RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/TPR/G/141 
17 November 2004  
 
(04-5082) 
Trade Policy Review Body Original:  English/ 
                French1 
  
 
   
 
TRADE POLICY REVIEW 
 
Reports by 
 
SWITZERLAND AND LIECHTENSTEIN 
 
 
   
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statements by Switzerland and Liechtenstein are 
attached. 
 
                                                      
1 Original version in French for the Report by Sw itzerland and original version in English for the 
Report by Liechtenstein. 
Note: These reports are subject to restricted circul ation and press embargo until the end of the meeting 
of the Trade Policy Review Body on Switzerland and Liechtenstein . Switzerland and Liechtenstein WT/TPR/G/141 
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CONTENTS 
 
    Page 
REPORT BY SWITZERLAND 
 
I. GENERAL COMMENTS 5 
 II. ECONOMIC ENVIRONMENT 7 
(1) E
CONOMIC AND MACROECONOMIC POLICY DEVELOPMENTS  7 
 
(i) Economic trends 7 (ii) Foreign trade 7 (iii) Foreign direct investment flow 8 (iv) Macroeconomic policies 8 
(v) Economic outlook and risks 9 
(2) 
MAIN AIM OF THE STRUCTURAL REFORMS :  TO STRENGTHEN SWISS ECONOMIC 
GROWTH  9 
 III. MAIN TRACKS OF RECENT AND CURRENT STRUCTURAL REFORMS AND 
OTHER PRIORITIES OF SWITZERLAND'S ECONOMIC POLICY 12 
(1) D
OMESTIC POLICY AREAS  12 
 
(i) Structural reforms 12 (ii) Other domestic policy priorities 17 
(2) F
OREIGN POLICY AREAS  19 
 
(i) Relations between Switzerland and the EU 19 (ii) Free-trade agreements 19 (iii) EFTA/Stockholm Convention internal relations 20 (iv) Cooperation with developi ng and transition countries 20 
(v) Customs measures 22 
(vi) Rules and disciplines 23 (vii) Exports promotion 23 
 IV. SWISS POSITION IN THE DOHA MULTILATERAL TRADE NEGOTIATION 
ROUND  24 
(1) 
GENERAL APPROACH TO TRADE POLICY  24 
(2) S WITZERLAND AND THE DOHA DEVELOPMENT AGENDA  24 
 REFERENCES  28 
 REPORT BY LIECHTENSTEIN 
 
I. INTRODUCTION 29  II. TRADE AND ECONOMIC POLICY ENVIRONMENT 29 
(1) E
CONOMIC GROWTH  29 WT/TPR/G/141 Trade Policy Review 
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    Page 
 
(2) T HE ECONOMIC SECTORS  30 
(3) S TATE ACTIVITIES  32 
(4) P ROSPECTS  32 
 III. TRADE POLICY DEVELOPMENTS AND FUTURE POLICY DIRECTIONS 32  
(1) T
HE WORLD TRADE ORGANIZATION (WTO) 33 
(2) T HE EUROPEAN ECONOMIC AREA (EEA) 33 
(3) T HE EUROPEAN FREE TRADE ASSOCIATION (EFTA) 35 
(4) C USTOMS UNION TREATY /ECONOMIC INTEGRATION WITH SWITZERLAND  35 
 
 
 
 Switzerland and Liechtenstein WT/TPR/G/141 
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REPORT BY SWITZERLAND 
 
I. GENERAL COMMENTS 
1. This report, together with that  of Liechtenstein and the Secretariat report on the two countries, 
establishes the basis for the review of th eir trade policy by WTO Members on 15 and 
17 December 2004, given the fact that they form an economic and monetary union and Liechtenstein is an integral part of Swiss customs territory. 
2. International trade plays a key role in the Swiss economy, accounting for a very substantial 
proportion of GDP
2, despite the virtual stagnation of foreign trade between 2000 and last year.  The 
Swiss Government attaches great importance to the openness of world markets for goods and services, 
including government procurement, and to st rong protection of intellectual property.   
3. Switzerland's economic policy aims at strengthening its international competitiveness  and is 
pursued by a macroeconomic policy  geared to fiscal consolidation, pr ice stability and a return to more 
buoyant growth, together with the establishment of domestic framework conditions favourable to 
investment. 
4. The Swiss Government has endeavoured to improve the economic environment in recent 
years by implementing structural reforms , despite relatively unfavourable economic conditions.  The 
measures introduced in domestic policy areas  included a major revision of the Law on Cartels, further 
liberalization in the telecommunications, railways a nd postal sectors, an extension of the scope of 
government procurement, continued reforms in ag riculture, and an adaptation of many technical 
standards to those of the European Union (EU).  Moreover, a new seventeen-point structural reform 
package was introduced in early 2004 to stimulat e growth by revitalizing the domestic economy. 
5. Switzerland's main priorities in foreign policy areas  remain economic openness and further 
liberalization of international trade, at the multilateral, regional and bilateral levels.   
6. At the multilateral  level, the Swiss Government notes that the trend towards faster 
globalization implies both opportunities and challenges for all parties enga ged in international trade.  
Increased interdependence requires further reinforc ement of multilateral coope ration and the relevant 
institutions.  In this connection, the Swiss Government believes that a key role must be assigned to the 
WTO for the progressive liberalization of international trade, setting up the rules, rights and obligations governing international trade, and dispute settl ement.  It is also important in this regard to 
promote consistency in external economic policy activities and other government policies on both the 
national and the multilateral levels.  Switzerland co nsequently looks for a positive outcome to the 
current Doha Round negotiations.   
7. Switzerland thus welcomed the Decision adopted by the WTO General Council on 
1 August 2004 , which gives fresh impetus to the Doha  negotiations and lays the groundwork 
necessary for the next stage of negotiations on mo dalities.  This Decision is a key step towards 
opening up the world economy, as WTO Members ha ve succeeded in agreeing on the negotiating 
framework for non-agricultural market access (NAM A) and agriculture, furt hering negotiations on 
services and other issues and starting negotiations on trade facilitation.  Switzerland believes that, in 
order for the negotiations to succeed, they must be fair for all participants, whether developed or 
developing countries, whether large or small.  In th is connection, there must be sufficient transition 
phases for sensitive economic sectors (agriculture, fo r example) to allow for socially sustainable 
                                                     
 
2 Exports and imports of goods and services amounted to 42.6% and 36.0% of GDP respectively in 
2003. WT/TPR/G/141 Trade Policy Review 
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structural adjustment.  Switzerland nonetheless regr ets the fact that the links between trade and 
investment, the interaction of trade and competition policy and transparency of government procurement, which were all mentioned in the Doha Declaration, are not in the negotiation 
programme, meaning that these issues w ill not be addressed in the Doha Round. 
8. As to European integration , Switzerland began implementi ng the first seven bilateral 
agreements as from 1 June 2002.  In addition, negotiations with th e EU were concluded in June 2004 
on a second series of bilateral agreements in such  diverse fields as justice, police, asylum and 
migrations (under the Schengen and Dublin Agreements), the taxation of savings and action to combat 
fraud in indirect taxation (customs fraud) and the areas that had not been covered by the first Bilateral 
Agreements, in particular processed agricultural pro ducts, the environment, statistics, pensions, the 
media and a package of measures presented as a decl aration of intent in the field of education, 
in-service training and youth programmes.   
9. Switzerland has also continued to work at  the EFTA level, expanding its network of free-
trade agreements  in the Mediterranean, South-Eastern Eu rope and more recently with countries 
outside Europe.  The preferential policy followed  by Switzerland and the EFTA countries does not 
aim to take the place of trade liberalization on the world level but to eradicate discrimination with 
regard to Swiss exporters which is  the result of preferential agreemen ts signed by third countries.  The 
policy is thus complementary to Switzerla nd's commitment within the WTO process.   
10. To date, the EFTA States have signed free-trade ag reements with 13 partners:  Turkey, Israel, 
Romania, Bulgaria, Morocco, the Palestinian Au thority, Macedonia, Mexico, Croatia, Jordan, 
Singapore, Chile and Lebanon.  In addition, Swit zerland has signed bilateral free-trade agreements 
with the European Community and the Faroe Isle s.  Negotiations are currently ongoing between 
EFTA States and several Mediterranean countries a nd countries outside Europe (Tunisia, Egypt, 
SACU - South Africa, Botswana, Lesotho, Namibia,  Swaziland – and Canada).  The EU enlargement 
to 25 countries on 1 May 2004 brought about the simu ltaneous termination of free-trade agreements 
with eight new EU members, that is Estonia, Hung ary, Latvia, Lithuania, Poland, Slovakia, Slovenia 
and the Czech Republic.  The free-trade relations  between Switzerland and these countries will be 
maintained under agreements with the European Union.   
11. Switzerland also firmly supports the integration of developing countries, transition countries 
and least developed countries in the world economy  through trade and investment.  The Swiss 
authorities are in favour of markets being opened to products from the least developed countries 
(LDCs), of action to assist countries in the process of joining the WTO and of strengthened technical 
assistance to developing countries to integrate into the multilateral trading system and promote their capacity-building.  Moreover, Switzerland has stre ngthened its negotiating mechanism by establishing 
a high-level unit whose main tasks are to analyse th e trade-related needs of developing countries, and 
in particular the most vulnerable among them, and to incorporate sound development policy principles 
into trade negotiating positions.   
12. In general terms, the Swiss Government  is seeking to ensure the internal consistency  of its 
policies by a high degree of coordination between th e relevant agencies and federal offices, including 
in international negotiations.  At the same time , the Government aims to promote the necessary 
external transparency  by means of information , followed by the participation  of the Swiss people, 
Parliament and interested parties in the decision-making process
.  In so doing it can ensure that 
policies command wide support .   
13. This report first sets out the economic environm ent in which Swiss trade has developed since 
the last examination of Switzerland's trade policy, in 2000.  It then presents the Swiss Government's Switzerland and Liechtenstein WT/TPR/G/141 
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main objectives concerning structural adjustments to strengthen economic growth.  The report also 
describes the main directions of reforms that have  already been undertaken and of current reforms, 
together with the other main priorities of Swiss ec onomic policy, at the domes tic and foreign levels.  
Finally, it points to the objectives followed by Swit zerland in multilateral negotiations, which remain 
an important instrument in continuing to ope n up the Swiss economy and integrate in the world 
economy, together with the necessary additions to  current reforms at the domestic level.   
II. ECONOMIC ENVIRONMENT 
(1) ECONOMIC AND MACROECONOMIC  POLICY DEVELOPMENTS  
(i) Economic trends 
14. In 1997, the Swiss economy began to pick up after a decade of relatively disappointing 
performance.  After a brief slow-down in 1998, par tly due to the impact of the Asian crisis, the 
recovery accelerated during the second half of 1999, with a growth rate of 3 per cent in comparison 
with the previous two quarters.  This trend continued in 2000. 
15. During 2001 there was the beginning of a slow down, with share prices on the international 
stock markets starting to fall.  In the autumn of  2001, the slowdown was more marked and a series of 
substantial negative shocks affe cted the Swiss economy.  The terrorist attacks on New York and 
Washington, D.C., the bankruptcy of Swissair, the continued collapse of the investment bubble on 
financial markets, the news of accounting scandals  and then the SARS (Severe Acute Respiratory 
Syndrome) epidemic in Asia all had a strong im pact on the Swiss economy from autumn 2001.  Taken 
as a whole, 2001 still managed to benefit from th e dynamism of 2000, even though GDP began to 
contract during the third and fourth quarters of 2001.   The shocks in 2001, added to the decrease in 
external demand, had their full impact in Swit zerland in 2002 and 2003.  In 2002, Switzerland's 
annual GDP was almost stagnant (+0.3 per cent) and over the whole of 2003 there was a decrease in real GDP (-0.4 per cent).  In 2002 and 2003 Switzer land experienced a shrinkage in employment and 
an increase in unemployment.  Inflation measured by consumer prices, which was already low in 2000 
(1 per cent on a yearly average), fell to 0.5 per cent until 2003, reflecting the weakness of the Swiss 
economy during the period under review.   
16. From mid-May 2003, economic activity in the Euro zone picked up, and the Swiss economy 
also recovered substantially, initially largely stimul ated by the external sector.  Driven by very 
positive monetary movements, economic recovery in Switzerland was strengthened during the second 
half of 2003 and the beginning of 2004.  Mid-20 04, growth was mainly stimulated by domestic 
demand, whereas the very dynamic expansion of  exports as from the middle of 2003 suffered a 
setback in the summer of 2004, while still at a hi gh level.  On the job market, and contrary to 
expectations, the rate of unemployment reacted le ss rapidly to the economic upturn and employment 
continued to retract until the middle of 2004.   Between autumn 2003 and August 2004, the 
unemployment rate (seasonally adjusted) st ayed virtually unchanged at 3.9 per cent.
3  
(ii) Foreign trade 
17. Exports of Swiss goods4 increased greatly in value at the end of the 1990s until the first half of 
2001.  They then fell back slightly because of the gl obal economic slowdown.  It was only in the first 
half of 2004 that the value of exported goods was greate r than that recorded in the first six months of 
2001.  In all, the value of exports of goods rose fro m 67.6 billion Swiss francs in the first half of 2001 
                                                      
3 See http://www.seco.admin.ch/themen/zahlen/wirt schaft/konjunkturtendenzen/index.html?lang=fr. 
4 Excluding trade in precious metals, preci ous stones, works of art and antiques. WT/TPR/G/141 Trade Policy Review 
Page 8 
 
 
to 70.6 billion Swiss francs for the first half of 2004 (+4.5 per cent).  Imports of goods  also 
continuously increased in value at the end of the 1990 s, peaking during the first half of 2001.  Imports 
then fell back slightly until the second half of 2002.   Since then, they have picked up a little, reaching 
65.3 billion Swiss francs during the first half of 2004,  while staying 3.3 per cent below their level of 
three years earlier.  These developments mirror the general economic recession, with the marked 
slowdown in the equipment sector and the reduction in  domestic demand that occurred near the end of 
2001.   
18. Exports of chemical products increased in value by about 18 per cent, while those of precision 
instruments by about 20 per cent between the first ha lf of 2001 and the corresponding period of 2004.  
The value of exports of machinery and electronic ap pliances and equipment was particularly affected 
by the global weakness in investment demand, falling back by 13 per cent over the same period.  
Conversely, there was an increase of about 10 per cen t in imports of chemical products in the same 
period.  Consequently, the percentage of chemical  products in imports rose to 22 per cent during the 
first half of 2004, with pharmaceuticals holding an  increasing share of this category of products.  
However, there was a substantial decrease in im ports of machinery and electronic appliances and 
equipment, with the value of imports in this sector  standing 14 per cent lower in the first half of 2004 
in relation to the level reached three years earlier. 
19. Between the first half of 2001 and the same peri od of 2004, the greatest increase in exports of 
goods was that in goods exported to transition countries (mainly China) and the emerging Asian 
markets.  The rate of increase in exports to the 25 EU countries, Switzerland's main trading partner 
with about 63 per cent of exports, was less than the average (3.6 per cent).  Meanwhile, imports from 
the 25 EU countries fell by only 0.7 per cent, i.e.  l ess than the average.  However, imports from the 
United States and Japan fell substantially during th e period under review, which for the United States 
also mirrored the strong appreciation in the dollar exchange rate which continued until 2002.  The 
largest increases were in imports from certain EU partners (in particular the new member States) and China.
5 
(iii) Foreign direct investment flow 
20. Exports of capital linked to foreign direct investment (FDI)  came to 75 billion Swiss francs in 
2000 following the dynamic global movement of me rgers and acquisitions.  In the following two 
years, the financial crisis and economic weakness  weighed heavily on FDI de velopment.  Thus, in 
2002 FDI outflows hardly reached about one sixth of the value recorded in 2000.  In 2003, Swiss 
companies' capacity to invest abroad picked up  thanks to the economic recovery.  Above all, 
investments in the United States increased rapidly in  2003.  On the other hand, investments in the EU 
decreased yet again.  FDI flow into Switzerland wa s 33 billion Swiss francs in 2000, i.e.  at a new 
record level.  Investments in the industrial sect ors, which amount to only 15 per cent of FDI in 
Switzerland, rose particularly sharply.  Duri ng 2001 and 2002, FDI inflows nonetheless fell to 
15 billion Swiss francs and 9 billion Swiss francs resp ectively, owing to the weakness of the world 
economy.  In 2003, inflows increased again to 16 bil lion Swiss francs.  The greater part of the capital 
came from the United States – the largest country of  origin – and essentially went into the financial 
sector and holding companies. 
(iv) Macroeconomic policies 
21. Since 2000, Swiss economic policy  has given major priority to a macroeconomic policy 
environment designed to maintain stability.  The new monetary policy  framework has allowed the 
                                                      
5 See http://www.seco.admin.ch/themen/zahlen/wirtsc haft/aussenwirtschaft/unt erseite00225/index.html 
?lang. Switzerland and Liechtenstein WT/TPR/G/141 
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Swiss National Bank (SNB) to react quickly to an in ternational environment disturbed by a series of 
substantial negative shocks.6  SNB monetary policy has been geared to ensuring price stability and 
balanced recovery of growth.  Too strong an appreci ation of the Swiss franc in relation to the Euro has 
thus been avoided, despite the massive adjustment of the dollar vis-à-vis the Euro that has taken place 
since 2002.   
22. Following a decade in which public finances  considerably worsened, during which the 
debt/GDP ratio increased from 30 to 55 per cent, stabilization measures aiming in particular at wiping out the structural deficit were taken at all levels  in public bodies.  These measures should ensure that 
public administration finances gradually eliminate thei r deficits over the medium term.  At the federal 
level, a budgetary rule in the shape of a constitutional amendment – the debt brake
7 – should lead to a 
structurally balanced federal budget as from 2007.  This rule has been applied since 2003, but given 
the existence of a large structural deficit, stabili zation is gradually being achieved by authorizing a 
supplementary deficit of 3 billion in 2004, 2 billio n in 2005 and one billion in 2006.  The aim of the 
debt brake is to balance the budget over the me dium-term, while giving free play to automatic 
stabilizing mechanisms.  This instrument thus allows  the debt level to be stabilized while reinforcing 
the credibility of budgetary policy without prev enting an anti-cyclical budgetary policy.   
(v) Economic outlook and risks 
23. Between early and mid-2004, the negative risks  for both the international and Swiss economic 
climate increased.  The higher than expected rise in  oil prices, the beginning of a dip in business 
leaders' confidence in the future, a halt in the increase in Swiss exports, which are nonetheless at a 
high level, together with the s till troubling level of domestic dema nd in Germany, Switzerland's main 
trade partner (accounting for 20 per cent of Swiss expor ts):  all constitute risk factors.  The slower 
improvement on the Swiss job market is also indicative of uncertainty about the quality of the movement from economic upturn to domestic demand,  and in particular household consumption.  
Nevertheless, the Swiss authorities have kept their growth forecast for Swiss GDP at 1.8 per cent for 
2004 and 2.3 per cent for 2005
8 because of the international econom ic context, a very favourable 
exchange rate for the Swiss franc and interest ra tes, and also available economic information that 
points to buoyant development during the first six month of 2004.  The slight acceleration in Swiss 
GDP expansion in 2005 presupposes similar devel opment throughout the EU countries, with which 
Switzerland largely shares its vitality on the economic front.   
24. In the wake of an economic performance that for long has been one of the least dynamic 
internationally, major structural reform projects have been undertaken in  Switzerland in recent years, 
or are in preparation, with the aim of increasing competition on product markets.  Still more remains to be done in order to reach the level of ot her countries, in particular the EU members. 
(2) 
MAIN AIM OF THE STRUCTURAL REFORMS :  TO STRENGTHEN SWISS ECONOMIC GROWTH  
25. Following Switzerland's failure to join the European Economic Area (EEA) in 1992, which 
would have given impetus to a wide-ranging refo rm programme, it became clear that independent 
efforts had to be made for the Swiss economy, as economic fluctuations could no longer hide the 
structural weaknesses that had appeared after th e first oil shock.  Since that time, the Swiss 
Government's growth policy has tu rned towards reforms to increase  productivity.  During the latest 
session of the legislature, reforms concentrated on fo ur growth factors:  production efficiency, labour 
input, innovation and the impact of the State in the economy.   
                                                      
6 See http://www.snb.ch/f/geldpolitik/geldpol.html. 
7 See http://www.efd.admin.ch/f/dok/faktenbl aetter/efd-schwerpunkte/106_schulden.htm. 
8 See http://www.seco.admin.ch/news/00378/index.html?lang=fr. WT/TPR/G/141 Trade Policy Review 
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26. In order to improve the efficiency of the productive sector, competition has been strengthened 
and public infrastructures progressively liberalized.  The projects that have been implemented include more particularly the revision of the Law on Ca rtels, the liberalization of the postal market, 
telecommunications, rail transport of goods (see also pa ragraphs 37 to 39).  With regard to opening up 
the market to international competition, the signing  of the bilateral agreements with the EU, which 
include inter alia  freedom of movement, air transport and the Law on Technical Barriers to Trade, is 
also indicative of substantial progress (see paragraphs 70 et seq.).   
27. The second growth factor involved increasing the supply and quality of labour input.  To 
make work and family compatible, a crèche- building programme was launched and maternity 
insurance was approved by referendum on 26 Se ptember 2004.  The revision of unemployment 
insurance has brought about a sustainable reduction in insurance contributions by reducing the incentive to make maximum use of benefits.  The Stat e has also continued to invest in training while 
improving its efficiency, partly thanks to a new Law on Vocational Training.   
28. Innovation is one of the most important engin es of growth in Switzerland.  The relevant 
framework conditions have been improved by fac ilitating contacts between universities and economic 
circles, by increasing resources available for resear ch, revising the Law on Patents and the taxation of 
employee options, and by modernizing the law on the largest joint stock companies.   
29. Finally, the impact of the State on the economy was closely examined.  The debt brake that 
was introduced is a mechanism for controlling State debt during the economic cycle.  By analysing 
the impact of the regulation and carrying out tests on SMEs (small and medium-s ized enterprises) it is 
possible to evaluate the administrative cost and i ndirect costs of the laws.  A reform of company 
taxation has also made this source of fiscal  revenue economically more efficient.   
30. Despite the reforms undertaken, it has been cl ear in recent years that Switzerland's weak 
growth has remained a pressing problem.  However,  it was also necessary to take into account the 
result of some of the referendums .  Thus the reform of the electricity market , designed to liberalize the 
electricity market, was rejected in the referendum in 2002.  In this case, altern ative solutions had to be 
found:  the Federal Tribunal (Supreme Court) thus  ruled that existing legislation on competition 
allowed electricity producers and consumers alike to ask  for access to electricity networks.  Similarly, 
a financial package  that was designed to bring about a reform of direct taxation in Switzerland, in 
particular by reducing tax pressure on families and modifying the system of taxing property, was 
rejected in the referendum in May 2004, mainly because of opposition from the cantons which feared 
that there might be a transfer of the Confederati on's excessive financial burdens to the cantons at a 
time when many of them are still experiencing financial difficulties.   
31. Accordingly, growth policy remains a priori ty for the Swiss Government.  Following the 
report on growth and the proposals made by an ad  hoc working group on grow th, the Federal Council 
approved a package of 17 measures for economic grow th, as part of the programme of the 2003-2007 
legislature.
9  In actual fact, the programme already contains a host of other measures that will have an 
impact on growth.  To be considered as belongi ng to the growth package, each measure had 
nonetheless to obey three criteria.  First, it should be an essential measure on the macroeconomic level 
(as opposed to the sectoral level, or to have no direct economic impact).  Second, it should be 
implemented specifically by the Federal Council during the legislature and, last, it should be 
compatible with a lowering of State expenditure and with a market economy system.  Seventeen 
measures were adopted, with the package divided into two halves.   
                                                      
9 See http://www.evd.admin.ch/evd/news/03248/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/141 
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32. The first half concerns the improvement of  the framework conditions for the dynamic, 
productive and competitive part of the economy.   To attain this objective means:  
 - Reforming company taxation to guarantee in particular greater fairness in the taxation 
of different legal forms and different types of capital;  
 
 - improving company management by better transparency;     - revising the Law on the Domestic Market to heighten competition between 
companies on this market;  
 
 - revising the Federal Law on Government  Procurement in order to continue 
desegmenting markets that are too diverse;  
  - revising VAT to simplify it and to reduce distortion on investments;     
 - examining the need to adapt to developm ents in the services market, particularly in 
the EU;  and 
  - cutting down on administrative burdens.    
33. Secondly, the aim is to guarantee that the dy namic, productive and competitive part of the 
economy has access to more resources, either by incr easing the supply of factors, or by limiting the 
use of inputs by the low-productivity part of the protected domestic sector.  In this respect, the purpose is:   
- To extend the free movement of persons to the new EU member States;  
- to help employees aged between 55 and 67 to participate in the job market;  
- to eliminate the structural deficit and stab ilize State expenditure, in particular with a 
stabilization plan;   
- to revise the Law on Health In surance to give a greater economic orientation to the 
health system;   
- to revise disability insurance to limit the growth of expenditure of this social 
insurance and to ensure that it e ffectively attains its objectives;  
- to continue agricultural policy reforms to  improve productivity in agriculture and 
prepare for greater international openness;   
- to open up the electricity sector in such a way as will be compatible with EU 
directives. 
34. In this context of increasing productive resources in favour of the economy, it is also planned 
to invest further in the system of education and reform the system to make it more productive and 
successful.  A communication on this subject will be  issued by the Federal Council on Training, 
Research and Technology (FRT) 2007-2011.   
35. It may seem surprising that the negotiation of international agreements mentioned in the 
programme of the legislature are not part of the gr owth package.  The main reason is that because of WT/TPR/G/141 Trade Policy Review 
Page 12 
 
 
the criterion of the Federal Council's exclusive respon sibility, international negotiations have not been 
included in the growth package.  The second reaso n is that the weakness in productivity growth lies 
above all in the domestic sectors, where there are c onsequently more reforms to be carried out.  In 
fact, given the specific character of the Swiss economy (high external competitiveness, balance of 
payments surplus, strong Swiss fran c, etc.), the reforms to stimul ate productivity in domestic markets 
have become essential for the success of the ex ternal economy and growth in general.   
III. MAIN TRACKS OF RECENT AND CURRENT STRUCTURAL REFORMS AND 
OTHER PRIORITIES OF SWITZERLAND'S ECONOMIC POLICY 
(1) DOMESTIC POLICY AREAS  
36. As indicated above, the Swiss Government has c ontinued to implement the structural reforms 
undertaken in the 1990s despite the rather unfavourab le economic conditions at the beginning of this 
century, in order to stimulate its very weak econom ic growth and to strengt hen domestic competition, 
the inadequateness of which can in part be explaine d by very high prices when compared with other 
countries.  In the following paragraphs can be found some of the key aspects of reforms undertaken or underway that aim to strengthen the Swiss ec onomy's competitive capacity (revision of the Law on 
Cartels, liberalization of the postal market, teleco mmunications and rail transport of goods, revision of 
the Customs Law, further reforms in agriculture , revision of the Law on the National Bank and the 
regulation of financial services, intellectual propert y, government procurement, reduction of technical 
barriers to trade, regulating genetic engineeri ng and products containing genetically modified 
organisms, simplification of administrative procedures,  State trade), together with other priorities of 
Swiss domestic policy (environmental polic y, fundamental labour standards).   
(i) Structural reforms 
37. With regard to competition , the amendment to the Law on Cartels came into force on 
1 April 2004.
10  Notable among the main changes is the fact  that penalties can be directly applied for 
certain types of infringement.  Previously it w as necessary to determine the unlawfulness of the 
restraint on competition.  Since the determination did not in itself lead to penalties, it had few 
practical consequences for the comp any in question.  Only in the case of a subsequent offence could 
administrative or criminal penalties be applied to th e company at fault, something which substantially 
diminished the deterrent effect of the legislation.   Another new element in the 2004 amendment is the 
introduction of a leniency programme to encourage co mpanies to reveal cartel activities in which they 
have played a part.  Lastly, the amendment also modified the conditions in which company mergers 
among the media should be notified to the competition authority.   
38. As to infrastructures , liberalization efforts are continuing.  The increased competition that 
followed the liberalization of the te lecommunications sector  led to a very substantial reduction in the 
price of fixed telephone services.  However, fixed costs tend to remain higher than those in other 
countries.  This fact encouraged the Federal Council to liberalize access to the last kilometre.  The 
question is now being debated in Parliament.  As for the postal services , total liberalization of parcel 
transport was effective as from 1 January 2004.11  
39. The first phase of the railway reform  began in January 1999.  More particularly, companies 
were obliged to make a clearer separation between  the transport and infrastructure sectors and to 
introduce open access to the network.  An arbitr ation commission was set up to guarantee that 
applications were treated in a non-discriminatory manne r.  Open access can also be granted to foreign 
                                                      
10 See http://www.evd.admin.ch/evd/dossier s/kartellgesetz/index.html?lang=fr. 
11 See http://www.uvek.admin.ch/komm unikation/post/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/141 
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rail services, if certain conditions are fulfilled.  With the entry into force of the agreement on land 
transport between Switzerland and the EU on 1 June  2002, open access to the network has also been 
granted to the EU's rail services.   
40. In 2004 the Swiss Government put before Parliament a bill to reform the current Swiss 
Customs Law , which has been in force since 1925.  This  law lays down customs procedures whereas 
the Customs Tariffs Law sets out how customs tariffs  are determined.  The aim of the new bill is to 
further harmonize Swiss customs legislation with releva nt international law, and in particular with EU 
law and the work of the World Customs Organization.  It will help provide the Swiss economy with instruments and procedures similar to those offere d to its European competitors.  Moreover, the new 
Customs Law will create the necessary legal foundation for the customs administration, to enable the 
administration to carry out the missions of the mode rn State that go beyond customs duties, such as, 
for example, improving border protection to guarantee the country’s internal security.  From the economic point of view, the new Customs Law seek s to maintain and even extend the stages of 
liberalization that were introduced into the current  law after the Uruguay Round, in particular with 
regard to processing trade.  In addition, the bill provides for liberalization of the customs warehouses 
regime which are an important tool for an open economy and depend largely on international trade.
12  
41. Switzerland is making great efforts to pursue the reform of its agricultural policy , which was 
begun in the early 1990s.  This progressive, ongoing reform is a response to the challenges arising 
from the country’s determination to benefit from ne w export possibilities, on the one hand in order to 
facilitate trade in agricultural products, and on the ot her hand to fulfil existing and future obligations 
under the WTO Agreement on Agriculture.  This re form, moreover, makes for an adequate response 
to society’s concerns about ecology, food safety a nd animal welfare, and to adapt the agricultural 
policy priorities to growing budgetary restrictions, while affording farmers the best possible conditions for continuing their work.   
42. The provisions on trade in agricultural products with the EU improved when the bilateral 
agreement on agricultural products came into force in 2002.  This agreement provides, inter alia , for 
the partial or total liberalization of trade in sever al agricultural products, and in particular cheese.  
Reciprocal commitments regarding phytosanita ry and zootechnical provisions, geographical 
indications and marketing standards recognition also  fall within the scope of this agreement.   
43. As to Switzerland’s WTO commitments, the re form of agricultural policy fulfils the 
objectives of reducing production-rela ted support and of liberalizing th e domestic agricultural market.  
Direct payments decoupled from production are increasingly replacing market support.  Once all the 
facets of the "Agricultural Policy 2007"
13 are in place, the State, leaving aside customs protection, will 
hardly intervene any more in the market.  For ex ample, the milk quota system will be abolished by 
2009 at the latest.  Agricultural reforms will nonetheless be pursued beyond the present decade.  
There is talk of an Agricultural Policy 2011, or  possibly 2015.  The current reforms will also 
contribute to necessary structural adjustment in a particularly vulnerable sector.   
44. At the operational level, the agricultural po licy reform programme (AP 2007) has the main 
priorities of the previous reform programme (AP 2002).  The reform is still based on Article 104 of 
the Federal Constitution, which was adopted with a large majority by the people and the cantons on 
9 June 1996.  This Article sets out the tasks to be  performed by agriculture and lays down the main 
lines of agricultural policy;  it states, inter alia , that in a market economy context, agriculture must 
perform many tasks (multifunctionality) and go be yond the mere production of food products.  By 
                                                      
12 As the bill on customs was being debated in Parlia ment when this report was being written, the final 
decisions had not yet been taken.  See FF No.  6/2004,  http://www.bk.admin.ch/ch/f/ff/2004/629.pdf. 
13 See http://www.blw.admin.ch/dossiers/00091/index.html?lang=fr. WT/TPR/G/141 Trade Policy Review 
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means of direct payments, the Confederation remunerates ecological and other services that 
agriculture provides but that do not have market value as such.   
45. The new Law on the National Bank  (LNB), passed by Parliament in October 2003, entered 
into force on 1 May 2004.14  It clarifies the monetary policy mandate of the Swiss National Bank 
(SNB).  It states, inter alia , that "the National Bank shall conduc t a monetary policy in the general 
interest of the country.  It shall ensure price st ability.  In so doing, it shall take into account the 
development of the economic situation."  (Article 5,  LNB).  In addition, the new law stipulates that 
the SNB must contribute to the stability of the financial system.  The new law and corresponding 
ordinance clarify the Bank's competence in monitoring  share transaction payment systems.  Thanks to 
this supervisory function, the SNB supports the secur ity and efficiency of the Swiss financial market 
infrastructures.  The SNB’s supervisory activities ar e risk-oriented, i.e. it utilizes the means at its 
disposal in certain fields where the risks are particularly high. 
46. Three developments in the field of financial services  are of particular interest.  Work on 
establishing a Federal Financial Market Supervisory Authority (FINMA)  has moved ahead 
considerably.  Proposals on FINMA's organisation a nd on supervisory instruments that are valid for 
all specialised fields have been put forward by a commission of experts.  They were published in 
July 2003 with an appended draft bill.  The prop osals suggest that the new authority should be 
established under public law, have  legal personality and be finan ced by emoluments and special 
supervisory taxes.  The new authority is initially in tended to bring together the Swiss Federal Banking 
Commission (SFBC) and the Federal Office for Pr ivate Insurance (BPV).  In August 2004, the 
commission of experts completed its draft bill on s upervising financial markets with a section on the 
system of penalties, setting out the range of pena lties that the future FINMA should have at its 
disposal.15  
47. In the action to combat money laundering, me ntion should be made of the work on the 
implementation of the 40 Revised Recommendati ons of the Financial Action Task Force on Money 
Laundering (FATF).16  Current Swiss legislation is already substantially compatible with the new 
standards, but some adaptations must nonetheless be made, in particular in criminal law and joint-
stock company law – by including in the list of offe nces those deemed to lead to money laundering.  
At the same time, some changes must be made  to the Money Laundering Law (LBA) which have 
proved necessary during the first years of implemen tation.  An interdepartmental study group has 
been set up with the task of putting together a draft on the requisite changes in legislation to 
implement the FATF's 40 Revised Recommendations.   
48. The third reform project that deserves mention is the complete overhaul  of the Law on Mutual 
Funds (LFP ).17  The aim is partly to guarantee the euro-com patibility of the law, and partly to extend 
the law's scope and liberalize the field more generally , while maintaining effective investor protection.  
An expert committee has drafted a bill18 accompanied by an explanatory report.  The committee 
proposes that the law on mutual funds be completely  rethought;  in the future, new legal forms of 
collective capital investments will be introduced and all the forms of collectiv e investments that are 
                                                      
14 See http://www.snb.ch/f/snb/index. html?file=recht/content_recht.html. 
15 For further information on current reform projects of Swiss financial market regulation, see 
http://www.finweb.admin.ch/f/index.htm. 
16 In June 2003, the Financial Action Task Force on Money Laundering (FATF) revised its 
40 recommendations, which serve as the international st andard to combat money laundering and the financing 
of terrorism. 
17 See http://www.finweb.admin.ch/pdf_neue_Ve rsion/PDF-f/FS-Anlagefondsgesetz_EBK_f.pdf. 
18 In order to take into account the new scope, the Law on mutual funds should in the future be called 
"Federal Law on Collective Capital Investments (LPCC)". Switzerland and Liechtenstein WT/TPR/G/141 
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recognized by Swiss law and are not subject to authorization will be governed by one single 
supervisory law.  In order not to weaken the positio n of the Swiss mutual fund sector in the EU before 
the law is completely overhauled, the Ordinan ce on Mutual Funds has been partially revised.19  This 
essentially concerns the implementation of the Dir ective on Products, the adaptation to the Directive 
on Services in relation to Equity Capital requireme nts and the introduction of a simplified prospectus 
for share funds.  The partial revision of th e Ordinance on Mutual Funds came into force on 
1 August 2004.  A complete revision of the Ordina nce on Mutual Funds is currently being prepared 
and should come into force in January 2006. 
49. The Swiss Government attaches paramount importance to the protection of intellectual 
property  with a view to constantly promoting resear ch, development and innovation efforts in the 
corporate sector.  Strong protection within a strict  international framework can alone justify enormous 
research costs in a number of sectors concerned, inter alia,  with the life sciences.  The protection of 
geographical indications is also essential for both agricultural and manufactured products.  
Consequently, recognition and international respect for geographical indications is a priority for 
Switzerland, in order to encourage producers to  concentrate on the production of specialities.   
50. In regard to intellectual property, Switzerland affords protection over and above the minimum 
standards provided for in the TRIPS Agreement.  Three laws governing intellectual property rights – 
the Federal Law on Copyright and Neighbouring Ri ghts, the Law on Patents, and the Law on the 
Protection of New Varieties of Plants – are curren tly being part revised.  The purpose is to adapt 
Swiss legislation to international intellectual propert y rules.  On 1 January 2002, the new Federal Law 
on Design Protection came into force, replacing th e old Law on Industrial De signs and Models dating 
from 30 March 1900.20  The main aim of this new law was, inter alia , to adapt Swiss law with a view 
to ratifying the Geneva Act of the Hague Agreem ent Concerning the International Registration of 
Industrial Designs, adopted on 2 July 1999.21  
51. The law on government procurement  regulates an important sector of the Swiss economy.  
The overall expenditure of the communes, cantons  and the Confederation for the construction, 
supplies and services markets is close to 30 billion Swiss francs, a figure that represents about 25 per 
cent of total public expenditure and 8 per cent of gross domestic product.   
52. Under the WTO Agreement on Government Proc urement, which has been in force since 
1 January 1996, the Confederation and cantons, to gether with public companies operating in the 
water, urban transportation and energy sectors, obey the WTO rules on market tenders and 
procurement transactions for goods, services and cons truction contracts, provided the contracts are 
above a certain threshold.  Switzer land and the EU have signed a bilate ral agreement that enlarges this 
scope.  Thus, since June 2002, for Switzerland a nd the EU, purchases by communes, by rail transport 
and private companies that are concessionaires or work  on the basis of special or exclusive rights, are 
reciprocally open on the basis of the WTO rules.22  
53. Overall, since 1996 Swiss legislation on govern ment procurement has proved its worth.  
However, the Confederation today considers it necess ary to modify certain provisions that make for 
cumbersome procedures, complicate management or impede the use of new technical facilities.  The 
Confederation seeks, inter alia , to examine whether it is possible to broaden the dialogue between the 
various parties involved in government procurem ent.  Adjudication rules should be made more 
                                                      
19 See http://www.finweb.admin.ch/pdf_neue_Vers ion/PDF-f/FS-TeilrevAnla gefondsV_EBK_f.pdf. 
20 See http://www.admin.ch/ch/f/rs/c232_12.html. 
21 See http://www.bk.admin.ch/ch/f/rs/12/0_232_121_4/index.html. 
22 See http://www.beschaffung.adm in.ch/de/beschaffungswesen_bund/recht_org_zahlen/ivoeb_172. 
056.5.de.pdf. WT/TPR/G/141 Trade Policy Review 
Page 16 
 
 
flexible so that procedures can be quicker and mo re efficient.  It is also essential to harmonize 
requirements at the national level.  Hence, a revi ew of federal legislati on on government procurement 
is underway.23  The new federal legislation should be co mpleted by 2007, and it will have an impact 
on the corresponding legislation at the level of the cantons.   
54. Swiss policy on technical barriers to trade  continues to adapt national technical requirements 
so as not to create technical barriers to trade, and to make them compatible with those of its main 
trading partners.  Moreover, subject to certain conditions and independent ly, Switzerland recognizes 
test reports or conformity certificates issued by foreign agencies.  These efforts go hand in hand with 
the negotiation of mutual recognition agreements in this field.   
55. Since 2000, (public) technical regulations  and (private) standards  have gradually continued 
to be aligned on those of the EU.  Thus a bilate ral Agreement on mutual recognition of results of 
conformity assessment came into force on 1 J une 2002 under Bilateral Ag reements I between 
Switzerland and the EU.  This Agreement, which establishes mutual recognition of the proof of 
conformity, should significantly facilitate trade with EU partners.  MFN-based trade should also benefit, as more products that are approved for sal e in the EU can now be put on sale in Switzerland 
without requiring a new conformity assessment.   
56. The Swiss Government’s desire for reform can also be seen in the way the regulatory 
framework has been modified for building products and control of medicines .  In the past, technical 
regulatory measures could be specified for certain produc ts at a sub-federal (usually cantonal) level.  
For building, until 2001 competences for regulati ons governing products was shared between the 
Confederation and cantons.  On 1 January 2001, the Federal Law on the Circulation of Building 
Products
24 and its implementing Ordinance came into fo rce.  This federal legislation unified the 
26 different legislations that had b een applied up to that date.   
57. When the Federal Therapeutic Goods  Law came into force in 200125, regulatory competence 
was transferred from the cantonal to the federal le vel for all pharmaceuticals for human and veterinary 
use, and also for medical equipment.  All pharmac euticals (on prescription or over the counter) must 
now be approved and recorded by the Swiss Therap eutic Goods Agency (Swissmedic) before being 
put on sale in Switzerland.  Since the legislation on  building products and th erapeutic goods came into 
force, technical regulation falls entirely within the competence of the Confederation, with the 
consequent reduction in technical barriers to trade in  these fields.  It must, however, be said that in 
many fields the cantons are still responsible fo r market implementation and surveillance.   
58. With regard to the simplification of administrative procedures , it should be noted that a 
Federal Administrative Court has been established to replace 36 Federal Appeal Commissions and departmental appeal services, which will be brought  together in a single independent legal authority 
employing some 400 people.  It will be operational in 2007, provided that  Parliament is able to finish 
the necessary legislative work by th at date.  In the early years it will be housed in temporary premises 
in the Berne region before setting up in St. Gall, in principle in 2010.   
59. Following two referendums in 1992 and 1998, Sw itzerland adopted a regulatory framework 
for genetic engineering  and products containing genetic ally modified organisms (GMOs).  It has 
developed a strategy based on information, safety, use of precautionary measures, consideration of 
                                                     
 
23 See http://www.bbl.admin.ch/fr/aktuell/pressem/2004/2004_9_01_beschaffungsrecht.htm. 
24 Loi sur les produits de construction , LPCo – RS 933.0, see http://www .admin.ch/ch/f/rs/9/933.0.fr. 
pdf. 
25 Loi fédérale sur les produits thérapeutiques – LPTh, RS 812.21, see http://www.admin.ch.ch/f/rs/8/ 
812.21.fr.pdf . Switzerland and Liechtenstein WT/TPR/G/141 
 Page 17 
 
 
ethical arguments, forward-looking regulation op en to future developments and respect for 
international rules. 
60. Switzerland has recently legislated on the use of genetically m odified organisms in food .  The 
Federal Law on the Application of Genetic Engineeri ng to the non-human field that regulates the use 
of GMOs in food production came into force on 1 January 2004.  The law was notified to the WTO.26 
Requirements for the labelling of foodstuffs and an imal feed containing GMOs will be amended to 
take into account the new Law Relating to Non-human Gene Technology (Gene Tec hnology Law).  
These amendments should come in to force on 1 February 2005.27  
61. In the notification on State Trading Enterprises  that Switzerland made to the WTO in June 
200428, the only body included was the Swiss Alcohol Board, which the Swiss Government justified 
by its aim of limiting high-degree alcohol production and consumption for public health reasons.  The 
other legislation, which dated from 1959 and wher eby the Confederation had exclusive rights to 
importing bread flour for food safety and to protect  the national flour-milling industry, was abolished 
in 2001.  With the sole exception of the Swiss Alcohol Board, Switzerland no longer has any State 
Trading Enterprises in the agricultural sector. 
(ii) Other domestic policy priorities 
62. Switzerland is actively taking part in all international negotiations on the environment , to 
promote sustainable development throughout the world.   The relevant legal basis for its participation 
is Article 2, 54 of the Swiss Constitution and the Federal Law on the Protection of the Environment as 
the principal legislation on environmental protecti on in Switzerland, together with Federal Council 
reports on foreign policy (1993 and 2000).  Switzer land believes that, within the framework of 
multilateral environmental agreements, the use of trade-related measures which are both non-
discriminatory and non-protectionist, is in certain  circumstances the best way of ensuring that 
environmental objectives will be met.  The Swis s Agency for the Environment, Forests and 
Landscape (OFEFP) is mainly responsible for a pplying the regulations on the environment.29  
63. At the international level, Switzerland’s goal is for environmental agreements to be negotiated 
and implemented coherently , while taking into account internatio nal trade obligations.  Switzerland 
cooperates with foreign governments to ensure c onformity with the laws on importing and exporting 
material that may pose a risk to human health or  the environment, including hazardous waste, toxic 
chemical products, biocides and substances that destroy the ozone layer.   
64. Switzerland has ratified all the multilateral agr eements on the environment – the Montreal 
Protocol on Substances that Destroy the Ozone Layer, the Basel Convention on the Control of 
Transboundary Movements of Hazardous Wastes a nd their Disposal, the Rotterdam Convention  on 
the Prior Informed Consent Procedure for Ce rtain Hazardous Chemicals and Pesticides in 
International Trade (PIC), the Stockholm Convention on Persistent Organic Pollutants (POP), and the 
Cartagena Protocol on Biosafety to the Conven tion on Biological Diversity.  Implementation is 
ongoing.  In addition, the Kyoto Protocol was ra tified by Switzerland in the summer of 2003.  
Switzerland has thus made a commitment to reduce its emissions of six greenhouse gasses to 8 per 
cent below the 1990 level.  The mainstay of Switzerland’s climate policy is the Law on CO 2 which 
has been in force since 2000.  In order to reach its  objective of reducing consumption of fossil fuel 
                                                      
 26 Notifications G/TBT/Notif.00/49 and G/TBT/Notif.00/49/Add.1. 
 27 Notifications G/TBT/N/CHE/ 40, G/TBT/N/CHE/42 and G/SP S/N/CHE/37, G/ SPS/N/CHE/38. 
28 Notification G/STR/N/10/CH of 30 June 2004. 
29 See http://www.environnement-sui sse.ch/buwal/fr/medien/index.html. WT/TPR/G/141 Trade Policy Review 
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(overall -10 per cent, for combustibles -15 per cent and for fuel -8 per cent) stipulated in the Law, the 
Federal Council decided to introduce a tax incentive. 
65. Switzerland also seeks to ensure that the inte rnational processes tied in with the environment 
in such forums as the World Summit on Sustai nable Development, the Commission on Sustainable 
Development (CSD), the UN Forum on Forests or the Task Force for the Environment (post-Kiev 
process) are taken into account in ongoing environmen tal negotiations and consequently considered as 
part of the global environmental system.   
66. Environmental policy is also affected by several  modifications to legislation that have been 
enacted in road transport  further to the Agreement signed with  the EU on land transport (Bilateral 
Agreements I, see also paragraph 70 below).  The changes include an increase to 40 tons maximum 
weight for lorries driven in Switzerland and an in crease in the quota of 40  ton lorries from the EU 
allowed into Switzerland in compensation for the in crease in the heavy goods vehicles tax, which is 
designed to encourage the transfer of goods traffic from road to rail.   
67. Switzerland has spoken in the WTO about the importance of core labour standards .  
Switzerland called for the topics of trade on the one hand and social issues on the other hand to be 
dealt with cohesively (Singapore Consensus, conf irmed at Doha in 2001).  Switzerland also made 
clear that the WTO must deal with trade and not address the question of human rights in an independent fashion.  Thus, like other international organizations (IOs), the WTO must stay within its 
brief while ensuring that the provisions develope d within the WTO are consistent with those 
developed in other IOs, and vice-versa.
30  
68. Switzerland has recognized the importance of the report of the World Commission on the 
Social Dimension of Globalization, published under the aegis of the International Labour 
Organization (ILO)  in February 2004.  The social dimension of globalization is an important priority 
for Switzerland and is part of the follow-up to the Copenhagen Social Summit and the Millennium 
Summit.  More particularly, the follow-up must be integrated in the multilateral system and based on 
the recommendation of the World Commission on the Social Dimension of Globalization report.  
Switzerland endorses the following recommendations in the report:  integrating economic, social and 
environmental aspects in national and international development policies;  giving priority to global 
growth, investment and job creation, market liberalization by means of fair rules, the prime responsibility of States, the promotion of human ri ghts and democracy, and greater democracy within 
financial and trade institutions.  Switzerland would look favourably on a more in-depth analysis of 
initiatives to progressively set out integrated policy proposals which, in given areas, would establish a 
fair balance between the economic, the social and th e environmental fields.  The first initiative could 
address the question of global growth, investment and job creation and the relevant bodies of the 
United Nations, World Bank, IMF, WTO and ILO s hould take part.  Moreover, Switzerland would 
also be in favour of examining other initiativ es such as organizing "Multi-Stakeholder Policy 
Development Dialogues" or setting up a "Globali zation Policy Forum".  Implementing the social 
dimension of globalization is also a priority  for Switzerland within the framework of the 59
th session 
of the UN General Assembly.  The two co-chairpersons of the World Commission on the Social Dimension of Globalization have, inter alia , stated that within the framework of the General 
Assembly they intend to encourage a resolution asking all UN Member States, organizations and 
bodies, including ECOSOC, together with other rele vant parties (in particular the Bretton Woods 
institutions and the WTO) to examine the report of  the Working Party and submit their views during 
the 60
th session of the General Assembly, in 2005. 
                                                      
30 See http://www.seco.admin.ch/themen/arbeit/seiten/00067/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/141 
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(2) FOREIGN POLICY AREAS  
69. Switzerland's concern to mutually reinforce th e policies of reform, liberalization and openness 
can also be found in the various foreign policy measures taken by the Government over the period 
under review.   
(i) Relations between Switzerland and the EU 
70. Switzerland has close relations with the EU in the matter of European integration .  
Contractually, this has meant the following.  In 1972, the two parties signed a free trade agreement 
(for industrial products).  In 1999, seven Bila teral Agreements were signed on free movement of 
persons, land and transport, air transport, agricu lture, research, technical barriers to trade and 
government procurement.  The Agreements came into force on 1 June 2002, enabling Switzerland not 
only to further open up its economy and improve its acces s to the EU market as an enhancement to the 
1972 free trade agreement, but also to strengthe n the "euro-compatibility" of the technical rules 
governing national economic legislation.  The experience of the first two years since their entry into force is promising.   
71. In the course of 2004, Switzerland has reached  agreement with the EU on nine additional 
agreements in order to strengthen its regi onal links with its main economic partner.
31  These new 
agreements deal with cooperation in the fields of  justice, asylum and migration (Schengen/Dublin), 
taxation of savings, action to combat fraud, pr ocessed agricultural products, the environment, 
statistics, the media, pensions, education, voca tional training and youth.  They underscore the 
continuation of the bilateral approach adopted by Sw itzerland after the rejection of membership of the 
European Economic Area (EEA) in 1992.  The diffe rent agreements still ha ve to be approved by 
Parliament, and in the possible event of a referendum, by the population.32  
72. During the second part of the current legi slature (2003-2007), the Federal Council will 
publishing a report on the advantages and disadvant ages of Switzerland joining the EU.  A wide-
ranging debate will ensue on the basis of this report.  The Federal Council should then be able to lay 
down the major guidelines of its policy to wards the EU for the years ahead.  
(ii) Free-trade agreements 
73. In regard to free trade , Switzerland and its EFTA partners ar e seeking to extend their network 
of agreements.  For Switzerland, an important objec tive is to ensure that the conditions of access to 
foreign markets for its exporters are equivalent to those for their competitors.  Often, the only possible 
way of eliminating discrimination against Swiss exports – which is the result of preferential 
agreements concluded with third countries – is to sign free trade agreements.  The preferential policy 
followed by Switzerland and the EFTA countries is not  intended to replace trade liberalization at the 
global level.  It is complementary to Switzerland's commitment in the WTO process.   
74. The growing trend throughout the world to si gn preferential regiona l and supraregional 
agreements is continuing.  Consequently, the EFTA  countries, including Switzerland, will carry on 
broadening their network of free trade agreements .  EFTA State agreements include an increasing 
number of fields beyond trade in goods and protec tion of intellectual property, such as trade in 
services, investments and government procurement.   
                                                      
31 During the first two quarters of 2004, 63.3 per cent of Swiss exports and 83.4 per cent of Swiss 
imports were with the EU(25). 
32 Bilateral Agreements II – Official texts, s ee http://www.europa.admin.ch/nbv/off/f/index.htm. WT/TPR/G/141 Trade Policy Review 
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75. At the present time, the EFTA States have signe d free trade agreements with 13 partners:  
Turkey, Israel, Romania, Bulgaria, Morocco, the Pa lestinian Authority, Macedonia, Mexico, Croatia, 
Jordan, Singapore, Chile and Lebanon.  In add ition, Switzerland has signed bilateral free trade 
agreements with the European Community and the Faroe Islands.   
76. EU enlargement to 25 countries on 1 May 20 04 brought about the simultaneous termination 
of free trade agreements with eight new EU member s, namely Estonia, Hungary, Latvia, Lithuania, 
Poland, Slovakia, Slovenia and the Czech Republic.  The free-trade relations between Switzerland and 
these countries will nonetheless be maintained on the basis of the free trade agreement with the 
European Union signed in 1972 and othe r relevant bilateral agreements.   
77. Negotiations are currently underway between th e EFTA States and Tunisia, Egypt, the SACU 
(South Africa, Botswana, Lesotho, Namibia, Swazi land) and Canada.  The possibility of negotiating 
free-trade agreements with South Korea and Thaila nd is currently being explored.  The EFTA States 
have signed Declarations of C ooperation with Albania, Algeria,  the Gulf Cooperation Council, 
Mercosur, Serbia and Montenegro and Ukraine.  In addition, Switzerland and the EFTA States are 
closely following the situation with regard  to other potential free-trade partners. 
(iii) EFTA/Stockholm Convention internal relations 
78. An agreement amending the Convention estab lishing EFTA (the Stockholm Convention of 
1960) was signed in Vaduz on 21 June 2001 and ente red into force on 1 June 2002.  Under this 
agreement, the level of cooperation between Switzerland and the other EFTA States is now 
comparable to that between Switzerland and the EU through the sectoral bilateral agreements of 1999 
(with the exception of the agreement on scientific research).  In addition, the Convention is 
supplemented by provisions covering, inter alia , services, movements of capital and the protection of 
intellectual property rights.   
(iv) Cooperation with developing and transition countries 
79. Switzerland, which was one of th e first contributors to launch trade cooperation programmes , 
for example through the Agency for Internati onal Trade Information and Cooperation (AITIC)33, is in 
a favourable position to meet the Doha commitment s.  The Swiss response to the work programme, 
which places the needs of developing counties at  the core of negotiations, is that of a trade policy 
consistent with development policy , which both influences its position in the negotiation of 
multilateral and bilateral trade agreements and the trade part of its techni cal cooperation programme.  
To this end, Switzerland has strengthened and bette r targeted its existing trade cooperation – trade 
policy, trade efficiency, market access, trade- related environmental and social issues, basic 
agricultural products – while broa dening cooperation to include new topics (intellectual property, 
transparency in government procurement, promoti on of competition, standards).  But Switzerland has 
above all established a body to examine the consistency of these two policies .   I t  i s  a n  
interdepartmental group whose main tasks are to an alyse trade demand in developing countries, in 
particular the most vulnerable, and to integrate the principle of good development policy into trade 
negotiation positions. 
                                                      
33 AITIC’s brief is to help the less privileged develo ping or transition countries to participate more 
actively in the WTO's work and negotiations.  It gives pe rsonalised assistance on inte rnational trade issues, and 
specific information on subjects that are of direct interest to the less privilege d countries.  Its services are also 
intended for countries that do not have a Mission in Geneva. Switzerland and Liechtenstein WT/TPR/G/141 
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(a) Cooperation in trade policy 
80. Switzerland has deliberately endeavoured to bring its work programme closer to the 
challenges put forward in the Doha Work Progra mme.  To this end, it is working at both the 
multilateral and bilateral levels. 
81. To strengthen national capacity-building in trade policy in partner countries , the Swiss 
Government has broadened its field of action, in pa rticular in the fields of intellectual property, 
transparency in government procurement, compe tition law and standards.  These complex areas, 
which have taken on particular importance since th e Doha meeting, today make up a major challenge 
for developing countries (for example, the trade in biological resources that Switzerland supports through the UNCTAD Biotrade initiative, and also tha nks to bilateral projects).  A thematic approach 
should allow far in-depth involvement to help the countries in question formulate their trade policies 
and implement the necessary reforms.  Such an a pproach entails the par ticipation of not only 
governmental bodies, but also the private sector, civ il society and academia.  In this respect, a pilot 
project to set up a Trade Law Centre in southern A frica has been implemented.  Depending on results 
and possibilities, this kind of project could be impl emented in other regions a nd be of greater benefit 
to LDCs.   
82. Another example is the exports promotion , which necessarily goes hand in hand with the 
developed countries' market access demands in th e Doha Declaration.  Developing countries face 
internal restrictions on trade that give rise to hi gh transaction costs, and consequently diminish their 
competitiveness on the world market.  Swiss econom ic cooperation measures aim on the one hand to 
create internal framework-conditions that are more su itable for trade, and on the other, to reduce the 
cost of transactions and hence improve the competitiv eness, particularly of SMEs, on the international 
market.  Three levels of measures are envisag ed:  improving framework-conditions for trade (by 
supporting reforms of customs administrations or by backing the setting up of independent services 
for certification, accreditation and control, for ex ample sanitary and phytosanitary conditions of 
products for farming), support for trade associati ons, strengthening export capacity and developing 
electronic commerce.   
83. Switzerland has also strengthened its programme on horizontal themes  such as advice and 
expertise for government officials responsible for foreign trade issues in a number of partner 
countries.  Special emphasis is laid on accession procedures, implementing WTO rules, negotiations 
and regional trade integration.  For countries that are already Members, Switzerland is continuing its 
support for the Integrated Framework multilateral initiative, which seeks to integrate the trade 
component in national poverty reduction plans a nd strengthen national trade policy capacities in a 
coordinated way.   
84. Switzerland disburses roughly 40 million Swi ss francs a year on its trade cooperation 
programmes. 
(b) Trade policy consistent with development policy 
85. The aim of Swiss economic cooperation is the progressive integration of developing 
countries, particularly the least devel oped, within the global trading system .  To better pursue this 
objective, Switzerland is continuing to revise its syst em of preferential tariffs while keeping in sight 
the aims of its agricultural policy.
34  Given the difficulties met by developing countries, and 
                                                      
34 The second of three stages in the system of pr eferences – zero tariffs, zero quotas – for LDCs, came 
into force on 1 April 2004 and reduced tariffs by 55 per cent to 75 per cent in relation to the normal rate.  The third stage will be submitted to Parliament in 2006. WT/TPR/G/141 Trade Policy Review 
Page 22 
 
 
particularly the LDCs, through the erosion of preferences and the rules of origin framework, the Swiss 
Government is considering whether it is desirable to  target its system of preferences more efficiently 
on countries whose economic competitiveness depends on the system, to reform the rules of origin 
and to promote multilateral "best practices" with  regard to systems of preferences.   
86. Such a view of trade policy  is consistent  with development policy .  Similarly, the Swiss 
Government closely follows the impact of its negotiating positions on the economic development of 
developing countries.  Trade and development  are not necessarily antagonistic.  Some policies are 
neutral;  others are more favourable to development,  but do not for all that impinge on trade interests 
(for example, encouraging progressive yet ambitious liberalization of the temporary movement of 
persons for the supply of services).  There are, howev er, fields where trade and development interests 
conflict.  In these cases, Switzerland tries to fi nd alternatives that will diminish these conflicting 
effects.  Since, for example, the Swiss agricultural reform progr amme does not allow for a rapid 
opening up of the market, Switzerland has made prio rity commitments to reduce export subsidies, to 
provide food aid that is not motivated by a d esire to eliminate agricultural surpluses and to 
substantially cut back tariff escalation in the food industry.  To this end,  Switzerland has ordered 
internal studies to take a critical look at the existen ce of tariff escalation and peaks together with quota 
administration methods and their potential impact  on developing countries' exports.  These studies, 
once examined and discussed, will help Switzer land to fine-tune its negotiating position. 
87. Again, from the stand point of consistency, Switzerland is seeking innovative solutions in 
order to propose a tariff reduction package for i ndustrial products that takes account of a WTO 
Member's trade level and development potential.  Mo reover, Switzerland is looking into ways of off 
setting the difficulties that developing countries experience in responding to new disciplines in trade facilitation by linking these efforts to in creased specific technical assistance. 
88. Another key matter of thought is the question of special and differential treatment (S&D) , 
where Switzerland is trying to introduce a more sy stemic approach to the question in discussions at 
the WTO.  The aim is to target more efficiently th is favourable treatment of development for countries 
with the greatest needs, for example by develo ping criteria that take account of the level of 
development in S&D.  In addition, Switzerland is  proposing a mechanism to accompany the transition 
to accession to special agreements.  This would be a monitoring activity to support countries as they 
set up the necessary institutions.  This means, inter alia , that together with the authorities, technical 
missions would periodically examine the quality and efficiency of the technical assistance provided, 
and also the measures taken at the national level.  The date on which obligations came into force 
would be determined by validation by the Member s of the organization, in consultation with the 
country in question.   
89. The work on consistency will cover an extended period of time .  It is a slow and difficult 
process that presupposes official support of the government in question.  After two years of 
experience, Switzerland stands ready to pur sue its commitment to consistency.   
(v) Customs measures 
90. As for customs registration, documentation a nd procedures, two measures have been taken 
since 2000.  First, in accordance with its oblig ations under the Harmonized System Convention, 
Switzerland implemented the HS 2002 changes on 1 January 2002 and su bmitted its amended 
Schedule of Concessions to the WTO for verificati on and certification.  Second, more substantial 
reductions and simplifications were introduced by the adoption of two ordi nances on 1 March 2002:  
one from the Federal Council dealing with reductio ns in duties on passenger traffic (Ordinance on 
passenger traffic) and the other from the Federal Department of Finances on the tariff rate for Switzerland and Liechtenstein WT/TPR/G/141 
 Page 23 
 
 
passenger traffic.  The most significant simplification is the application of a single exemption of 
300 Swiss francs per person per day on all goods, with the exception of alcoholic beverages and 
manufactured tobacco subject to specific quantita tive exemptions franchises, and also imported 
agricultural products subject to quotas and in qu antities liable to customs duties.  With this 
modification, the distinction between border traffi c and passenger traffic has disappeared.  Thus the 
passenger's place of domicile no longer plays a part in the granting of value exemptions and quantitative exemptions. 
(vi) Rules and disciplines 
91. In multilateral forums, Switzerland constantly seeks the adaptation of rules  and disciplines  to 
enable governments to respond to the challenges of globalization.  This is what lies behind 
Switzerland’s efforts regarding a round of multila teral negotiations with a sufficiently broad 
negotiating programme to satisfy all 148 WTO Members.   
92. Switzerland adopted the same position in the steel  dispute with the United States, when for 
the first time Switzerland took part in a WTO pa nel as a complainant and in an Appellate Body 
proceeding (WT/DS253/AB/R).  With the seven other co-complainants, Switzerland successfully 
challenged American safeguard measures which, in th e shape of supplementary tariffs of up to 30 per 
cent, had been imposed on 10 groups of steel pr oducts on 20 March 2002.  On e week before the WTO 
Dispute Settlement Body adopted the report by the Appellate Body, on 4 December 2003, the 
United States terminated the measures which were found to be inconsistent  with Article XIX of 
GATT 1994 and the Agreement on Safeguards.   
(vii) Exports promotion 
93. Established under a Federal Law on Export Risk Guarantees, the Swiss Export Risk 
Guarantee Scheme (GRE) aims to create and safeguard employment opportunities in Switzerland, 
while promoting foreign trade through, inter alia,  the diversification of export markets.  The GRE 
covers political and transfer risks, trade risks and pre-delivery risks.  Until recently, only trade risks 
could be covered when buyers were State or pa rastatal buyers, equally when public services were 
involved.  Private sector trade risks, on the other hand, could be covered onl y if a GRE-approved bank 
provided a guarantee.  Although the Swiss authorities are still of the opinion that trade risk coverage 
should be left to market players, they had to face the fact most other industrialized countries had 
included coverage of these risks in their export ri sk guarantee schemes.  This development was also 
the outcome of a growing trend to privatize activ ities previously controlled by the public sector, both 
in developing countries and in transition countri es.  To avoid Swiss export companies from being 
systematically placed at a disadvantage in rela tion to foreign competitors, new legislation was 
prepared, inter alia , to extend GRE coverage to private buye rs.  It was accepted in a referendum in 
2004 and is currently before Parliament.
35  
94. Lastly, in 2000 a legislative amendment was designed to improve export opportunities for the 
official export promoter (Osec Business Network Sw itzerland) to develop SMEs' export capacity.  By 
providing information, advice and contacts, Osec answ ers the specific needs of SMEs, which, because 
they are small, are not always able themselves to  seek out all the necessary information on potential 
markets.  Osec's activities were once again debated in Parliament in 2003.  The discussion centred on 
the risk of violating the principle of subsidiarity vis à vis  private sector supply that applies to all of 
                                                      
35See http://www.seco.admin.ch/imperia/md/conten t/publikationenundformulare/lasre_fr.pdf?PHPSES
SID=31cf0f3e621606969def6a1a2ea46251. WT/TPR/G/141 Trade Policy Review 
Page 24 
 
 
Osec's services through competition betw een Osec and private sector suppliers.36  Another related 
issue was the risk of cross-subsidization between Osec's government-subsidized services (required by 
law) and its own private sector services (allowed by law). 
IV. SWISS POSITION IN THE DOHA MULTILATERAL TRADE NEGOTIATION 
ROUND  
(1) GENERAL APPROACH TO TRADE POLICY  
95. A policy of openness and progressive liberalization of foreign trade make up the other facet of 
the Swiss Government's endeavours in structural  reforms to strengthen economic growth.  This 
openness is a welcome development opportunity for the most dynamic economic sectors.  The 
resulting additional economic growth also tends to  facilitate the necessary structural adjustments 
which would prove to be even more difficult in l ess favourable economic conditions.  Traditionally, in 
industry and many services, Switzerland has applied a policy of openness.  Economic performance in 
these sectors and the standard of living reached show  that this policy has generally been a success.  
Competitiveness on foreign markets, however, is ne ver acquired once and for all.  The moves to 
openness and liberalization should therefore be kept up.  At the same time, for the other, more 
vulnerable sectors of the economy, the necessary openness and liberalization must occur at an 
acceptable pace.  Hence, a sector-s pecific approach is needed. 
96. The trend towards faster globalization that st ems from increased interdependence includes 
both opportunities and challenges for all parties involv ed in international trade.  For opportunities to 
gain the upper hand, the progressive liberalization of trade must be controlled by international rules 
that are correctly applied by all.  This is par ticularly important for small countries which are often 
more vulnerable because of their strong dependence on foreign trade.  Switzerland is no exception.  
Consequently, this means increasing multilateral coopera tion and strengthening its institutions.  In this 
connection, the Swiss Government believes that a ke y role must be assigned to the WTO in the fields 
of the progressive liberalization of international trade, the establishment of rules, rights and 
obligations governing interna tional trade, and also the settlement of disputes.  It is also necessary to 
strengthen the world trading system by better integr ation of developing countries, transition countries 
and the LDCs.   
97. In view of the historical importance of intern ational trade in the development of the Swiss 
economy, the Swiss Government is strongly attached  to an open system of multilateral trade.  If 
Switzerland also participates in various bilateral or regional free-trade agreements, it is because the 
Government regards such agreements as a further means of speeding-up trade liberalization at the 
international level.  On the other hand, they can  in no sense act as a substitute for the multilateral 
trading system.  Faced with the growing trend towa rds regionalization of trade, the Swiss Government 
believes that strengthening the multilatera l trading system is a priority.   
(2) SWITZERLAND AND THE DOHA DEVELOPMENT AGENDA  
98. The Swiss Government intends to maintain  active support for further multilateral trade 
negotiations within the framework of the Doha Development Agenda.  Th e negotiations should not 
only cover market access but should also aim at strengthening existing trade rules and introducing 
new ones, promoting consistency between the multilate ral trading system and other policies such as 
the environment or development.  Given the importa nce that it attaches to a favourable outcome to 
                                                      
36 Rapport sur la politique économique extérieure 2003 and Message concernant des accords 
économiques internationaux du 14 janvier 2004 .  See http://www.admin.ch/ch/f/ff/2004/257.pdf. Switzerland and Liechtenstein WT/TPR/G/141 
 Page 25 
 
 
these negotiations, the Swiss Government has clearly defined its objectives for each of the 
negotiations specific to the Doha Round,  which can be summarized as follows:  
99. With regard to non-agricultural market access , the Swiss Government seeks to obtain better 
access to other markets ( inter alia  to those of emerging countries outside Europe with which 
Switzerland does not have a free-trade agreement).  The Swiss Government believes that an ambitious 
formula supplemented by sectoral policies and nego tiations on non-tariff barri ers should be developed 
on the basis of the framework agreement of 1 August 2004.   
100. Regarding services , Switzerland has given full backing to  improving market access;  its initial 
offer was submitted in April 2003 and covers hor izontal commitments, professional services, postal 
services, telecommunications services, construction-related services, education services, tourism 
services, and sea, air and road transport services.  The Federal Council has confirmed its commitment to apply the principle of no a priori exclusion of any sector or mode in the GATS negotiations.  
Consequently Switzerland is examining all the request s it has been received.  Particular attention is 
given to requests that are in line with its grow th policy and the possibilities of increasing market 
access and national treatment.  As for public servi ces, Switzerland does not make commitments that 
are incompatible with its current federal and cant onal legislations.  The Swiss Government's requests 
to other Members mainly concentrate on sophisti cated high added-value services and on services that 
are used as inputs by other companies.  Its requests also fully take into account Members' market size 
and levels of developmen t.  The Swiss Government  defends uninterrupted ne gotiations in high-quality 
services.  It intends, moreover, to submit a revised offer in May 2005. 
101. Switzerland has a systemic interest in the strengthening of WTO rules .  It takes the view that 
rules should be regularly updated to take account of  developments in the world economy.  Moreover, 
any inconsistencies between the various rules in for ce should be examined.  As to the rules currently 
being negotiated, it should be stressed that Switzerland neither applies anti-dumping duties nor 
countervailing measures.  It is, however, in favour of strengthening the rules in these fields in order to 
prevent the abusive effects of such measures.  Swit zerland also calls for clarification of the rules on 
customs unions and free-trade agreements in order to  increase security and transparency and ensure 
compatibility and reciprocal support between regiona l trade agreements and the multilateral trading 
system.   
102. As regards the " Singapore issues ", Switzerland is gratified that, when the Decision was taken 
by the General Council on 1 August 2004, it was decided to launch negotiations on trade facilitation , 
which represents a key demand for Swiss economic  players.  Switzerland expects simplified 
streamlined customs procedures.  Substantial gain s in efficiency should be achieved by reduced 
transaction costs which would be of benefit to all economies.  Switzerland nonetheless regrets that the 
relationship between trade and investment, the interaction between tr ade and competition policy  and 
the transparency in government procurement , mentioned respectively in paragraphs 20 to 22, 23 to 25 
and 26 respectively of the Doha Declaration, are not part of the negotiating agenda.  Switzerland 
intends to take firm steps so that these topics c ontinue to be examined within the WTO framework, 
even if not within the Doha negotiations.  Otherw ise, the WTO could well become obsolete if it does 
not manage to follow the rapid development of trade and investment in the world economy.   
103. As for agriculture
, Switzerland intends to pursue the reforms of its agricultural policy (see 
paras. 41 to 44).  Like the other G10 members, it is seeking an agreement which, as well as continuing 
with progressive liberalization of market access, a gradual reduction of domestic support – a source of 
trade distortions – and the elimination of all inst ruments with an export-subsidy effect, also takes 
account of the non-trade related aspects of agricu lture.  These are food security, protection of the 
environment and the countryside, animal welfare,  consumer information on production methods and WT/TPR/G/141 Trade Policy Review 
Page 26 
 
 
the protection of geographical indications.  Th e liberalization process brings about additional 
economic pressures for farmers in the G10 countries.   For this reason, Switzerland calls for the 
modalities to hasten reforms that can  be maintained and allow sufficie nt flexibility.  In this regard, it 
is gratifying that WTO Members have explicitly recognized in the negotiations the need to take 
account of sensitive products. 
104. In the case of geographical indications , the Swiss Government is looking to extend the 
additional protection that the TRIPS Agreement curr ently reserves only for wines and spirits to all 
products (agricultural and industrial) , together with the creation of a multilateral register for wines and 
spirits, with legal effect.   
105. In the field of trade and environment , Switzerland has over these past four years actively 
participated in the work of the WTO Committe e on Trade and Environment in Special Session 
(CTESS) and in that of the Committee on Trade and Environment (CTE) by submitting several documents on the issues under consideration.  One of  Switzerland's priorities has been to clarify the 
link between the WTO provisions and the multilateral ag reements on the environment, so as to ensure 
consistency between the two systems in the event of  a dispute.  In addition, Switzerland aims to 
achieve more favourable treatme nt of environmental goods.   
106. Switzerland is actively taking part in negotiations designed to improve the dispute settlement 
mechanism .  This mechanism is of particular interest to the smaller WTO Members, and constitutes a 
guarantee that the law prevails over strength and an assurance that the commitments undertaken will 
be fulfilled.  An improvement of these rules is thus  of major systemic interest to Switzerland.   
107. With regard to special and differential treatment (S&D) , Switzerland believes that S&D 
dispositions should be better adapted to the needs of  specific groups of developing countries:  the least 
developed countries and countries w ith similar economic structures should gain greater benefit than 
more advanced developing countries.  To this e nd, and to make the system both transparent and 
predictable, a system of objective and relevant criteria from the trade point of view should be 
developed.  In addition, a supervisory system taking account of countries' specificities should be 
established to optimize the advantages that a gi ven country can gain from the S&D provisions and 
from the multilateral trading system as a whole.   
108. Switzerland supports the " Cotton Initiative " launched by West African countries in 2003, and 
has proposed three-fold action:  first, the relevant  organizations should work in favour of reducing the 
short-term problems of these countries by moderniz ing and restructuring the cotton sector, including 
in areas such as loans to small producers, quality ma nagement and transport infrastructure;  second, 
WTO Members should give tax and quota-free access  for cotton and cotton products from the poorest 
countries and substantially reduce le vels of distorting domestic suppor t in cotton in particular and 
eliminate all types of export subsidy as an integral pa rt of the negotiations on ag riculture;  and third, if 
the negotiations on agriculture do  not produce the desired result on cotton, specially adapted measures 
should be found.   
109. Switzerland intends to participate actively in the definition of modalities , in negotiations on 
trade facilitation, and in all the fields of nego tiation during the next negot iating phase of the Doha 
Round.  The WTO is facing major challenges:  the globalization of inter- and intra-enterprise relationships and the very rapid growth of mark ets demands corresponding changes in the rules of 
international trade.  This is why Switzerland believes that the results of negotiations should not just be 
circumscribed to figures, but should also lay down ru les that will be properly applied by all parties 
involved in international trade.  Switzerland also  wants more transparency during the negotiations 
themselves.  All the different shades of opini on represented among the 148 WTO Members should be Switzerland and Liechtenstein WT/TPR/G/141 
 Page 27 
 
 
heard so that, at the end of the day, each and ev ery Member can declare "ownership" of the results 
which will have to be balanced.  This also means th at efforts will have to be redoubled to arrive at 
better dialogue with parliaments and between parliaments, with NGOs and between NGOs.  
Significant progress at this level is indispensable fo r current trade policy objectives to be realized as a 
whole. WT/TPR/G/141 Trade Policy Review 
Page 28 
 
 
REFERENCES 
 
 Swiss National Bank, Bulletin trimestrial , Zurich. 
 
Swiss Federal Council, Rapport sur la politique économique extérieure 2000 and Messages 
concernant des accords économiques internationaux , OFCL, Berne,  10 January 2001, 263 p. 
 Swiss Federal Council, Rapport sur la politique économique extérieure 2001 and Messages 
concernant des accords économiques internationaux , OFCL, Berne, 9 January 2002, 432 p. 
 Swiss Federal Council, Rapport sur la politique économique extérieure 2002 and Messages 
concernant des accords économiques internationaux , OFCL, Berne, 15 January 2003, 121 p. 
 Swiss Federal Council, Rapport sur la politique économique extérieure 2003 and Messages 
concernant des accords économiques internationaux , OFCL, Berne, 14 January 2004, 112 p. 
 Federal Department of the Economy, Le rapport sur la croissance , Grundlagen der Wirtschaftspolitik 
Nr.  3F, Berne, 2002.  
Federal Department of Finances, Les finances publiques 2004:  Confédération, cantons, communes , 
Berne, 2004.  Federal Office of Agriculture, Rapport agricole 2000 , Berne, 2000. 
 Federal Office of Agriculture, Rapport agricole 2001 , Berne, 2001. 
 
Federal Office of Agriculture, Rapport agricole 2002 , Berne, 2002. 
 Federal Office of Agriculture, Rapport agricole 2003 , Berne, 2003 
 Switzerland and Liechtenstein WT/TPR/G/141 
 Page 29 
 
 
REPORT BY LIECHTENSTEIN 
 
 
I. INTRODUCTION 
1. Since the first WTO trade policy review of Sw itzerland–Liechtenstein in the year 2000 the 
development of Liechtenstein can be characterized  by a consolidation process.  In the years 1995-
2000 Liechtenstein joined the European Economic Area (EEA)37, the World Trade Organization 
(WTO) and the Agreement on Government Procuremen t of the WTO (GPA).  These steps led to far-
reaching legal and organisational adjustments in Liechtenstein.  The years after 2000 have been a 
period of completion and fine tuning of these new adjustments.   
2. Liechtenstein is highly dependent on external re lations.  The external economic relations are 
tremendous:  virtually all raw mate rials and input parts and products have to be bought abroad;  a 
significant part of the value added in the industria l and the services sector goes back to customers 
abroad;  Liechtenstein employs almost as many cro ss border workers as resident persons (the relation 
is 0.9:1) and also higher educati on is gained mainly abroad.  Thus , Liechtenstein's economic operators 
have every interest in access to liberalized market s.  At the same time the Government has to find a 
balance between liberalising further Liechtenstein's  own market and taking care of Liechtenstein's 
specific situation due to its limited territory, its limited human and natural resources and the extremely 
high percentage (66 per cent) of non-Liech tenstein citizens in the workforce.   
II. TRADE AND ECONOMIC POLICY ENVIRONMENT 
3. Due to international standards and especially th e standards of the EEA, Liechtenstein started 
in the second half of the nineties to liberali ze the postal services, telecommunications services and 
transport services.  In the years 2000-04 this libera lization process has continued and structures have 
been adapted and optimized.  In addition, first liberalization steps towards privatization of the 
electricity and gas sectors have been approved by the Parliament. 
4. Great efforts have been put into the creation of  new and the improvement of existing laws in 
the context of financial services in order to comply  with international standards.  A special emphasis 
has been given to supervision of  financial services (see below). 
(1) ECONOMIC GROWTH  
5. In the years 2000-04 growth figures of the previous years could not be repeated.  The 
economic indicators reflect a period of stagnation.   Since 2003 the Liechtenstein economy started to 
recover.  The GDP increased from 4,002 million Sw iss francs (1999) to 4,195 million Swiss francs in 
2000 and to 4,205 million Swiss francs in 2001.  From 2000 to 2001 there was a sharp decrease of the GNP (-8%) and of the national income (-9,6 per cent) .  Total employment in Liechtenstein increased 
from 26,797 (2000) to 29,055 (2003) employees.  Industrial exports
38 decreased from 4622 million 
Swiss francs in the year 2000 to 4422 million Swis s francs in 2001 and to 4294 million Swiss francs 
in the year 2002 but rose again by 8.2 per cent to 4,646 million Swiss francs in the year 2003.  
Exports to Switzerland remained at around 12 per cent of the overall exports.  In the year 2003, 
exports to EEA-Members increased by more than 10 per cent up to 1816 million Swiss francs (43 per 
cent of the overall exports).  Exports to other count ries (44 per cent of all exports) also increased by 
9 per cent.  By individual countries the main des tinations were the US (641,9 million Swiss francs), 
Germany (596.5 million Swiss francs) and Switzer land (595,2 million Swiss francs).  Within the 
                                                      
37 See explanations under III (2). 
38 Only including firms which are member of the Liechtenstein Chamber of  Commerce and Industry. WT/TPR/G/141 Trade Policy Review 
Page 30 
 
 
Asian countries, Taiwan ranks before Hong Kong and Japan as export destinations.  In 2003, the 
Liechtenstein export industry has not increased employment in Liechtenstein but has opened 
18 branches abroad.  The number of employees in  195 branches of the Liechtenstein exporting 
industry outside of Liechtenstein went up from 23,611 to 26,873.   
6. The total balance sheet of the 16 banks in Liechtenstein decreased from 36,964 million Swiss 
francs in the year 2000 to 34,788 million Swiss fra ncs in the year 2001 and to 32,665 million Swiss 
francs in the year 2002.  In the year 2003, it increased again up to 34,908 million Swiss francs.  The net profit of the banks and client assets under mana gement have shown a similar pattern during these 
years. 
7. Liechtenstein has the same inflation rate as Sw itzerland (2000:  1.6 per cent, 2001:  1.0 per 
cent, 2002:  0.6 per cent, 2003:  0.6 per cent).  Inte rest rates remained stable with some slight 
decreases.  There are no figures available reflecting private consumption or investment.  The unemployment rate in Liechtenstein is traditionally very low;  the maximum rate so far has been 
2.4 per cent (2004). 
8. The development of the Liechtenstein national budget in the period 2000-03 was determined 
by several factors, including the performance on th e stock exchanges, which had an effect on the 
capital reserves.  The current expenses surged from 596 million Swiss francs in 2000 to 664 million 
Swiss francs in the year 2003.  Tax income st eadily increased until 2001, but declined in the 
subsequent two years.  The overall state income decreased from 829 million Swiss francs in the year 
2000 to 794 million Swiss francs in the year 2003.  Th e current expenses have been affected by the 
exchange losses on reserve assets (man aged by external asset managers) in these years.  In the year 
2002 Liechtenstein had the first negative national budget (-47 m illion Swiss francs and -57 million 
Swiss francs for the current budget and overall budge t respectively) since many years.  The "own 
capital" steadily lies at 1.7 billion Swiss francs.  In 2003 and 2004, the Government has proposed 
several measures to cut expenditure and has also changed the (managemen t) criteria for its investment 
policy. 
(2) T
HE ECONOMIC SECTORS  
9. The highly industrialized economy of Liechtenstein is characterized by a broad diversification 
of sectors, businesses and products.  The average value added is very hi gh, based on research and 
development, qualified expertise, a wide range  of high-tech and niche products, strong export 
orientation, and a highly developed financial services sector.   
10. The employment figures in Liechtenstein are extraordinarily high.  With a population of 
34,000, there are 29,000 jobs.  This considerable le vel of employment can be explained by the fact 
that the number of cross-border commuters to Liech tenstein is many times higher than the number of 
cross-border commuters from Liechtenstein.  A bout 13,000 individuals commute daily from the 
region (Austria, Switzerland and Germany) to their workplace in Liechtenstein.  This is about 45 per 
cent of the total work force.  As of 31 December  2003, jobs were partitione d as follows:  53.7 per cent 
in commerce and services, 45 per cent in industry an d manufacturing, and 1.3 per cent in agriculture 
and forestry.  By international standards, the ve ry low proportion of agriculture and forestry is 
striking, as is the relatively high proportion of the manufacturing sector.  The services sector is considerably smaller than in other European countries. 
11. About 40 per cent of the GDP is the result of value added in industrial production and 
manufacturing, 30 per cent in the financial services sector, 25 per cent in general services, and the 
remainder in household, agriculture and forestry.  The industry and manufacturing sector counts for Switzerland and Liechtenstein WT/TPR/G/141 
 Page 31 
 
 
559 businesses.  More than 70 per cent of these are small businesses (1 to 9 employees) while nine 
companies have more than 250 employees.  In  2002, the commercial economy encompassed 3,015 
businesses.  The employees of these businesses wo rk in 125 professions , 95 of which are 
apprenticeship professions. 
12. Liechtenstein has evolved in the last fifty year s from an almost purely agricultural State into 
one of the most highly industrialized countries in the world.  The most important branches of the industrial sector are mechanical engineering,  plant construction, manufacturing of precision 
instruments, dental technology, electronic contro l devices, vacuum, heating and lighting technology, 
dentistry and pharmaceutical products and food-processi ng industry.  The per capita value of exports 
is about five to eight times higher than the corr esponding value for Germany, Austria or Switzerland.  
With 292 million Swiss francs, the expenditures in  2003 for research and development of industrial 
companies belonging to the Chamber of Commerce and Industry amounted to over 8,000 Swiss francs per inhabitant.   
13. Financial services are an important economic sect or in Liechtenstein, but not the largest.  
Seventeen per cent of persons employed in Liechtens tein work in the financial sector.  The services 
offered include in particular asset management, inte rnational asset structuring, investment funds as 
well as insurance and re-insurance business.  Sixteen banks, 385 asset managers and trust companies, 
23 Liechtenstein insurance companies, 185 insura nce companies from abroad engaging in free 
movement of services (within the EEA) and 17 fu nd management companies with 190 investment 
funds operate in Liechtenstein.  Liechtenstein banks manage assets in the amount of 104 billion Swiss 
francs as of end 2003.  The assets in Liechtenstein investment funds currently amount to 14 billion 
Swiss francs.  The close treaty relationship with Sw itzerland, the introduction of the Swiss franc as 
legal currency and the passing of the 1926 Act on Pe rsons and Companies, that allowed for a broad 
selection of company forms, as well as an investor friendly tax system, are the foundation on which Liechtenstein's financial center is built.  The last 15 years have been a particular dynamic period for 
the Liechtenstein financial center.  The accession to the European Economic Area in 1995 acted as a 
catalyst for a series of fundamental changes and f acilitated access to the markets of other countries. 
14. The Government is the primary authority for li censing all banking, investment, and insurance 
activities.  In order to further strengthen the qualit y of the financial center, the Parliament has passed 
in June 2004 a bill establishing an independent integrated financial supervisory authority, 
consolidating the current functions of the agenci es involved in financia l sector supervision and 
regulation.  As an EEA member, Liechtenstein is obliged to implement relevant EU legislation.  
Accordingly, banking, insurance, securities and ac counting legislation is based on the relevant EU 
Directives.  Because of the close monetary links with Switzerland, financial institutions are also 
required to meet the accounting guidelines of the Sw iss regulatory authority.  Banks, insurance firms 
or funds companies with no physical presence are not permitted. 
15. Liechtenstein has a vital interest in the worldw ide enforcement of internationally recognized 
standards to prevent abuse of the financial market s.  Liechtenstein's foreign policy therefore pays 
great attention to the development and internationa l enforcement of uniform rules to combat money 
laundering and the financing of terrorism.  At the na tional level, legislative, administrative and other 
practical measures have been taken in the last years to achieve this goal, and the relevant standards in 
Liechtenstein have been acknowledged by interna tional bodies such as the International Monetary 
Fund (IMF).  In 2002, Liechtenstein underwent an Of fshore Financial Center Assessment by the IMF.  
In their report of September 2003, the IMF expert s attested Liechtenstein 's preventive measures 
against money laundering and financing of terrorism a " high level of compliance with international 
standards", including, a high degree of implementation of  the FATF (Financial Action Task Force) WT/TPR/G/141 Trade Policy Review 
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recommendations on combating money laundering as well as the 8 special recommendations of the 
FATF on combating the financing of terrorism. 
16. The primary sector employs 1.3  per cent of the total workforce.  The number of employees in 
the primary sector remained stable during the past f our years.  Two thirds of the gross agricultural 
return is produced by the dairy industry. 
17. Liechtenstein's economic life has benefited from social harmony for many years.  The 
relationship between employers and employees is a p eaceful and co-operative one.  The country has a 
fully-fledged social welfare system.   
(3) STATE ACTIVITIES  
18. The Government of Liechtenstein does not provi de any export subsidies, support of research, 
structural policy nor any subsidies to companies.  Furthermore, the Government has no possibility to 
influence an exchange rate increase of the Swiss fran c.  The main features of the playing field set by 
the Government's economic policy are trade laws , sound (mainly positive)  budgets, low taxes, 
stability and reliability of the policy, the creation of high quality educational systems, low administrative burden and a slim and customer oriented public administration.   
19. In order to maintain and expand the favourab le economic conditions in Liechtenstein the 
Government participated in the foundation of a Competence Center for Small and Medium-Sized Enterprises (SME) under the direction of the Liechten stein University of Applied Science.  This 
Competence Center supports SME in their start-up phase.  The Center advises young professionals and companies in the growth phase on business pl anning and management, arranges contacts with 
financial institutions, investors or  potential business partners.   
20. Due to the country's small territory (160 square  kilometres) and in view of the relatively high 
proportion of non Liechtenstein citizens of the total of the resident and of the working population 
(34,5 per cent and 65,3 per cent respectively) Liech tenstein regulates new investments (green field 
investments) and immigration.  By regulating fo reign direct investments (also for non-resident 
Liechtenstein citizens) the Government respects the limited area with its rural character of 
Liechtenstein and preserves access to real estate for the resident population.  Compared to the last 
Trade Policy Review Switzerland-Liechtenstein th e portion of non Liechtenstein citizens of the 
resident and of the working population has even increased.  Therefore, the Government does not see 
any leeway to ease restrictions concerning immigration and employment.  In view of this specific situation, Liechtenstein has, even in the EEA, sp ecial rules for the free movement of persons.   
(4) P
ROSPECTS  
21. The economic prospects for the near future ar e good due to the social, legal and economic 
stability that Liechtenstein's location provides.  There are, however, constraints for further growth, namely the very low supply of and the high prices for land and property as well as the dried-out labour market.  An external factor that might ha ve a slowing down effect on the economic growth is 
the revaluation of the Swiss franc.   
III. TRADE POLICY DEVELOPMENTS AND FUTURE POLICY DIRECTIONS 
22. The framework of the trade environment of Li echtenstein is outlined by the Customs Union 
Treaty with Switzerland, Liechtenstein's member ship in the European Free Trade Association 
(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 greater economic cooperation in Switzerland and Liechtenstein WT/TPR/G/141 
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regional agreements.  Trade agreements are importa nt tools for a small and highly export oriented 
country such as Liechtenstein.  These agreements a llow Liechtenstein's economic operators to trade 
on rule-based systems.  So far Liechtenstein has not been involved in any WTO or EFTA dispute 
case.   
(1) THE WORLD TRADE ORGANIZATION (WTO) 
23. Liechtenstein is fully committed to the multila teral rules-based trading system and will 
continue to emphasise the importance of universal broad-based trade liberalization.  Liechtenstein 
strongly advocates the Doha Development Agenda  and the Doha Work Programme and remains 
firmly committed to its successful conclusion.  The WT O system has to respond with flexibility to the 
realities and needs of this century's economy and to th e increasingly diverse situations of its members.  
Improved market access means more trade, and more  trade is beneficial to all, developed and 
developing countries alike.  It al so offers opportunities for growing trade among developing countries.  
The Doha Round has also to be a development round to help developing countries to profit from these 
new opportunities.  The multilateral trading system  is a proven vehicle in promoting economic 
development and growth and is central to the futu re prosperity of our nations.  In the view of 
Liechtenstein there exists no alternative to th e WTO multilateral trading system.  The multilateral 
system has to be strengthened.   
24. Liechtenstein's agricultural sector is not only small in absolute but also in relative terms.  It 
accounts for only one percent of employment.  Liecht enstein is a net food importer.  Agriculture in 
Liechtenstein is more than just food production.  The Liechtenstein agricultural sector has in the last 
decades and years gone through tremendous structural changes.  This sector has to be looked at from 
political, social and environmental perspectives.  Non-trade concerns have to be duly taken into 
account when talking of progressive liberalization steps of this sector.  WTO has to allow Members to follow different objectives with their agricultural polic y than only trade.  Liechtenstein of course is 
ready to look into agricultural reforms.   
25. As necessary flanking measures for Liechtenstein,  the extension of protection of geographical 
indications to products other than wine and spirits should absolutely be part of WTO. 
26. Despite more than 50 years of tariff negotiati ons, non-agricultural market access is still an 
unfinished business.  Further progress has to be achieve d during this Round, in particular in areas of 
export interests to developing countries.  Liechte nstein supports further s ubstantial reductions in 
custom duties and their comprehensive binding. 
27. Services form an important part of the overa ll package of the current negotiating Round.  
Services account for a large part of economic growth, both in industrialized and developing countries.  Liechtenstein has handed in a comprehensive offer last year. 
28. As the outcome of the negotiations should be bene ficial to all, Liechtenstein welcomes that 
specific concerns of developing countries are a ddressed in all areas of the negotiations.   
(2) T
HE EUROPEAN ECONOMIC AREA (EEA) 
29. The Agreement on the European Economic Area ex tends the single market of the EU to the 
three EFTA countries Iceland, Liechtenstein and No rway.  This means that the four fundamental 
freedoms of the internal market of the EU, th e free movement of goods, services, capital and WT/TPR/G/141 Trade Policy Review 
Page 34 
 
 
persons39, apply within the EEA mainly in the same wa y as in the EU.  In addition, the Agreement 
includes flanking and horizontal policies in order to  strengthen the internal market.  These horizontal 
policies include research and development, statisti cs, education, social policy, the environment, 
consumer protection, tourism, small- and medium-s ized enterprises, culture, information services and 
audiovisual services.  The membership entails the ob ligation to transpose EU single market legislation 
into national law and to comply w ith supervisory law standards and pr inciples applicable to the entire 
EEA.  By 2003, the overall number of adopted legal acts amounted to 4037. 
30. Liechtenstein became a Member of the EEA Agreement on 1 May 1995 in order to secure its 
economic success on a long term basis.  This w as a radical step for Liechtenstein, requiring 
concentrated action at the political and administrativ e levels over an extended period of time, as well 
as far-reaching legal and organisational adjustments,  also in order to preserve the customs union 
between Liechtenstein and Switzerland.  However, the efforts have been worthwhile – the outcome 
has been largely positive.   
31. Clearly, the EU is the most important market for Liechtenstein's econom ic operators and the 
EEA with its four freedoms has given them an approp riate legal framework.  As a consequence of this 
agreement, a large part of Liechtenstein's economic legislation is based on EU law.  At the end of 
2003, Liechtenstein had implemented more than 98 per cent of the relevant internal market rules, 
which is above the EU average. 
32. In the period 2000-04 the most important development for the EEA was its enlargement due 
to ten new EU Member Countries.  An enlargemen t Agreement for the EEA was negotiated with the 
EU, its Member Countries and the new EU Members.   Basically, the adapta tions to the internal 
market rules negotiated for these accessions within the EU (transitional periods for the free movement 
of persons, etc.) have been taken over into the EEA Enlargement Agreement.  The three EEA-EFTA 
States, Iceland, Liechtenstein and Norway, have established their own financial mechanism to co-
finance projects for the development of disadvantaged  regions in the enlarged EU.  Since 1 May 2004, 
the EEA Enlargement Agreement is applied provisi onally until all EU Members have ratified, which 
is expected in autumn 2004. 
33. Although it is difficult to foresee, if, in the longer term, the EEA can be kept in its present 
form, Liechtenstein is interested to keep this  or a similar contractual framework for economic 
relations with the EU.  Adaptations might in par ticular be necessary, should one or the other EFTA 
State change its integration policy toward the EU. 
34. The relationship between Liechtenstein and the EU is not limited to the EEA and in the 
coming years, the cooperation might widen in scope.  In 2004, Liechtenstein has concluded 
negotiations with the EU on the taxation of saving interests, a treaty that should soon be signed.  
Exploratory talks are also conducted on an associati on in the so-called areas of Schengen and Dublin 
(open borders, visa, asylum, etc.), in parallel to a similar Swiss Association.  Such an opening of the 
borders would further strengthen Liechtenstein's political and economic ties to its eastern neighbour, 
Austria. 
                                                      
39 In the EEA Liechtenstein has special rules as far as free movement of persons is concerned, by which 
nationals of EEA States are still subject to a permit from the Liechtenstein authorities to take up residence in Liechtenstein. Switzerland and Liechtenstein WT/TPR/G/141 
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(3) THE EUROPEAN FREE TRADE ASSOCIATION (EFTA) 
35. Liechtenstein became a full EFTA member on 1 September 1991.  Hitherto, Liechtenstein had 
been covered by the EFTA Convention through a par ticular Protocol under which the interests of 
Liechtenstein were taken care of by Switzerland.   
36. In June 2001 EFTA-Ministers si gned an updated EFTA-Convention that entered into force on 
1 June 2002 in parallel with the b ilateral Agreements between Switzer land and the EU.  For the first 
time since the signing of the EFTA Convention in  Stockholm in 1960 Member States agreed to 
substantial changes to the Convention.  The cond itions for trade in goods have been improved by 
removing technical barriers to trade, allowing for mutual recognition of certification of industrial 
products and facilitating trade in certain agricultura l products.  Substantial new provisions have been 
introduced on the free movement of persons, in vestment and services, public procurement and 
intellectual property rights.  The updated Conventio n creates conditions between the EFTA States that 
in many respects are similar to those between th e EFTA States and the EU, provided by the EEA 
Agreement and the bilateral Agreements  between Switzerland and the EU.   
37. EFTA's network of contractual relations is c ontinuously expanded according to its policy of 
making a dynamic and independent contribution to improving economic conditions across Europe and 
beyond and of forging strong links with trading part ners outside the continent.  Due to the EEA-
Enlargement in May 2004, eight of the existing 20 fr ee trade agreements have been replaced by the 
EEA Agreement.   
38. Since 2000 the EFTA States have concluded new free-trade agreements with Croatia, Jordan, 
Macedonia, Mexico, Singapore.  An Agreement with Chile has been signed in June 2003.  It will enter 
into force in 2004.  With Lebanon an Agreement has b een signed in June 2004.  They have in addition 
signed since 2000 declarations of cooperation with  Algeria, the Gulf Cooperation Council, Mercosur, 
Serbia and Montenegro and Ukraine.  Free trade negotiations with Tunisia and Egypt are nearly 
finalised.  Negotiations with SACU (Southern Afri can Customs Union) are in progress.  A first round 
of free trade talks with South Korea has taken place in August 2004.   
(4) CUSTOMS UNION TREATY /ECONOMIC INTEGRATION WITH SWITZERLAND  
39. The close cooperation with Switzerland is reflected  in many (more than 50) bilateral treaties, 
the most important of them being the Customs Trea ty and the Currency Treaty.  The Customs Treaty, 
in combination with other agreements pertaining to the movement of persons, made possible the 
abolition of any border or customs control between the two countries.  Of equal practical importance 
to Liechtenstein's economy is the Currency Treaty which forms the legal basis for using the Swiss 
franc as the official currency in Liechtenstein.   
40. The provisions of the Customs Treaty stipulate th at the Swiss laws pertaining to customs as 
well as other federal legislation necessary for th e implementation of the customs-free zone are 
applicable in Liechtenstein.  In addition, trade and customs treaties concluded by Switzerland with 
third parties (with the exception of the EEA countries)  also apply to Liechtenstein on the basis of the 
Customs Treaty.  Switzerland is authorized to repres ent Liechtenstein in rele vant negotiations and to 
conclude such treaties with effect in Liechtenstein. 
41. The treaty facilitated the bilateral cooperation far beyond its original scope of application, in 
particular in the areas of social welfare (health , social security), education (vocational and 
professional training), transport and environment. WT/TPR/G/141 Trade Policy Review 
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42. The entry into force of the EFTA Convention on 1 June 2002 (see above) has led to an 
additional integration step in the relations between  Liechtenstein and Switzer land.  Substantial new 
provisions with regard to the relationship between  the two countries have been introduced mainly on 
the free movement of persons a nd public procurement.  The ot her updates of the EFTA-Convention 
have brought only marginal improvements to the already existing status quo. 
43. Future developments of the existing close links between the two countries will strongly 
depend on the integration policy both  countries will choose towards the EU. 
__________