RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/141 
17 November 2004  
 
(04-4777) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Switzerland and Liechtenstein 
 
Report by the Secretariat 
 
  
 
This report, prepared for the second 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 (A nnex 3 of the Marrakesh Agreement 
Establishing the World Trade Organization), sought clarification from the 
Government of Switzerland and Liechtens tein on its trade policies and practices. 
 
Any technical questions arising from this report may be addressed to Mrs. 
Catherine Hennis-Pierre (tel: 022/ 739 56 40) and Mr. Jacques Degbelo 
(022/739 55 83). 
 
Document WT/TPR/G/141 contains the policy statement submitted by 
Switzerland and Liechtenstein. 
 
 
 
Note: This report is 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/S/141 
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CONTENTS 
 
   Page 
SUMMARY OBSERVATIONS vii 
(1) M AIN ECONOMIC DEVELOPMENTS  vii 
(2) T RADE AND FOREIGN INVESTMENT REGIME  vii 
(3) T RADE POLICY INSTRUMENTS  viii 
(4) S ECTORAL POLICIES  viii 
(5) T RADE POLICY AND TRADING PARTNERS  ix  
I. ECONOMIC ENVIRONMENT 1 (1) I
NTRODUCTION  1 
(2) R ECENT ECONOMIC DEVELOPMENTS  2 
(i) Macroeconomic developments 2 (ii) Sectoral developments 8 
 (iii) Balance of payments 10 
(3) D
EVELOPMENTS IN TRADE  11 
(i) Switzerland 11 
(ii) Liechtenstein 14 
 (iii) Trade in services 16  (iv) Foreign direct investment 16 
 (v) Outlook 19 
II. TRADE AND INVESTMENT REGIMES 20 
(1) G
ENERAL FRAMEWORK  20 
(2) A GENCIES INVOLVED IN TRADE POLICY IMPLEMENTATION  21 
(3) T RADE POLICY OBJECTIVES  21 
(4) T RADE AGREEMENTS AND ARRANGEMENTS  22 
(i) WTO 22 
(ii) Regional and bilateral agreements 23 (iii) Trade disputes and consultations 37 
(5) F
OREIGN INVESTMENT REGIMES  38 
(i) Switzerland 38 
(ii) Liechtenstein 40 
III. TRADE POLICIES AND PRACTICES BY MEASURE 42 
(1) O VERVIEW  42 
(2) M EASURES DIRECTLY AFFECTING IMPORTS  43 
(i) Registration, documentation, and customs procedures 43 (ii) Tariffs, other duties and taxes 44 
(iii) Rules of origin 53 
(iv) Anti-dumping, countervailing, and safeguard measures 55 (v) Import prohibitions, licensing, and controls 56 
(vi) Local-content and local -purchase requirements 58 
(vii) Standards and other technical requirements 58 (viii) Government procurement 67 
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(3) M EASURES DIRECTLY AFFECTING EXPORTS  71 
(i) Export procedures, taxes, and controls 71 (ii) Export subsidies, and duty and tax concessions 72 
(iii) Export promotion 72 
(iv) Export credits, insurance and guarantees 72 (v) Other provisions 74 
(4) M
EASURES AFFECTING PRODUCTION AND TRADE  74 
(i) Government subsidies and other assistance 74 (ii) State-trading enterprises and exclusivity rights 77 
(iii) Developments in competition policy and price surveillance 80 
(iv) Intellectual property rights (IPRs) 84 
IV. TRADE POLICIES BY SECTOR 90 
(1) I
NTRODUCTION  90 
(2) A GRICULTURE  91 
(i) Overview 91 
(ii) Specific policy measures 97 
(3) M ANUFACTURING AND ENERGY  106 
(i) Manufacturing 106 
(ii) Energy 110 
(4) C ONSTRUCTION  115 
(5) T ELECOMMUNICATIONS  117 
(6) P OSTAL SERVICES  123 
(7) O VERLAND TRANSPORT  124 
(8) A IR TRANSPORT  126 
(9) T OURISM  132 
(10) P ROFESSIONAL SERVICES  133 
(i) Legal services 134 
(ii) Accounting and auditing services 135 (iii) Engineering and architectural services 139 
(11) F
INANCIAL SERVICES  140 
(i) Banking services 141 (ii) Insurance services 146 
REFERENCES 151 
APPENDIX TABLES 155 
 
 
 Switzerland and Liechtenstein WT/TPR/S/141 
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CHARTS 
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I. ECONOMIC ENVIRONMENT 
 
I.1 Real exchange rate developments, 1999-04 7 
I.2 Switzerland:  composition of merchandise trade, 1999 and 2003 13 I.3 Switzerland: direction of merchandise trade, 1999 and 2003 15 
I.4 Net foreign direct investment flows into Switzerland, 1993-03 17 
I.5 Foreign direct investment stock in Switzerland, 1998 and 2002 18 
II. TRADE AND INVESTMENT REGIMES 
 
II.1 Regional and bilateral trade agreements, August 2004 25 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Applied MFN tariff distribution, 2004 47 
III.2 Tariff escalation by ISIC 2-digit, 2004 49 
III.3 Standards in the customs union, February 2004 61 
IV. TRADE POLICIES BY SECTOR 
 
IV.1 Price of natural gas in selected OECD countries, 1997-03 112 
IV.2 Electrictiy prices in select ed OECD countries, 1997-02 114 
IV.3 Construction spending by project, Switzerland, 1995-03 116 
 
TABLES 
I. ECONOMIC ENVIRONMENT 
 
I.1 Switzerland and Liechtenstein at a glance 2 
I.2 Economic indicators, Switzerland, 1999-02 3 
I.3 (a) LIBOR target ranges and rates, end-1999-mid-2004  
 (b) Swiss and other OECD-area money market interest rates, 1999-03 6 I.4 Switzerland:  balance of payments, 1999-03 10 
I.5 Switzerland:  comparison of Sw F and US$ values of exports and imports, 1999-03 11 
I.6 Switzerland:  value of exports and imports, by type, January-June 2004 12 I.7 Liechtenstein: direct trade (excluding trade to and through Switzerland), 1999-02 16 
II. TRADE AND INVESTMENT REGIMES 
 
II.1 Main trade-related laws and regulation in Switzerland, September 2004 20 
II.2 Swiss and Liechtenstein participation in free-trade agreements, September 2004 24 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Structure of the MFN tariff, 2000 and 2004 46 
III.2 Summary analysis of the MFN tariff (AVEs), 2004 48 
III.3 Preferential tariff by country grouping, 2004 51 III.4 Selected products subject to import prohibitions, 2004 56 
 
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III.5 Exclusivity arrangements affecting production or trade, 2004 79 
 
IV. TRADE POLICIES BY SECTOR 
 
IV.1 Switzerland:  agricultural production, 1997-03 91 
IV.2 Switzerland:  self-sufficiency in basic food products, selected years 92 
IV.3 Producer and consumer support estimates, selected countries, 1995-03 94 
IV.4 Consumer prices of animal and vegetal products, selected years 95 
IV.5 Switzerland:  financial support to agri culture, and economic indicators, 1990-03 98 
IV.6 Usage of domestic support categories, export subsidies and export credits, 1995-00 99 
IV.7 Tariff quotas, 2004 102 IV.8 Administration of tariff quotas, 2004 103 
 
APPENDIX TABLES 
I. ECONOMIC ENVIRONMENT 
 
AI.1 Switzerland:  main origins of imports, by HS2, 2003 157 
AI.2 Switzerland:  main destinations of exports, by HS2, 2003 163 
II. TRADE AND INVESTMENT REGIMES 
 
AII.1 Notifications to the WTO, January 1999 to July 2004 171 
AII.2 Swiss and EU concessions in the 200 2 bilateral agreement on agriculture 174 
AII.3 EU-Switzerland protocol on processed agricultural goods 176 
III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
AIII.1 Applied MFN tariff averages by HS2, 2004 178 
 
 
IV. TRADE POLICIES BY SECTOR 
 
AIV.1 Outlays for direct payments, Switzerland, 1998-03 181 AIV.2 Tariffs exceeding 50%, 2004, and value of imports 182 
AIV.3 Threshold and indicative prices for groups of fodder products and seeds, 1999 and 2004 185 Switzerland and Liechtenstein WT/TPR/S/141 
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SUMMARY OBSERVATIONS 
 
(1) MAIN ECONOMIC DEVELOPMENTS  
1. The Swiss and Liechtenstein 
economies have shown differing trends in 
economic growth since the last joint review of their trade policies in 2000.  Liechtenstein has grown rapidly, with increasing employment and a diversification of its economy.  The 
Swiss economy is recovering from a prolonged 
period of  stagnation;  this recovery has not, so far, been coupled with declining unemployment.  
2. Internal macroeconomic developments 
that have affected the Swiss economy in the 
last four years include deterioration in the 
fiscal situation and sharp swings in monetary policy.  Currently,  Switzerland is pursuing a rigorous fiscal policy, seeking to reduce the deficit that has built up,  coupled with a 
generally supportive monetary policy.  Being 
linked in monetary union with Switzerland, Liechtenstein is a "policy taker" in the monetary and exchange rate areas. 
3. Both economies are increasingly 
reliant on high-technology and knowledge-
based manufacturing industries, as well as the 
services sector.  However, the food processing industry, highly dependent on agriculture and on protection, remains important for Switzerland and to a lesser extent for 
Liechtenstein.  Given its small economic size, 
Liechtenstein has been able to focus on the development of "niche" industries in diversifying its economy;  manufacturing has become an important element in the economy.   
4. Both Switzerland and Liechtenstein 
are also heavily dependent on external trade, and hence on developments in the world economy.  The European Union (EU) remains the largest partner of both, with the United States also an important export market.  
Imports from rapidly developing economies 
such as China;  Singapore;  the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu; Turkey;  and Brazil have grown considerably.   (2) T
RADE AND FOREIGN INVESTMENT 
REGIME  
5. Trade policy in goods for both 
Switzerland and Liechtenstein is principally 
determined by Switzerland, under the Customs 
Union Agreement of 1923.  Liechtenstein has been a member of the European Economic Area (EEA) since 1995;  Switzerland has remained outside the European Union and the 
EEA, and this has necessitated some 
adaptations of the treaties linking the two economies. Liechtenstein's membership of the EEA would seem to have contributed considerably to its economic progress in recent years.  
6. Since 2000, the Swiss Government has 
pursued several autonomous reforms of its trade-related policies and regulations, mainly to increase transparency, promote market competition and lower consumer prices.  
Proposals for changes have covered a wide 
range of areas such as energy, cartels, 
intellectual property, and government procurement, but have met varying degrees of parliamentary and popular success.   
7. The WTO remains central to 
Switzerland's trade policy, but regional trade 
agreements have become ever more important. In areas such as tariffs where liberalization is largely conditional on successful WTO negotiations, few unilateral reforms have been 
implemented since 2000. As a member of 
EFTA, Switzerland maintains free trade in non-agricultural products, as well as selective agricultural agreements, with other EFTA members, the EU and a number of other 
European countries, as well as with Chile, 
Israel, Jordan, Lebanon, Mexico, the Palestinian Authority, Singapore and Turkey.  
8. The main thrust for change in Swiss 
trade policy has come from the bilateral agreements with the expanding EU, which has 
resulted in notable market liberalization 
between the two partners, and considerable convergence of Swiss regulations to those of the EU. The first group of agreements, which entered into force in 2002, covers selected WT/TPR/S/141 Trade Policy Review 
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agricultural products, c onformity assessment, 
public procurement, civil aviation, land and air transport, research, and free movement of persons.  Political agreement was reached on 
the second group in June 2004, but they are 
yet to be ratified.  They cover trade in various processed agricultural goods, the Schengen and Dublin agreements on justice, police, asylum and migration, taxation of savings, the 
environment, statistics, media, and contain 
provisions relating to youth, education and professional training.   
(3) T
RADE POLICY INSTRUMENTS  
9. The common customs tariff of 
Switzerland and Liechtenstein, which is fully 
bound, except for gas and petroleum products, 
still consists entirely of specific duties.   The overall simple average applied MFN tariff rate (ad valorem equivalent) was 9.3% in 2004 (up from 8.9% in 2000);  this masks a 
considerable dispersion of rates.   Ad valorem 
equivalents (AVEs) of tariffs on agricultural products (WTO definition) average 36% and range up to 1,705%;  the average AVE of tariffs on non-agricultu ral products is 2.3%. 
While only 18% of all tariff lines are duty-free, 
another 39% of lines carry "nuisance" rates 
less or equal to 2%.     
10. The common tariff shows several 
idiosyncrasies (partly related to the protection of agriculture and food processing), including 
widespread tariff exemptions on products used 
as inputs;  a system of quarterly adjustments of agricultural tariffs for domestic price stability purposes (under a "threshold price system"); and a complex price compensation 
scheme designed to protect agro-processing 
industries and reduce their input costs.  Moreover, additional tares increase the dutiable weight of m any imported products, 
and thus the level of tariff protection.   
11. Customs procedures are efficient and 
transparent, with clearance mostly carried out 
electronically.  Switzerland and Liechtenstein have not taken any anti-dumping, countervailing or safeguard measures since 2000.  However, for a large number of agricultural products, they have reserved the 
right to invoke the special safeguard clause under the WTO Agreement on Agriculture.  Trade controls and restrictions are in place 
only for security, safety, health and 
environmental reasons, and to apply UN and certain EU trade sanctions.     
12. The Swiss law on cartels has been 
reinforced with direct sanctions against illegal 
agreements;  it now also precludes restrictions 
on imports on grounds of intellectual property rights.  Since 2000, the Swiss Government has abolished or reduced state trade and other exclusive rights, with a few exceptions such  as on production and trade in salt.  There has 
also been a considerable reduction of the 
number of technical requirements that deviate from those in the EU;  a single "SPS passport" has been introduced;  and conformity assessment procedures have been harmonized 
with those of the EU on many products.  
Nevertheless, this still falls short of the "Cassis de Dijon" principle applied by Liechtenstein and other EEA members on all non-agricultural goods and services. 
13. In addition to various support 
programmes available mainly to farmers and 
food producers, the Swiss government has granted, during the period under review, ad hoc support to the Swiss national airline and to two cantonal banks.   
(4) S
ECTORAL POLICIES  
14. Switzerland and Liechtenstein have 
maintained generally lib eral trade regimes for 
manufacturing and services.  Their companies are generally competitive as well as export-
based, and have developed with little or no 
government assistance.  The main exceptions are certain industries with low productivity mainly in food manufacturing, and in construction.  In addition, the electricity, water, and gas subsectors remain under 
monopolies, although change is underway.    
15. Since their last TPR, Switzerland and 
Liechtenstein have continued to reform their services industries.  The reforms have gone Switzerland and Liechtenstein WT/TPR/S/141 
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further than their multilateral commitments in 
certain areas, such as financial services.  Liechtenstein has adapte d its legislation to 
better combat money laundering. Bank secrecy 
continues to be an important aspect of the 
banking system in both economies. Switzerland maintains public monopolies in certain cantons on certain fire and natural damage insurance services, and  on the 
insurance of workplace accidents.  Cantonal 
banks enjoy fiscal privileges and debt guarantees, but their special legal status was under review in 2004.   
16. Telecommunications and postal 
services are two areas where significant 
market opening laws and regulations have 
been implemented on an MFN basis. The positive effects of the reforms for consumers are tangible, despite Swisscom's de facto monopoly over certain important services such 
as leased lines and the local loop.  The range 
of postal services that remain under state monopoly in Switzerland and in Liechtenstein has been further reduced.   The bilateral agreements between Switzerland and the EU, and Liechtenstein's membership in the EEA 
have also contributed to the liberalization of 
bilateral trade in services between the parties.  Moreover, the bilat eral agreement on free 
movement of persons with the EU may lower labour costs in Switzerland and contribute to 
the further development of mainly business 
and tourism services, which are largely labour intensive.  
17. In general, policies in the agricultural 
sector have yet to depart from the 
constitutional principle of self-sufficiency.  
Generally prohibitive out-of-quota tariffs on imports that compete with domestic production contribute to keeping domestic food prices high by international comparison, at the expense of consumers and other sectors of the 
economy.  The level of financial support to 
Swiss agriculture has remained unchanged since 2000, although the gradual move away from price support towards direct payments has continued.  Support to farmers in 
Liechtenstein is higher still.  Food industries 
rely intensively on government incentives, including tariff concessions,  to compensate 
for the effects of agricultural policies on their production costs. Export subsidies, mainly on skim milk powder and certain cheeses, at the 
time they were last notified in 1998, continued 
to be the second highest among WTO Members.  Currently, the authorities are promoting the development of geographical indications, labelling, and organic standards 
of production to develop markets for high-
quality, specialty agricultural and food products.   
(5) T
RADE POLICY AND TRADING 
PARTNERS  
18. Both Switzerland and Liechtenstein 
have taken steps to fu rther liberalize their 
economies.  Increasingly, the key element in Switzerland's reform process has been movement towards closer  convergence with 
the EU.  The bilateral agreements concluded 
by Switzerland with the EU have already 
opened, and will further open, the Swiss and EU markets in goods, services and movement of persons progressively to each other.  They will also harmonize much of their trade-related legislation, without formally 
prejudicing Switzerland's trade policy 
independence. Liechtenstein's EEA membership since 1995 has opened the bulk of its economy to greater competition at the regional level, and contributed to growth.  In 
many instances, market opening by both 
Switzerland and Liechtenstein has also taken place on an MFN basis, often spurred by WTO provisions.  The outlook for their economies depends on the continuation of this reform 
process, as well as on external factors, 
particularly continuing economic growth in 
other major economies.  
19. In some areas, the pursuit of common 
regulations between Switzerland, Liechtenstein and the EU/EEA will facilitate 
trade with the rest of the world.  However, the 
bilaterally-driven in creasingly liberal access 
between the Swiss and Liechtenstein economies on the one hand, and the expanding EEA on the other, could bias trade and 
investment flows and policies in a Eurocentric WT/TPR/S/141 Trade Policy Review 
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direction, at the expense of other developed 
and developing countries.  It is therefore important for the authorities of both countries to consider the discriminatory elements of the  existing and new agreements, and the 
potentially greater advantages of market opening on an MFN basis.