RESTRICTED  
  
WT/TPR/G/280  
19 March 2013  
(13-1500)  Page: 1/37  
Trade Policy Review Body  Original: English/French  
 
TRADE POLICY REVIEW 
REPORTS BY 
SWITZERLAND AND LIECHTENSTEIN  
Pursuant to the Agreement Establishing the Trade Policy Review Mechanism (Annex 3 of the 
Marrakesh Agreement Establishing the World Tr ade Organization), the policy statement by 
Switzerland and Liechtenstein is attached. 
 
 
Note: This report is subject to restricted circulation and press embargo until the end of 
the first session of the meeting of the Trade Polic y Review Body on Switzerland and Liechtenstein. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  CONTENTS 
1   REPORT BY SWITZERLAND .......................................................................................... 4  
1.1   Genera l remark s ....................................................................................................... 4  
1.2   Economic environment ............................................................................................... 7  
1.2.1   Economic and macroeco nomic policy de velopments ..................................................... 7  
1.2.1.1   Economic trends .................................................................................................. 7  
1.2.1.2   Foreign trade and current balance .......................................................................... 9  
1.2.1.3   Foreign dire ct investme nt flows ............................................................................. 10 
1.2.1.4   Macroeco nomic policies ........................................................................................ 13 
1.2.2   Growth policy and future challenges ......................................................................... 14 
1.2.2.1   Brief evaluati on of growth  policy ........................................................................... 14 
1.2.2.2   Internal challenges .............................................................................................. 15 
1.2.2.3   External challenges ............................................................................................. 16 
1.3   Main focus of recent and current structural reforms and other priorities of 
Switzerland's econ omic policy ............................................................................................ 16 
1.3.1   Domestic policy areas ............................................................................................. 16 
1.3.1.1   Revision of the Law on cartel s and other impediment s to competition ......................... 16 
1.3.1.2   Revision of the law on banks (Reinf orcing the stability of the financial sector, 
"too big to fail") ............................................................................................................... 17 
1.3.1.3   Agricultural Policy 2011 and Agricultural Policy 2014- 2017 ........................................ 17 
1.3.1.4   Revision of  the law on energy ............................................................................... 18 
1.3.1.5   Revision of the law on electr icity supply ................................................................. 18 
1.3.1.6   Revision of the law on CO 2 ................................................................................... 19 
1.3.1.7   Implementation of the revised Ag reement on Government Procurement at the 
internal level ................................................................................................................ ... 19 
1.3.1.8   Total revision of the law on  alcohol ........................................................................ 20 
1.3.1.9   Intellec tual property ............................................................................................ 21 
1.3.2   Foreign policy areas ............................................................................................... 22 
1.3.2.1   Relations between  Switzerland and the EU .............................................................. 22 
1.3.2.2   Free trade agreements ......................................................................................... 23 
1.3.2.3   Cooperation with developing countries and countries with economies in 
transition ........................................................................................................................ 23 
1.3.2.3.1   Trade policy-related cooperation ......................................................................... 24 
1.3.2.3.2   Trade efficiency/international standards ............................................................... 24 
1.3.2.3.3   Market access .................................................................................................. 25 
1.3.2.3.4   Sustaina bility of exports .................................................................................... 25 
1.3.2.4   Rules and disciplines ........................................................................................... 25 
1.3.2.5   Expo rt promotion ................................................................................................ 26 
1.3.2.6   Other external  policy priorities .............................................................................. 26 
1.3.2.6.1   Environment .................................................................................................... 26 
1.3.2.6.2   Core labour standards ....................................................................................... 27 WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.4   Switzerland and ne gotiations at  the WTO ..................................................................... 28 
REFERENCES .................................................................................................................. 3 0 
2   REPORT BY LIECHTENSTEIN ...................................................................................... 31  
2.1   Introduction ............................................................................................................. 31 
2.2   Trade and econom ic policy environment....................................................................... 31 
2.2.1   Economic growth ................................................................................................... 32 
2.2.2   The econ omic se ctors ............................................................................................. 33 
2.2.3   State activities ......................................................................................................  35 
2.3   Trade policy developments  and future polic y direct ions .................................................. 35 
2.3.1   The World Trade Organization (WTO) ........................................................................ 36 
2.3.2   The European Economic Area (EEA) .......................................................................... 36 
2.3.3   The European Free Trade Associat ion (EFTA) ............................................................. 36 
2.3.4   Customs Union Treaty/Econo mic Integration wi th Switzerland ...................................... 37 
 
 WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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1  REPORT BY SWITZERLAND 
1.1  General remarks 1.1.  This report, together with that of Liechtenstein and the Secretariat report on 
the two countries, establishes the basis for the review of their trade policy  by Members of the 
World Trade Organization (WTO) on 23 and 25 Ap ril 2013, given the fact that they form an 
economic and monetary union and Liechtenstein is an integral part of Swiss customs territory. 
1.2.  Switzerland's economic policy is a liberal one. Macroeconomic policy  is geared to maintaining 
a balanced budget in the medium term and keeping prices stable. The Swiss authorities endeavour to maintain full employment and the Government is undertaking reforms in order to support sustained growth by creating investment-friendly internal framework conditions. 
1.3.  International trade  continues to play a key role in the Swiss economy . The recession that 
affected the global economy following the financial and economic crisis in the last quarter of 2008 
only had a modest and short-term impact in Sw itzerland. As of the second half of 2009, it 
gradually gave way to a welcome phase of expans ion. Although recovery slowed down somewhat 
once again during the second half of 2011 and in 2012, this is mainly attributable to the effects of the strong Swiss franc and the decline in demand worldwide on export-oriented sectors of 
Switzerland's economy. As the Swiss economy is highly dependent on foreign trade
1, it is hardly 
surprising that the Swiss Government attaches great importance to global markets open to goods and services, including government procurement, an d to strong protection for intellectual property. 
1.4.  The Government's priorities for Switzerland's foreign economic policy  have been embodied in 
the strategy  contained in the introductory chapter to the Federal Council's 2004 Report on foreign 
economic policy.
2 This strategy, supplemented in 2008 by a chapter entitled "Natural resources in 
the external economic strategy" and in 2009 by a chap ter entitled "The Principle of sustainability in 
foreign policy", is based on three components . The first is to improve access to external markets 
and help to ensure the introduction of a cohe rent and observed set of international rules. 
The second is to improve Switzerland's competit iveness by making its domestic market more 
competitive, and the third is to integrate the la rgest possible number of countries into the global 
economy by assisting the economic development of partner countries. 
1.5.  The first of these objectives is to ensure that Swiss suppliers have  non-discriminatory access  
to markets worldwide . For this to be achieved, on the one hand, barriers to cross-border trade 
such as customs or non-tariff barriers must be dismantled. On the other, in order to give 
Swiss exporters legal certainty and protect those in vesting abroad, transparent trade rules that are 
effective and compatible at the international level have to be drawn up. 
1.6.  Because international trade has historically played an important role in developing 
Switzerland's economy, the Government remains deeply attached to an open multilateral trading 
system . At a time when there is a growing trend towa rds regionalizing trade, Switzerland considers 
strengthening of the multilateral trading system  to be a priority . In its view, multilateralism is the 
best way of ensuring open trade and protecting economic actors. In general, smaller countries are better able to defend their interests in a multilateral forum rather than finding themselves in a situation where there is an unequal balance of market power. 
1.7.  For the Swiss Government, the WTO has a vital role to play in the gradual liberalization of 
international trade, the establishment of rules to govern it, as well as in the settlement of 
disputes. The multilateral trading system must be  made even stronger by integrating developing 
countries, countries with economies in transition and least developed countries (LDCs) 
more closely. 
1.8.  Since the strategy was drawn up in 2004, Switzerland has endeavoured to gain better access 
to foreign markets, particularly under the Doha Round framework and by means of free trade 
agreements. In spite of the continuing deadlock in the Doha Round negotiations, Switzerland 
                                               
1 Exports and imports of goods and services (not including objects of value), respectively, accounted 
for 49.5% and 38.7% of the gross domestic product in 2011. 
2 See http://www.seco.admin.ch/dokumentation/publikation/00004/00018/01800/index.html?lang=en . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  remains firmly committed to pursuing the negotiations most likely to have a successful outcome at 
the WTO as a priority, including those on issues that were not originally part of the Doha Agenda. Switzerland also welcomes the adoption of a procedure to monitor the implementation of any new measure likely to be trade restrictive following the onset of the financial crisis in autumn 2008, and 
this mechanism has since become an integral part of the WTO's work. 
1.9.  The reason why Switzerland is also party to several bilateral  or regional free trade 
agreements is that it believes them to be a complement to – and not a replacement for - the 
multilateral trading system in accelerating the liberalization of trade on an international scale. 
1.10.  Situated at the heart of Europe, Switzerland has naturally over the years developed close 
economic relations with the members of the European Union (EU) . In addition to 
the 1972 Free Trade Agreement, Switzerland has signed Bilateral Agreements I and II with 
the EU
3, which cover a large number of areas, namely , free movement of persons, air and land 
transport, agriculture and processed agricultural products, training and research, technical barriers to trade, government procurement, cooperation in matters relating to justice, the police, asylum 
and migration (Schengen/Dublin), taxation of savi ngs, action to combat fraud, the environment, 
statistics, participation in the MEDIA programme and pensions. Since 2009, Switzerland and the EU have also signed agreements on customs facilitation and security, education, recognition of 
protected designations of origin (PDO) and protected geographical indications (PGI), and 
cooperation with the European Defence Agency. 
1.11.  In addition to its bilateral agreem ents with the EU, the 1960 Convention of the European 
Free Trade Association (EFTA) , the Free Trade Agreement with the Faroe Islands and the 
Free Trade and Economic Partnership Agreement signed with Japan in 2009, Switzerland has a 
network of 24 free trade agreements concluded under the EFTA framework (Albania; Canada; 
Chile; Colombia; the Cooperation Council for the Arab States of the Gulf (GCC)
4; Croatia; Egypt; 
the former Yugoslav Republic of Macedonia; Hong Kong, China; Israel; Jordan; Lebanon; Mexico; 
Montenegro; Morocco; the Palestinian Authority/PLO; the Republic of Korea; Peru; Serbia; Singapore; the Southern African Customs Union (SACU
5); Tunisia; Turkey; and Ukraine. 
1.12.  As there is an ongoing trend towards the proliferation of preferential agreements at the 
international level and in view of its economic interests, Switzerland intends to pursue its policy of concluding free trade agreements with non-EU partners. Within the EFTA framework, for example, it is currently negotiating with Algeria, Bosnia & Herzegovina, four Central American States 
(Costa Rica, Guatemala, Honduras and Panama), India, Indonesia, the Russia-Belarus-Kazakhstan 
C u s t o m s  U n i o n ,  T h a i l a n d  a n d  V i e t  N a m .  A t  t h e  bilateral level, in January 2011, Switzerland 
and China started negotiations on a free trade agreement between the two countries. 
Lastly, Switzerland and the other EFTA countri es are exploring the possibility of holding 
negotiations with other trading partners. 
1.13.  As the second objective of Switzerland's foreign economic policy strategy, a more 
competitive domestic market  is essential for two reasons. Firstly, the introduction into Switzerland 
of competitive structures at the international level means opening up economic sectors that are still highly compartmentalized. Switzerland does not yet take full advantage of the international division of labour inasmuch as some of these sectors (for example, agriculture or the health 
system) are still highly protected from foreign competition and their performance is lower than 
average. In the context of an ongoing trend toward s overvaluation of the Swiss franc in particular, 
it is essential to be able to lower the cost of inputs for firms - a prerequisite for taking advantage 
of opportunities in external markets - and to maintain the cost of living at an affordable level both 
for wage-earners and for the remainder of the popu lation living in Switzerland. Secondly, opening 
up protected sectors allows Switzerland to proclaim its ambitions more forcibly, thereby 
strengthening its negotiating capacity. This aspect is particularly important at a time when 
economic power is being redistributed and partners  of importance to Switzerland are no longer 
confined to economies with similar characteristics and interests. 
                                               
3 See also the Report of the Swiss Government for the 2004 Trade Policy Review of Switzerland and 
Liechtenstein. 
4 Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. 
5 Botswana, Lesotho, Namibia, South Africa and Swaziland. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.14.  This is why, in order to lower the high costs which Switzerland's economy has to pay, the 
strategy recommends opening up to foreign competition and internal reforms. These recommendations were followed in the 2004-2007 and 2008-2011 growth programmes. 
As far as external economic affairs are concerned, particular attention should be drawn to the 
internal reforms such as the revision of the Federal Law of 6 October 1995 on Technical Barriers to 
Trade (LETC; RS 946.51 ), which introduced, inter alia, the Cassis de Dijon Principle and confirmed 
the agreement on the free movement of persons (RS 0142.112.681 ) and its extension to 
the EU's new member countries. In agriculture, re forms were also adopted in the 1990s (including 
an important decoupling of direct production payments, a certain opening up of the market, especially as far as relations with the EU are concerned). 
1.15.  The third objective of Switzerland's foreign economic policy is the integration of developing 
countries and countries with economies in transition into the global economy . Through economic 
cooperation for development (whether bilateral or multilateral), Switzerland is trying to help its partners to reorganize their national framework conditions with a view to closer integration into 
the global economy and sustainable economic gr owth. Fostering trade, developing the private 
sector, stronger economic and financial policies, developing infrastructure and supply systems in cities, together with measures to protect the clim ate and the environment, must assist in reducing 
poverty and economic and social disparities in the long term and boost the rational use of 
resources in partner countries. The "Aid for Trade" initiative launched in December 2005 at the Sixth Ministerial Conference of the WTO in Hong Kong, China, is one example of 
implementation of such development cooperation. As part of this initiative, Switzerland has in 
particular made a stronger commitment to boosting sustainable trade. 
1.16.  At the multilateral level, international organizations not only engage in development 
activities but also exercise a degree of surveillan ce over the national economic policies of all 
countries (peer review). Switzerland's participation and its contributions to international 
organizations active in the economic and financial spheres (International Monetary Fund (IMF), World Bank, regional development banks, Or ganisation for Economic Co-operation and 
Development (OECD), the WTO, United Nations specialized agencies) are therefore extremely 
important both for Switzerland's economic development cooperation and for its dialogue with other industrialized countries. 
1.17.  In this context, the Swiss authorities are further supporting the broad opening up of 
markets to products from LDCs, action in favour of countries in the process of acceding to 
the WTO and enhanced technical assistance to developing countries to allow them to become integrated into the multilateral system and to develop their capacity to benefit from it. 
In particular, it strongly supported the agreement in favour of LDCs adopted at the WTO Ministerial 
Conference in Hong Kong, China, in 2005, under  which industrialized countries would, on a 
permanent basis, give LDCs market access free of customs duties and quotas for at least 97% of 
their tariff lines. Switzerland has therefore a llowed market access free of customs duties and 
quotas to all imports from LDCs. 
1.18.  The Swiss authorities also believe that it is extremely important to promote consistency 
among the various foreign economic policy activities and other government policies. At the internal 
level, the Swiss Government is ensuring closer coordination among the relevant Federal agencies 
and offices, including during the course of international negotiations. At the same time, it wishes to encourage the necessary external transparency  through information  and participation  of the 
people, Parliament and the spheres concerned by the decision-making process. By so doing, it can 
be sure that the policies thus defined will command widespread support  within Switzerland . 
1.19.  This report describes first of all the economic environment in which Swiss trade has 
developed since the previous Review of Switzerlan d's trade policy in 2008. It then highlights the 
impact which the measures taken by the Swiss Government in connection with its growth policy have had on Switzerland's overall economic develo pment and the challenges ahead. It goes on to 
describe the major reforms undertaken over the past four years and those under way, as well as 
the other main priorities of Swiss economic policy. Lastly, it recalls the objectives sought by 
Switzerland at the WTO, taking into account  the current deadlock in the Doha Round. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.2  Economic environment 
1.2.1  Economic and macroeco nomic policy developments 
1.2.1.1  Economic trends 1.20.  The internal economic reforms resolutely undertaken by Switzerland since 1993, the 
growing globalization of trade and closer economic integration with Europe, especially the effective 
implementation of free movement of persons within the EU and EFTA, have resulted in the Swiss economy's rapid recovery from the global recession that followed the outbreak of the 
financial and economic crisis in 2008-2009. A moderate rise in prices, low rates of interest, sound 
public finances and reorganization by businesses in recent years, but above all the revival in global 
trade, constituted the basis for strong domestic de mand and an upturn in the export-led economy. 
From the second half of 2009 onwards, th e sharp drop of 2.9% in Switzerland's gross domestic 
product (GDP) that had occurred in the first half of 2009 gradually gave way to a welcome phase 
of recovery in 2010 (+3%). 
1.21.  Nevertheless, the emergence of the debt crisis in eurozone countries in 2010 changed the 
situation once again for the Swiss economy . The fear that Greece's debt crisis would spread to 
other countries and, possibly, to major countries in Europe, led investors to seek safe investments such as gold, real estate, and strong currencies such as the Swiss franc. As a result, the Swiss 
franc rose sharply in comparison with the situation in the real economy. Moreover, since the 
second half of 2011, the Swiss economy has had to face a marked decline in global demand. 
Industry and tourism, two key sectors for Switzerl and's economy, have been particularly affected. 
The financial sector, hitherto the engine driving Switzerland's growth, has been suffering since the 
bursting of the speculative real estate bubble in  the United States. In 2011, value added in the 
financial sector was around 20% below the 2007 level. During the second half of 2011, the positive impetus spurring global growth of the economy only came from (private and government) 
consumption and investment in equipment. On the other hand, the declining trend in exports and 
investment in construction has had a negative impact on the trend in GDP growth. In the third quarter of 2011, GDP fell for the firs t time in comparison with the preceding quarter 
(-0.2%). Overall, in spite of a rebound in the fourth quarter, Switzerland's GDP fell back to 1.9% 
in 2011. 
1.22.  After a rise of around one half a percentage point during autumn and winter 2011-2012, 
Switzerland's GDP fell slightly (-0.1%) in the second quarter of 2012 before increasing by 0.6% in 
the third quarter, despite the slowdown in the world economy in the course of 2012. Globally, 
although spending on household consumption and by the government sector have continued to provide a positive impetus for GDP growth, export s of services and investment, particularly in 
equipment, have made a negative contribution. Over all, real GDP nevertheless rose by 0.9% in the 
first three quarters of 2012 compared to the same period the previous year. At the end of 2012, it is expected that GDP will stagnate at best, so  that for the year as a whole, the Swiss economy 
should grow by only 1% in 2012 and by no mo re than 1.3% in 2013. For the remainder of 2012 
and for 2013, economic trends th erefore remain marked by the notable diversity between sectors 
mainly active on the domestic market (sectors related to consumption, construction, various 
services focusing on the domestic market), whose growth remains strong, and those dependent on 
exports, which are facing the need to adapt because of the continued strength of the franc and the 
weakness of the global situation. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  Real GDP – percentage variation in compar ison with the previous quarter 2008:1-2012: 
(figures adjusted seasonally in Swiss francs, linked, to prices for the previous year, base year, 2005, 
estimates according to ESA95) 
-2.5-2.0-1.5-1.0-0.50.00.51.01.5
 
Source: State Secretariat for Economic Affairs (SECO). 
Breakdown of real GDP – percentage variatio n in comparison with the previous period 
in the previous year: 2008:1-2012:3 
(figures adjusted seasonally in Swiss francs, linked, to prices for the previous year, base year 2005, 
estimates according to ESA95) 
-4.0-3.0-2.0-1.00.01.02.03.04.0
Final consumption  expenditure
Gross capital formation
External balance
 
Source: State Secretariat for Economic Affairs (SECO). 
1.23.  The Swiss economy's capacity for re sistance has also been apparent in the labour market in 
recent years. After the unemployment rate among the working population reached a peak of 4.2% 
at the end of 2009 (seasonally adjusted rate), the rebound in employment that occurred from the 
last quarter of 2009 onwards led to a gradual drop in unemployment as of early 2010. By the end 
of July 2011, the unemployment rate had gradually returned to 3% (seasonally adjusted rate). From October 2011 to May 2012, the number of unemployed starting to rise again. After falling back slightly in summer 2012, a reflection of the temporary revival of economic activities 
in Switzerland during autumn and winter 2011-2012, the unemployment rate began increasing 
again in October. In December 2012, it was once again 3.0% of the working population (seasonally adjusted rate). In the light of the economic downturn in the second quarter of 2012 
and the low rate of growth forecast for the months to come, it can be expected that the 
unemployment rate will continue to rise and may reach 3.3% in 2013. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.24.  In line with its mission, the Swiss National Bank (BNS) took measures to deal with 
the strong franc in late summer 2011 by increasing liquidity in Swiss francs on the money market 
and by setting a floor rate of SwF 1.20 to €1.6 But even at this rate, the Swiss franc remains 
extremely high and is very prejudicial to exports. In autumn 2011, the Parliament adopted a series 
of measures for a total of SwF 870 million in order to offset the effect of the strong franc. 
This programme covered investment and payments in a number of sectors, particularly unemployment insurance (SwF 500 million), inno vation and technology (SwF 212.5 million), 
tourism (SwF 100 million) and transport (SwF 46.5 million).
7 
1.25.  Swiss exports to markets outside the eurozone and to the United States have become 
increasingly important to Switzerland. Performanc e in many of these markets is dynamic despite 
the global situation, which remains bleak: some in fact also have a currency that has risen against 
the euro and the dollar since 2009. 
1.26.  The Swiss economy will have to become accustomed for a long time to a currency that 
tends to be strong. Switzerland will therefore only be able to deal with the situation if it manages 
to retain its strong points in the long term, namely, financial stability, high-quality training, a high 
level of research and technology, low taxes and business-friendly framework conditions. This is why its objective must remain promotion of the Swiss work place and innovation and full 
employment for all categories so as to bolster the middle class and maintain social cohesion. 
1.2.1.2  Foreign trade
8 and current balance 
1.27.  Negatively affected by the global financia l and economic crisis that erupted in autumn 2008, 
Switzerland's foreign trade experienced its worst downturn for decades in 2009. After a record 
high in 2008, exports and imports of goods in fact plunged by 14.3%, respectively 9.9% in 
real terms in 2009, thus returning to their 2006 level. For exports, this was the largest fall recorded over one year since 1944 and, for imports, since 1975. The trend only started to be 
reversed at the end of 2009. As to the trade balance , it ended 2009 with a surplus 
of SwF 20.3 billion, an increase of some SwF 0.7 billion in comparison with 2008.
9 
1.28.  After the downturn in 2009, exports of goods (+7.4%) recovered in 2010 in real terms, 
taking advantage of a strong increase in global demand, particularly from Asia, even though the 
volume remained lower than the 2008 record high. For eight export sectors out of ten there was a 
return to the black, with the clocks and watches and metalworking industries, whose sales rose by one fifth, showing the most impressive increase. Other industries ranged from -18 to +8%. 
The trend in the Swiss franc exchange rate nevertheless compelled many exporters to lower their 
prices and, consequently, their margins. Imports of goods rose by 9.4% in volume terms. In 2010, the rising trend in imports turned out to be mo re sustained than that for exports, probably 
attributable, inter alia, to the higher Swiss franc. Although Switzerland's trade balance recorded 
increasingly positive balances up to 2009, in 2010, for the first time since 2005, there was a slight dip in the trade surplus to SwF 19.5 billion, which can be explained notably by the growing deficit 
with the EU (especially Germany and Ireland).
10 
1.29.  After the recovery in 2010, the costly franc and the deterioration in the global situation 
weighed on Switzerland's foreign trade in 2011, pa rticularly during the second half. Although 
exports still rose by 7.9% overall in real terms, in nominal value they increased by only 0.1%, 
showing the extent of the price concessions that ha d had to be made by the export industry. While 
d e m a n d  f r o m  A s i a  f l o u r i s h e d ,  t h a t  f r o m  E u r o p e  a g a i n  d r o p p e d ,  w i t h  t h e  e x c e p t i o n  o f  I r e l a n d .  Imports in nominal value remained largely at the 2010 level. Because the nominal value of exports 
rose more strongly than that of imports, Switzerland's trade balance surplus increased by 21%, 
                                               
6 See http://www.snb.ch/fr/mmr/reference/pre_20110915_1/source . 
7 See http://www.seco.admin.ch/themen/02860/04718/index.html?lang=fr . 
8 It should be noted that a revision of the ordi nance on foreign trade st atistics came into force 
on 1 January 2012 (RS 632.14 ). This revision follows the agreement between the Swiss Confederation and the 
European Community on cooperation in  the area of statistics. Consequently, the European Union's regulations 
on foreign trade statistics have applied to Switzerl and since 1 January 2012. Among the major changes are 
entries showing two countries for imports (country of sh ipment and country of origin) and the currency of the 
invoice, together with new requirem ents concerning quality. As a resu lt, Switzerland's foreign trade data 
from 2012 onwards are not necessarily comparable with those for previous years. 
9 See http://www.news.admin.ch/NSBSubscriber/message/fr/31475 . 
10 See http://www.news.admin.ch/NSBSubscriber/message/fr/37516 . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  reaching SwF 23.5 billion. In industry, the chemicals and pharmaceuticals industry is now the 
foremost contributor to the positive balance, with a figure of SwF 37 billion. On the other hand, the largest deficits come from vehi cles (SwF -12 billion) and energy products (SwF -9 billion).
11 
1.30.  In 2012, Switzerland's foreign trade held its own, bearing in mind the unfavourable global 
economic environment.12 Exports of goods expanded by 1.5% in nominal terms, but fell slightly 
by 0.2% in real terms in 2012 in comparison wi th the previous year. The modest increase in 
exports came from three branches only, namely, clocks and watches, chemicals and 
pharmaceuticals, and foodstuffs, beverages and tobacco, and occurred outside Europe, notably 
in North and Latin America (+10%). Although ex ports by the watches and clocks and chemicals 
and pharmaceuticals industries increased very satisfactorily in both nominal terms (+11% and +5.8%, respectively) and real terms (+6.6% and +4.4%, respectively), 
deliveries overseas by the machinery and electronics industry, on the other hand, fell sharply in 
both volume and nominal terms (-12.5% and -9.6%, respectively). The Swiss economy was not immune from the downturn in the European economic situation or the slowdown in a number of 
Asian countries so the increase in imports of goods also remained modest in both volume (+0.6%) 
and nominal (+1.2%) terms in comparison with 2011. Switzerland's total trade balance in 2012 
was SwF 24.4 billion, up by some SwF 860 million in comparison with 2011. 
1.31.  Because of the large decrease in the capital income balance (SwF -77.5 billion), almost 
exclusively caused by a sharp drop in the net in come earned by direct investment banks as a 
result of the turmoil in financial markets between 2007 and 2008, the Swiss current transactions 
balance only yielded a surplus of SwF 11.8 billion in 2008 compared to SwF 72.9 billion in 2006, 
despite an increase from SwF 44.4 billion to Sw F 65.3 billion in the goods and services balance 
surplus between 2006 and 2008. 
1.32.  Exports of services , which  still played a decisive role in the rising surplus in the current 
account balance up until 2007, have barely increased overall since 2008, like the credit balance for 
trade in goods .
13 The sharp fall in net capital income was, however, almost totally reversed 
from 2009 onwards so that the current account balance once again rose strongly to SwF 82 billion 
in 2010.14 As a percentage of GDP, the current account balance surplus, which had fallen 
from 14.4% in 2006 to only 2.1% in 2008, recovered to 14.3% in 2010. 
1.33.  In 2011, the current balance surplus once again fell sharply to SwF 49.2 billion, 
or 8.4% of GDP, mainly because of the lower surplus in capital income. This decline 
reached SwF 29.7 billion for a surplus of Sw F 19.5 billion. One of the main results was 
the SwF 31.2 billion contraction in income earned from foreign direct investment. Overseas trade in goods and services ended with a surplus of SwF 60 billion, a SwF 2.3 billion decrease in 
comparison with 2010. The trade balance was positi ve at SwF 14.4 billion (+SwF 1.2 billion) as a 
result of a 2% growth in exports to SwF 197.9 billion, a major contributor being the clocks and 
watches industry. The services balance had a surplus of SwF 45.6 billion (-SwF 3.5 billion). Income 
contracted by 2%, mainly because of the 8% decrease, to SwF 15.1 billion, in income earned by 
banks for their financial services, a trend that has been repeated for the fourth consecutive year. Lastly, as regards tourism, Switzerland's earnings remained stable at SwF 15.6 billion at a time when the franc was strong. The monetary factor was felt to a greater degree, however, in the 
other direction, with the Swiss increasing their spending on holidays abroad by 6%, reaching a 
total of SwF 12.4 billion. 
1.2.1.3  Foreign direct investment flows 
1.34.  Exports of capital for Swiss foreign direct investment
15 decreased from SwF 49.1 billion 
in 2008 to SwF 28.7 billion in 2009. In a difficult economic environment, industry in particular 
substantially restricted its purchases abroad and invested considerably less than in the 
previous year (SwF 10.5 billion compared to SwF 28.3 billion in 2008). Exports of capital by banks 
and insurance companies, the worst affected by the financial crisis in 2008, however, showed a marked increase. In 2010, exports of capital for Swiss foreign direct investment recovered strongly 
                                               
11 See http://www.news.admin.ch/NSBSubscriber/message/fr/43290 . 
12 Provisional figures. See http://www.news.admin.ch/message/index.html?lang=fr&msg-id=47648 . 
13 2008: SwF 15 billion and 2009: SwF 16 billion. 
14 See http://www.snb.ch/en/iabout/stat/statpub/bop/stats/bop . 
15 See http://www.snb.ch/en/iabout/stat/statpub/fdi/stats/fdi . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  to reach SwF 82.7 billion. This increase was largely the result of transactions by foreign-owned 
financial and holding companies. The sharp fluctuations in capital flows in businesses within this group are not exceptional and often are not in any way related to the general trend in direct investment. Setting aside foreign-owned financial and holding companies, exports of capital for 
foreign direct investment amounted to SwF 41.3 billion, compared to SwF 27.6 billion in 2009. 
Insurance companies and banks played a key role in this increase, while industry invested less overseas than in the previous year. The capital exported was for the most part invested in 
subsidiaries that already existed abroad, while the acquisition of companies reached the low level 
of 2009. 
1.35.  In 2011, there was a marked drop in exports of capital for foreign direct investment, 
from SwF 82.7 billion in 2010 to SwF 42 billion. Foreign-owned financial and holding companies 
played a leading role in this decline. Foreign investment by commercial firms, insurance companies 
and banks likewise showed a year-to-year declin e. Industry, on the other hand, notably the 
chemicals and plastics industries, has markedly increased its export of capital in this area. 
As in 2010, Swiss companies have for the most part invested overseas. For the first time, 
Asian countries have been the main beneficiaries of Swiss direct investment, with exports of capital reaching SwF 16.6 billion, compared to SwF 11.5 billion going to the United States, 
SwF 5.4 billion to the EU and Sw F 4.9 billion to Latin America. 
1.36.  At the end of 2011
16, the stock of Swiss direct investment in subsidiaries abroad rose 
by SwF 29.9 billion to reach SwF 1,000.3 billion. This increase was mainly attributable to exports of capital, whereas exchange rate trends had a slightly negative impact on the value of stocks of 
direct investment in francs. Compared to other countries, Switzerland has a high level of foreign 
direct investment. At the end of 2011, according to a classification by the IMF
17, it ranked eighth in 
the world in terms of foreign direct investment. The United States, the United Kingdom, France, 
Germany, China, the Netherlands and Luxembourg  occupy the top seven places, with the latter 
two countries also being the site of a number of holding companies. The high place occupied by 
Switzerland can be explained by a number of reas ons, especially the presence in Switzerland of 
many headquarters of large multinational groups and its attraction as a site for foreign-owned 
holding companies. In terms of geographical re gions, Swiss direct investment in 2011 could be 
broken down as follows: SwF 458 billion in Eu rope, including SwF 404.4 billion in the EU; 
SwF 229.3 billion in North America, including SwF 197.6 billion in the United States; 
SwF 182.7 billion in Central and South America; SwF 97.5 billion in Asia; SwF 22.4 billion in 
the Pacific region; and SwF 10.4 billion in Africa. 
Flows of Swiss foreign direct investment 
(SwF billion) 
0100002000030000400005000060000700008000090000100000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Industry Services Total
 
Source: Swiss National Bank. 
                                               
16 See http://www.snb.ch/en/iabout/stat/statpub/fdi/stats/fdi . 
17 See http://elibrary-data.imf.org/Report.aspx?Report=11666810 . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.37.  Foreign investors18 substantially increased their direct investment in Switzerland  in 2009 in 
comparison with the preceding year: they bought more companies, increased capital in existing 
subsidiaries and reinvested a larger percentage of the profits in subsidiaries. Overall, imports of capital rose from SwF 16.5 billion to SwF 31.4 bi llion between 2008 and 2009. In 2010, imports of 
capital for foreign direct investment in Switzerland continued to rise and reached SwF 33.9 billion. 
While investment in industry fell, this was more than offset by the transactions by financial and holding companies and investment in commercial firms. 
1.38.  In 2011, imports of capital for foreign direct investment in Switzerland amounted 
to SwF 10.5 billion as against SwF 33.9 billion the previous year. This setback can mainly be attributed to intra-group lending. In 2011, this line ended with the export of SwF 4.1 billion, 
whereas capital amounting to SwF 15.1 billion ha d been imported the previous year. Commercial 
firms, together with financial and holding companies and, to a lesser extent, companies in the 
chemicals and plastics sectors, received foreign direct investment, whereas the metalworking and machinery sector and insurance companies recorded disinvestment. 
1.39.  At the end of 2011
19, the stock of foreign direct investment in Switzerland rose 
by SwF 26.4 billion to reach SwF 606.8 billion, of which SwF 465 billion came from the EU and SwF 69.3 billion from the United States. The main reason for this increase is that one 
company that had been Swiss owned became foreign owned .
20 According to the breakdown of 
immediate investor by country, countries in the Rest of Europe (non-EU)  and Asia groups were 
mostly responsible for the increase in the stock of direct investment; according to the breakdown of final investor by country, the increase could mainly be attributed to the Rest of Europe group of 
countries and the United States. The stock of direct investment from the EU, on the other hand, 
showed a marked decline, whichever breakdown is used. 
Flows of foreign direct investment in Switzerland 
(SwF billion) 
-100000100002000030000400005000060000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011Industry Services Total
 
Source: Swiss National Bank. 
1.40.  Between 2008 and 2011, the number employed  in overseas subsidiaries of Swiss companies 
increased by 11.5%, reaching a total of 2.964 million in 2011. The number employed by foreign 
groups in Switzerland increased by 7.6% over the same period, with approximately 431,000 jobs. 
                                               
18 See http://www.snb.ch/en/iabout/stat/statpub/fdi/stats/fdi . 
19 See http://www.snb.ch/en/iabout/stat/statpub/fdi/stats/fdi . 
20 Synthes, bought by Johnson & Johnson for US$21.3 billion. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.2.1.4  Macroeconomic policies 
1.41.  Swiss economic policy  gives major priority to a macroeconomic policy environment designed 
to maintain stability. The Federal Constitution makes the BNS responsible for conducting a monetary policy  that serves the country's general interests.
21 The new Federal Law on 
the Swiss National Bank (LBN, RS 951.11 ), which came into force in May 2004, defines this 
responsibility and specifies that it is the task of the BNS to ensure price stability. In so doing, the BNS must take into account the evolving situation. The monetary policy strategy conducted 
by the BNS in order to fulfil its task consists of three components. Firstly, the BNS considers price 
stability to be equivalent to an annual increase of less than 2% in the Swiss consumer price index. Secondly, it publishes an inflation forecast based on a scenario that takes into account global economic trends and on the hypothesis that the Libor (three months, Swiss francs) at the time the 
forecast is published will remain unchanged for the following three years. Thirdly, at the 
operational level, the BNS gives the Libor a target range, which is usually one percentage point, and in general seeks to keep it in the middle of the chosen range. Furthermore, 
on 6 September 2011, the BNS determined a floor rate for the euro. 
1.42.  In 2008, monetary policy came under great strain because of the considerable uncertainty 
regarding trends in the economy and in financial markets. For the first ten months of 2008, 
inflation rose above the 2% threshold for the first time since 1995, driven by higher prices for oil 
and raw materials. The BNS nevertheless continued to pursue its monetary policy. It was obvious that the financial crisis would lead to a noticeable slowdown in Switzerland's growth. The BNS therefore left the range of 2.25%-3.25% for the three-month Libor unchanged until October 2008. 
It then brought it down in four stages to 0-1% between October and December. In conjunction 
with foreign central banks, it also took measures to calm money markets. 
1.43.  The beginning of 2009 was marked not only by a difficult situation and uncertainties in 
financial markets, but also by a high risk of deflation caused by the economic crisis and the 
surging Swiss franc and this led the BNS to decide  in March to bring the range of the three-month 
Libor down to 0%-0.75% and to oppose any appreciation of the franc against the euro. It also 
bought up bonds in francs from Swiss debtors in the private sector in order to increase liquidity. 
This expansionist monetary policy continued until the end of the year. In December 2009, as the risk of deflation diminished as a result of the up turn in the economic situation, the BNS announced 
that it would henceforward only oppose any excessive revaluation of the franc against the euro. 
1.44.  In summer 2010, the world economy picked up somewhat, but uncertainties remained. 
Towards the middle of the year, the situation had become sufficiently stable at the national and international levels to remove to a large extent any risk of deflation in Switzerland. In June, 
the BNS therefore considered that appreciation of the franc no longer represented the same threat 
as previously for price stability and economic tren ds. It therefore decided not to intervene anew on 
the currency market in the second half of the ye ar. It left the three month Libor range unchanged 
at 0-0.75%, but did not take any further measures to offset the appreciation of the franc against 
the euro. Even though price stability was ensured for the short term, long-term risks remained. This is why from summer 2010 onwards the BNS invited bids for repos and issued BNS stock in order to absorb liquidity and exert an influence over the three month Libor. 
1.45.  The deepening euro crisis in summer 2011 once again highlighted the extremely heavy 
upward pressure on the franc. In order to combat the strong franc, in August 2011 the BNS lowered the three-month Libor range, bringing it down to 0%-0.25%. Its aim was to bring the 
three-month Libor as close as possible to zero. At the same time, it increased liquidity in francs on 
the money market in three stages, and it rose fr om SwF 30 billion to SwF 200 billion. The upward 
pressure on the franc became even more acute at the beginning of September. 
On 6 September 2011, the BNS therefore announced that it would no longer accept a rate lower 
than SwF 1.20 to the euro on the exchange ma rket. Through this measure, the BNS confronted 
the serious threat to the Swiss economy and the ri sk of deflationary trends linked to excessive 
overvaluation of the franc. It emphasized that it would resolutely impose this floor rate and was 
prepared to buy unlimited amounts of foreign currency for this purpose. This trend in monetary 
policy remained unchanged during 2012 and was reaffirmed by the BNS when it reviewed the economic and monetary situation on 13 December 2012. The BNS expects that, after 
a 0.7% decrease in 2012, inflation forecast for Switzerland will remain slightly negative 
                                               
21 See http://www.snb.ch/en/iabout/monpol . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  in 2013 (-0.1%) and will only rise by 0.4% in 2014, so  there is no risk of inflation in Switzerland in 
the foreseeable future. 
1.46.  Compared with the international situation, government finances are in a favourable situation 
in Switzerland. Between 2009 and 2011, the regular financial balance of government departments 
remained generally positive, despite the deteriorating economic situation. Communes, however, 
had deficits, whereas cantons posted a surplus. These discrepancies have no doubt continued throughout 2012. At the Federal level, surpluses have been posted since 2006, but they were 
lower between 2009 and 2011 in comparison with the record surplus in 2008. The financial 
account should post a surplus again for the 2012 financial year. Following the peak reached in 2005, the Confederation's gross debt decreased until 2009 and has since been stable. In view of the rising GDP in recent years, the Confederation's debt ratio (as a percentage of GDP) fell 
from 28.1% in 2005 to 19.6% at the end of 2011.
22 This performance can be explained not only 
by economic growth, but also underlines the new direction taken by the Confederation's financial policy. The debt brake budgetary rule has played a key role in this respect. This rule has been in 
effect since 2003 and requires that Federal finances be in balance throughout an economic cycle. 
It has allowed the rapid remedial measures necessary to prevent structural deficits (2003 and 2004 remedial programmes) to be taken, whil e at the same time authorizing measures in 
support of the economic environment when n eeded (stabilization measures in 2009-2010, 
measures against the strong franc in 2011). In addition, a new budgetary rule supplementing the 
debt brake was introduced in 2010 to prevent unexp ected special expenditure from adding to the 
Federal debt. This rule provides that financial balance must be guaranteed in the medium term for 
the special budget as well. 
1.47.  At Federal level, budgetary strategy is based on the two fundamental objectives set in 
the 2011-2015 parliamentary session, namely, capaci ty to meet the debt brake requirements and 
limit the increase in spending so as to stabilize the share of expenditure. The 2013 budget , 
adopted by Parliament in December 2012, includes a modest structural surplus (SwF 66 million, or 0.01% of GDP, for total expe nditure of SwF 64.9 billion). The financial plan for 2014-2016 , 
presented by the Federal Council in August 2012, is structurally balanced overall. Bearing in mind 
the additional expenditure agreed since then, howe ver, and any new expenditures that may arise, 
as well as the uncertainties surrounding the economic environment, the Federal Council considers that some remedial measures are required. At the end of December 2012, it therefore put before 
Parliament a programme for consolidation and review of responsibilities. The remedial measures 
proposed amount to around SwF 700 million annually (or 0.1% of GDP) and should help to maintain the margin of manoeuvre needed to meet the debt brake requirements. The Federal 
Council is thus responding to a request by Parliament to review responsibilities and ease Federal 
finances. 
1.2.2  Growth policy and future challenges 
1.2.2.1  Brief evaluation of growth policy 
1.48.  Since the publication of the "2002 Report on  Growth", Switzerland has continued to conduct 
an in-depth study of the causes of its weak economic growth . This led to the introduction of the 
"Measures by the Federal Council to promote growth" (or simply "Growth package") in 2004. 
This economic programme focuses on six main areas, namely: (1) competition on the domestic 
market; (2) economic integration; (3) optimizing the State's efforts; (4) maintaining a high rate of employment; (5) competitiveness in training; and (6) legal conditions that are attractive to 
business. In April 2008, the Federal Council approved the report on growth policy for 2008 
to 2011, thereby fulfilling a mandate given to it by Parliament, advocating the continuation of the growth policy during the 2007-2011 parliamentary term. 
1.49.  The growth policy for 2008-2011  is built around three main components. Firstly, a reduction 
in the high level of costs. Secondly, business needs to be given a more important role, and, thirdly, professional activities in Switzerland should be developed. The 2008-2011 growth policy 
should also induce an ongoing process because the Federal Council already realized at the time 
that the short-term revival would not last for ever. It was thus essential to boost trend economic 
growth over the long run in order to increase prosperity. 
                                               
22 For government authorities as a whole, the debt ratio fell to 35% in 2011. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.50.  Unlike the series of measures to promote growth that had been taken during the previous 
legislative term, the 2008-2011 growth policy is not confined to the measures within its sole competence that the Federal Council may submit to Parliament. International economic agreements and the economic policy of cantons offe r such vast potential for growth that they have 
also been incorporated in the growth policy action plan. 
1.51.  It did not prove possible, however, to implement some measures defined in the 2008-2011 
growth policy as the Federal Council would have wished. For example, in the full-scale review of 
postal legislation decided by Parliament, the traditional provider of postal services retains a partial 
monopoly. The reform of value added tax (VAT) did not lead to the introduction of a single rate or the administrative streamlining that should have ensued. There are also attempts to overturn at least in part some measures already decided (Cassis de Dijon Principle, free movement of 
persons). Nevertheless, it is the view of the Federal Council that all these reforms remain 
important for the revival of the Swiss economy. 
1.52.  The lack of a successful conclusion to various reform projects launched in connection with 
the 2008-2011 growth policy is, however, in marked contrast to the highly favourable place 
Switzerland continues to occupy in international competitiveness rankings, and with the feeling that Switzerland has confronted the recent financial and economic crisis better than many other 
industrialized countries. Nevertheless, this performance is more the result of appropriate 
budgetary and monetary policies than the expression of an underlying trend towards strong growth. If Switzerland appears both competitive an d wealthy, this is above all attributable to 
strong participation by the labour force (82.5% in 2011) rather than a high level (US$48/hour in 
purchasing power parity in 2010) or growth in productivity (-0.5% annually between 2008 
and 2011). 
1.2.2.2  Internal challenges 
1.53.  This finding incited the Federal Council to pursue its efforts, paying particular attention to 
raising productivity, notably in domest ic economic sectors. The aim of the new growth policy 
for 2012-2015 is therefore to take all measures likely to raise the economy's productivity as a 
whole. It also seeks to ensure that – at the sectoral level – internal market-oriented sectors no 
longer base their future growth on extra labour to an exaggerated degree, as was the case in the 
recent past, but rather on increasing productivity. 
1.54.  In its growth policy, the Federal Council also endeavours to lower costs in Switzerland 
because these do not only have a direct effect on consumers and businesses, but also on price and 
wage levels, thereby exerting a negative impact on the competitiveness of the Swiss economy. In the area of health, rising costs have to be contained, not only to limit the increase in health 
insurance premiums but also to confront the opening of markets in the EU. The division of 
responsibilities among the Confederation, the cantons and communes makes effective cost management somewhat more complicated (for example, the legislation on construction and land 
planning). International acceptance of Switzerland's tax system is under threat to some extent and 
this must not hamper investment in Switzerland's economy. Switzerland is of course one of the most attractive places in which to set up a business, but competition among economic market places is becoming increasingly keener. The Conf ederation and the cantons (as well as cities and 
communes) which laud the merits of the Swiss market place abroad and play a key role in 
attracting business need to make even greater efforts. 
1.55.  The 2012-2015 growth policy includes a seventh and new field of action concerning the 
question of "the sustainability of resources de rived from the environment". The energy intensity 
indicator linking energy consumption and GDP will ill ustrate this field of action, whose aim is to 
encourage growth that respects the environment. One of the major challenges in this sphere is to 
achieve climate objectives at reasonable cost by using resources efficiently. Other challenges 
include developing infrastructure and linking Sw itzerland to international transport networks. 
Lastly, demographic change means that in Switze rland today the number of people retiring is 
larger than the number of young skilled people entering the labour market. In years to come, the 
population of working age will therefor e grow more slowly in Switzerland. 
1.56.  The 2012-2015 growth policy must help to raise productivity, in practical terms 
through: (1) reform of the health sector; (2) reform of the agricultural policy for 2017 onwards; WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  (3) the change in the direction of energy policy (gradual elimination of nuclear energy), using 
the means chosen, must not become an excessive burden on businesses; (4) the determination of budgetary priorities for eight years, peri odically revised; (5) the establishment of 
clear budgetary rules for managing social insura nce so as to prevent political blockages from 
affecting its financing and jeopardizing the benefi ts offered; and (6) keener competition in the 
Swiss economic market by using information and communication technologies. Above all, it is a question of moving ahead in the direction of "electronic government" (e-government) and 
streamlining administrative procedures.
23 
1.2.2.3  External challenges 1.57.  Switzerland is also facing a number of external challenges that it will have to overcome. 
With the growing number of cross-border valu e creation and supply chains, more and more 
businesses are involved in the international division of labour within the global production and 
supply process. At a time when markets for goods, services and capital are increasingly integrated, each State continues to regulate its own national economy. The external shocks which countries 
cannot overcome alone constitute an enormous challenge. In this connection, the very sharp 
appreciation of the franc since 2010 underlines the vulnerability of the Swiss economy. Furthermore, the 2008-2009 financial and economic crisis reinforced the trend towards trade and 
financial protectionism worldwide. The increasing scarcity of natural resources as a result of the 
world's growing population and changes in consumption patterns will make the question of resources even more important in the future. This issue of resources is exacerbated by climate change, over-exploitation of ecosystems and non-renewable resources, the limited reserves of 
fossil fuels and awareness that the cost of nuclear energy is not what it was made out to be. 
Switzerland, which has few raw materials, is therefore particularly affected in this respect. 
1.3  Main focus of recent and current structural reforms and other priorities of 
Switzerland's economic policy 
1.58.  A number of structural reforms have been introduced in recent years, at both the internal 
and the external levels, to complement and reinforce the growth policy. The combination of 
broader openness to the outside, the introduction  of free movement of persons within the EU 
and EFTA and the reforms of the domestic market have helped to boost competition at the domestic level, while at the sa me time making exports more co mpetitive. As a result of the 
combined positive impact of these various policies, Switzerland has been able, on the one hand, 
to limit the negative impact of the 2008-2009 fina ncial and economic crisis on its economy and, 
on the other, to effect a rapid return to growth , even though some considerable risks remain in 
relation to the persistence of growth because of the enduring debt crisis, notably in the eurozone, 
and the strong franc. Switzerland is determined to continue these reforms both internally and in 
foreign economic policy in order to maintain a sound economic and financial situation despite the serious economic problems facing many of its economic and trading partners.  
1.3.1  Domestic policy areas 
1.59.  Some noteworthy aspects of the reforms introduced since the previous Review of 
Switzerland's trade policy are described below. There has been a new revision of the Law on cartels and other impediments to competition, a revised law on banks (reinforcing the stability of 
the financial sector, "too big to fail"), the 2011 Agricultural Policy and the 2014-2017 Agricultural 
Policy, the revision of the law on energy, the revi sion of the law on supplies of electricity, the 
revision of the law on CO
2, the internal implementation of the revised Agreement on Government 
Procurement, the total revision of the law on alco hol and, lastly, the new developments in relation 
to intellectual property. 
1.3.1.1  Revision of the Law on cartel s and other impediments to competition 
1.60.  The Federal Council approved and forwarded to Parliament the message on a new revision 
of the Law on cartels and other impediments to competition (LCart) , of 22 February 2012. 
The Council of States' competent commission deci ded to take up the issue on 26 June 2012 and is 
currently continuing to discuss it in detail. This new revision of LCart has a twofold objective: on 
                                               
23 See SECO, Politique de croissance 2012-2015 , Report of the Federal Council, Bern, 2012, 69 pages. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  the one hand, to increase competition in Switzerland in keeping with the country's liberal economic 
regime and, on the other, to provide greater legal certainty. At the institutional level, it is planned to transform the current secretariat of the Competition Commission (COMCO) into a Competition Authority, and the Competition Commission itself into a judicial body in the form of a new chamber 
belonging to the Federal Administrative Tribunal. The plan also takes into account developments in 
European legislation, thereby creating a competition framework that responds to the needs of a modern economy. 
1.61.  With this in mind, it is planned notably to prohibit any particularly prejudicial forms of 
cartel-type understandings, although an exception may be made on the grounds of economic efficiency. In the context of a strong franc, on 17 August 2011 the Federal Council decided to boost competition in Switzerland by taking legal steps to prohibit horizontal agreements on prices, 
quantities or geographical allocation of markets, as well as vertical agreements on minimum or 
fixed prices and unequivocal territorial partition, while authorizing opportunities to justify these. This measure aims in particular to tackle Switzerland's high prices, enhance the Swiss economy's 
international competitiveness in the long term and provide a response to legal problems that arose 
in relation to the regulations in effect (Article 5, LCart). 
1.62.  The basic difference in comparison with the current legislation is the fact that the unlawful 
nature of particularly prejudicial horizontal or vertical agreements will no longer result from their 
direct economic effects on a case-by-case basis, i.e. by seriously hindering competition, but will 
depend on the type of agreement. Bans and penalties will depend on the competition parameters eliminated by the agreement in question (price competition, import competition, etc.). 
The five types of agreement that are already p unishable will be deemed intrinsically unlawful 
u n d e r  t h e  L a w .  I t  w i l l  n o  l o n g e r  b e  n e c e s s a r y  t o  prove that they seriously hinder competition. 
The economic impact will, however, play a role in the level of the penalty. On the other hand, 
such agreements may still be lawful if they ar e justified on grounds of economic efficiency. 
1.63.  In addition, it should be possible to proh ibit concentrations of businesses or make them 
subject to reservations or conditions if they seriously hinder competition. In return, greater 
attention will have to be paid to efficiency gains resulting from a concentration when evaluating a 
project from the point of view of the legislation on cartels. The current legislation is based on a 
dominant-position test. 
1.3.1.2  Revision of the law on banks (Reinforcing the stab ility of the financial sector, 
"too big to fail") 
1.64.  The recent world financial and economic crisis has shown that in Switzerland as well the 
failure of a large bank constituted a major risk to the economy. The Federal Council wants to 
prevent any bank from being "too big to fail" and compelling the State use public money to save it. 
A series of measures has been adopted to bolster the resistance of systemically important banks to the crisis and to reinforce the stability of the financial sector as a whole. The total revision of the 
ordinance on own funds allows the international rules prescribed by the Basel Committee on 
Banking Supervision (Basel III) to be transpos ed into Swiss law. According to the revised 
ordinance, which came into force on 1 January 2013, banks must have higher quality own funds and also have additional means available in the form of a capital buffer. In Switzerland, 
systemically important banks will have to comply with additional requirem ents. By 2018, they will 
have to increase their own funds to 19%, meet more stringent liquidity requirements and improve 
the risk spread. They will also have to arrange for responsibilities that are important for the 
economic system to continue to be assumed if there is a risk of insolvency. The relevant 
amendments to the law on banks have been in force since 1 March 2012. 
1.3.1.3  Agricultural Policy 2011 an d Agricultural Policy 2014-2017 
1.65.  Switzerland's agricultural policy is based on Article 104 of the Federal Constitution, which 
calls for agricultural production that takes into account simultaneously the requirements of sustainable development and market economy princi ples. Farmers are not only seen as producers 
of food, but also as contributing to the populati on's food security, the conservation of natural 
resources, the upkeep of the rural landscape  and decentralized occupancy of the land. 
This multifunctional concept is included in the Constitution and is the basis for the direct payments to farmers for the services they provide in the public interest.  WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.66.  The main feature of the 2011 Agricultural Policy (PA 2011) , the fourth stage in the reform 
of Swiss agricultural policy launched in 1992, is the reallocation of market support to decoupled 
direct payments; there has been a 30% reduct ion in market support. In addition, the key 
measures taken have been the elimination of ex port subsidies for agricultural commodities and 
reduced customs duties on cereals, animal feed , oilseeds and cut flowers. At the conclusion 
of PA 2011, there has been noticeable progress in relation to ecology and efforts to protect and promote biodiversity have been intensified.  
1.67.  With the 2014-2017 Agricultural Policy (PA 14/17) , the fifth stage in the reform, the Federal 
Council is proposing a long-term strategy aimed at promoting more innovation in agriculture and the food chain, further enhancing competitiveness and better targeted support for services in the 
public interest. The key component of PA 14/17 is the development of a system of direct 
payments. In future, payments will systematically  be directed towards services in the public 
interest desired by the population and laid do wn in the Federal Constitution, by means of 
payments for open rural landscapes, security of su pplies, biodiversity, the quality of the landscape, 
the production system and efficient use of resources.  
1.68.  The future concerns of Switzerland's agricu ltural policy include the globalization of markets 
and closer European relations. Switzerland has chos en to be proactive in face of these challenges. 
Negotiations between Switzerland and the EU on a free trade agreement in the agrifood sector 
have been under way since November 2008. The aim is to open up markets covering the whole of the food production chain. For the time being, discussions are at a standstill, mainly because of 
outstanding institutional issues between Switzerland and the EU. At the same time, Switzerland 
has continued to harmonize its legislation with that of the EU, which forms the basis for updating 
and developing the current agricultural agreemen t between Switzerland the EU. The EU is by far 
the largest trading partner for Switzerland's agri food sector. Increased interaction between the 
Swiss and EU agricultural markets therefore makes a substantial contribution to reform of Swiss 
agricultural and food policy.  
1.3.1.4  Revision of the law on energy 
1.69.  On 1 July 2012, the Federal Council enacted the amendment to the law on energy 
(Article 8) adopted by the Federal Assembly on 23 December 2011. By means of this amendment, 
the Federal Assembly decided to modify the orde r of priority of possible measures. The Federal 
Council now has the possibility of directly issuin g orders on energy consumption by facilities, 
equipment and vehicles, without having to wait fo r the measures taken freely by the economy to 
take effect, as had previously occurred in most cases.  In doing so, it will be guided by profitability 
and the best available technology (best equipment) and will take into account international 
standards and recommendations by recognized specialized institutions. The Federal Council may 
also in due time adapt Swiss requirements to new international consumption standards, notably those of the EU. If it finds it appropriate, the Federal Council may nevertheless continue to rely in 
the first place on voluntary agreements with economic sectors. 
1.3.1.5  Revision of the law on electricity supply 
1.70.  The law on electricity supply (LApEl) , adopted by Parliament in 2007, envisages the opening 
up of the market in two stages: during the first five years (2009-2013), only end consumers with 
consumption exceeding 100,000 kWh have free access to the market. After five years, households 
and small-scale consumers will also be able freely to choose their electricity supplier. Full market liberalization will be introduced by Federal de cree, which may be the subject of an optional 
referendum. The extra-high voltage network is oper ated by a Swiss grid operating firm (swissgrid) 
that will remain directly or indirectly under Swiss control (cantons, communes and electricity suppliers). Looking at the experience gained since 2009, it appears that the objectives sought in 
opening up the market have not yet been achieved, namely, the introduction of a competitive and 
secure electricity supply at transparent prices. In early 2010, the Federal Office of Energy, together with various internal and external groups, undertook an analysis of the legal bases with a view to revising the LApEl. In March 2011, this anal ysis was deferred in view of the urgent need to 
develop a new energy strategy for 2050 following the tragic events in Japan. Work on revising 
the LApEl resumed in 2012, in tandem with th e establishment of the 2050 energy strategy. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.3.1.6  Revision of the law on CO 2 
1.71.  The law on CO 2 has been revised for the post-2012 period.24 In December 2011, Parliament 
decided to reduce Switzerland's greenhouse gas emissions by at least 20% in comparison with their 1990 levels by 2020. As the revised CO
2 law focuses on reductions made in Switzerland, the 
potential for domestic reduction is exploited and incentives are given for increased use of 
renewable energy with low emission rates, encouraging technological innovation and fostering job creation in sectors of the future. Domestic measures to enhance efficiency also have the 
advantage of lessening Switzerland's dependence on imports of energy and help to reduce the 
harmful effects of atmospheric pollution on health. The revised CO
2 law came into effect 
on 1 January 2013. 
1.72.  The new legal bases represent a continuation of the current CO 2 l a w .  I n  a d d i t i o n  t o  
measures taken in the context of other sectoral policies (for example, SuisseEnergie25, the 
proportional heavy vehicle tax [RPLP]26), measures and tools that have proved their worth have 
been renewed and improved and new measures introduced: 
 CO2 tax (incentive) levied on fuel; 
 partial allocation of the CO 2 tax to financing measures in the construction sector; 
 exemption from the CO 2 tax and system for trading emission quotas for companies 
producing large volumes of emissions; 
 requirement that importers of fossil fuels offs et part of the emissions caused by their 
products; 
 requirement that operators of thermal power stations using fossil fuels offset the 
stations' emissions; and lastly 
 flexibility mechanisms in the Kyoto Protocol (limited recognition for emission reductions 
in projects carried out abroad). 
1.3.1.7  Implementation of the revised Ag reement on Government Procurement at the 
internal level 
1.73.  On 18 November 2009, the Federal Council approved the amendment to the ordinance on 
government procurement (OMP) . The purpose of this decision was to modernize, streamline and 
clarify Federal legislation on government procurement and make it more flexible. The functioning of procedures was improved in order to save time, lower costs and generate a positive impact on the economic situation. This decision was taken after the Federal Council had decided 
on 17 June 2009 to renounce the partial unification of government procurement law at the national 
level owing to lack of consensu s. The amendment to the OMP came into effect on 1 January 2010. 
Since then, calls for bids by Federal bodies have had to be published on the electronic platform 
simap.ch , operated jointly by the Confederation and the cantons. 
1.74.  With this change to the OMP, the Federal Council enshrined the principle that bidders must, 
as a minimum, observe the eight core conventions of the International Labour Organization (ILO). 
This principle applies indiscriminately to foreign and Swiss bidders. Pursuant to the Declaration by 
the ILO on fundamental principles and rights at work, adopted on 18 June 1998 by the 86
th Session of the ILO General Conference held in Geneva, each member State has an 
obligation, inherent in ILO membership, to respect, promote and implement the principles that are 
the subject of these conventions. There are no w 185 member States of the ILO. A contracting 
agency may reject the award of a contract or excl ude a bidder if it does not observe the ILO's core 
conventions. 
                                               
24 http://www.admin.ch/ch/f/ff/2012/109.pdf . 
25 http://www.suisseenergie.ch/fr-ch/utilities/a-propos-de-suisseenergie.aspx . 
26 http://www.ezv.admin.ch/zollinfo_firmen/steuern_abgaben/00379/index.html?lang=en . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.75.  Since 2008, Switzerland has also reinforced its anti-corruption system. Suspect cases may 
be brought to the attention of the Swiss Federa l Audit Office (CDF) anonymously ("whistleblower 
hotline") and it then undertakes supplementary enquiries. Preventing corruption is an integral part of courses on government procurement law. Th e Confederation's employees subscribe to the 
Federal Administration's Code of Conduct and are given information leaflets. In 2009, 
the Federal Council established an interdepartmen tal working group to combat corruption, ensure 
coordination and exchange of information and ex perience in the Federal Administration. As the 
central procurement service for the Federal Administration, the Federal Office for Buildings and 
Logistics (FOBL) has taken additional measures to prevent corruption in relation to procurement. It regulates and limits competence for awarding co ntracts and applies the principle of dual control. 
Internal directives spell out the general requirements governing the acceptance of benefits. 
An integrity clause is an integral part of contra cts and provides for the usual types of penalty but 
also for the cancellation of a contract if there is any attempt at corruption. 
1.76.  On 24 October 2012, the Federal Council approved the total revision of the ordinance on the 
organization of the Confederation's procurement (Org-OMP ). The revised ordinance came into 
force on 1 January 2013. The total revision of th e Org-OMP determines, in particular, the bases 
applicable to the introduction of a procurement control system ("procurement controlling") for the 
Federal Administration as a whole. This system has three computerized components, a tool for 
managing contracts, statistics on procurement and follow-up of sustainability. These three tools will make it possible to furnish more precise data  on the Confederation's procurement in the future 
and to undertake regular analyses. The aim is to know who has awarded what contract, to which 
bidder and following what procedure, what are the contracts and what payments have been made, 
and to what extent sustainable development aspects have been taken into account. 
1.77.  On 23 March 2012, the Federal Council approved the revision of the WTO Agreement on 
Government Procurement. The deposit of Switze rland's instruments of ratification with the 
Director-General of the WTO will require prior am endment of Federal and cantonal legislation on 
procurement and will have to be approved by Parliament. The Federal and cantonal authorities 
have developed a mechanism for adapting the curre nt legislation to the new provisions in the 
revised Agreement on Government Procurement. The opportunity will be taken to harmonize Federal and cantonal legislation as much as possible. This work will take place according to a timetable that is also imposed by parliamentary procedure and should enable Switzerland to ratify 
the revised Agreement in the course of 2015. 
1.3.1.8  Total revision of the law on alcohol 1.78.  The law on alcohol currently in force dates back to 1932 and is one of the oldest 
Federal laws. There have of course been many  partial revisions throughout its 80 years of 
existence, but these have not prevented it from only responding in part to current requirements. This why the Federal Council included revision of the law on alcohol among its objectives for 
the 2007-2011 parliamentary session. Through this total revision, the Federal Council is pursuing 
the following objectives. Firstly, liberalization of the market : three of the Confederation's 
monopolies and 41 out of 43 authorizations will be eliminated. Moreover, it is planned that the Confederation should withdraw totally from the market for ethanol. Secondly, improvement of the 
taxation and control system : the taxation system will be streamlined by making taxation directly 
related to production and import of spirits. The number of taxpayers, which is currently around 48,000, will fall to some 3,000. In addition, tax privileges will be harmonized. These 
streamlining measures will mean a sharp reduction in controls by the administration, without 
affecting tax revenue. Thirdly, reorganization of the regulations on the market : by combining in a 
single law the provisions on trade in alcoholic beverages and their advertising, currently spread 
over several different texts, it will be possible to avoid duplication in the legislation and in its 
implementation and the ensuing legal uncertainty w ill be removed. Furthermore, it will create 
the conditions for greater consistency in the policy on alcohol (and in the market for alcohol) by making trade in alcoholic beverages subject to uniform rules. Lastly, redistribution of 
responsibilities : the elimination of the Confederation's import monopoly and its withdrawal 
from the ethanol market will enable Alcosuisse, th e profit arm of the Federal Alcohol Board (FAB), 
to be privatized. The Board's other services will be incorporated into the central Federal 
Administration. This will make it possible to concentrate on the potential for synergy with other 
administrative responsibilities.  WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.79.  On 25 January 2012, the Federal Council approved the message on the total revision of the 
law on alcohol. It forwarded two draft laws to both Chambers of Parliament, namely, the law on taxation of spirits and the law on trade in alcohol. Liberalization of the markets for ethanol and spirits is accompanied by stronger protection for young people and the introduction of a "night 
regime" applicable to the sale of alcohol. The present FAB will be incorporated into the Federal 
Customs Administration (FCA), where it will be responsible for implementing the two new laws. The matter is before Parliament. The drafts will first be examined by the Council of States, which 
has priority. Discussions will take place in several stages. The Council of States' Committee for 
Economic Affairs and Taxation (CEA T-CS) will prepare the text for the Council. In so doing, it will 
take into account the advice of the Committee for Social Security and Health (CSSH-CS). The Council of States will then take a decision on the drafts in plenary session. Lastly, the draft will be 
examined by the relevant committees of the National Council. After the second Council has 
discussed the text, any differences between the Nation al Council and the Council of States will be 
eliminated. The parliamentary stage will end by a final vote in the two Chambers. The timetable 
for the various stages will be fixed by Parliament . Once adopted, the laws will be subject to an 
optional referendum.  
1.3.1.9  Intellectual property 
1.80.  Because of its few raw material resources and the size of its domestic market, innovation 
plays a catalytic role in Switzerland's export-o riented economy. Switzerland therefore attaches 
paramount importance to protection of intellectu al property and guarantees protection over and 
above the minimum standards in the TRIPS Agreement. Because of this keen interest, it takes an 
active and constructive part in the discussions under way in various international forums, 
especially within the WTO and the World Intellectual Property Organization (WIPO). 
1.81.  The partial revision of the patent law mainly concerned biotechnology inventions and 
ratification of the WIPO Patent Law Treaty (PLT), but also included other revisions of legislation on 
the principal intellectual property rights (copyright, trademarks, geographical indications and designs), introducing in particular additional provisions
27 on combating counterfeiting and piracy. 
This partial revision came into effect on 1 July 2008. 
1.82.  The latest revision28 of the copyright law ( LDA RS 231.1)29 introduced the standard of 
protection prescribed in WIPO's internet treaties30 in order to adapt legislation to technological 
progress. Switzerland is also one of the signatories to the Beijing Treaty on Audiovisual 
Performances adopted in June 2012 at the Diplomatic Conference held in Beijing. 
1.83.  As far as patents are concerned, a new provision has been introduced into the Federal Law 
on patents  (LBI, RS 232.14 ). This came into force on 1 July 2009 and, with some exceptions, it 
allows  patented goods placed on the market within Switzerland or the European Economic Area by 
the owner of a patent or with his/her agreement to be imported, used or resold in Switzerland at a professional level. The legislation on patents has also been supplemented by the introduction of 
two new laws. The law on patent attorneys (LCBr, RS 935.62)
31 came into force on 1 July 2011 
and regulates the conditions for using the title of "patent attorney", reserving it for persons 
enrolled in the Register, with specific professional qualifications and having passed an examination, in accordance with the provisions laid down in the law. The law on the Federal Patent 
Court (LTFB, RS 173.41 )
32 was fully implemented on 1 January 2012; it establishes a special 
national court with exclusive competence, inter alia , for ruling on the validity or infringement of a 
patent. The Court is composed of judges with legal training and judges with technical training, 
thus providing the necessary expert knowledge to guarantee effective legal protection for patents. 
The Court commenced work on 1 January 2012. 
                                               
27 These provisions, inter alia, give the Federal Customs Administ ration the means for effective 
intervention (for example, the authority to act ex officio), provide heavier penalties for violation on a 
commercial scale (for example, larger fines) or the possibility for the owner of a trademark or design to 
prohibit the import, export or transit of counterfeit good s, even if this is done by individuals. For further 
details, see WT/TPR/G/208. 
28 Entered into force on 1 July 2008. 
29 See http://www.admin.ch/ch/e/rs/231_1 . 
30 Treaty of 20 December 1996 on copyright (WCT) and Treaty of 20 December 1996 on performances 
and phonograms (WPPT). 
31 See http://www.admin.ch/ch/e/rs/c935_62.html . 
32 See http://www.admin.ch/ch/e/rs/c173_41.html . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.84.  The substance of the law on the protection of trademarks and indications of source 
(LPM, RS 232.11 )33 was not revised during the period under review. In view of the importance it 
attaches to the protection of geographical indications, Switzerland has made an active and constructive contribution to the relevant discussions within the WTO. Switzerland is in favour of a 
high level of protection irrespective of the type of product designated by a geographical indication 
and it supported the communication of 19 April 2011 (TN/C/W/60) submitted by a number 
of WTO Members proposing the appropriate amendment of Section 3, Part II, of 
the TRIPS Agreement in the context of the Doha Round negotiations. At the national level, work on 
legislation is under way in order to define the conditions under which use of the name "Switzerland" and of the Swiss flag on produc ts will be allowed ("Swissness" project). 
1.85.  Regarding the enforcement of intellectual property rights , Swiss legislation covering the 
main intellectual property rights (copyright, trademarks, geographical indications and designs) was 
supplemented in the course of the latest partial revision of the patent law, which came into force in July 2008. Effective measures to combat the growing trade in counterfeit or pirated goods are 
provided (notably border measures), together with harmonized and dissuasive penalties. 
Any infringement of intellectual property rights  on a commercial scale may now be punished by a 
maximum term of imprisonment of five years and a fine of up to SwF 1,080,000. In addition, the 
Swiss authorities (in particular the Federal Intellectual Property Institute (IPI)) and economic 
circles have a platform called STOP PIRACY
34 whose aim is to provide information on the risks and 
negative consequences of counterfeiting and piracy and to reinforce coordination in this respect between the public and private sectors. 
1.3.2  Foreign policy areas 
1.86.  Switzerland's concern that policies on reform, liberalization and openness should be 
mutually reinforcing can also be seen in the various foreign policy measures  taken by the 
Government during the period under review. 
1.3.2.1  Relations between Switzerland and the EU 1.87.  As far as European integration is concerned, Switzerland has close relations with the EU. 
Contractually, this has meant the following: in 1972, the two parties signed a free trade 
agreement (for industrial goods). In 1999, seven bilateral agreements were signed on the free 
movement of persons, land transport, air transp ort, agriculture, research, technical barriers to 
trade and government procurement. These agreements have been in force since 1 June 2002, 
enabling Switzerland not only to open up its economy still further and improve its access to 
the EU market, thus complementing the 1972 free trade agreement, but also to strengthen the euro-compatibility of the technical regulations in Switzerland's economic legislation. 
The experience of implementing these agreements since their entry into force has been promising. 
1.88.  In the course of 2004, Switzerland signed nine additional agreements with the EU in order 
to strengthen its regional links with its main economic partner. These new agreements cover 
cooperation in the areas of justice, asylum and mi gration (Schengen/Dublin), taxation of savings, 
action to combat fraud, processed agricultural products, the environment, statistics, promotion of films, pensions, education, vocational training and youth. They mark the continuation of the bilateral approach adopted by Switzerland after the rejection of membership of the 
European Economic Area (EEA) in 1992. With the exception of the agreement on combating 
fraud, which is a mixed agreement and hence must be approved by all EU States (to date, one of the 27 EU members has not yet ratified the agreement), the agreements have entered into 
force.
35 Since 2009, Switzerland and the EU have signed further agreements on 
customs facilitation and security, education, recognition of PDOs and PGIs and on cooperation with the European Defence Agency. 
1.89.  The Swiss Federal Council gives priority  in its European policy to the consolidation and 
development of the bilateral route by signing new agreements on market access and cooperation 
in areas of common interest. 
                                               
33 See http://www.admin.ch/ch/e/rs/c232_11.html . 
34 See http://www.stop-piracy.ch/en/home/h1.shtm . 
35 See http://www.europa.admin.ch/themen/00500/index.html?lang=en . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.3.2.2  Free trade agreements 
1.90.  In the context of Switzerland's foreign economic policy, the free trade agreements with its 
non-EU trading partners, together with its membership of the WTO and the bilateral agreements with the EU, constitute an indispensable contribution to maintaining and enhancing the 
competitiveness and the attraction of Switzerland as an economic centre.
36 By signing free trade 
agreements, mostly within the EFTA framework, Switzerland aims to give its firms access to foreign markets that places them on an equal footing with their main competitors. In addition, 
these agreements generally provide more legal certainty, as well as stability of the framework 
conditions governing economic relations with the partner States concerned, while at the same time helping to diversify and galvanize Switzerland's external economic relations. The preferential policy 
followed by Switzerland and the EFTA countries is not, however, intended to replace trade 
liberalization at the global level. It remains a complement to Switzerland's commitment to 
the WTO process. 
1.91.  Since the previous Review of its trade policy in 2008, Switzerland has continued to expand 
its network of free trade agreements. Accordingly, since the beginning of 2009, it has signed a 
bilateral agreement with Japan and, within the EFTA framework, agreements with Canada (2009); Albania and Serbia (2010); Colombia and Peru (2011); Ukraine; Hong Kong, China; 
and Montenegro (2012), bringing the number of fr ee trade agreements within the EFTA framework 
up to 24.
37 The majority of the free trade agreements signed with partners outside 
the Euro-Mediterranean area are extended sectoral agreements. In addition to movement of goods, competition law and intellectual property, they generally also include substantial 
commitments on services, investment and government procurement. In addition, since mid-2010, 
Switzerland and EFTA countries have proposed to all their negotiating partners the inclusion of special provisions on trade and sustainable development. 
1.92.  As there is an ongoing trend towards the proliferation of preferential agreements at the 
international level and in view of the Swiss economy's interests, Switzerland intends to pursue its policy aimed at concluding free trade agreements with non-EU partners. Switzerland is therefore 
currently engaged in negotiations with the fo llowing within the EFTA framework: Algeria, 
Bosnia & Herzegovina, four Central American States (Costa Rica; Guatemala; Honduras and Panama), India; Indonesia; the Russia-Belarus-Kazakhstan Customs Union; Thailand; and Viet Nam. Negotiations with Malaysia will commence shortly. At the bilateral level, 
in January 2011, Switzerland and China started negotiations on a free trade agreement between 
the two countries. Lastly, Switzerland and the other EFTA countries are exploring the possibility of 
initiating negotiations with other trading partners. 
1.3.2.3  Cooperation with developing co untries and countries with economies in 
transition 
1.93.  Switzerland, as the host country of international organizations such as the WTO, 
the International Trade Centre (ITC), the United  Nations Conference on Trade and Development 
(UNCTAD) and the ILO, is destined to play a key role in promoting trade. As already indicated, 
economic development cooperation is one of the three pillars of the Federal Council's foreign 
economic strategy, namely integration of developing countries into the global trading system . 
This is why from the outset of the Doha negoti ations, the SECO has significantly developed its 
trade promotion cooperation programmes and adapted them to its partners' needs. 
1.94.  Switzerland recognizes the importance of consistency between its trade and development 
policies, and this influences both its position in negotiations on trade agreements and its 
trade-related cooperation programme. To achieve this, Switzerland has strengthened and better targeted its trade-related cooperation, broadening it to include sanitary and phytosanitary 
measures and other emerging issues such as competition, the award of contracts or technical 
requirements and standards. The principl e of sustainability, focusing on the environmental and 
                                               
36 See http://www.seco.admin.ch/themen/00513/00515/01330/index.html?lang=en . 
37 The full list of EFTA's free trade partners was as follows (status at the end of January 2013): Albania; 
Canada; Chile; Colombia; Cooperatio n Council for the Arab States of the Gulf (GCC); Croatia; Egypt; 
former Yugoslav Republic of Macedonia; Hong Kong, China; Israel; Jordan; Lebanon; Mexico; Montenegro; 
Morocco; Palestine; Peru; Republic of Korea; Serbia ; Singapore; Southern African Customs Union (SACU); 
Tunisia; Turkey and Ukraine. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  social  dimension of economic issues is a cross-cutting objective at the heart of all these 
programmes. In addition, global issues such as climate change are becoming increasingly 
important because trade has the potential to address these challenges effectively. 
1.95.  Switzerland's trade-related cooperation is based on the following three thrusts: trade policy, 
trade efficiency (including the application of international standards) and market access. These 
three thrusts are addressed below, together with the cross-cutting objective of Swiss trade-related 
cooperation: the sustainability of exports. 
1.3.2.3.1  Trade policy-related cooperation 
1.96.  The growing complexity of world trade raises major challenges for the developing countries, 
in particular for the least developed among them, which find themselves obliged to build up their 
institutional capacity  in order to make sure that their voice is heard during multilateral and 
bilateral trade negotiations and when implementing the outcome of these negotiations . This is why 
Switzerland supports multilateral initiatives for LDCs, for example, the Enhanced Integrated 
Framework , Aid for Trade  or the Inter-Agency Cluster on Trade and Productive Capacity of the 
Chief Executive Board  (UN Trade Cluster ). The purpose of these initiatives is to integrate trade into 
national poverty reduction strategies as a tool for development and to ensure better coordination of trade-related technical assistance provided by the industrialized countries and 
multilateral agencies. 
1.97.  At the same time, Switzerland provides assistance in understanding and implementing the 
WTO Agreements . In acceding to the WTO, many developing countries have underlined the need 
to build up their trade policy-related capacity. In order to achieve this objective, Switzerland's 
trade promotion involves a series of activities aimed at creating and supporting specialized 
services for the authorities in partner countries (f or example, Laos, Viet Nam, Lebanon, Tajikistan, 
Montenegro, Serbia and Liberia). Switzerland supports programmes that target both the partner 
countries and "the international role of Geneva", working closely with organizations that specialize 
in WTO law, for example, the Advisory Centre for WTO Law (ACWL). In order to foster better 
understanding of the WTO's rules and proc edures, Switzerland supports the work of 
the WTO's Institute for Training and Technical Cooperation through the Doha Development Agenda 
Global Trust Fund and also works with the ITC, especially its WTO Division. 
1.98.  Switzerland is working in partnership with specialized national and international 
organizations such as UNCTAD (competition policy) and the IPI (rights under 
the TRIPS Agreement) or the Federal Customs Administration (trade facilitation). Together with 
partner countries, it identifies needs in order to develop cooperation programmes adapted to each level, thereby helping to build the capacity of pub lic and private sectors, notably by setting up an 
appropriate legal and institutional framework. 
1.3.2.3.2  Trade efficiency /international standards 
1.99.  One essential concomitant of demands by developing countries for market access is 
improving trade efficiency and the production capacity of their enterprises . Together with the ITC, 
Switzerland is supporting the development of a comprehensive range of services intended for small and medium-sized enterprises (SMEs) in developing countries. The purpose of these services, which are provided by local suppliers (export promotion entities or chambers of commerce), is to 
increase the export capacity and competitiveness of  SMEs and to integrate them more closely into 
international value-creation chains for both goods and services (for example, textiles and tourism). They include, inter alia , trade information, training in trade-related matters, development of 
products and markets, management of the logistics chain and of production. 
1.100.  One other area of intervention aimed at  enhancing the export capacity and integration 
of SMEs in international value chains concerns programmes which help SMEs to comply with 
international market standards . In cooperation with the United Nations Industrial Development 
Organization (UNIDO), Switzerland gives local authorities in partner countries support to improve quality systems, particularly as regards the examination of standards and quality criteria. Better metrology and the introduction of modern testing procedures will allow partner countries to 
determine themselves - using internationally recognized methods - whether their exports of WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  agricultural products and intermediate products comply with international standards for consumer 
safety. 
1.3.2.3.3  Market access 1.101.  In order to facilitate access to its market for products from developing countries , under its 
Generalized System of Preferences (GSP), Switzerl and gives them extensive reductions in customs 
duty on agricultural and textile goods and exempt ion for all other goods. These tariff preferences 
are of particular benefit to LDCs, which can export  all their goods to Switzerland free of duty and 
without quotas. Another instrument, the Swiss Import Promotion Programme  (SIPPO) is intended 
for export-oriented SMEs in developing countries or countries with economies in transition. It facilitates direct links between exporters in  developing countries and European importers, 
including those in Switzerland; it also assists SMEs and national export promotion institutions to 
sustainably enhance the competitiveness of SMEs and to gain a foothold in international markets. 
1.3.2.3.4  Sustainability of exports 1.102.  One cross-cutting  objective  of particular importance in Switzerland's trade-related 
cooperation is the  sustainability of exports. Switzerland pursues this objective by endeavouring to 
promote the efficient use of resources in producti on, to encourage the transfer of environmentally 
friendly technology, to convince firms to adopt core labour and human rights standards, to give 
priority to exports manufactured using sustainable methods, and in the agricultural sector, the use 
of organic certification and good agricultural practices. As far as the protection of biological diversity is concerned, several issues are covered: access to genetic resources and fair sharing of the benefits from exploiting them ( access and benefit sharing ), traditional knowledge and 
geographical indications. In the case of the United Nations Framework Convention on Climate 
Change, Switzerland supports the promotion of pilo t projects in the industrial sector through the 
clean production programme, the creation of new market mechanisms for trading CO
2 emission 
rights and strengthening of the Kyoto Protocol-related institutions. 
1.103.  For many developing countries, the promotion of organic farming or fair trade products 
provides a good opportunity to penetrate agricult ural markets in Switzerland and the EU. It also 
helps to increase the local value added of basic and processed agricultural products. 
In Switzerland, high-quality regional specialities with acknowledged properties are also a good trade outlet. This is why trade-related cooperation projects aim to improve market access for such niche products. In addition, Switzerland is taking further steps to promote sustainable 
development in mass markets. Minimum social and environmental criteria are defined in 
agreement with representatives of interest groups in the various links in the value-creation chain 
(producers in developing countries, representatives of wholesalers, retailers and the agri-food 
industry) and with non-governmental organizations. In an effort to increase the use and the 
impact of such private voluntary standards, Switzerland supports initiatives intended to provide better information on the various standards, to improve and harmonize tools for training producers 
regarding the various standards and to involve decision-makers in emerging and developing 
countries more closely in the international discussions on such standards. Along the same lines, Switzerland supports the Global Reporting Initiative (GRI) and the United Nations Global Compact so as to expand the respective networks in em erging countries and, thereby, respond better to 
local needs in relation to sustainable management and reporting. 
1.104.  Switzerland spends around SwF 120 million a year on its trade-related co-
operation programmes . 
1.3.2.4  Rules and disciplines 
1.105.  In multilateral forums, Switzerland is constantly seeking to adapt rules and disciplines  to 
enable governments to respond to the challenges of globalization. Its efforts in the Doha Round to 
maintain a fairly broad programme of negotiations in order to satisfy all 159 Members of the WTO 
are along the same lines. During the period under review, Switzerland was not involved (either as 
a complainant or as a defendant) in any dispute settlement case in the WTO. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.3.2.5  Export promotion 
1.106.  The Swiss Export Risk Insurance Scheme (SERV)38, an autonomous agency of the 
Confederation with its own legal status, has its basis in the Federal Law of 16 December 2005 on Swiss Export Risk Insurance (LASRE; RS 946.10 )
39; it is subject to monitoring by the Federal 
Council, which is the responsibility of the Federal Department of Economic Affairs, Education and 
Research (EAER) and is exercised by the SECO. The SERV introduced four new products in 2009: working capital insurance
40, counter guarantees41, refinancing guarantees42 and letter of credit 
confirmation insurance.43 The introduction of the first three products required the creation of a 
legal basis, namely, the Federal Law of 20 March 2 009 on the provisional extension of services by 
the SERV (RS 946.11 ), originally scheduled to end in December 2011. In October 2011, this law 
was extended until the end of December 2015. Several SERV measures contained in the 
implementing ordinance were also revised in Oc tober 2011, for example, the rate of cover for 
supplier credit insurance, which rose from 85% to 95%. 
1.107.  Export promotion by the State is based on the Federal Law on export promotion 
of 6 October 2000 (RS 946.14 ), under which every four years the Federal Assembly determines 
the ceiling for spending on export promotion measures. In September 2011, members of the Assembly decided to continue promoting exports for the period 2012 to 2015, setting an overall 
spending ceiling of SwF 84 million. Implementati on of export promotion measures has been 
outsourced and entrusted to Osec, a private and independent association, with the aim of helping firms in Switzerland and Liechtenstein, particularly SMEs, to pursue their current export activities and develop new ones. Complementing private initiati ves according to the principle of subsidiarity, 
Osec provides firms with general information on markets, the various branches and certain aspects 
o f  e x t e r n a l  e c o n o m i c  a f f a i r s .  I t  a l s o  g i v e s  t h e m  a d v i c e  o n  e x p o r t - r e l a t e d  m a t t e r s  a n d  s u p p o r t s  their marketing efforts abroad (participation in fairs). During the period under review, as part of 
the third stage of the Confederation's cyclical stabilization measures in 2009, Osec was 
granted SwF 25 million as initial financing for the introduction of three platforms to promote exports specializing in clean technology (cleantech), medical technology (medtech), and 
architecture, engineering and design. These plat forms are entrusted with facilitating access 
by SMEs to promising export markets in the branches in question. They enable Switzerland's offer to be consolidated, better identification of fore ign demand and improved networking of firms with 
exchange of information among them. Umbrella tr ademarks make Swiss SMEs more visible on the 
markets targeted. These three export platforms are set up in the form of associations and have 
been operating since summer 2010. They have until 31 December 2015 to achieve financial autonomy. 
1.3.2.6  Other extern al policy priorities 
1.3.2.6.1  Environment 1.108.  Switzerland plays an active role in all international negotiations on the environment  in 
order to promote sustainable development  worldwide. The relevant legal basis for this is 
the Swiss Constitution (Articles 2, 54 and 73) and, in particular, the Federal Law on protection of 
the environment (LPE, RS 814.01 )
44, together with the Federal Council's reports on foreign 
policy.45 Switzerland considers that implementing trade-related measures that are both 
non-discriminatory and non-protectionist within the framework of multilateral environmental 
                                               
38 See http://www.serv-ch.com/en . 
39 See http://www.admin.ch/ch/e/rs/946_14/index.html . 
40 The SERV's working capital insurance provides insu rance against losses on manufacturing credits that 
are granted to Swiss exporters and used to manufacture goods whose export is insured by the SERV. 
41 Under the counter guarantee, the SERV undertakes to remit specific  compensation to the financial 
institution issuing the guarantee, at the exporter's request, in the event of the contract bond being called and the non-fulfilment of contractual obliga tions on the part of the exporter.  
42 Under the refinancing guarantee, the SERV guarantees  the refinancing institutio n to fulfil the payment 
obligations of the bank granting export  credit in the event of non-payment. 
43 The SERV insures letters of credit used to pay debts due to Swiss exporter s against non-payment by 
means of letter of credit confirmation insurance. The ba nks thus endorse letters of credit from foreign financial 
institutions, the risks of which they would not have accepted without such insurance. 
44 See http://www.admin.ch/ch/e/rs/c814_01.html . 
45 See http://www.admin.ch/ch/e/ff/2012/2677.pdf  for the 2011 report and 
http://www.eda.admin.ch/eda/en/home/do c/publi/ppol/polit.html#ContentPar_0012  for the previous reports. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  agreements is, under certain circumstances, the mo st effective way of ensuring that environmental 
objectives are met. The implementation of environm ental regulations is chiefly the responsibility of 
the Federal Office for the Environment (OFEV).46 The Office considers that environmental policy 
must also be designed as a policy for managing natural resources and long-term protection of 
natural capital. Likewise, policies in areas such as agriculture, electricity, transport, trade and 
development aid must automatically incorporate environmental concerns. 
1.109.  Switzerland strives to ensure that the principles enshrined in its Constitution and 
legislation – namely, protection of the environment and the precautionary, polluter pays and 
sustainable development principles  – are also applied at the international level. The protection and 
sustainable use of natural resources are incorporated into other areas of foreign policy. Switzerland's objective is to ensure that environmental agreements  are negotiated and 
implemented consistently , while at the same time taking into account international trade 
commitments . It is nevertheless aware of the fact that trade agreements give States a margin of 
manoeuvre in respect of the environment, a margin that can be used to the benefit of the 
economy without becoming a discriminatory barrier to trade, for example, through the promotion 
and transfer of environmental technology. Within the WTO and in its bilateral trade policy (free trade, investment), Switzerland pursues the objective of achieving a balance between trade 
and environmental regulations. In the WTO negotiat ions, it supports the establishment of a list of 
environmental goods for which trade would be facilitated. It considers, however, that production processes and methods must be taken into account when defining certain environmental goods inasmuch as these may have a decisive effect on the environmental impact (biofuels for example). 
In the interests of free trade, Switzerland wishes to see harmonization of the relevant regulations 
in various environmental agreements. The initiatives in favour of a Green Economy launched within the framework of the United Nations Envi ronment Programme (UNEP) and the OECD should 
in the long term lead to an international regime for the effective and equitable management of 
natural resources. Switzerland cooperates with othe r governments in order to ensure that the laws 
governing import and export of goods that might be hazardous to human health or the 
environment, including hazardous wastes, toxic chemicals, biocides and ozone-depleting 
substances, are consistent. 
1.110.  Switzerland is committed to institutional reforms that will help to achieve more effective 
implementation and, if needed, further development of existing international environment-related 
regulations and processes. It has ratified the major multilateral environmental agreements . 
These concern the climate, biological diversity and chemicals. With regard to the latter, 
Switzerland welcomes the amalgamation of the Secretariats of the Basel, Rotterdam and 
Stockholm Conventions. It is working towards the conclusion of a binding agreement on mercury. 
In relation to climate , it is in favour of setting legally binding objectives for the reduction of 
greenhouse gases for all industrialized countries, but also for emerging countries that are large 
emitters depending on their capacities. It is re ady to agree to a second period of commitments 
under the Kyoto Protocol from 2013 onwards. Switzerland and the EU are negotiating on setting up a network for their emission quota trading system s. The central element of Switzerland's climate 
policy is the law on CO
2, which was revised in 2011, inter alia, with a view to the post-Kyoto 
period (see Section 1.3.1.6 above). Since July 2008, Switzerland has exempted biofuels that have 
a positive ecological and social impact from the tax on mineral oils. In relation to the Convention 
on Biological Dive rsity (CBD), Switzerland supports the implementation of the 2011-2020 global 
strategic plan. It calls for clarification of financial needs in relation to the CBD. Switzerland would 
like see synergies deepened and more cooperation among the various biodiversity-related conventions. It intends to make efforts to ensure  that the Global Environment Facility (GEF) is 
given the resources needed in relation to biodiv ersity and is made more effective. Switzerland 
supports the study entitled The Economics of Ecosystems and Biodiversity (TEEB), which proposes a framework for taking into account the value of biodiversity and ecosystemic services. It adopted a national biodiversity strategy in April 2012 and will draw up an action plan up to mid-2014 to 
give effect to the ten objectives in this strategy. 
1.3.2.6.2  Core labour standards 1.111.  As regards the promotion of core labour standards , Switzerland has emphasized the 
importance of this aspect at the WTO: it has called for trade topics, on the one hand, and social 
issues, on the other, to be dealt with in a cohe rent fashion (Singapore Consensus, reaffirmed at 
                                               
46 See http://www.bafu.admin.ch/index.html?lang=en . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  Doha in 2001). Switzerland has also made clear that the WTO must deal with trade and not 
address the question of human rights independently. The WTO - like other international organizations - should confine itself to its areas of competence, while at the same time ensuring that the provisions it develops are consistent with those developed in other international 
organizations, and vice-versa. Both at the WTO and the ILO, Switzerland is committed to ensuring 
that cross-cutting issues such as trade and social standards  are dealt with consistently  and 
globally . It calls for stronger and more effective cooperation between the WTO and the ILO and 
supports observer status at the WTO for the ILO.  Two important publications on the issue of 
globalization and labour markets were publishe d jointly by the WTO and the ILO at the end 
of 2011. These two publications are a constructive contribution to the current debate on the relationship between trade and development at th e national, regional and global levels. They 
include proposals concerning the way in which consistent trade and social policies can help to 
promote quality jobs together with adequate protection in the context of open markets.
47 
1.112.  The social dimension of globalization is an important priority for Switzerland. The 
development and effective implementation of fundam ental labour principles and rights, as well as 
the ILO's eight related core standards, are a prerequisite for a fair globalized economy. 
1.113.  Switzerland ensures that its economic liberalization policy benefits the largest possible 
number, that it is supported by the population an d does not call into question harmonious social 
and labour relations. Consequently, its economic liberalization policy is accompanied by a strong social component. Switzerland therefore supports a strong and credible ILO to promote fundamental labour principles and rights. It is actively working to accompany the social dimension 
of globalization through decent work and workers' rights. This is why Switzerland advocates the 
promotion of social peace and justice throughout  the world. For Switzerland, the opening of 
markets has, in the long term, a positive impact on growth and well-being. It therefore seeks to 
ensure that unregulated liberalization does not have negative effects, opposing those who have 
lost out from liberalization and those who benefit from it. 
1.114.  Decent work is a universal objective, recognized as one of the main ways of achieving the 
objective of development. The promotion of paid and freely chosen employment is thus a political 
priority for effectively combating poverty. 
1.115.  Switzerland has a strategy for commitment at the ILO that is based on a sustainable social 
development approach and on the need to reinforce the coherence of government and multilateral 
political action. The strategy has three axes: working towards a stronger ILO, credibly applying 
and promoting the ILO's principles and standard s in Switzerland, and promoting decent work 
throughout the world. 
1.4  Switzerland and negotiations at the WTO 
1.116.  The key priorities of Switzerland's foreign economic policy remain economic openness and 
continued liberalization of international trade at the multilateral, regional and bilateral levels. 
1.117.  At the multilateral level, the Swiss Government considers that the trend towards 
accelerated globalization involves both opportunities and challenges for all stakeholders in international trade. The resulting interdependence of economies means closer multilateral cooperation and stronger institutions. In this context, it is the Swiss authorities' view that 
a major role must be played by the WTO in relation to gradual liberalization of international trade, 
the establishment of rules, rights and obligations governing international trade, and the settlement of disputes.
48 Currently, the foremost priority must, however, be to preserve what has been 
achieved at the WTO, in other words, guarantee th e integrity of the Agreements and of the dispute 
settlement system and, on that basis, rein in protectionist trends. As long as Members continue to observe the WTO Agreements and to settle their trade disputes through its dispute settlement 
mechanism, the system will function. Switzerland also considers it necessary to promote 
consistency  between external economic policy activities  and other government policies at both the 
national and multilateral levels.  
                                               
47 http://www.ilo.org/trade ; the first work is a joint ILO-WTO publication entitled Making globalization 
socially sustainable . The second is entitled Trade and employment: From myths to facts . 
48 See http://www.seco.admin.ch/themen/00513/01122/01124/index.html?lang=en . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  1.118.  In the short term, Switzerland believes it is important to seize the opportunity afforded by 
the Ninth WTO Ministerial Conference, to be held in Bali from 3 to 6 December 2013. The aim of Members with a view to Bali should be to re ach a significant and balanced outcome and to help 
to reinforce the multilateral trading system, while at the same time being aware that such an 
outcome will represent neither the end of the road nor the conclusion of all the negotiations under 
way at the WTO. Nevertheless, this new phase should constitute a solid basis for the future work of the WTO and help to maintain its relevance in the twenty-first century. Switzerland is firmly 
committed to the conclusion of agreements based on paragraph 47 of the Doha mandate . 
An agreement on trade facilitation should be at the heart of Bali's outcome, together with 
development-related issues  of benefit to the LDCs in particular and certain issues concerning 
agriculture. At the same time, together with many othe r Members, Switzerland is actively working 
towards an updated Agreement on information technology  and the negotiation of an ambitious 
International agreement on services. Such an agreement should be open to all WTO Members 
ready to participate. In addition, in order to su pport the integration of the developing countries, 
particularly LDCs, into global trade, Switzerland will work towards development of the 
Aid for Trade initiative. As part of its economic cooperation, Switzerland encourages in particular 
trade that respects sustainable development. This approach is intended to build export capacity 
and competitiveness in firms in partner countries wh ile at the same time facilitating the import of 
goods to markets in the developed countries. Lastly, Switzerland also welcomes the decision on facilitating accession of LDCs to the WTO, adopted by the General Council on 25 July 2012.  
1.119.  It nevertheless remains true that one of the major challenges that Members will have to 
face in the long term will be to ensure that the progress made so far in the Doha Round is not 
called into question and that, when the time comes, it leads to a successful outcome to the negotiations in all areas. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  REFERENCES 
Swiss National Bank, Bulletin trimestriel, Zurich. 
Swiss Federal Council, Rapport sur la politique économique extérieure 2009, Messages concernant 
des accords économiques internationaux et Rapport concernant les mesures tarifaires prises 
pendant l’année 2009 , OFCL (Federal Office for Buildings and Logistics), Bern, 13 January 2010, 
406 pages. See http://www.seco.admin.ch/dokumentat ion/publikation/00008/00101/04074/ 
index.html?lang=fr . 
Swiss Federal Council, Rapport sur la politique économique extérieure 2010, Messages concernant 
des accords économiques internationaux et Rapport sur les mesures tarifaires prises en 2010 , 
OFCL, Bern, 12 January 2011, 411 pages. See http://www.seco.admin.ch/dokumentation/publik ation/00008/00101/0460 8/index.html?lang=fr . 
Swiss Federal Council, Rapport sur la politique économique extérieure 2011, Messages concernant 
des accords économiques internationaux et Rapport sur les mesures tarifaires prises en 2011 , 
Bern, 11 January 2012, 323 pages. See 
http://www.seco.admin.ch/dokumentation/publik ation/00008/00101/0484 0/index.html?lang=fr . 
Swiss Federal Council, Rapport sur la politique économique extérieure 2012, Messages concernant 
des accords économiques internationaux et Rapport sur les mesures tarifaires prises en 2012 , 
Bern, 9 January 2013, 166 pages. See 
http://www.seco.admin.ch/aktuell/00277/01164/ 01980/index.html?lan g=fr&msg-id=47392 . 
State Secretariat for Economic Affairs (SECO), Tendances conjoncturelles , quarterly annex to 
"La Vie économique ", in the issues for February, April, July and October. See 
http://www.seco.admin.ch/dokumentation/pu blikation/00007/00021/index.html?lang=fr . 
Federal Department of Economic Affairs, Le rapport sur la croissance , Grundlagen der 
Wirtschaftspolitik Nr. 3F, Bern, 2002. 
Swiss Federal Council, Rapport de croissance 2008-2011  Bern, 2 April 2008, 122 pages. See 
http://www.seco.admin.ch/themen/003 74/00459/00460/inde x.html?lang=fr . 
State Secretariat for Economic Affairs, Politique de croissance 2012-2015 , Report of the Federal 
Council, Bern, 2012, 69 pages. See 
http://www.news.admin.ch/NSBSubscrib er/message/attachments/27193.pdf . 
 
Federal Department of Finance, Les finances publiques 2012: Co nfédération, cantons, communes , 
Bern, October 2012, 10 pages. See 
http://www.efv.admin.ch/f/d ownloads/oeff_finanzen/T aschenstatistik_f_web.pdf . 
 
Federal Office for Agriculture, Rapport agricole 2009,  Bern, 2009, 379 pages. 
Federal Office for Agriculture, Rapport agricole 2010, Bern, 2010, 268 pages. 
Federal Office for Agriculture, Rapport agricole 2011 , Bern, 2011, 284 pages. See 
http://www.blw.admin.ch/dokumentation /00018/00498/01515/in dex.html?lang=fr . 
Federal Office for Agriculture, Rapport agricole 2012 , Bern, 2012, 312 pages. See 
http://www.blw.admin.ch/dokumentati on/00018/00498/index.html?lang=fr . WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  2  REPORT BY LIECHTENSTEIN 
2.1  Introduction 2.1.  With a surface of 160 square kilometers, a resident population of about 36,000 and therefore 
a very limited domestic market, Liechtenstein has a constant track record of efforts to extend its 
economic integration with larger economic areas. This report on the Fourth Trade Policy Review of 
Switzerland and Liechtenstein presents the de velopments of the economic union between 
Switzerland and Liechtenstein during the past four years. Liechtenstein is an integral part of the 
Swiss customs territory, the two countries form a monetary union, and many other bilateral 
treaties, such as the Patent treaty, closely link them. This economic union has already existed for more than 90 years and constitutes a central building block for Liechtenstein’s economic access to the world markets. 
2.2.  The Trade Policy Review reflects at the same time the high degree of integration of 
Liechtenstein in the European Economic Area (EEA). The EEA Agreement forms the legal basis for economic cooperation between the three EEA EFTA  States (Iceland, Liechtenstein, and Norway) 
and the EU (27 Members). As a party to the EEA Agreement, Liechtenstein fully participates in the 
EU's Internal Market, which is based on the prin ciple of the free movement of goods, services, 
capital and persons, with uniform and common rules governing competition, including state aid. 
In addition, the Agreement covers cooperation in research and development, education, social 
policy, the environment, consumer protection, tourism, and culture. For the last 17 years, the EEA agreement has been the most important pillar for Liechtenstein’s economic actors to participate in the European markets. 
2.3.  These two legal and political frameworks – customs and monetary union with Switzerland and 
full participation in the European internal market – constitute the basis on which the Liechtenstein Government has been designing its reaction to th e shockwaves caused by the global financial and 
economic crisis since 2009 and the escalation of the sovereign debt crisis in spring 2010. 
In addition, reform measures to adapt the economic environment to the challenges and opportunities of further globalization have been put in place during the last four years, such as the 
strengthening of regional cooperation to foster research and innovation or the adoption and 
implementation of a completely revised new tax law.  
2.4.  Liechtenstein is firmly committed to the rules-based, transparent and open multilateral 
trading system of the World Trade Organisation (W TO). The trading system of the WTO is another 
central pillar of Liechtenstein's economic policy  since an open and well-functioning multilateral 
trading system is fundamental to economic growth  and development. Liberalisation of trade at 
multilateral and regional levels (via WTO and Eu ropean Free Trade Association (EFTA)) is a high 
priority of Liechtenstein's foreign economic policy. One of its main objectives is to ensure and to 
extend market access. 
2.5.  In an economic environment which is increasingly internationally linked and globally 
dependent, it is vital to promote general conditions for business activities which are stable and 
favorable. In addition to political continuity, this requires a predictable legal and social as well as a 
liberal economic order. The level of State intervention in economic processes is kept low. They are facilitated by fast administrative channels, a low level of bureaucracy and business-friendly tax 
legislation. 
2.2  Trade and economic policy environment 2.6.  During the last four years, the Liechtenstein Government has continued to adhere to its 
long-standing liberal economic policy based on self-dependent economic actors and state 
interventions that are limited to the establishment of framework conditions which are favourable to enterpreneurship. At the same time Liechtenstein incorporated newly adopted 
acquis communautaire  (over 6,500 EU legal acts are relevant for the EEA) into domestic law and 
expanded the network of free trade agreements together with the other EFTA Member States. 
2.7.  The enactment of a new law regulating the ge neral framework for the provision of services in 
Liechtenstein by EEA nationals, either as permanent establishment or as temporary cross-border 
provision is one example for this policy. The main elements of the law consist in the designation of WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  a single interlocutor in the national administration (one-stop-shop-principle), the tightening of 
deadlines for the issuance of a decision to a maximum of six weeks as well as the introduction of the general assumption that an authorisation has been provided if that deadline is not met. Liechtenstein has also implemented a new agricultural law with a focus on sustainable agriculture 
and entrepreneurial orientation. Great efforts have finally been put into the creation of new and 
the improvement of existing laws in the context of financial services in order to comply with evolving international standards while providing the basis for future business opportunities.  
2.2.1  Economic growth 
2.8.  Liechtenstein's economy is small in absolu te terms, poor in natural resources and highly 
export-oriented with a large share of value added in industry (39% of GDP in 2010). These factors 
are reflected in the impact of the global financial and economic crisis on Liechtenstein's economy 
during the last four years. Following a sharp fall in GDP growth in 2009 of almost 11%, 
Liechtenstein enjoyed a quick recovery with an  increase of 8.7% in 2010, amounting to a 
total GDP of SwF 5.3 billion (compared to 5.5 in 2008 and 4.9 in 2009). With the massive 
strengthening of the Swiss franc in the wake of the sovereign debt crisis in the Euro zone, 
Liechtenstein’s export industry has become under  additional pressure. Owing to the high GDP 
share of trade in goods and services, expectations  are that the Liechtenstein economy will feature 
growth between 0.1-0.5% in 2012-2013. There continue to be internal constraints for further 
growth as well, namely the very low supply of and th e high prices for land and property as well as 
the dried-out domestic labour market. 
2.9.  In spite of the considerable fluctuation with regard to GDP growth Liechtenstein's economy 
has continued to steadily create new jobs. The total number of jobs increased from 33,415 in 2008 
to 34,334 in 2010, reaching a further high in 2011 with 35,253. More than half of the employed persons (18,279) in 2011 commuted daily from neighbouring Switzerland and Austria or 
from Germany. Compared to the total of the resident population (36,475 in 2011), the high 
proportion of job creation remains a particular feature of Liechtenstein's economy. In 2011, 43.2% of the labour force worked in industry, 56% in services and 0.8% in agriculture. By international 
comparison, the very low proportion of agriculture and forestry is striking, as is the relatively high 
proportion of the manufacturing sector. The services sector is smaller than in other European countries. Unemployment rates during the last four years ranged between 2.3% (2008) and 3% (2009) as well as 2.2% (2010) and 2.3% (2011).  
2.10.  Industrial direct exports, excluding exports to or through Switzerland, increased 
from SwF 3,081 million in the year 2009 to SwF 3,325 million in 2010 and to SwF 3,329 million in the year 2011 which amounts to approx. SwF 90, 000 per inhabitant. The most important export 
country of Liechtenstein's industry and goods production sector remains Switzerland, followed by 
Germany and the United States.  
2.11.  At the end of 2011, the 17 Liechtenstein ba nks, including their foreign group companies, 
managed client assets in the amount of SwF 166 billion. This represents a decline of 1.3% since 
the previous year. The net inflow of new assets rose by 21.5% from SwF 5.8 billion in the previous year to SwF 7.1 billion in 2011. Client assets under the management of the Liechtenstein banks without foreign group companies amount ed to SwF 117.1 billion at the end of 2011 
compared with SwF 121.2 billion in the previous ye ar. They recorded a net outflow of new assets 
in the amount of about SwF 0.5 billion. 
2.12.  As regards insurance services, 21 life insurance, 14 non-life insurance, and 5 reinsurance 
undertakings operated with registered offices in Liechtenstein at the end of 2011. 12 undertakings 
operated as captives, of which 7 as direct insurers and 5 as reinsurers. The number of insurances thus stayed constant compared with the previous year. Liechtenstein is the only insurance center 
that offers insurance undertakings direct access both to the countries of the European Economic 
Area and to Switzerland.  
2.13.  The Liechtenstein fund center is a young market that has grown successively 
in recent years. Thanks to Liechtenstein’s memb ership in the EEA, investment undertakings benefit 
from free access to the European market.  WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  2.14.  Liechtenstein has the same inflation rate as Switzerland (2008: 2.3%, 2009: 0.7%, 2010: 
0.6%, 2011: 0.1%). Interest rates continuously decreased and reached a historical low in 2011. There are no figures available reflecting private consumption or investment.  
2.15.  The situation of the Liechtenstein nati onal budget in the period 2008-2011 was overall 
marked by a downward trend. Fiscal consolidation is one of the priorities of the Liechtenstein 
government. In recent years, Liechtenstein has been confronted with less revenues and higher expenditures. This was due to, amongst other factors, the economic and financial crisis, the 
general demographic development, and structural changes in the financial sector. Up to 2009 
national budget has always had a surplus. Since 2010 Liechtenstein has run a budget deficit in each year. In 2013, the Government expect s a budget shortfall of SwF 209 million 
(3.8% of 2010 GDP). In order to continue its policy of zero external debt and to stop the further 
reduction of state reserves, budget consolidation is being pursued through tight cost controls and 
measures to secure revenues. The Government aims to reduce public expenditures by SwF 180 million (3% of 2010 GDP) through a comprehensive action plan by 2015. 
2.2.2  The economic sectors 
2.16.  Liechtenstein's economy is broadly divers ified by sectors, businesses and products. The 
average value added is very high, based on resear ch and development, qualified expertise, a wide 
range of high-tech and niche products, strong export orientation of its industry, and a highly 
developed financial services sector. Its services sect or covers more or less all services of the UN 
services classification system. The rate of inve stment in research and development compared to 
GDP currently stands at the remarkable figure of 6.8%. 
2.17.  As an average over the past four years about 38% of the GDP is the result of value added in 
industrial production and manufacturing, 29% in general services, 27% in the financial services sector and the remainder in household, agriculture and forestry. At the end of 2010 Liechtenstein's 
economy accounted for 3,827 businesses (i.e. an average of one business per 10 inhabitants). 
More than 70% of these are small businesses (1 to 9 employees) while 17 companies have more than 250 employees. 
2.18.  The primary sector employs 0.8% of the total workforce. The number of employees in the 
primary sector decreased by 0.3% during the past four years. Liechtenstein is a net food importer. 
Two thirds of the gross agricultural return is produced by the dairy industry. Some 90 farms produce 13 to 14 million kg milk per year. The Liechtenstein agricultural sector has in the last 
decades and years gone through tremendous structural changes. It plays an important role for the 
sustainable maintenance of hilly and mountainous areas, which make up two thirds of Liechtenstein's territory. 
2.19.  Liechtenstein's agriculture is closely linked with Switzerland. The new law on agriculture 
of 11 December 2008 is a framework legislation whic h consolidates the former legislative acts on 
agriculture without introducing fundamental changes. It provides the legal basis for Government 
ordinances in different fields related to agricultural activities and allows the necessary flexibility for 
the Government to adapt to the continuously changing environment with regard to agriculture. It is aimed at increasing the competitiveness of Liechtenstein's agriculture sector and maintaining 
market conditions similar to those in Switzerland. As new elements the law introduced the 
definition of professional requirements for the recognition as a farmer and the further promotion of 
their entrepreneurship. A special focus continues to be placed on sustainable agriculture. 
2.20.  Liechtenstein has evolved in the last fifty years from an almost purely agricultural State into 
one of the most highly industrialized countries in the world. Lacking a significant home market, 
virtually all goods produced are exported. Theref ore, Liechtenstein’s industry, specialized in 
high-tech niche products, was from the outset exposed to international competition. The high 
dependence on export constitutes a certain vulnerability of Liechtenstein’s industrial sector, 
although it is, thanks to its specific range of products and the diversity of its export markets, relatively well managing the current economic crises. The most important branches of the internationally competitive industrial sector are mechanical engineering, plant construction, 
manufacturing of precision instruments, dental technology, electronic control devices, vacuum, 
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  industry. The per capita value of exports is considerably higher than the corresponding value 
for Germany, Austria or Switzerland.  
2.21.  Financial services also constitute an important economic sector in Liechtenstein 
(27% of GDP in 2010). Private wealth management dominates the financial centre today, offering 
a broad product portfolio. Fiduciary services and private banking account for approximately 80% of 
the added value generated by the financial centre, wh ile the rest is generated by insurers, the fund 
industry, independent asset managers and others. Globalization has an important effect on the 
competitive situation of the Liechtenstein financial centre. The most important challenges include 
the worldwide opening of markets, rapid technolo gical progress, and the accelerating cycles of 
innovation. These challenges have changed the fr amework conditions and rules of the game for 
international competition.  
2.22.  As an EEA member, Liechtenstein implements relevant EU legislation. Accordingly, banking, 
insurance, securities and accounting 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 Swiss regulatory authority.  
2.23.  After the Liechtenstein financial sector overcame the global financial crisis of 2007–2008 
comparatively well, its income situation started to worsen noticeably. Earnings fell in 2011 and are 
now at low levels in parts of the Liechtenstein financial sector, while turnover has stagnated or 
fallen. The short- and medium-term income and growth outlook of the financial sector is dampened, since persistently difficult market circumstances and increasing regulatory and administrative costs must be assumed. 
2.24.  The strong Swiss franc represents a challeng e in that a large and gr owing share of turnover 
is being generated abroad in foreign currencies. When the Swiss franc appreciates, the turnovers reported in francs drop accordingly. The same is true of income. Most of the costs of the financial 
sector are incurred in Swiss francs, however, to the extent the parent companies are located in 
Liechtenstein. This leads to a worsening ratio of costs and income. In the longer term, there is a risk of shifting costs abroad unless the currency situation returns to normal. 
2.25.  The Liechtenstein financial sector is facing  this phase marked by high uncertainty with a 
comfortable capacity to bear risks. Capital resour ces in recent years have risen again, and equity 
ratios are far above the international standards. The consistent orientation toward private banking, the high equity backing, and the conservative a ttitude toward new risks offer safeguards for a 
stable financial center and security for bank clients. 
2.26.  On 12 March 2009 the Liechtenstein Government adopted the "Liechtenstein Declaration". 
Through this declaration, Liechtenstein publicly  expressed its commitment to implement global 
standards of transparency and exchange of tax information as developed by the OECD and to 
advance its participation in international efforts in order to counteract non-compliance with foreign tax laws. With the declaration, Liechtenstein also clarified its position regarding privacy and 
banking secrecy and confirmed its readiness to speed up the negotiation of tax information 
exchange and other agreements with a view to havi ng a network of such arrangements in place as 
soon as reasonably possible in order to address the global issue of tax fraud and tax evasion as well as the legitimate interests of its export industry to avoid double taxation. Since the publication 
of the declaration Liechtenstein has negotiated and concluded a high number of Tax Information 
Exchange Agreements as well as some Double Taxation Agreements and has revised its national legislation for the implementation of these agreemen ts. It is actively participating in the work of 
the OECD Global Forum on Taxation where it has passed into the second phase of the peer review. 
2.27.  Liechtenstein has a vital interest in the worldwide enforcement of internationally recognized 
standards to prevent abuse of the financial markets. Liechtenstein's foreign policy therefore pays 
great attention to the development and internatio nal enforcement of uniform rules to prevent and 
combat money laundering and the financing of terrorism. At the national level, legislative, administrative and other practical measures have been taken in the last years to achieve this goal, and the relevant standards in Liechtenstein have  been acknowledged by international bodies. 
In 2007, Liechtenstein underwent the second Financial Centre Assessment by the IMF. The IMF 
certified the FMA’s effective measures in the fight against money laundering and financial WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  transactions with a terrorist background. In 2013 its performance will again be assessed during 
the third Financial Centre Assessment by the IMF.  
2.2.3  State activities 2.28.  The Government of Liechtenstein neither provides export subsidies or guarantees, structural 
policy nor subsidies to companies with the exception of farms. Furthermore, the Government has 
no possibility to influence an exchange rate increa se of the Swiss franc. The main features of the 
playing field set by the Government's economic poli cy are trade laws, stability and reliability of the 
policy, the creation of high quality educational systems, a business-friendly tax regime, low 
administrative burden and a slim and customer oriented public administration.  
2.29.  With the aim of further promoting an in vestor-friendly environment in accordance with 
relevant EEA law, the Liechtenstein tax act has been fully revised. The new tax act of 2011 
replaced the tax act of 1961. Under the new tax act legal persons taxable in Liechtenstein and 
engaged in economic activities are subject to a corporate income tax of 12.5%. The existing 
capital tax has been abolished. Income and gain s from participations are tax-exempt, and losses 
carried over are no longer subject to a time limi t. In addition, a notional interest deduction has 
been introduced. Other important innovations include group taxation for affiliated companies and deductions for income from intellectual property rights. The new tax act also contains provisions 
on the tax treatment of national and cross-border restructurings. 
2.30.  The new tax regime further provides for the elimination of the "special company taxes" for 
domiciliary or holding companies, since this special tax type threatened to violate the EEA Agreement with respect to the prohibition of State aid. As a consequence, the new tax act 
contains provisions for a private asset structure, which facilitates taxation of asset management 
companies. The compatibility of these provisions with EEA law was confirmed by the EFTA Surveillance Authority in its decision of 15 February 2011.  
2.31.  On the basis of a new Location Marketing Act a public entity called "Liechtenstein Marketing" 
has been established to promote and raise the prof ile of Liechtenstein internationally as a highly 
diversified place to do business and as an attractive tourism destination. 
2.32.  Besides participation in the Competence Centre for Small and Medium-Sized Enterprises 
(SME) under the direction of the Liechtenstein University of Applied Science (the Centre advises young professionals and companies in the growth  phase on business planning and management, 
arranges contacts with financial institutions, investors or potential business partners) the 
Liechtenstein Government has also launched, toge ther with the authorities of the neighbouring 
Swiss canton of St. Gallen, the establishment of the "RhySearch" centre. Under the umbrella of this centre for research and innovation several Swiss universities and the Liechtenstein University 
of Applied Science will cooperate and facilitate access for SME in the Rhine Valley to research 
activities carried out by those institutions.  
2.33.  Due to the country’s small territory and in view of the high proportion of non-Liechtenstein 
citizens of the total resident and working population (33% and 68% respectively), Liechtenstein 
regulates new investments (green field investments) and immigration. By regulating foreign direct investments (also for non-resident Liechtenstein citizens) the Government respects the limited territory with its rural character and preserves access to real estate for the resident population. 
Compared to the last Trade Policy Review of Switzerland-Liechtenstein the portion 
of non-Liechtenstein citizens of the resident an d working population has not changed. 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, been granted 
special rules concerning the free movement of persons.  
2.3  Trade policy developments and future policy directions 
2.34.  The framework of the trade environment of Liechtenstein is outlined by the Customs Union 
Treaty with Switzerland, Liechtenstein's membership 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, WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  deeper economic cooperation in regional agreements. So far Liechtenstein has not been involved in 
any WTO or EFTA dispute case.  
2.3.1  The World Trade Organization (WTO) 2.35.  The WTO system has to respond with flexibili ty to the realities and needs of this century’s 
globalized economy and to the increasingly divers e situations of its members. Improved market 
access means more trade, and more trade is benefi cial to all, developed and developing countries 
alike. Furthermore, it offers opportunities for an increase in trade among developing countries. 
The multilateral trading system is a proven vehicle in promoting economic development and 
growth and is central to the future prosperity of our nations. In the view of Liechtenstein there exists no alternative to the WTO multilateral trading system. The multilateral system has to be strengthened.  
2.36.  Services form an important part of the overall package of the current negotiating Round. 
Services account for a large part of economic growth, both in industrialized and developing countries. Therefore, Liechtenstein welcomes the initiative on a possible ambitious plurilateral 
trade in services agreement.   
2.3.2  The European Economic Area (EEA) 2.37.  The EU is the most important market for Liechtenstein's economic operators and the EEA 
with its four freedoms has given them an appropriate legal framework. As a consequence of this 
agreement, a large part of Liechtenstein’s economic legislation is based on EU law. Mid 2012, Liechtenstein had implemented 99.6% of the relevant internal market rules, which is above the EU average. Liechtenstein’s legislation in the respective areas is therefore equivalent with 
European law.  
2.38.  The relationship between Liechtenstein and the EU is not limited to the EEA. In 2004, 
Liechtenstein concluded negotiations with the EU on the taxation of saving interests. 
Since January 2012, Liechtenstein participates in th e areas of Schengen and Dublin (open borders, 
visa, asylum, etc.). Association with Schengen and Dublin supplements and deepens Liechtenstein’s integration in Europe in the areas of justice, home affairs, and asylum. Schengen 
provides the legal basis to grant legal assistance in cases of fraud relating to both direct and 
ind ire c t taxe s . T he  ne g otiatio ns  on an Anti-F raud Agreement between Liechtenstein and the EU 
and its Member States were largely concluded in June 2008. The agreement strengthens information exchange in the case of tax offences, wi th respect to both indirect and direct taxation.  
2.39.  The EEA had shown in its past that it offers a stable contractual framework for economic 
relations with the EU. Adaptations might in particular be necessary, should one or the other EFTA State change its integration policy towards the EU. 
2.3.3  The European Free Trade Association (EFTA) 
2.40.  Liechtenstein became a full EFTA member on 1 September 1991. Hitherto, Liechtenstein had 
been covered by the EFTA Convention through a particular Protocol under which the interests 
of Liechtenstein were taken care of by Switzerland.  
2.41.  Since the early 1990s, EFTA has established an extensive network of contractual relations 
with States and Territories in Central and Eastern Europe, in the Mediterranean region and overseas. As of today, the EFTA States have a network of 24 Free Trade Agreements with a total 
of 33 partner countries and territories
 around the world: with Albania (2010), Canada (2009), 
Chile (2003), Colombia (2011), Croatia (2001), Egypt (2007), Gulf Co-operation Council (GCC, comprising Bahrain, Kuwait, Oman, Qatar, Sa udi Arabia, United Arab Emirates), Hong Kong, 
China (2012), Israel (1992), Jordan (2001), Lebanon (2004), Macedonia (2000), Mexico (2000), 
Montenegro (2012), Morocco (1997), Palestinian Authority (1998), Peru (2011), Serbia (2010), Southern African Customs Union (SACU, comprising Botswana, Lesotho, Namibia, South Africa and 
Swaziland) (2006), Singapore (2002), the Republic of Korea (2005), Tunisia (2004), 
Turkey (1991) and Ukraine (2012). The FTAs concluded by the EFTA States aim at enhancing mutual market access and ensuring that economic operators are granted non-discriminatory treatment vis-à-vis their main competitors in these markets. WT/TPR/G/280 • Switzerland and Liechtenstein 
 
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  2.42.  EFTA is currently engaged in free trade negotiations with Algeria, Bosnia-Herzegovina, 
four Central American States (Costa Rica, Guatemala, Honduras and Panama), India, Indonesia, Thailand, Customs Union Russia-Belarus-Kazakhstan as well as with Vietnam. The negotiations with Malaysia will start soon. Furthermore, th e EFTA States explore the possibility to open 
negotiations with other third countries.  
2.3.4  Customs Union Treaty/Econo mic Integration with Switzerland 
2.43.  The close cooperation with Switzerland is  reflected in many (more than 50) bilateral 
treaties, the most important of them being the Customs Treaty and the Currency Treaty. 
The Customs Treaty, in combination with other agreements pertaining to the movement of persons, 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.  
2.44.  The provisions of the Customs Treaty stipul ate that the Swiss laws pertaining to customs as 
well as other federal legislation necessary for the implementation of the customs-free zone are 
applicable in Liechtenstein. In addition, trade an d 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 represent Liechtenstein in relevant negotiations 
and to conclude such treaties with effect in Liechtenstein. 
2.45.  The Customs Union 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. The entry into force of the 
revised EFTA Convention on 1 June 2002 has led to an additional integration step in the relations 
between Liechtenstein and Switzerland.  
2.46.  The integration policy both countries choose towards the EU in future may have a major 
influence on the further developmen t of the existing close links. 
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