantages no longer met the requirements of 
the international community . Meanwhile, the AVS is facing financial challenges as it has to provide 
pensions to an ever -increasing number . The next corporate tax reform will be carried out by 
implementing the two pillars of the OECD tax ref orm. The required 15 % minimum taxation (pillar 2) 
is due to come into effect in January  2024 through a Constitutional amendment . However, the 
national implementation of the transfer of taxing rights to market States (pillar 1) cannot yet be 
decided, as ada ptations relating to international law are required in advance.  
 Micro, small and medium -sized enterprises (MSMEs)  
 While Switzerland lacks an official definition of a micro, small and medium -sized enterprise 
(MSME), any business venture, whatever its legal form and activity, is considered an MSME if it 
employs fewer than 250 persons . Switzerland has almost 600,000 MSMEs, which account for more 
than 99 % of all its companies and generate two thirds of all its jobs . In 2019, 42 % of Swiss exports 
were attributed  to MSMEs . As for imports, MSMEs accounted for 59 % of inflows.  
 To ensure prosperity and employment, it is important for companies, especially MSMEs, to 
have access to open markets . For small companies with no overseas presence and limited resources, 
an ope n trade policy is crucial . Simple procedures and legal certainty regarding market access are 
thus essential . Reducing technical barriers to trade is essential in this context.  
 Foreign economic policy interests are defined by consulting all interested parti es at an early 
stage . The SME Forum, an extra -parliamentary expert committee established by the Federal Council 
in 1998, is committed to ensuring that the federal administration pays special attention to small and 
medium -sized enterprises (SMEs) in its act ivities.  
 During consultation procedures, the SME Forum examines draft laws and ordinances and 
develops position papers reflecting the SME perspective . It assesses the implementation of the 
planned measures, particularly the administrative burdens, costs in volved and limitations on 
entrepreneurial freedom . The Forum also addresses specific areas of existing regulations and 
proposes simplifications or alternative regulations . The SME Forum provides a place for discussion WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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between its members (most of whom are male and female entrepreneurs) and the federal offices . 
Both parties thus analyse the concerns and demands of MSMEs.  
 MSMEs attach great importance to simple regulations that are both easy to apply and 
transparent . The SME portal and the EasyGov.swiss busin ess portal play strategic roles in this 
respect.  
 The SME portal of the State Secretariat for Economic Affairs (SECO) is the single window 
for SMEs . Created almost 20 years ago, it provides a wide range of information for SMEs, from 
starting up a business t o succession planning : practical information, news articles, key regulations, 
Government services for SMEs, etc. I t also provides links to e -Government services . In 2021, 
the SME portal had about 1.8  million  individual visitors.  
 In November  2017, the Confederation launched the EasyGov.swiss online window for 
interactions between businesses and the authorities . At the outset, the platform was mainly used by 
company founders, who can complete all the administrative procedures required to set up their 
business online, from registering the business to VAT, social insurance and accident insurance . 
Currently, some 40 administrative services are available - and the window has over 50,000 users, 
with a strong growth trend . EasyGov's main aim is thus to  reduce the administrative burden 
on MSMEs . The range of services offered by the authorities will be considerably extended during 
the 2020-2023 legislative period.  
 The Swiss Export Risk Insurance (SERV) agency is an institution under public law of the 
Swiss Confederation . SERV covers political and commercial risks in connection with the exportation 
of goods and services . The insurance and guarantees of SERV provide Swiss exporting companies 
with cover against non -payment and facilitate the financing of expo rt transactions . SERV's solutions 
also make it easier for companies to obtain credit or a higher credit limit and help them maintain 
their liquidity when exporting . SERV's offers are available to all companies, including MSMEs based 
in Switzerland . Traditionally, MSMEs account for more than two thirds of SERV's customer base.  
 Switzerland Global Enterprise (S -GE) is the official Swiss export promotion organization . In 
particular, it supports MSMEs in seeking and exploiting export opportunities abroad . S-GE reports 
on international market developments, offers advice, identifies international contacts, partners and 
business opportunities and helps to promote Swiss products and services abroad . The organization's 
branches in 31 countries also provide assistance abroad.  
 Innovation policy  
 In 2016, Switzerland Innovation, a network of independent regional sites for research and 
innovation, bringing industry and academia together, was inaugurated . It is represented by two hubs 
centred around the two Federal Institute s of Technology in Zurich and Lausanne and four additional 
network locations . The network forms an ecosystem that enables innovative universities and 
businesses to collaborate and use their research results to develop new marketable products and 
services . Switzerland Innovation is now an important component of the Swiss innovation promotion 
portfolio : it supplements federal instruments such as Innosuisse, the Swiss innovation agency, as 
well as regional and cantonal initiatives . Since its launch, the networ k has attracted 
around  240 companies, including 50 from abroad . Eight hundred  new jobs have been created.  
 On 1 January  2018, Innosuisse, the Swiss innovation promotion agency, took on the tasks of 
the Commission for Technology and Innovation (CTI) . Innosuisse is a federal institution under public 
law with legal personality . It is an independent agency in respect of its organization and 
management . The Federal Council sets strategic objectives and exercises a form of oversight, for 
example, by checking  every year whether the strategic objectives have been achieved.  
 In order for innovation promotion to respond more swiftly to SMEs' changing circumstances 
and needs, the Federal Law on the Promotion of Research and Innovation (LERI) was amended 
in 2021. This amendment seeks to give Innosuisse more room for manoeuvre and greater flexibility, 
including when it comes to promoting innovation projects and start -ups. WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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1.4  Trade Policy  
 Overview  
 In accordance with its foreign economic policy strategy and its COVID -19 transition strategy 
for economic policy, adopted in November  2021 and June 2021 respectively, Switzerland attaches 
great importance to trade policy in the pursuit of its objectives (see Sections 1.3.1 and 1.3.2) . 
Switzerland's trade policy is anchored in the  multilateral trading system of the WTO and 
complemented by a broad range of preferential arrangements with the EU and other partner 
countries . In addition, Switzerland promotes sustainable trade and international standards for the 
protection of the enviro nment, human rights and workers' rights.  
 It is important for Switzerland to improve conditions to promote open markets . Thus, 
Switzerland will remove tariffs on industrial products as of 1 January  2024. The removal of tariffs 
will benefit Swiss consumers a nd businesses by reducing the price of many consumer goods, 
production costs and the administrative burden on importing businesses . Trade relations will become 
more efficient, and competition will be strengthened.  
 On 1 January  2018, Switzerland embarked on  the DaziT programme : a large-scale programme 
to transform its customs procedures . In order to facilitate trade and ease the burden on the 
economy, the DaziT programme provides for the systematic simplification and full digitali sation of 
all customs proced ures by the end of 2026 . New applications simplify, inter alia , the customs 
clearance of goods in tourist traffic and enable mobile payment of the flat -rate fee for heavy goods 
traffic . The successful implementation of DaziT requires close collaboration wi th national and 
international partners . Discussions with neighbouring countries' customs administrations and 
European authorities are under way to simplify and speed up border crossings.  
 WTO  
 For Switzerland's economy, a strong, transparent and predictable rules-based multilateral 
trading system remains central . The WTO continues to form the indispensable basis of global trade 
and is the only mechanism with the potential to produce truly multilateral, inclusive solutions in the 
area of trade for a globalized  economy.  
 Against the backdrop of the COVID -19 pandemic and its ensuing uncertainties, Switzerland 
has pursued its active engagement across the WTO agenda in support of the multilateral trading 
system.  
 The WTO has an important role to play to address the s ocial and economic challenges of the 
health crisis . The Organization must contribute to global economic recovery and stability by 
promoting a comprehensive and coordinated response to the pandemic through coherent, effective 
and targeted trade policies . To increase the production and distribution of essential goods, including 
vaccines, in all regions of the world, Switzerland supports a holistic approach to the WTO's pandemic 
response . Keeping markets open, minimizing export restrictions, ensuri ng transparency on trade 
measures and the state of value chains, and facilitating trade through simplified customs procedures 
will contribute to the common goal.  
 Intellectual property is a key aspect of the holistic approach . The Agreement on Trade -Related  
Aspects of Intellectual Property Rights (the TRIPS Agreement) promotes partnerships between 
stakeholders in the research, development and production of new health technologies . The TRIPS 
Agreement proved its usefulness and effectiveness during the COVID -19 pandemic by acting as an 
incentive to produce drugs and vaccines of a complex composition quickly and safely . It is crucial 
that the TRIPS Agreement remains a reliable and predictable legal framework to continue 
encouraging collaborations between stakeho lders and the effective sharing of know -how and 
technology.  
 The COVID -19 pandemic has highlighted the importance of preserving and strengthening the 
multilateral trading system . To realize the full potential of multilateralism, however, all Members 
must as sume international responsibilities and commitments commensurate with their ability to help 
strengthen the multilateral trading system . Furthermore, reform of the WTO is necessary in order WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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to better address relevant developments in the global economy and t he needs of business and 
society.  
 WTO reform should enhance the Organization's three functions . First, as regards the 
negotiating function, the WTO must demonstrate its ability to conclude multilateral agreements that 
respond to current challenges, such as  the digitali sation of the economy and environmental 
sustainability . The continuation of the moratorium on customs duties on electronic transmissions 
and reaching a tangible agreement on fisheries subsidies are outcomes that will contribute to 
the WTO's cr edibility . The matters of special and differential treatment and a level field of 
competition must be included in the reform.  
 Multilateral solutions continue to be the best way to avoid discrimination between countries 
and regions . In this regard, Switzerland is open to consideration of various approaches that can add 
value to the multilateral trading system, including best practices and other non -legally binding 
commitments.  
 Where agreement among all WTO members is not achievable, plurilateral init iatives are a 
valuable alternative . In this connection, Switzerland welcomes the recent conclusion of the 
negotiation on domestic regulation of trade in services and the adoption at the end of 2020 of a set 
of recommendations in support of MSMEs . The good work on the joint statement initiatives must 
continue . The aim is to improve conditions for e -commerce, investment facilitation for 
development,  MSMEs, trade and environmental sustainability matters, and trade and gender . All 
these topics are relevant to t he WTO's modernization.  
 Second, the restoration of a functioning dispute settlement system is a top priority . All 
Members must engage in constructive dialogue to find concrete solutions . Since 2018, Switzerland 
has stepped up its participation in the WTO d ispute settlement system and strengthened its capacity 
in this area . Like several other WTO Members, Switzerland initiated WTO dispute settlement 
proceedings against US import restrictions on certain steel and aluminium products in July 2018 
(DS556) . During the period under review , Switzerland acted as a third party in 22 panel 
proceedings,  15 of which were related to the US measures on steel and aluminium and the 
rebalancing measures taken by some Members in response to these measures . As a third party, 
Switzerland regularly submits written or oral contributions.  
 Third, Switzerland attaches high importance to the WTO's regular work, in particular the 
monitoring of developments in the trading environment and of compliance by Members with WTO 
rules, including  on transparency . The reform should serve to improve the function of monitoring  WTO 
rules. This implies a systematic improvement in the transparency and operation of committees, 
including how trade irritants are addressed.  
 Switzerland also strongly support s the aim of making the WTO truly universal through further 
accession of new Members that meet the Organization's standards.  
 For Switzerland, further reduction of tariff and non -tariff barriers for industrial products and 
services continues to be of particular interest, along with a strengthening of the regulatory 
framework for the protection and enforcement of intellectual property rights . Switzerland also 
strongly supports WTO work on e -commerce, with a view to fostering digitally enabled trade, 
particularly for MSMEs and developing countries.  
 With respect to agriculture, Switzerland will pursue its constructive engagement in 
negotiations, underlining the need to adequately take into account non -trade concerns . During the 
period under review, Switzer land has demonstrated its commitment by eliminating export subsidies 
on agricultural products, in accordance with the decision adopted at the Tenth Ministerial Conference 
(MC10) in Nairobi, which required the national legislation to be amended.  
 Switzerland  has successfully completed the process of revising national law on Government 
procurement to harmonize federal and cantonal legislation and to transpose the requirements of the 
revised WTO plurilateral Agreement on Government Procurement (GPA) . In force s ince 
1 January  2021, the revised federal legislation on Government procurement and the revised  GPA 
provides  a modernized regulatory framework that improves legal certainty and simplifies the 
application of the law, while offering new opportunities to SMEs.  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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 Switzerland's engagement in the WTO includes an active role in a range of groups of Members 
sharing common interests, such as the G10 in agriculture, the Friends of the System and the Ottawa 
Group . During the period under review, Switzerland continued to host a yearly informal WTO 
ministerial gathering traditionally on the fringes of the World Economic Forum in Davos.  
 Other multilateral and plurilateral initiatives  
 Switzerland actively supports trade and investment -related work in the OECD . The OECD's 
analytical and policy -oriented output continues to make a valuable contribution to promoting policy 
coherence, strengthening the multilateral trading system and showing the consequences of 
protectionism.  
 Switzerland also supports the activities of the UN Confe rence on Trade and Development 
(UNCTAD) in the areas of trade and investment, among others . Analysis, consensus -building and 
technical assistance by UNCTAD play an important role in helping developing countries better 
integrate into the global economy, and  measure progress towards the UN 2030 Agenda for 
Sustainable Development.  
 Switzerland closely follows the work of the G20, which gives political impetus to global 
economic trends . At the invitation of the respective G20 presidencies, Switzerland has partic ipated, 
as a guest in 2013, and regularly since 2016, in all meetings of the finance track, as well as in those 
of the Anti -Corruption Working Group (ACWG) . Under Saudi Arabia's presidency in 2020, Switzerland 
was invited to participate in all G20 meetings . In 2021, under Italy's presidency, Switzerland again 
participated in the finance track, the ACWG, the Trade and Investment Working Group (TIWG) and 
the Health Working Group . In the TIWG, Switzerland continued to promote its values of open trade 
and moder nization of the multilateral trading system.  
 Preferential relations  
 As part of its foreign economic strategy, Switzerland has continued to negotiate, conclude and 
modernize bilateral and regional preferential agreements that complement and support the 
multilateral trading system . In 2020, 75 % of Switzerland's merchandise exports went to preferential 
trading partners . Switzerland aims to further expand and deepen its preferential trading relations.  
1.4.4.1   European Union  
 The European Union continues to be Switzerlan d's most important economic partner by far . 
The close relations between the two sides are reflected in an extensive network of contractual 
arrangements developed over time . In the area of trade, this network includes a free trade 
agreement concluded in 197 2 and a range of further agreements, most of which have become 
effective since 2002 and cover topics such as customs cooperation, agricultural products, technical 
barriers to trade, land and air transport, government procurement and the free movement of 
persons.  
 During the period under review, Switzerland and the EU continued to conduct negotiations on 
an institutional agreement . The institutional agreement aimed to preserve Switzerland's access to 
the European single market and to create a basis for extend ing this access . On 26 May 2021, due 
to substantial differences between the parties on key aspects, such as wage protection and the 
citizens' rights directive, the Federal Council decided not to sign this agreement . However, 
safeguarding and developing wel l-established bilateral cooperation with the EU remains a priority 
for the Government.  
 The Federal Council has adopted a series of measures to give positive impetus to relations 
with the EU . In the short term, the Parliament approved by a large majority on 3 0 September  2021 
the liberalization of the second Swiss contribution to certain EU member States . In the medium 
term, Switzerland proposes to establish a structured high -level political dialogue . Within this 
framework, a common agenda for furt her cooperation may be developed and monitored . In addition, 
Switzerland has embarked on a systematic assessment of regulatory differences between 
Switzerland and the EU, including in the area of domestic market agreements.  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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1.4.4.2   Free trade partners  
 Deepening an d extending Switzerland's preferential trade relations beyond the EU and the 
European Free Trade Association (EFTA) Convention also remain major objectives of the 
Government . These FTAs make an important contribution to sustaining the competitiveness of th e 
Swiss economy and the country's attractiveness as a business location through improved access to 
foreign markets and enhanced cooperation on an equal footing with Switzerland's main competitors.  
 With partners outside the Euro -Mediterranean area, Switzerl and is generally seeking FTAs 
that are comprehensive in scope, including trade in goods, services, investment, intellectual 
property, competition, government procurement, trade facilitation, and trade and sustainable 
development provisions.  
 Switzerland neg otiates, concludes and administers its FTAs mostly in association with its EFTA 
partners . During the period under review, new EFTA free trade agreements were concluded with 
Ecuador (2018, entry into force in November  2020) and Indonesia (2018, entry into f orce in 
November  2021), and a substantive agreement was reached with the Mercosur States (2019) . 
Switzerland signed a bilateral FTA with China in 2013, which entered into force in July 2014. In 
addition, the existing agreement with Turkey was modernized (2 018, entry into force in 
October  2021). Switzerland also signed a bilateral agreement with the United Kingdom (2019, entry 
into force in January  2021).  
 By the end of 2021, Switzerland had 33 FTAs with 43 partner countries outside the EU 
and EFTA. Together with its EFTA partners, Switzerland is pursuing negotiations with India, Malaysia, 
Moldova and Viet Nam . In parallel, Switzerland is engaged in negotiations on further development 
of several existing EFTA free trade agreements, including those with Chile, Mexico and the 
Southern  African Customs Union (SACU).  
 Trade and development  
 Supporting the integration of developing countries into the global economy, a pillar of Swiss 
foreign policy, remains an objective of Switzerland's new foreign economic strategy . In that context, 
promotion of trade plays a key role and offers significant opportunities for sustainable economic 
growth and job creation . Trade promotion is a key objective of Switzerland's development 
cooperation for the period 2021 -2024, as it has been in previous periods . International trade is a 
key part of the solution to accelerate recovery from the COVID -19 crisis, especially for developing 
countries.  
 Switzerland has supported the global Aid for Trade Initiative of the WTO and the OECD since 
its inc eption in 2005 . During the period under review, Switzerland continued its commitment to the 
Enhanced Integrated Framework (phase II), which aims to promote the integration of the least 
developed countries (LDCs) into world trade.  
 In the period under review, Switzerland's trade promotion work focused on strengthening 
export capabilities of MSMEs in designated partner countries and on facilitating imports into target 
markets . Several initiatives aiming to improve institutional capacity to participate in  international 
trade and value chains have been carried out in this framework . Similarly, climate change mitigation 
and adaptation and gender equality are important cross -cutting objectives . The projects, most of 
which were implemented with partner organiz ations, included:  
• Provide assistance to customs administrations to strengthen compliance with 
international standards and best practices in the import, export and transit of goods . 
This assistance has been put into operation through the World Customs Organ ization's 
(WCO) Global Trade Facilitation Programme and the World Bank's Trade Facilitation 
Support Programme, in particular to help WTO members implement the Trade 
Facilitation Agreement;  
• Building in -country export know -how (for example, on quality requirements, product 
labelling and border procedures), in partnership with the International Trade Centre 
(ITC), and supporting the work of ITC's Trade for Sustainable Development programme WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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and the Standards Map database, whic h aims to provide transparency on voluntary 
sustainability standards;  
• Assisting trade policy makers in partner countries to build their capacity in trade 
negotiations and implementation of trade agreements and unilateral trade policies;  
• Assisting trade sup port organizations in partner countries in facilitating MSME exports 
to Switzerland and other European markets;  
• Establishing local quality assurance systems to help MSMEs' comply with international 
standards;  
• Developing investment climate programmes in som e 30 countries, in cooperation with 
the International Finance Corporation (IFC).  
 Switzerland remains a major donor of the Advisory Centre on WTO Law (ACWL) . Along with 
the International Labour Organization (ILO), Switzerland has committed to promoting comp liance 
with core labour standards, particularly in the textiles sector (Better Work), supporting MSMEs 
through the Sustaining Competitive and Responsible Enterprises (SCORE) programme and 
promoting decent work and productive employment through the Producti vity Ecosystems for Decent 
Work. During the period under review, Switzerland also became one of the main donors to UNCTAD's 
programme on E -Commerce and the Digital Economy (ECDE), which aims to create an enabling 
environment and build capacity in e -commerc e. 
 Trade and sustainability  
 In Switzerland's view, trade must contribute to achieving the goals of sustainable 
development, as reflected in the United Nations 2030 Agenda, and the challenge of climate change 
in particular . In the WTO and other internationa l organizations, Switzerland therefore actively 
advocates policies and rules that promote sustainable development and coherence between trade 
rules and relevant environmental, labour and social commitments.  
 Within the WTO, besides its active participation in the Committee on Trade and Environment, 
in November  2020 Switzerland joine d two initiatives that complement multilateral efforts : the trade 
and environmental sustainability structured discussions (TESSD) and the informal dialogue on 
plastics pollution a nd environmentally sustainable plastics trade (IDP).  
 Switzerland participates actively in the negotiations on the Agreement on Climate Change, 
Trade and Sustainability (ACCTS) . This initiative aims to demonstrate the mutual support and 
complementarity of t rade and environmental policies . The initiative thus provides a systemic 
contribution to the debate on trade and environment, including within the WTO.  
 During the period under review, as mentioned above, all Switzerland's FTAs with its EFTA 
partners includ e a chapter on trade and sustainable development . Dialogue is taking place with a 
number of partner countries on the implementation of the related commitments.  
 In October  2017, Switzerland ratified the Paris Agreement on climate change, which promotes, 
inter alia , the phasing out of fossil fuels . As such, Switzerland supports fossil fuel subsidy reform in 
the Friends of Fossil Fuel Subsidy Reform group . This group is committed to the phasing -out of 
inefficient fossil fuel subsidies, in line with the G20 and  APEC statements.  
 Switzerland is a signatory to the Basel Convention, an amendment to which entered into force 
on 5 December  2019, prohibiting the transboundary movement of hazardous waste (destined for 
final storage, recovery or recycling) between OECD an d non -OECD countries.  
 In January  2020, the Government adopted a revised Plan on Corporate Social and 
Environmental Responsibility and a revised National Action Plan on the Implementation of the UN 
Guiding Principles on Business and Human Rights . These plan s aim to increase coherence between 
Switzerland's economic policy and the country's obligations to promote responsible business conduct 
and human rights . It also involves setting expectations towards Swiss -based businesses and 
planning various awareness -raising and training initiatives . This includes the promotion of due WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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diligence in the responsible conduct of business following the UN Guiding Principles as well as the 
relevant OECD instruments for multinational enterprises.  
1.5  Outlook  
 During the period under review, Switzerland's economic policy has remained focused on 
maintaining and improving Switzerland's prosperity, while respecting the Sustainable Development 
Goals.  
 During the COVID -19 crisis, Switzerland benefited from a number of stabilizing factors, su ch 
as the diversified economic structure, a high degree of international openness, a high -quality 
education system, a flexible labour market, a moderate tax burden and sound public finances . 
Following the unprecedented economic downturn triggered by the COVID -19 pandemic, Switzerland 
adopted the COVID -19 transition strategy, which aims to strengthen the economy's long -term 
recovery and address shortcomings in the Swiss economy, such as insufficient labour productivity 
and the need to strengthen competitio n in the domestic market.  
 For Switzerland to continue to succeed in a rapidly evolving, interdependent global economy, 
open markets and non -discriminatory trade rules are of fundamental importance . At the same time, 
Switzerland is mindful of a strong need to make trade work more and better for developing countries, 
in particular LDCs, and for sustainable development more generally in line with the UN 2030 Agenda . 
Switzerland will therefore actively pursue mutually supportive economic, social and environment al 
policies both at the domestic and global levels.  
 For Switzerland, the WTO remains the anchor of its trade policy . Switzerland will continue to 
strongly support and actively contribute to preserving a well -functioning multilateral trading system 
and to k eeping it relevant for the membership and the global economy . Switzerland thus supports 
the necessary reform of the WTO . In Switzerland's view, while maintaining the aim of multilateral 
solutions at the centre, further developing and reinforcing the WTO's regulatory framework will also 
require variable approaches to address the wide range of interests and reflect the different stages 
of development of Members.  
  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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2  REPORT BY LIECHTENSTEIN  
2.1  Introduction  
 In 2019, the Principality of Liechtenstein celebrated the 300th anniversary of its existence within 
unchanged national borders. Liechtenstein 's territory today covers an area of 160 km2, making it 
the fourth smallest state in Europe. The settlement area amounts to 11%, while 42% of the national 
territory is considered forest area, 33% agricultural area, and 15% unproductive area. The 
Liechtenstein Constitution, which is still in force today, was adopted in 1921. In 1923, Liechtenstein 
and Switzerland concluded a Customs Treaty, which will thus have its 100th anniversary next year. 
Moreover, it was during this time that the Swiss Franc was introduced as Liechtenstein 's currency. 
These steps had a very positive economic effect on the country, although the actual upswing in 
Liechtenstein began only afte r 1945. In addition to the Customs Treaty, cooperation with Switzerland 
today is based on more than one hundred other treaties, such as the Currency Treaty and 
agreements in areas such as education, intellectual property, agriculture, road transport, and 
indirect taxes.  
 Milestones in the recognition of Liechtenstein as an independent member of the international 
community were its accession to the Council of Europe in 1978, its accession to the UN in 1990, its 
admission to the European Free Trade Association  (EFTA) in 1991, and its accession to the World 
Trade Organi zation (WTO) in 1995. Moreover, Liechtenstein has been a member of the European 
Economic Area (EEA) since 1995 and an associate member of Schengen -Dublin since 2011. Its 
economic foreign policy is  built upon four pillars: (i) the inclusion in the Swiss customs and currency 
union; (ii) the participation in the European Single Market through the Agreement on the EEA; (iii) 
a broad network of free trade agreements concluded through EFTA and (iv) the m embership in the 
WTO.  
 Unhindered access to the European Single Market via the EEA Agreement constitutes a 
comparative advantage and an essential factor for the security and stability of the Liechtenstein 
economy. EEA membership has opened up new business o pportunities, leading to further 
diversification of the Liechtenstein economy and has positioned Liechtenstein as a reliable partner 
in Europe. At the same time, the Customs and Currency Treaties guarantee market access to 
Switzerland. The overall outcome of Liechtenstein 's EEA membership is therefore very positive, 
which is underlined by consistently very high levels of approval for EEA membership among 
businesses, the population, and policymakers.  
 The report on the Sixth Trade Policy Review of Switzerland  and Liechtenstein presents the 
developments in the economic union between Switzerland and Liechtenstein during the past four 
years. It simultaneously reflects the high degree of Liechtenstein 's integration in the EEA, which 
forms the legal framework for economic cooperation between the three EEA EFTA States (Iceland, 
Liechtenstein, and Norway) and the EU member States. As a party to the EEA Agreement, 
Liechtenstein fully participates in the EU' s Internal Market, which is based on the principle of the 
free movement of goods, persons, services and capital, with uniform and common rules governing 
competition, including state aid. In addition, the EEA Agreement covers cooperation in other areas, 
such as research and development, education, social policy, the environment, consumer protection, 
tourism, and culture.  
 Since an open and well -functioning multilateral trading system is fundamental to economic 
growth and development, the trading system of th e WTO is an essential element of Liechtenstein 's 
economic policy. Liechtenstein is firmly committed to the rules -based, transparent and open 
multilateral trading system of the WTO. Liberali zation of trade at multilateral and regional levels (via 
WTO and EF TA) is a high priority of Liechtenstein 's economic foreign policy.  
2.2  Trade  and Economic Policy Environment  
 As a small and open economy, Liechtenstein has been significantly affected by the global 
economic downturn, triggered by the Covid -19 pandemic. Howeve r, contrary to the global financial 
crisis, when Liechtenstein 's GDP contracted considerably more than in other (larger) economies, the 
contraction in terms of output does not stand out in the current recession when compared to other 
(larger) European econ omies. While there had first been a strong decline of external demand, 
exports have quickly recovered and the labor market has remained remarkably resilient to the WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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downturn. In details, in 2020, direct merchandise exports from Liechtenstein amounted to CHF  2.86 
billion, a significant decline of -16.4% from the previous year, while direct imports also decreased 
significantly by -17.0% to CHF 1.65 billion. While merchandise exports were severely hit during the 
first wave of the pandemic in early 2020, Liechte nstein 's economy has benefited from a strong 
recovery in external demand since the second half of 2020.  Notwithstanding the significant drop in 
output, Liechtenstein 's economy is expected to remain resilient. Similarly, even during the 
challenging time of the Covid -19 pandemic, Liechtenstein 's government budget has remained 
remarkably sound. Liechtenstein 's public finances are characterized by virtually zero debt (CHF 37 
million or 0.6% of GDP in 2019) and large financial reserves. Between 2014 and 2019, Li echtenstein 
has reported budget surpluses between 2% and 4% of GDP annually (the surplus amounted to 3.7% 
of GDP in 2019, up from 3% in 2018), leading to an increase in total financial reserves at the overall 
government level (state, local government and s ocial insurances) to CHF 6.7 billion in 2019, slightly 
exceeding GDP in that year.  
 The considerable level of stability and resilience of Liechtenstein 's economy is characterized by 
some important institutional specifics. In particular, the strong industria l and manufacturing base, 
contributing almost four times as much to gross value added (GVA) as financial services, 
differentiates Liechtenstein from other highly industrialised economies and financial centers. In light 
of the customs union with Switzerland  and the membership in the EEA, the financial sector and the 
real economy enjoy full market access to both the Swiss market and the European Single Market. 
The EEA membership is not only central for Liechtenstein 's international integration efforts, but al so 
implies that the financial sector is fully regulated by EU standards. Additionally, the customs and 
currency union with Switzerland and the associated membership in the Swiss franc currency area 
also generally contribute to the stability of the economy.  The industrial sector includes some highly 
successful niche players in global markets, with companies showing considerable flexibility in 
adjusting to changing structural circumstances. This flexibility results from the need to face strong 
competition in global markets and to be highly innovative to increase productivity against the 
background of a strong appreciation of the Swiss franc over the last years. Furthermore, high equity 
ratios in the non -financial corporate sector, high liquid reserves and no d ebt in the public sector as 
well as high incomes and wealth in private households increase the resilience of the whole economy, 
as temporary shocks can be better cushioned. Finally, Liechtenstein 's economy is characteri zed by 
a high degree of diversificati on, including within the different sectors of its economy.  
 In an environment where economies are increasingly internationally linked and globally 
dependent, which has become apparent with the effects of the Covid -19 pandemic, it is a central 
priority of th e Liechtenstein Government to promote conditions for business activities which are 
stable and advantageous. In addition to political continuity, this requires a predictable legal and 
social as well as a liberal economic order. The level of State interventi on in economic processes has 
been kept low for most of the reporting period. However, in order to mitigate the economic 
consequences of business closures and other health -related counter -measures ordered by the 
authorities since the outbreak of the pandemi c, Government and Parliament as well as local 
authorities have adopted a number of temporary support measures, including in particular a 
comprehensive fiscal support package adopted as early as in March 2020. These include making 
interest -free transitional  loans available to MSMEs, a provisional deferral of the payment of social 
insurance contributions and taxes, financial support for self -employed affected directly or indirectly 
by administrative lockdown measures, and the granting of short -time work allow ances. Most of these 
support measures have been phased out in the meantime. However, short -time work allowances, 
which have helped to avoid temporary lay -offs, will continue until the end of March 2022.  
 The fiscal measures taken by the government to cushi on the economic consequences of the 
Covid -19 pandemic, which were further extended by municipalities ' budgets, resulted in fiscal 
stimulus measures amounting to around 2% of GDP. Despite these extra expenditures in light of the 
global pandemic, and an addi tional extraordinary expenditure of CHF 100 million to increase reserves 
in the social security system, the budget balance on the state level remained significantly positive 
in 2020.  
 Indeed, sound public finances have become an important structural charac teristic of 
Liechtenstein 's economy. Following the financial crisis of 2008, the government enacted structural 
reforms which significantly lowered public spending, with the public spending ratio standing at 20.9% 
of GDP in 2019, the lowest level among all European countries. Against this background, today 's 
public finances reflect a fast and decisive implementation of necessary structural reforms and an 
efficient decision -making in economic policy in the last decade. Thereby, the public sector has WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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repeatedl y confirmed its flexibility to adapt to new circumstances and its high political effectiveness 
in implementing structural reforms.   
 During the last four years, the Liechtenstein Government has thus continued to adhere to its 
long-standing liberal economic policy relying on self -dependent economic actors and confining state 
interventions to the establishment of framework conditions which are favourable to 
entrepreneurship. At the same time Liechtenstein has continued to incorporate newly adopted 
European acq uis communautaire into domestic law: More than 11,300 EEA -relevant legal acts of the 
European Union are now applicable in Liechtenstein. Moreover, Liechtenstein has further expanded 
its network of free trade agreements together with the other EFTA Member S tates, who, since 2016, 
have concluded new preferential agreements with other members of the WTO, such as Georgia, the 
Philippines, Ecuador and Indonesia.  
 Economic  growth  
 Liechtenstein 's economy is small in absolute terms, poor in natural resources and hig hly 
export -oriented with a large share of gross value added generated in manufacturing. It has shown 
stable growth in recent years up until 2019, with GDP increasing from CHF 6.1 billion in 2016 to CHF 
6.4 billion in 2017 and CHF 6.5 billion in 2018. For t he first time since 2015, the economic momentum 
of previous years (2016: +1.9%; 2017: +3.7%; 2018: +2.7%) weakened in 2019, with GDP 
amounting to CHF 6.4 billion, showing a contraction of -2.4%.  
 For many years, Liechtenstein 's economy experienced an above -average growth in 
employment. The population of Liechtenstein almost doubled since 1970 to 39 '062 by the end of 
2020. Over the same period, the number of persons employed in Liechtenstein more than tripled to 
40,328. In 2017, the number of jobs started to  exceed the number of people residing in 
Liechtenstein. Due to the strong economic growth over the past decades and the small size of the 
country, an increasing input of labour from neighbouring countries is required. More than half of the 
employed persons  commute daily, mostly from neighbouring Switzerland and Austria or from 
Germany. Compared to the total resident population, the high proportion of job creation remains a 
particular feature of Liechtenstein 's economy. In 2020, 40% of the employment in term s of full -time 
equivalents was in industry, 60% in services and 0.1% in agriculture. By international comparison, 
the very low proportion of agriculture and forestry is striking, as is the relatively high proportion of 
the manufacturing sector. The service s sector is smaller than in other European countries. 
Unemployment rates in recent years first decreased further from 2.1% in 2016 and 1.8% in 2017 
to 1.7% in 2018 and 1.5% in 2019 before slightly rising again to 1.9% in 2020 and dropping to 
1.6% in 2021. This underscores the good recovery and the robustness of Liechtenstein 's labour 
market.  
 Liechtenstein companies create jobs not only in Liechtenstein, but also in significant numbers 
abroad. The number of employees working abroad for industrial companies w hich are members of 
the Liechtenstein Chamber of Commerce and Industry (LCCI) increased strongly in recent years to 
58,201 in 2019. This corresponds to a foreign share of 80%. In the same year, the Liechtenstein 
banks had, in terms of full -time equivalents , approximately 4,000 employees working abroad 
(compared to 2,129 in Liechtenstein).  
 Due to its small size, highly developed and open economy, and its competitive industry, 
Liechtenstein traditionally is highly dependent on foreign demand and has high leve ls of import and 
exports compared to its GDP. Since trade data is available for Liechtenstein (1995), the country has 
never registered a negative trade balance. The foreign trade ratio is high by international standards, 
and can be explained by the high fo reign trade surplus driven by the exports. The most important 
export destination country for Liechtenstein 's industry and goods production sector besides 
Switzerland remains Germany, followed by the United States, Austria and France.  
 At the end of 2019, L iechtenstein 's economy accounted for 5,050 commercially active 
companies. About 88% of them had fewer than ten employees, 98% fewer than 50. The number of 
companies in Liechtenstein is therefore very large compared to the population: There is one 
commercia lly active company for nearly every eight inhabitants. The number of commercially active 
companies in Liechtenstein has nearly doubled in the last two decades. Employment (number of 
persons employed part -time and full -time) in Liechtenstein is diversified across the economic sectors 
of industry and manufacturing, financial services, and general services. The ten companies with the WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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highest employment are spread across all three of these economic sectors, accounting for 63% of 
total employment in Liechtenstei n in 2019.  
 Assets under management of the 13 banks (until 2020: 14 banks) in Liechtenstein and abroad 
collapsed in the wake of the financial crisis of 2008/2009 and subsequent far -reaching reforms in 
the financial centre, but since then they have risen aga in quite steadily to over CHF 365.4 billion 
(including foreign group companies) in 2020. Assets under management in Liechtenstein, excluding 
foreign group companies, also recovered and exceeded the level of 2007, amounting to CHF 179.2 
billion in 2020. In 2020, net new money placed with Liechtenstein financial institutions including 
foreign group companies amounted to CHF 17.7 billion (2019: CHF 20.4 billion) respectively to CHF 
5.5 billion (2019: CHF 1.0 billion) if foreign group companies are not taken in to account. The positive 
trend in assets under management and net new money thus seems to be continuing in spite of the 
pandemic. According to estimates by the Boston Consulting Group (2015), Liechtenstein has a share 
of about 1% in the total of USD 11 '000 billion in cross -border assets under management. Compared 
to other countries/territories, Liechtenstein 's financial sector can thus be considered a rather small 
player.  
 As regards insurance services, there were 19 life insurance, 14 non -life insurance, an d three 
reinsurance undertakings operating with registered offices in Liechtenstein at the end of 2020. 11 
undertakings operated as captives. Compared with the previous year, the numbers of insurances 
slightly decreased. Liechtenstein is the only insurance  center that offers insurance undertakings 
direct access both to the countries of the EEA and to Switzerland. The solvency rate of the 
Liechtenstein insurance sector was approximately 190% at the end of 2020.  
 The Liechtenstein investment fund center is a r elatively young market that has grown 
successively in recent years. Thanks to Liechtenstein 's membership in the EEA, investment 
undertakings benefit from free access to the European market. At the end of 2020, there were 522 
investment undertakings in Liec htenstein with net assets of CHF 59.1 billion.  
 Liechtenstein has the same inflation rate as Switzerland (2017: 0.53%, 2018: 0.94%, 2019: 
0.36%, 2020: -0.73%). There are no figures available reflecting private consumption or investment 
in Liechtenstein only .  
 The economic sectors  
 Liechtenstein 's economy is broadly diversified by sectors, businesses and products. The 
average value added is very high, based on research and development, qualified expertise, a wide 
range of high -tech and niche products, strong e xport orientation of its industry, and a highly 
developed financial services sector. Its services sector covers more or less all services of the UN 
services classification system. The rate of investment in research and development compared to 
GDP in 2019 s tood at 5.7% or CHF 375.4 million, 98% of the investments made by companies 
themselves. The 436 new patent applications (2019: 437) at the European Patent Office in 2020 
correspond to 11.2 patent applications per 1 '000 inhabitants, which is very high in co mparison with 
other countries.  
 In 2019, 45.8% of GVA  was the result of value added in industrial production and 
manufacturing, compared to 42.6% in general services, 11.5% in financial services2 and 0.1% in, 
agriculture, forestry and fishery.  
 The primary sector employs 0.6% of the total workforce, its sha re having further decreased 
from 0.8% in 2017. In 2020, there were 95 recogni zed farms in Liechtenstein. These managed an 
agricultural area of 3,584 ha. The average agricultural area per farm was 37.7 ha. In 2016, the 102 
recognized farms had managed an av erage usable agricultural area of 35.2 ha per farm. Of the 95 
recognized farms, 76 kept cattle in 2020.  
 
2 Traditionally, in Liechtenstein 's statistics, financial and insurance activities, legal and accounting 
activities as well as activities of head offices were regarded as financial service providers. More recently, statistics 
take the NACE  Rev.2 classification as a reference (Statistical Classification of Economic Activities in the European 
Community). The figure listed for financial services represents activities in accordance with divisions 64 to 66 of 
that classification system (i.e. fin ancial and insurance activities).  
 WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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 Liechtenstein 's agriculture is closely linked with Switzerland through the Customs Treaty due 
to which the Swiss Federal Law on Agriculture is applicab le in Liechtenstein as well. Moreover, 
identical climate, relief, soil, topography, and structure of production, together with a common policy 
formulated by Switzerland for the customs union, have enhanced the similarities between the 
Liechtenstein and Swi ss agriculture sectors. The prices of agricultural products are broadly the same 
in Switzerland and Liechtenstein. The reduction of the total number of farms over the last few 
decades (through mergers and liquidations) has led to an increase in the number of farms with a 
size of over 20 ha, and thus to an increase in the average size. Some 80% of the farmland is under 
lease. Organic agriculture has developed strongly in recent years. About 39% of all of Liechtenstein 's 
agricultural land is used to produce a gricultural products that meet organic standards. 40% of all 
professional farmers in Liechtenstein are organic farmers. Organic farming has thus become an 
inherent part of agriculture in Liechtenstein. There are also 10 organic -certified food processors in  
Liechtenstein. Staple products such as milk and vegetables compose the backbone of the organic 
farming movement in Liechtenstein, which began 30 years ago. Liechtenstein 's agricultural sector 
also plays an important role for the sustainable preservation o f the characteristic landscape of hilly 
and mountainous areas, which make up two thirds of Liechtenstein 's territory.  
 Liechtenstein 's economy continues to be strongly shaped by its goods production. In 2019, 
the goods -producing sector provided 36.5% of all jobs. This represents a remarkably high 
proportion, compared to other European countries. Jobs in the goods -producing industry are 
provided by a total of 625 enterprises (2019). These enterprises are mainly small companies with 
less than 50 persons emp loyed. They are engaged in a large number of speciali zed market niches 
and contribute to the broad diversification of Liechtenstein 's economy. The most important branches 
of the industrial sector are mechanical engineering, plant construction, manufacturin g of precision 
instruments, dental technology, electronic control devices, vacuum, heating/lighting technology, 
dentistry and pharmaceutical products and food -processing industry.  
 Financial services also constitute an important economic sector in Liechten stein. Private 
banking and wealth management account for a substantial part of the added value generated by the 
financial centre today, while the rest is generated in particular by insurers, the fund industry and 
independent asset managers. Globalization h as an important effect on the competitive situation of 
the Liechtenstein financial centre. The most important challenges include restrictions to (global) 
market access, the rapid technological progress, and the accelerating cycles of innovation.  
 As an EEA  Member State, Liechtenstein must implement relevant EU legislation. Accordingly, 
banking, insurance, securities and accounting legislation is based on the relevant EU Directives and 
Regulations. Moreover, Liechtenstein as an EEA Member State fully partici pates without the right to 
vote in the European Financial Surveillance System. In addition, the Liechtenstein 's financial 
institutions benefit from an EU passport granting them the unhindered access to the EU Market.  
 The appreciation of the Swiss franc co ntinues to represent a challenge for Liechtenstein 
companies, in particular in the manufacturing sector, as a large and growing share of turnover is 
being generated abroad in foreign currencies. When the Swiss franc appreciates, the turnovers 
reported in f rancs drop accordingly. The same is true of profits, because most of the costs of the 
financial sector are incurred in Swiss francs, to the extent the parent companies are located in 
Liechtenstein, which leads to a worsening ratio of costs and income. The Liechtenstein financial 
sector, however, is facing this uncertainty with a comfortable capacity to bear risks. The average 
core capital (Tier 1) ratio across all banks was 22.3% in June 2021. This is far above the 
requirements of Basel III (8%, including s upplementary capital) and the EU average (approx. 
17.2%). This is also true for the leverage ratio, which at 7.8% by the end of 2020 was significantly 
above the requirements of Basel III (3%). The consolidated cost/income ratio of banks in the 
Liechtenstei n financial centre was 71.2% in 2020. The high level of capital adequacy offers a 
guarantee for a stable financial center and security for banking clients.  
 In accordance with the "Liechtenstein Declaration" of 12 March 2009, when the Liechtenstein 
Governme nt committed to implement global standards of transparency and exchange of tax 
information as developed by the OECD and to advance its participation in international efforts in 
order to counteract non -compliance with foreign tax laws, Liechtenstein is acti vely participating in 
the work of the Global Forum on Transparency and Exchange of Information for Tax Purposes and 
has been assigned a rating of "Largely Compliant" in the second phase of the Global Forum 's Peer 
Review. Until now, Liechtenstein has conclu ded 21 Double Taxation Agreements according to the 
OECD Standard, concluded 27 Tax Information Exchange Agreements (TIEA), ratified the Multilateral WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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Convention on Administrative Assistance in Tax Matters in August 2016 ("Multilateral Convention") 
and signe d the Multilateral Competent Authority Agreement on Automatic Exchange of Financial 
Account Information ("AEI MCAA") in 2014. As an early adopter for the implementation of the global 
standard on automatic exchange of information, Liechtenstein has conclude d an Agreement to 
Automatic Exchange of Information in Tax Matters (AEOI) with the EU which has entered into force 
on 1 January 2016. As of 1 January 2022, Liechtenstein 's AEOI network comprised a total of 
114 AEOI exchange partners. Liechtenstein has also  joined the Inclusive Framework of the OECD to 
implement measures against Base Erosion and Profit Shifting (BEPS) and signed the Multilateral 
Competent Authority Agreement on Country -by-Country Reporting ("CBC MCAA") in 2016. After 
joining the OECD/G20 Inc lusive Framework on BEPS in 2016, Liechtenstein moreover abolished its 
IP Box regime with a grandfathering period that ended on 31 December 2020. Furthermore, 
Liechtenstein ratified the Multilateral Convention to Implement Tax Treaty Related Measures to 
Prevent Base Erosion and Profit Shifting (MLI) in 2019. Today, Liechtenstein does not have any 
harmful tax regimes as confirmed by the annual Peer Reviews by the Forum on Harmful Tax Practices 
(FHTP).  
 Liechtenstein has a vital interest in the worldwide enfo rcement of internationally recognized 
standards to prevent abuse of the financial markets. Liechtenstein 's foreign policy therefore pays 
great attention to the development and international enforcement of uniform rules to prevent and 
combat money launderin g and the financing of terrorism.   
 At the national level, legislative, administrative and other practical measures have been taken 
in the last years to achieve this goal. Liechtenstein has fully implemented the EU 's 5th Anti -Money 
Laundering Directive. The  implementation of relevant standards in Liechtenstein has been 
acknowledged by international bodies. In 2021/2022, the regime in Liechtenstein on anti -money 
laundering (AML) and the combating of financing of terrorism (CFT) was again assessed by the 
Counc il of Europe Committee of Experts on the Evaluation of AML and CFT (Moneyval). An on -site 
visit was conducted in September 2021 in the framework of a mutual evaluation process aimed at 
assessing jurisdictions' technical compliance and effective implementat ion of international 
standards, in line with the 2013 methodology of the Financial Action Task Force (FATF). The report 
on the evaluation is scheduled for discussion and adoption at MONEYVAL 's 63rd  Plenary meeting in 
Spring 2022.  
 On 1 January 2020, the To ken and Trusted Technology Service Provider Act (TVTG) – also 
known as the "Blockchain Act." – entered into force in Liechtenstein. With this new law, Liechtenstein 
was the first country to introduce a comprehensive regulation of the token economy. On the one 
hand, the law regulates civil law issues in relation to client and asset protection. On the other hand, 
adequate supervision of the various service providers in the token economy has been established. 
In addition, there are measures to combat money lau ndering by making service providers subject 
to rules on anti -money laundering and the combating of financing of terrorism. Furthermore, the law 
provides clarity and legal certainty with regard to digital securities.  
 There had been widespread legal uncertai nty regarding business models on blockchain 
systems which are not covered by financial market legislation but nonetheless involve carrying out 
activities that are very close to the financial sector. With the Blockchain Act, Liechtenstein now 
defines the mi nimum requirements for these activities in blockchain systems and requires all of them 
to be registered with the Liechtenstein Financial Market Authority. The new law also contains a legal 
classification of elements on blockchain systems. The Blockchain Ac t defines the term "token" as a 
new construct to enable the transformation of the "real" world to blockchain systems while ensuring 
legal certainty, thereby opening up the full potential for application of the so -called token economy. 
The introduction of t he legal construct of the "token" in Liechtenstein law requires that the legal 
consequences – such as ownership, possession, and transfer – must also be legally defined.  
 The applications of blockchain technology are not restricted to simple transactions o f coins or 
tokens with an exchangeable value between private individuals. Rather, they provide the option for 
a large range of economic services, as assets or rights in general can also be recorded in blockchain 
systems. For the financial transactions, thi s provides the possibility to create a digital recording of 
means of payment or assets and the possibility to conduct transactions with no direct intermediary 
being responsible for the execution of such transaction. The low costs for digital transactions a re 
likely to open up new opportunities beyond financial services in fields such as logistics, mobility, 
energy, industry, media, and many more. All these potential applications are grouped together under 
what is called the "token economy".  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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 Because of the r apid pace and broad scope of the development of blockchain technology and 
its areas of application, Liechtenstein 's Blockchain Act is formulated abstractly enough to ensure that 
it remains applicable for subsequent technology generations. That is why the l aw uses the term 
"transaction systems based on trustworthy technologies (TT systems)". As blockchain technology is 
actively used in Liechtenstein, the new law clarifies which requirements apply for important activities 
on TT systems (TT services). Customer  protection is improved and the application of due diligence 
obligations is required in order to ensure compliance with international standards and extensive and 
effective fighting of money laundering. The law defines a legal framework for all applications  of the 
token economy in order to ensure legal certainty for current and future business models. In 
particular, this involves rules on generating and storing tokens. For securities to be represented in 
a token on a TT system, and transferred therein, via a  physical document without any detours, the 
legal concept of the book -entry securities ("Wertrecht") has been accepted in Liechtenstein 
legislation, and at the same time the necessary interfaces between the securities law and the 
Blockchain Act have been c reated. Book -entry securities are "dematerialized" securities where the 
functions of a certificate can be replaced by an entry into the book -entry register.  
 State activities  
 The Government of Liechtenstein provides neither traditional export subsidies or g uarantees, 
nor subsidies to companies, with the exception of the agricultural sector, which mainly consists of 
family -owned micro -businesses. The main features of the playing field set by the Government 's 
economic policy are free trade agreements, stabilit y, durability and reliability of the policy measures, 
maintaining a high -quality educational system, a business -friendly tax regime, low administrative 
burden and a lean and customer -oriented public administration. In order to further facilitate the 
intera ction with the public administration, the Government is currently advancing the digitali sation 
of most public services, for example including identification and payment services. For that purpose, 
a "Digitalisation Roadmap for the Liechtenstein Public Admi nistration" was developed in 2020. The 
Roadmap, which includes more than 100 digitalisation projects across 29 public offices, is to be 
implemented in the coming years. In its e -Government Act, the government has stipulated that from 
2023 onwards, all comm unication between companies and public authorities must be conducted 
electronically.   
 With the aim of further promoting an investor -friendly environment in accordance with 
relevant EEA law, the Liechtenstein tax legislation was completely revised in 2011 w hen a totally 
new tax act replaced the previous one dating back to 1961. Under the new tax act, legal persons 
taxable in Liechtenstein and engaged in economic activities are subject to a corporate income tax of 
12.5%. The existing capital tax was abolished . Income and gains from participations are tax -exempt, 
and losses carried over are no longer subject to a time limit. In addition, a notional interest deduction 
has been introduced. Other important innovations include group taxation for affiliated companie s, 
provisions for private asset structures, the facilitation of taxation of asset management companies, 
or provisions on the tax treatment of national and cross -border restructurings.  
 The Central Entrepreneur Service of the Office of Economic Affairs provi des advice related to 
new or expanding business projects, with a focus to start -ups, administrative management, 
formalities or dealing with authorities. In addition to that, there are a number of private initiatives 
helping young professionals and companie s in the growth phase on business planning and  
management, and arranging contacts with financial institutions, investors or potential business 
partners. To promote innovation, research and development in the industry, the Liechtenstein 
Government has estab lished, together with the authorities of the neighbouring Swiss Canton of St. 
Gallen, the "RhySearch " centre. RhySearch connects companies and research institutions and 
conducts high -level own research in the fields of optical coating and high -precision ma nufacturing. 
The Government also supports the newly founded Switzerland Innovation Park Ost which connects 
regional industry with research institutions, with a focus on health, mem -industry and digitalisation.  
 The Investor Summit Liechtenstein has been con necting start -ups and MSMEs seeking capital 
with top -class investors and decision -makers for several years. Company presentations are at the 
heart of these event which are sponsored by the Liechtenstein Government as well as numerous 
other partners. Capita l-seeking start -ups and growth -oriented MSMEs are given the opportunity to 
present themselves to a high -calibre audience and make interesting contacts. Decision -makers and 
investors are thus given the opportunity to get to know a wide variety of interestin g investment 
opportunities in a very short time.  WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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 Due to the country 's small territory and in view of the high proportion of non -Liechtenstein 
citizens within the total resident and working population (34% and 70%, respectively), Liechtenstein 
is compelled to strictly regulate cross -border employment and immigration. Compared to the last 
Trade Policy Review of Switzerland -Liechtenstein, the share of non -Liechtenstein citizens within the 
resident and working population has further increased. Therefore, the Go vernment does not see any 
leeway to ease restrictions concerning immigration and employment. The special rules concerning 
the freedom of movement of persons, granted to Liechtenstein in the EEA, remain unchanged. 
Furthermore, in view of Liechtenstein 's geo graphic position and size and in order to respect its rural 
character and preserve access to real estate for the resident population, the Government restricts 
investment into real estate (also for non -resident Liechtenstein citizens).  
 Liechtenstein has est ablished a comprehensive macroprudential policy framework, with a 
transparent division of responsibilities among the Financial Market Authority (FMA), the Financial 
Stability Council (FSC) and the Government. In light of the significance of the financial c entre for 
the economy as a whole, macroprudential supervision and policy plays a key role in Liechtenstein. 
In absence of a national central bank in Liechtenstein, ensuring financial stability is legally defined 
as part of the FMA 's mandate. Based on the f indings of the FMA 's financial stability analyses and the 
subsequent discussion between the FMA and the Government, the FSC proposes and publishes 
macroprudential measures, recommendations and warnings. In this context, the FSC has become a 
well-establishe d institution in Liechtenstein. A comprehensive policy -mix composed of capital buffers 
as well as lender - and borrower -based measures is currently in place to improve the systemic 
resilience of the financial sector and to reduce the build -up of systemic ri sks. With a legislative 
revision in 2019, Liechtenstein has introduced an effective and transparent macroprudential capital 
framework for the banking sector. In light of the vulnerabilities related to the high indebtedness of 
private households, the policy -mix also includes various instruments to mitigate risks in the real 
estate sector.  
2.3  Trade Policy Developments and Future Policy Directions  
 The framework of the trade environment of Liechtenstein is determined by the Customs Treaty 
with Switzerland, Liecht enstein 's membership in EFTA, the EEA and the WTO. These vessels allow 
Liechtenstein to participate in the multilateral trading system but at the same time to join, as a 
complementary tool, deeper economic cooperation in regional agreements. So far Liechte nstein has 
not been involved in any WTO or EFTA dispute settlement case.  
 The World  Trade Organization (WTO)  
 Liechtenstein attaches high importance to a strong, rules based Multilateral Trading System. 
The WTO plays a key role in ensuring non -discriminator y market access for all WTO members and 
as a stronghold against protectionism. At the same time the WTO system has to respond with 
flexibility to the realities and needs of this century 's globalized economy and to the increasingly 
diverse situations of its  members. Improved market access means more trade, and more trade is 
beneficial to all, developed and developing countries alike. Furthermore, it offers opportunities for 
an increase in trade with and among developing countries. The multilateral trading sy stem is a 
proven vehicle in promoting economic development and growth and is central to the future 
prosperity of our nations. Both the monitoring and negotiating arms of the WTO need to be 
strengthened and further developed.  
 Liechtenstein is committed to further strengthening the multilateral system. It does not 
perceive the various initiatives launched by groups of interested WTO member States in recent years 
as a threat to that system but rather as a chance to revive the neg otiating function of the WTO. For 
a very small member State of the WTO as Liechtenstein, the inclusiveness of such initiatives is key, 
however. Given that this prerequisite is guaranteed, Liechtenstein has thus joined the plurilateral 
Joint Statement Initi atives on Services Domestic Regulations, on E -Commerce, on MSMEs and on 
Trade and Gender and has been a co -sponsor of the Trade and Environmental Sustainability 
Structured Discussions, including the Initiative on Fossil Fuels Subsidies Reform.  
 The Europea n Economic Area (EEA)  
 The European Single Market is the most important market for Liechtenstein 's economic 
operators. Due to the EEA -Agreement with its four economic freedoms, Liechtenstein has non -WT/TPR/G/ 425 • Switzerland and  Liechtenstein  
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discriminatory access to this market. As a consequence of this agreement, a large part of 
Liechtenstein 's economic legislation is based on EU law. Mid 2021, Liechtenstein had implemented 
99.6% of the relevant internal market rules. Liechtenstein 's legislation in the respective areas is 
therefore identical with Eu ropean Union law.  
 The relationship between Liechtenstein and the EU is not limited to the EEA. Since 2011, 
Liechtenstein participates in the areas of Schengen and Dublin (open borders, visa, police 
cooperation , asylum, etc.). The association with Schengen  and Dublin supplements and deepens 
Liechtenstein 's integration in Europe in the areas of justice and home affairs.  
 The EEA had shown in its past that it offers a stable contractual framework for economic 
relations with the EU. Liechtenstein remains stron gly committed to the EEA and focuses on 
continuing the good cooperation between the EFTA and the EU in the EEA to protect the functioning 
of this common market.  
 The European Free Trade Association (EFTA)  
 Liechtenstein became a full EFTA member on 1 Septemb er 1991. Hitherto, in light of the 
customs union with Switzerland, Liechtenstein had been covered by the EFTA convention through a 
particular Protocol.  
 Since the early 1990s, EFTA has established an extensive network of contractual relations 
with States a nd Territories in Central and Eastern Europe, in the Mediterranean region and overseas. 
As of today, the EFTA States have a network of 29 Free Trade Agreements with a total of 40 partner 
countries and territories  around the world.  
 The FTAs concluded by the  EFTA States aim at enhancing mutual market access and ensuring 
that economic operators are granted non -discriminatory treatment vis -à-vis their main competitors 
in these markets.  
 Customs Union/Economic Integration with Switzerland  
 The close cooperation wi th Switzerland is reflected in more than 100 bilateral treaties, the 
most important of them being the Customs Treaty and the Currency Treaty. The Customs Treaty, in 
combination with other agreements pertaining to the movement of persons, allowed for the ab olition 
of any border or customs control between the two countries. Of equal practical importance to 
Liechtenstein 's economy is the Currency Union Treaty which forms the legal basis for using the Swiss 
franc as the official currency (legal tender) in Liech tenstein.  
 The provisions of the Customs Treaty stipulate that the Swiss laws pertaining to customs as 
well as other federal legislation necessary for the implementation of the customs -free zone are also 
applicable in Liechtenstein. In addition, trade and customs treaties concluded by Switzerland with 
third parties (with the exception of the EEA countries) regarding the provisions concerning trade in 
goods also apply to Liechtenstein on the basis of the Customs Treaty. Switzerland is authorized to 
represent  Liechtenstein in relevant negotiations and to conclude such treaties with effect in 
Liechtenstein.  
 The Customs Treaty facilitated the bilateral cooperation far beyond its originally envisaged 
scope of application, in particular in the areas of social welf are (health, social security), education 
(vocational and professional training), transport and environment. The entry into force of the revised 
EFTA Convention on 1 June 2002 has led to an additional integration step in the economic relations 
between Liech tenstein and Switzerland. Despite the difference in their integration policy towards the 
EU, both countries not only managed to maintain but continuously foster the already existing close 
links. This is owed particularly to the innovative and specific adap tations that are foreseen for 
Liechtenstein in the EEA -Agreement which allow for a dual marketability of goods produced in 
Liechtenstein, meaning that goods are certified according to rules of the respective market to which 
they are exported, either the EU  or Switzerland.  
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