RESTRICTEDWORLD  TRADE
ORGANIZATIONWT/TPR/S/77
6 November 2000
(00-4543)
Trade Policy Review Body
TRADE POLICY REVIEW
SWITZERLAND AND
LIECHTENSTEIN
Report by the Secretariat
This report, prepared for the joint Trade Policy Review of Switzerland and
Liechtenstein, has been drawn up by the WTO Secretariat on its own
responsibility.  The Secretariat has, as required by the Agreement establishing
the Trade Policy Review Mechanism (Annex 3 of the Marrakesh Agreement
Establishing the World Trade Organization), sought clarification from the
Governments of Switzerland and Liechtenstein on their trade policies and
practices.
Any technical questions arising from this report my be addressed to
Mr. J. Degbelo (tel. 739 55 83) or Mr. W. Alfaro (tel. 739 53 72).
Documents WT/TPR/G/77/CHE and WT /TPR/G/77/LIE contain the policy
statements submitted by the Governments of Switzerland and Liechtenstein,
respectively.
Note: This report is subject to restricted circulation and press embargo until the end of the meeting
of the Trade Policy Review Body on Switzerland and Liechtenstein.Switzerland and WT/TPR/S/77
Liechtenstein Page iii
CONTENTS
Page
SUMMARY OBSERVATIONS vii
(1) T HE ECONOMIC ENVIRONMENT vii
(2) I NSTITUTIONAL FRAMEWORK viii
(3) T RADE POLICY INSTRUMENTS ix
(4) S ECTORAL TRADE POLICY DEVELOPMENTS x
(5) T RADE POLICY AND TRADING PARTNERS xi
I. ECONOMIC ENVIRONMENT 1
(1) M AJOR FEATURES OF THE ECONOMIES 1
(2) E VOLUTION OF THE ECONOMIES 3
(3) T RADE PERFORMANCE AND FOREIGN INVESTMENT 5
(i) Trade in goods and services 6(ii) Foreign investment 10
(4) O
UTLOOK 11
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES 15
(1) I NSTITUTIONAL FRAMEWORK 15
(2) P OLICY FORMULATION AND IMPLEMENTATION 16
(3) P OLICY OBJECTIVES 18
(4) L AWS AND REGULATIONS 18
(5) A GREEMENTS 21
(i) Multilateral agreements 21
(ii) Bilateral agreements 22
(iii) Regional and other agreements 24
III. TRADE POLICIES AND PRACTICES BY MEASURE 28
(1) O VERVIEW 28
(2) M EASURES DIRECTLY AFFECTING IMPORTS 29
(i) Registration, documentation, and customs procedures 29
(ii) Tariffs, other duties, and taxes 30(iii) Import prohibitions, licensing, and controls 38(iv) Trade sanctions 39(v) Contingency trade remedies 39(vi) Rules of origin 41
(vii) Local-content and local-purchase requirements 42
(viii) Standards and other technical requirements 42(ix) Government procurement 46(x) Other measures 48WT/TPR/S/77 Trade Policy Review
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Page
 (3) M EASURES DIRECTLY AFFECTING EXPORTS 48
(i) Registration 48(ii) Prohibitions, controls, quotas, licensing, and voluntary restraints 48(iii) Export taxes, charges, and levies 49(iv) Export subsidies 49
(v) Duty and tax concessions 49
(vi) Export promotion and finance 49(vii) Export insurance and guarantees 50(viii) Other provisions 51
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 51
(i) Subsidies and adjustment assistance 51
(ii) Assistance for research and regional development 52(iii) Competition policy 53(iv) Protection of intellectual property rights 56
IV. TRADE POLICIES BY SECTOR 61
(1)
INTRODUCTION 61
(2) A GRICULTURE AND RELATED ACTIVITIES 62
(i) Main features 62(ii) Policy objectives and instruments 65(iii) Policy by type of product 74
(3) M
ANUFACTURING AND ENERGY 78
(i) Manufacturing 78
(ii) Energy 82
(4) S ERVICES 86
(i) Financial services 87(ii) Telecommunications and postal services 96(iii) Transport 100
(iv) Tourism 103
(v) Construction 106
REFERENCES 111
APPENDIX TABLES 113Switzerland and WT/TPR/S/77
Liechtenstein Page v
CHARTS
Page
I. ECONOMIC ENVIRONMENT
I.1 Ratio of merchandise exports to imports, Switzerland, 1990-99 6
I.2 Composition of trade by main commodity, Switzerland, 1994-99 8
I.3 Direction of trade, Switzerland, 1994-99 9
I.4 Real exchange rate developments, 1995-00 11I.5 Inward foreign direct investment stock, Switzerland, 1994 and 1998 12I.6 Outward foreign direct investment stock, Switzerland, 1994 and 1998 13
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Standards in the customs union, February 2000 44
IV. TRADE POLICIES BY SECTOR
IV.1 Producer price indices for selected products, 1995-99 70
IV.2 Cross-border trade in electricity, Switzerland, 1998 83
IV.3 Structure of the electricity market in Switzerland, 1997 84
IV.4 Energy imports by product, Liechtenstein, 1998 85IV.5 Number of banks and insurance companies in Switzerland, 1990-99 88IV.6 Assets of the Swiss banking system, 1993-99 89IV.7 Geographical distribution of premium revenue of Swiss private insurers, 1999 93IV.8 World-wide premium revenue of Swiss private insurance companies by
type of business, 1999 94
IV.9 Geographical distribution of tourists, Switzerland, 1997 104IV.10 Tourism receipts,  Switzerland, 1994-98 105
IV.11 Geographical distribution of tourists, Liechtenstein, 1990 and 1998 106IV.12 Construction spending by sector, Switzerland, 1994-98 107
IV.13 Construction volume by sector, Liechtenstein, 1990 and 1998 109
TABLES
I. ECONOMIC ENVIRONMENT
I.1 Switzerland at a glance, 1995-99 1
I.2 Economic indicators, Switzerland, 1995-99 3I.3 Balance of payments, Switzerland, 1995-99 5
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
II.1 Swiss and Liechtenstein participation in free-trade agreements, January 2000 25
III. TRADE POLICIES AND PRACTICES BY MEASURE
III.1 Restrictive impact of tariff quotas, 1999 31
III.2 Applied MFN tariff, 2000 34
III.3 Tariff lines where applied MFN rates are found to be higher than the
current bound rates, January 2000 35WT/TPR/S/77 Trade Policy Review
Page vi
Page
III.4 Special safeguard duties on pork meat and its by-products, 1 May-31 December 1999 40
III.5 Technical barriers affecting imports from countries participating
in the EEA, June 2000 43
III.6 Registrations of intellectual property rights, 1996-98 59
IV. TRADE POLICIES BY SECTOR
IV.1 Final production per agricultural branch, Switzerland, 1991-99 63
IV.2 Self-sufficiency in basic food products, Switzerland, 1991-98 64IV.3 Outlays for direct payments, Switzerland, 1998-99 66IV.4 Usage of domestic support categories, export subsidies and export credits,
Switzerland and Liechtenstein, 1995-99 68
IV.5 Framework plan for government support, Switzerland, 2000-03 68IV.6 Threshold prices for groups of fodder products and seeds,
Switzerland and Liechtenstein (since 1 January 1999) 71
IV.7 Market-access commitments via tariff quotas, Switzerland and Liechtenstein, 2000 72IV.8 Partially filled tariff quotas, Switzerland and Liechtenstein, 1998 73
IV.9 Export subsidies, Switzerland and Liechtenstein, 1995-99 76
IV.10 Exports by major Swiss industries, 1994-99 80IV.11 Structure of the Swiss banking system, 1998 89IV.12 Market access conditions for foreign-based insurance companies, 2000 95
APPENDIX TABLES
II. TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
AII.1 Selected notifications to the WTO, as of August 2000 115
III. TRADE POLICIES AND PRACTICES BY MEASURE
AIII.1 Tariff distribution by HS Chapters, January 2000 117
AIII.2 Tariff escalation, January 2000 120AIII.3 Mineral oil tax and surtax 123
AIII.4 Reduced rates of the mineral tax and surtax 125
AIII.5 Exclusivity arrangements affecting production or trade, 2000 126
IV. TRADE POLICIES BY SECTOR
AIV.1 "Indicative values" for selected fodder products and seeds 128Switzerland and WT/TPR/S/77
Liechtenstein Page vii
SUMMARY OBSERVATIONS
(1) T HE ECONOMIC ENVIRONMENT
1. Switzerland and Liechtenstein form a
customs and monetary union.  This, together
with their close cooperation in branches of
services has led to a deep integration of theireconomies.
2. Switzerland's economic reform
process, launched in the early 1990s, has
continued and is showing signs of success.
The growth rate of real GDP, which wasnegative in 1992 and 1993, exceeded 2% in
1998 and was 1.5% in 1999;  a rate of 2% is
forecast for 2000.  Inflation (measured by
changes in consumer prices) was lowered
from over 4% in 1992 to below 1% in 1999.Economic growth, together with employment
programmes, helped to reduce unemployment
from around 5% in 1995 and 1997 to 2.7% in
1999.  The demand for Swiss exports is not
generally sensitive to price; along with an
increase in domestic demand in 1998, this has
dampened the effect of the Asian crisis on theeconomy.  International reserves exceeded five
months of imports in recent years.  Fiscal
policy is aimed at reducing the public deficit,
while monetary policy has been geared at
price stability, recently defined ascorresponding to annual increases in the
consumer price index, which are lower than
2%.  Liechtenstein has responded to the new
international economic environment by
diversifying its participation in regionalagreements.  Limited investment opportunities
in Switzerland and Liechtenstein have
contributed to maintaining gross fixed capital
formation constant (at around 20% of GDP in
Switzerland);  reinvested benefits are themajor component of their inward foreign
direct investment (60% of the total in
Switzerland).
3. The major sectors of the Swiss and
Liechtenstein economies are manufacturing,
producing mostly high-technology goods, and
services, chiefly financial services.  Themanufacturing sector accounts for around
96% of the total value of merchandise exports,one third of real GDP, and 18% of total
employment in Switzerland;  and nearly the
total value of merchandise exports and 46% of
total employment in Liechtenstein.  Reflecting
the comparative advantages of the two
countries, the nature of their manufacturedproducts limits the price sensitivity of their
demand.  Moreover, as the manufacturing
sector in Switzerland and Liechtenstein is low
energy-intensive, the current increase in world
prices of petroleum products is expected tohave limited impact on their economies.  The
services sector accounts for around three
fourths of total employment and two thirds of
real GDP in Switzerland;  and half of total
employment in Liechtenstein.  Theattractiveness of financial services in both
countries has been favoured by, inter alia,
their political stability, tradition of bank
secrecy, and the world-wide confidence in the
Swiss franc (also legal tender in
Liechtenstein).  Liechtenstein's membership in
the European Economic Area (EEA) since1995 has also played its part.
4. Mining activities are almost non-
existent.  Agriculture contributes some 2% to
real GDP, less than 4% to the value of
merchandise exports, and 4% to totalemployment in Switzerland;  and around 1%
to total employment in Liechtenstein.  The
sector has remained highly protected despite
the reforms implemented in recent years.
High domestic prices of agricultural products(by international comparison) have been
maintained by, inter alia:  the high level of
protection;  the limited land areas and
resultant small size of farms;  unfavourable
topography;  and structural factors.  Overall,the development of branches such as tourism
has been negatively affected by high wages
and input prices of highly protected sectors
(e.g. food products, energy, construction, and
telecommunications services – at least up to
1998) and low productivity growth due to
market rigidities.  These various factors havecontributed to the high cost of living in
Switzerland and Liechtenstein.
5. Switzerland has traditionally run
current account surpluses, largely attributableWT/TPR/S/77 Trade Policy Review
Page viii
to surpluses in investment income and in trade
in services;  financial services is one of the
best performing branches.  An upward trend in
the ratio of merchandise trade to GDP since
the early 1990s has reflected its further
integration into the world economy, althoughexport coverage of merchandise imports is
also on an upward path.  The trade account
surpluses reflect increasing exploitation by
both Switzerland and Liechtenstein of their
comparative advantages and the resultant risein exports of high-technology products.  Main
imports include chemicals, certain semi-
manufactured products, such as iron and steel,
and certain consumer goods.  Agricultural
products represent less than 10% of totalmerchandise imports and their share declined
over the period 1994-99.  The European
Union has remained the largest trading
partner;  it supplies about 78% of total
merchandise imports, and accounts for around
60% of Switzerland's exports.
(2) I
NSTITUTIONAL FRAMEWORK
6. Under the 1923 Customs Union
Treaty, the Swiss Confederation and the
Principality of Liechtenstein form a customs
territory;  all commerc ial treaties and trade
agreements concluded by Switzerland alsoapply to Liechtenstein.  Under the Treaty and
various arrangements (including a monetary-
union agreement), Switzerland formulates
trade (in goods), monetary, and agricultural
policies for the customs union.  Except for fewpolicy instruments set up by the Liechtenstein
Office of National Economy for the
Principality, the Swiss State Secretariat for
Economic Affairs formulates policies on trade
in goods for the customs union.  In bothSwitzerland and Liechtenstein, policy
initiatives may also come from other
departments and institutions, including the
private sector.  Their investment regimes are
liberal, with the exception of a few restrictions
maintained on, inter alia, nationality grounds
(on investment in specified services branches),on acquisitions of real estate (more stringent
in the case of Liechtenstein), and in areas still
under State monopolies.7. The Customs Union Treaty and the
other arrangements were amended over the
years to allow participation by Liechtenstein
in international agreements.  Switzerland and
Liechtenstein are original Members of the
WTO and signatories to the PlurilateralAgreement on Government Procurement;
Liechtenstein's interests in the GATT were
covered by Switzerland until its own accession
in 1994.  Switzerland and Liechtenstein accord
at least MFN treatment to all their tradingpartners.  Under the monistic legal system
adopted by Switzerland and Liechtenstein,
public international laws (including the WTO
Agreements) take precedence over national
legislation, of which they form an integralpart.
8. Switzerland and Liechtenstein have
stressed the need for further strengthening the
multilateral trading system and progressive
multilateral liberalization of trade to
guarantee fair, sustainable, and better market
access for goods and services.  Fullcompliance by all Members to multilateral and
regional rules is important for medium-sized
trading nations whose manufacturing sectors
are export-oriented.  Participation in regional
and bilateral trade agreements is viewed as ameans to avoid trade diversion, which might
result from participation by their major
trading partners in such arrangements, and to
fill gaps where no multilateral agreement
framework exists.  In general, regional andbilateral trade agreements concluded by
Switzerland and Liechtenstein involve several
sectors;  unprocessed agricultural products
are not covered.  Since its last TPR,
Switzerland has been involved as complainantor third party in six disputes in the WTO.
9. Switzerland is a founding member of
the European Free Trade Association (EFTA).
Liechtenstein acceded in 1991;  until then its
interests in EFTA had been represented by
Switzerland.  In 1995, Liechtenstein became a
member of the European Economic Area(EEA) in which Switzerland does not
participate.  Accordingly, Liechtenstein has
established a Market Control and Surveillance
Mechanism (MCSM) to allow the sale in itsSwitzerland and WT/TPR/S/77
Liechtenstein Page ix
market of goods produced and traded in
conformity with either Swiss or EEA rules.
10. Membership of the EU is a strategic
objective of Switzerland.  It has concluded a
package of seven bilateral agreements with the
EU, on agriculture, government procurement,technical barriers to trade, overland transport,
air transport, free movement of persons, and
research.  These agreements will enter into
force in 2001, subject to ratification by the EU
member States.  Under the Generalized Systemof Preferences, Switzerland and Liechtenstein
accord non-reciprocal tariff preferences to
developing countries.
(3) T
RADE POLICY INSTRUMENTS
11. Under the 1923 Customs Union
Treaty, Switzerland formulates common trade
policy measures for the Union.  Therefore,
with the exception of products (covered by the
EEA Agreement) originating from the other
EEA member States and destined for
Liechtenstein, all imports to the customs union
are subject to the trade regime set up bySwitzerland.  The main trade policy instrument
is the common Swiss-Liechtenstein customs
tariff, consisting entirely of specific duties.
Multilateral trade liberalization within the
WTO framework has contributed to thereduction of customs duties since the last
Trade Policy Review of Switzerland.  Overall
tariff protection, measured by ad valorem
equivalents, averages around 9% (simple
average).  Tariffs are highly dispersed:  theimposition of specific duties has given rise to a
wide range of ad valorem equivalents
(differing from one tariff line to another).
12. The maximum rate of 678% applies to
out-of-tariff-quota imports of meat and edibleoffal of poultry;  rates higher than 400% apply
to meat of bovine animals, meat of swine,
edible offal, certain dairy products and live
plants, and specified edible vegetables, roots
and tubers.  The zero rate applies to 18% of
all tariff lines, including crude petroleum and
natural gas, metal ore, certain non-metallicmineral products, leather products (except
footwear and weari ng apparel), certainchemicals, electricity, and products subject to
duty-free treatment under the Pharmaceutical
Initiative, the Information Technology
Agreement, and the Plurilateral Agreement on
Trade in Civil Aircraft.  In aggregate, the
tariff displays negative escalation from first-stage processed goods to semi-finished
products, and positive escalation from semi-
finished to finished goods.  Positive tariff
escalation is pronounced on food products,
and moderate on textiles, leather products(except footwear and wearing apparel), wood
and wood products (except furniture), rubber
products, and certain chemicals.  Factors such
as incentive schemes contribute to enhancing
tariff escalation and/or the level of effectiveprotection.  Adjustments of tariffs and of the
incentives uphold, to a certain extent, the level
of effective protection;  additional tares for
customs purposes also plays a part.  In
addition, excise duties are collected on motor
vehicles at 4%, on distilled spirit at a standard
rate of Sw F 29 per litre of absolute alcohol,and on tobacco at 25% of the retail price or
6 centimes per unit.  Environmental taxes are
levied on mineral oils and volatile organic
compounds.  A value-added tax is collected at
a standard rate of 7.5%;  lower rates apply to"essential" products and services.
13. Switzerland and Liechtenstein have
bound some 99% of all tariff lines at the HS
eight-digit level and have lowered the bound
tariffs on all products but textiles to theirUruguay Round final levels.  The bound
customs tariffs are specific on agricultural
products (except seafood), and mixed on the
other products.  Customs tariffs on gas,
petroleum, and related products have not yetbeen bound.  Ceiling bindings on mostly
agricultural products and clothing, with bound
duties reaching 770% on meat products, leave
considerable margins for modification of
applied duties, and reduce somewhat the
predictability of the tariff.  The average bound
rate of around 12% is higher than the averageapplied tariff;  however, at end June 2000, the
applied duties were found to be higher than
the bound tariffs for three tariff lines at the HS
eight-digit level.  Switzerland and
Liechtenstein have bound other duties andWT/TPR/S/77 Trade Policy Review
Page x
charges at 0%.  They have reserved the right
to invoke the special safeguard clause (under
Article 5 of the WTO Agreement on
Agriculture) for almost all agricultural
products.  However, except for a safeguard
duty (under this Article) on imports of porkand pork products from 1 May to 31
December 1999, Switzerland and
Liechtenstein have not applied contingency
trade remedies (anti-dumping, countervailing,
and safeguard actions) since 1982.
14. Switzerland and Liechtenstein
maintain a non-automatic licensing system for
tariff-quota administration purposes, and
automatic licensing on out-of-quota imports,
on a range of products subject to mandatoryreserve stock requirements, and on
commercial imports of certain articles
containing gold.  Import prohibitions are
maintained on health, safety, phytosanitary,
and environmental protection grounds, or
under international conventions to which
Switzerland and Liechtenstein are signatories.However, the implementation of prohibition,
authorization, and phytosanitary regimes may
vary on the grounds of the origin of imports.
For instance, import bans apply to, inter alia,
potatoes, certain fertilizers, vine, and fruittrees from countries that are not members of
the European and Mediterranean Plant
Protection Organization (EPPO).  Imports of
meat and eggs (fresh or cooked), produced in
a manner prohibited in Switzerland, must belabelled as such.  Genetically modified
organisms must be indicated on labels if they
make up specified percentages of the total
weight of foodstuffs or of inputs used in the
production of foodstuffs.
15. Various incentive schemes are
available to producers, mainly manufacturers
of agricultural products.  Some of the schemes
are specific to either Switzerland or
Liechtenstein.  Exports of certain agricultural
products are subsidized;  export subsidies
have been reduced under the WTO Agreementon Agriculture. Switzerland and Liechtenstein
have dismantled virtually all restrictions on
their exports, with the exception of measures
maintained in compliance with internationalobligations and of controls on products
containing gold.
16. Standards and technical regulations
have been substantially harmonized with those
of the European Communities;  however,
differences still exist in certain areas.Switzerland has also amended its legislation
on competition with a view to aligning it on
that of the EU.  The remaining controversial
issues include the non-prohibition of dominant
positions by the Swiss legislation and its lackof automatic sanctions against unlawful
restraints on competition.  Liechtenstein relies
on the competition-policy framework provided
by the EEA.  The WTO Plurilateral Agreement
on Government Procurement, to which bothSwitzerland and Liechtenstein are signatories,
is the main framework governing public
purchases.
17. Switzerland and Liechtenstein revised
their intellectual property legislation with a
view to implementing the WTO Agreement on
Trade-Related Aspects of Intellectual PropertyRights (TRIPS).  On parallel imports, the
Swiss Federal Tribunal upheld the principle of
international exhaustion in cases involving
trade marks and copyright, and national
exhaustion in a case involving patent rights.Liechtenstein has legally adopted the principle
of international exhaustion for trade marks,
copyright, and rights related to copyright
(with the exception of rental rights), and EEA-
wide exhaustion for patents.
(4) S
ECTORAL  TRADE  POLICY
DEVELOPMENTS
18. Services and manufacturing are the
major sectors of the Swiss and Liechtenstein
economies.  Each has its own policies on tradein services, and acts independently in
international fora, including the WTO.  They
have substantially liberalized their services
sectors in recent years.  Their commitments
under the GATS largely reflect the state of
competition in the sector;  competition
remains limited by monopolies or exclusiverights held by public or private companies in
branches such as fire, natural damage, andSwitzerland and WT/TPR/S/77
Liechtenstein Page xi
workplace insurance, rail and air transport,
and postal services, mainly in the case of
Switzerland.  Switzerland and Liechtenstein
have maintained MFN exemptions under
Article II of the GATS for various reasons,
including promotion of common culturalobjectives, immigration regulation, protection
of the integrity of road infrastructure and the
environment, or bilateral or regional
agreements.  Switzerland participated in the
latest negotiations on financial andtelecommunications services and further
improved its commitments, mainly on
telecommunications services.
19. Except for incentive schemes largely
oriented towards the processing ofagricultural products, Switzerland and
Liechtenstein do not have policies specific to
manufacturing.  With the exception of few
products, standards and technical regulations,
which had limited imports of manufactured
goods, have been substantially harmonized
with those of the EC.  Nevertheless, non-tariffmeasures remain the major barriers to imports
in branches such as motor vehicles and
chemicals.  Liechtenstein eliminated such
barriers to its trade with the other members of
the EEA following its membership;  the MCSMhas been established for the purpose of
parallel marketability of products.  Tariff
protection for non-agricultural products
(WTO definition, which excludes processed
agricultural products, but includes mining andquarrying) averages 2.3%.  Owing to the
imposition of specific duties, tariff dispersion
is more pronounced in manufacturing than in
the other sectors, since the value of
manufactured goods (mainly high-technologyproducts) is not generally proportional to their
weight.
20. Switzerland formulates agricultural
policies for the customs union.  The reforms
launched in 1993 and pursued through the
"Agricultural Policy 2002" initiative have
reduced State intervention in the sector;public contributions to farm income through
direct payments are mostly based on
environmental considerations, and the scope
of guaranteed and margin systems has beenreduced substantially.  However, government
support to agriculture still represents nearly
three fourths of gross farm receipts;  exports
of dairy products, cattle, horses, fruit,
potatoes, and certain processed agricultural
products are subsidized.  The impact of thereforms on prices has been limited by the lack
of competition in certain branches, the price-
based schemes, and the replacement of
marketing boards with institutions
commissioned by the State.  The "prise encharge" system (on imports of certain
agricultural products), under which the
allocation of tariff quotas is contingent upon
local purchase also plays a role.  As a result,
domestic prices of agricultural products haveremained high by international comparison.
The negative effect of high prices of
agricultural products used as inputs in agri-
manufacturing has been dampened by the wide
variety of incentives.  Agriculture remains the
most protected sector. The simple average ad
valorem equivalent of MFN tariffs onagricultural imports is about 34%, nearly four
times the overall average, with a maximum of
678%.  Agricultural imports are also subject
to licensing for health, sanitary, phytosanitary,
compulsory reserve stock and tariff-quotamanagement considerations, and to specified
labelling requirements.  Overall, agricultural
policies remain complex.
(5) TRADE POLICY AND TRADING
PARTNERS
21. Switzerland and Liechtenstein have
always supported the multilateral trading
system.  Their support for the strengthening of
the WTO rules and disciplines in various
trade-related areas, and for the setting of newrules and additional initiatives to secure
market access, reflects the concern of medium-
sized trading nations with advantages in
services and modern export-oriented
manufacturing, as well as their non-
confrontational and consensus-seeking
tradition.  In addition, Switzerland continuesto play a significant role in the WTO.
22. Steps taken by Switzerland and
Liechtenstein to adjust their economies to theWT/TPR/S/77 Trade Policy Review
Page xii
new international economic environment have
resulted in a more efficient allocation of
resources, which has contributed to a better
exploitation of their comparative advantages
and to trade performance in recent years.
However, the reforms are still hesitant incertain highly protected sectors, mainly
agriculture.  Further liberalization of these
sectors might enhance the competitive
framework and contribute to lowering
domestic prices, to the benefit of theeconomies.23. The applied tariff, consisting
exclusively of specific duties (modified
quarterly on the basis of fluctuations in world
prices), and ceiling bindings on most
agricultural products do not ensure
transparency and predictability.  A shift toad valorem duties may introduce more
transparency in the tariff and reduce the
frequency of modifications, thereby increasing
predictability.