WORLD TRADE  
ORGANIZATION  WT/TPR/G/208/Rev.11 
12 March 2009  
 
(09-1253) 
Trade Policy Review Body Original: English/ 
 French 
  
 
   
 
TRADE POLICY REVIEW 
 
Reports by 
 
SWITZERLAND AND LIECHTENSTEIN 
 
Revision 
   
Pursuant to the Agreement Establishi ng the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), the policy statements by Switzerland and Liechtenstein are 
attached. 
 
 
                                                      
1 Original version in French for the Report by Sw itzerland and original version in English for the 
Report by Liechtenstein.  Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 3 
 
 
CONTENTS 
 
    P a g e  
 REPORT BY SWITZERLAND  5 
I. GENERAL COMMENTS 5 
II. ECONOMIC ENVIRONMENT 7 
(1) E
CONOMIC AND MACROECONOMIC POLICY DEVELOPMENTS  7 
 (i) Economic trends 7 
 (ii) Foreign trade and current balance 9  (iii) Flows of foreign direct investment 10 
 (iv) Macroeconomic policies 12 
 (v) Economic outlook and risks 13 
 (2) B
RIEF SUMMARY OF THE STRUCTURAL REFORMS  14 
III. MAIN FOCUS OF RECENT AND CU RRENT STRUCTURAL REFORMS AND OTHER 
PRIORITIES OF SWITZERLAND'S ECONOMIC POLICY 14 
(1) D OMESTIC POLICY AREAS  14 
 (i) Agricultural policy 2011 15 
(ii) Partial revision of the Law on technical barriers to trade 16 
(iii) Legislation on electricity supplies 16 
(iv) New Law on the Federal Financial Market Supervisory Authority 17 (v) Complete overhaul of postal legislation 17 
(vi) Revision of the Law on government procurement 17 
(vii) Implementation of the amendments to the Law on cartels 18 (viii) Intellectual property 19 
 (2) F
OREIGN POLICY AREAS  20 
(i) Relations between Switzerland and the EU 20 (ii) Free trade agreements 21 
(iii) Cooperation with developing coun tries and countries with economies in 
transition 21 
(iv) Revision of the Customs Law and customs measures 23 
(v) Government procurement 24 
(vi) Export promotion 24 (vii) Other external policy priorities 25 
IV. SWITZERLAND AND THE DOHA ROUND OF MULTILATERAL TRADE 
NEGOTIATIONS 27 
BIBLIOGRAPHY  31 
 
REPORT BY LIECHTENSTEIN 33 
I. INTRODUCTION 33 
II. TRADE AND ECONOMIC POLICY ENVIRONMENT 33  (1) E
CONOMIC GROWTH  34 
 (2) T HE ECONOMIC SECTORS  35 
 (3) S TATE ACTIVITIES  38 WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 4 
 
 
    P a g e  
 
III. TRADE POLICY DEVELOPMENTS AND FUTURE POLICY  DIRECTIONS 38 
 (1) T HE WORLD TRADE ORGANIZATION (WTO) 39 
 (2) T HE EUROPEAN ECONOMIC AREA (EEA) 39 
 (3) T HE EUROPEAN FREE TRADE ASSOCIATION (EFTA) 40 
 (4) C USTOMS UNION TREATY /ECONOMIC INTEGRATION WITH SWITZERLAND  41 
 
 
 Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 5 
 
 
 REPORT BY SWITZERLAND 
 
 
I. GENERAL COMMENTS 
1. This report, together with that  of Liechtenstein and the Secretariat report on the two countries, 
establishes the basis for the review of th eir trade policy by WTO Members on 15 and 
17 December 2008, given the fact that they form an economic and monetary union and Liechtenstein is an integral part of Swiss customs territory. 
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 in vestment-friendly framework conditions. 
3. International trade, which plays a key role in the Swiss economy
1, has been one of the major 
catalysts for Switzerland's economic growth since 2004.   It is therefore hardly surprising that the 
Swiss Government attaches great importance to glob al markets open to goods and services, including 
government procurement, and to strong protection for intellectual property. 
4. The Government's priorities for Switzerland's external 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 is based on three objectives .  The first is to improve access to 
external markets and help to ensure the introductio n of a coherent and observed set of international 
rules;  the second is to improve Switzerland's competitiveness by making its products more 
competitive;  and the third is to integrate the largest possible number of countries into the global economy.  These objectives underpin the three components of external economic policy, namely:  
(i) access to external markets and international rules ;  (ii)  internal market policy ;  and (iii) assisting 
the economic development of partner countries . 
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 
security and protect those investing abroad, transparen t trade rules that are effective and compatible at 
the international level have to be drawn up. 
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 to wards regionalizing trade, Switzerland considers 
strengthening of the multilateral trading system  to be a priority .  In its view, multilateralism is the 
best way of ensuring effective rules on market access and the protection of 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 ther e is an unequal balance of market power. 
7. For the Swiss Government, the WTO has a vital role to play in the gradual liberalization of 
international trade, the establishment of rules, ri ghts and obligations governing international trade, as 
well as in the settlement of disputes.  The multilatera l trading system must be made even stronger by 
                                                     
 
1 Exports and imports of goods and services, respec tively, accounted for 55.9% and 46.7% of the gross 
domestic product in 2007. 
2 See http://www.seco.admin.ch/dokumentation/publikation/00004/00018/01800/index.html?lang=fr. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 6 
 
 
 closer integration of developing countries, countri es with economies in transition and least developed 
countries.  Switzerland, therefore, intends to pursu e with determination its commitment to a rapid and 
positive outcome for the Doha Round negotiations. 
8. The reason why Switzerland is also party to several bilateral  or regional free trade 
agreements is that it believes them to be a complement ary way of accelerating the liberalization of 
trade on an international scale.  They could neve r, however, replace the multilateral trading system. 
9. Situated at the heart of Europe, Switzerland has naturally over the years developed close 
economic relations with the memb ers of the European Union (EU) .  In addition to the 1972 
Free Trade Agreement, Switzerland has signed Bilateral Agreements I and II with the EU3, which 
cover a large number of areas, namely, free movement of persons, air and land transport, agriculture 
and processed agricultural products, training and re search, technical barriers to trade, government 
procurement, cooperation in matters relating to  justice, the police, asylum and migration 
(Schengen/Dublin), taxation of savings and action to combat fraud, the environment, statistics, 
participation in the MEDIA programme and pensions. 
10. In addition to its Bilateral Agreements with the EU, the 1960 Convention of the European 
Free Trade Association (EFTA) and the Free Trade Agreement with the Faroe Islands, Switzerland 
has a network of 16 free trade agreements concluded under the EFTA framework (Palestinian 
Authority/PLO, Canada, Chile, Croatia, Egypt, the former Yugoslav Republic of Macedonia, Israel, 
Jordan, Lebanon, Mexico, Morocco, the Republic of  Korea, Singapore, Tunisia, Turkey and the 
Southern African Customs Union (SACU).4  Negotiations are under way between EFTA members 
and Algeria, India, Peru and Thailand.  Th e negotiations with the States belonging to the 
Gulf Cooperation Council/GCC5 and Colombia have been concluded as far as substance is concerned.  
EFTA member countries are also looking into the po ssibility of initiating negotiations with a whole 
series of other trade partners.  At the bilateral level, in May 2007, Switzerland and Japan commenced 
negotiations with a view to reaching an economic  partnership and free trade agreement of broad 
scope.  In 2007, Switzerland and China agreed to examine the possibility of signing a free trade 
agreement between the two countries.  In the fi rst instance, Switzerland and China will study the 
feasibility of an agreement at the internal level. 
11. As the second objective of Switzerland's external economic policy strategy, a more 
competitive domestic market is essential for two re asons.  Firstly, the introduction into Switzerland of 
competitive structures at the international level means opening up economic sectors that are still 
highly fragmented.  This is essential in order to lowe r the cost of inputs for firms - a prerequisite for 
taking advantage of opportunities in external markets - and to maintain living costs at an affordable 
level both for wage-earners and for the remainder of the population.  Secondly, opening up protected 
sectors allows Switzerland to proclaim its ambi tions more forcibly, thereby strengthening its 
negotiating capacity.  This aspect is particularly im portant at a time when economic power is being 
redistributed and partners of importance to Sw itzerland no longer confine themselves to economies 
with similar interests.  This is why considerable e fforts have been made in recent years to reform the 
domestic economy while at the same time opening up to a greater extent to the outside. 
12. The third objective of Switzerland's external economic polic y is the integration of developing 
countries and countries with economies in transition into  the global economy.  This is of interest to 
                                                      
3 See also the Report of the Swiss Government fo r the 2004 Trade Policy Re view of Switzerland and 
Liechtenstein. 
4 Botswana, Lesotho, Namibia, South Africa and Swaziland. 
5 Bahrain, Kuwait, Oman, Saudi Arabia and the United Arab Emirates. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 7 
 
 
 the Swiss economy in the long term as these count ries may become new outlets and offer attractive 
opportunities for investment and acquisition.  Switzerla nd is therefore trying to help its partners to 
reorganize their national framework conditions  through economic cooperation for development 
(whether bilateral or multilateral).  At the multila teral level, internationa l organizations not only 
engage in development activities but also exercise a degree of surveillance over the national economic 
policies of all countries (peer review).  Switzer land's participation and its contributions to 
international organizations active in the economic  and financial spheres (International Monetary 
Fund, World Bank, regional development banks , Organisation for Economic Co-operation and 
Development, the WTO, United Nations specialized agencies) are therefore extremely important both 
for economic development coopera tion and for dialogue with other industrialized countries. 
13. Consequently, the Swiss authorities support the opening up of markets to products from the 
least developed countries (LDCs), action in favour of countries in the process of acceding to the WTO and enhanced technical assistance to developing coun tries so as to allow them  to become integrated 
into the multilateral system and develop their capacity  to benefit from it.  It strongly supported the 
agreement in favour of LDCs adopted at the WT O's Sixth Ministerial Conference in Hong Kong, 
China, in December 2005, under which industrialized countries such as Switzerland would, on a permanent basis, give LDCs market access without customs duties or quotas for at least 97% of their 
tariff lines and at the latest by 2008.  Since 1 April 2007, Switzerland has allowed market access 
without customs duties or quotas to all imports  from LDCs (according to the United Nations 
definition), with the exception of sugar and rice.  For sugar, tariff-free and quota-free market access is 
granted from 1 July 2009, and for sugar from 1 Septem ber 2009.  It will be recalled in this connection 
that the first step towards giving LDCs greater  market access had already been taken in 2001 and 
2004. 
14. Finally, the Swiss authorities believe that it is extremely important to promote consistency 
among the various external economic policy activit ies and other government policies both at the 
national and international levels.  At the internal level, the Swiss Government is endeavouring to 
achieve this through closer coordination among th e 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.  
15. This report describes first of all the econom ic environment in which Swiss trade has 
developed since the previous review of its trade po licy in 2004.  After highlighting the impact which 
the structural adjustment measures taken by the Sw iss Government have had on Switzerland's overall 
economic development, it describes the main directi ons of the reforms undertaken over the past four 
years and those under way, as well as the other main priorities of Swiss economic policy at the 
domestic and foreign levels.  Lastly, it points to the objectives followed by Switzerland in multilateral 
negotiations, which remain the principal tool fo r continued opening up of the Swiss economy and 
integrating it into the world economy, as well as th e indispensable complement  to the reform efforts 
being undertaken at the domestic level. 
II. ECONOMIC ENVIRONMENT 
(1) E
CONOMIC AND MACROECONOMIC POLICY DEVELOPMENTS  
(i) Economic trends 
16. The internal economic reforms resolutely undert aken by Switzerland since 1993, the growing 
globalization of trade and closer economic integr ation with Europe, especially the effective WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 8 
 
 
 implementation of free movement of persons within the EU and EFTA, have resulted in a notable 
acceleration of Switzerland's economic growth since the economy started to recover in the second half 
of 2003.  From 2004 until 2007, the rate of gr owth in the gross domestic product (GDP) hovered 
around 3%. 
 
17. Nevertheless, the slowdown on the internati onal scene and the bearishness of financial 
markets will no doubt have an impact on the Sw iss economy until 2009.  The Swiss GDP's growth 
had already slowed down in the first half of 2008  (+0.3% for the first quarter and +0.4% for the 
second quarter 2008 in comparison with the previ ous quarter), with personal consumption and 
investment in machinery buoying up domestic growth6, even though increased personal consumption 
in the second quarter was sustained by exceptional factors.7 
                                                      
6 See http://www.seco.admin.ch/themen/00374/00456/index.html?lang=fr. 
7 These exceptional factors were household expenditure on housing and energy.  In the second quarter 
of 2008 these increased rapidly becaus e of the difference in temperature between April 2007 and April 2008 
(April 2007 was the hottest since records began in 1864). -1.0 -0.5 0.0 0.5 1.0 1.5 
1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4
2003 2004 2005 2006 2007 2008 
104106108110112114116118120122124Real GDP 
Percentage variation in comparison with the previous quarter and levels:  2003:1-2008:2
(figures adjusted seasonally, linked, to pri ces for the previous year, base year, 2000, non-
annualized figures)  
Source : State Secretariat for Economic Affairs (SECO ).Percentage variation GDP saSwitzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 9 
 
 
  
18. Since mid-2003, the contribution by financial services to Switzerland's economic success has 
been more than proportional.  Nevertheless, ev en though the Swiss property market is basically 
healthy, the current instability in international fina ncial markets will no doubt in the short term affect 
the capacity of Swiss banks to create value adde d, principally because of low prices on the stock 
market and the cutback in mergers and takeovers. 
19. Switzerland's recent economic success could not have been achieved with such vigour and 
with moderate inflation without the gradual implementation of the free movement of persons since 
2002.  The possibility of freely employing personnel within the European Economic Area has, inter 
alia, allowed Swiss firms to respond positively to st rong demand from abroad in recent years for 
high-quality Swiss products, particularly from count ries with emerging economies.  In years to come, 
free movement could yield additional advantages (fo r example, because of the level of immigrants' 
professional qualifications).  The recent prosperity should not, however, disguise the fact that the 
structural rate of growth in labour productivity has probably not increased all that much.  The need to 
continue with ambitious economic reform remains. 
(ii) Foreign trade and current balance 
20. During the recovery phase, foreign trade and domestic investment played a key role in 
boosting demand in Switzerland. 
21. The expansion of exports was confirmed in the first, but a bove all the second, quarter of 2008, 
even if exports of articles of value and precious materials are not included.  While tourism had the 
advantage of favourable conditio ns (good snow cover), other sales of services abroad (banking, 
insurance, transport) stagnated at best.  In the first half of the year, exports of goods increased by 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 
Source : State Secretariat for Economic Affairs (SECO). Gross capital formation External balance  Final consumption expenditure  
Breakdown of real GDP 
Percentage variation in comp arison with the previous p eriod in the previous year 
2004:1-2008:2 (at prices for the previous year)  WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 10 
 
 
 7.5% in comparison with the same period the previous  year in both nominal and real terms, and this 
was true for the majority of branches.  Although exports to the United States are not expanding, 
exports to developing countries show a dy namism that continues to bear up well. 
22. Imports  have fallen sharply.  Imports of services,  in particular banking commission, have 
been badly affected, while spending by residents abroad and imports of consumer goods alone seem 
to be rising.8 
23. The Swiss current account  balance had a surplus of Sw F 71 billion in 2006, compared to 
Sw F 58 billion in 2004.  As a per centage of GDP, the surplus in the current account balance therefore 
rose from 13% in 2004 to 14.5% in 2006.  In 2007, it fell and reached Sw F 68 billion (i.e. 13.4% of 
the GDP). 
24. The strong performance of services  exports  played a decisive role in  the rising surplus in the 
current account balance from 2004 to 2007.  Financia l services by banks, transit trade and insurance 
services, in particular, increased strongly.  The cred it balance for services rose from Sw F 16 billion to 
Sw F 44 billion.  The credit balance for trade in goods increased, from Sw F 7 billion in 2004 to 
Sw F 9 billion in 2007.  The capital income surplus declined to Sw F 39 billion in 2007 (2004:  
Sw F 42 billion).  Admittedly, in  2005 and 2006 it had exceeded Sw  F 50 billion because of the high 
income from direct investment.  In 2007, how ever, the income earned by banks from direct 
investment fell because of the turmoil on the financ ial markets.  As a result, net capital income 
showed a marked decrease.9 
(iii) Flows of foreign direct investment 
25. Vigorous growth in the global economy, str ong performance by business and low interest 
rates boosted direct investment from 2004 to 2007.10  Over this period, foreign investment by Swiss 
firms (export of capital) amounted to Sw F 248 billion, almost double the amount invested between 
2000 and 2003 (Sw F 140 billion).  In 2004 and 2005, exports of capital showed a sharp rise from 
year to year, mainly because more profits were be ing reinvested in subsidiaries abroad.  In 2006, 
direct investment reached a new record of Sw F 94  billion.  This annual growth can be explained by 
the large increase in Swiss firms' acquisitions ab road.  For example, industry bought several firms 
situated outside Switzerland.  From 2007 onwards, however, this trend weakened and, as a result, 
direct investment fell in comparison with the previous year.  Between 2004 and 2007, the geographical focus of investment activities by Swiss firms shifted.  At a figure of Sw F 100 billion, 
their investment within the EU was twice as high as that between 2000 and 2003.  In North America, 
on the other hand, investment fell slightly in co mparison with the previous period and amounted to 
Sw F 50 billion.  Exports of capital to central a nd South America, as well as to Asia, showed a 
particularly sharp increase, from Sw F 19 billion to Sw F 46 billion and Sw F 3 billion to Sw F 30 billion, respectively. 
                                                     
 
8 See http://www.ezv.admin.ch/themen/00504/01508/index.html?lang=fr. 
9 See http://www.snb.ch/fr/iabout/stat/statpub/bop/stats/bop. 
10 See http://www.snb.ch/fr/iabout/sta t/statpub/fdi/id/statpub_fdi_actual. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 0 20 40 60 80 100 
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Percenta ge variations tota l Real GDP industry Real GDP services  
Source : Swiss National Bank. Foreign direct investment 
Sw F billion  
-5 0 5 10 15 20 25 30 35 40 45 50 
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007Total Industry Services
Source : Swiss National Bank. Direct investment in Switzerland
Sw F billion  WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 12 
 
 
 26. For the period 2004-2007, foreign direct inv estment in Switzerland (import of capital) 
amounted to Sw F 87 billion (compared to Sw F 79  billion from 2000 to 2003).  American-owned 
financial and holding companies took advantage of  a time-bound tax relief measure in 2000 and 2005, 
allowing them to repatriate to the United States the profits they had kept in Switzerland in previous 
years.  This withdrawal of capital had a marked impact on direct investment in Switzerland in 2004 
and 2005.  During the course of the following two years,  foreign firms started to reinvest massively in 
Switzerland.  Record levels were reached in 2006 and 2007, amounting to Sw F 41 billion and 
Sw F 46 billion, respectively.  Both of these years we re marked by the takeover of a large Swiss firm 
by foreign investors.  Between 2004 and 2007, the largest amount of foreign investment in 
Switzerland came from the EU, totalling Sw F 98 billion (Sw F 46 billion from 2000 to 2003).  
North American investors, on the other hand, withdrew capital amounting to Sw F 10 billion from 
Switzerland, after having invested Sw  F 32 billion between 2000 and 2003. 
(iv) Macroeconomic policies 
27. Swiss economic policy  gives major priority to a macroeconomic policy environment designed 
to maintain stability.  The Federal Constitution ma kes the Swiss National Bank (BNS) responsible for 
conducting a monetary policy  that serves the country's general interests.11  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 stabi lity.  In doing so, 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, 
its inflation forecast is based on a scenario that takes into account global economic trends and 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. 
28. The low interest rate in the early part of the decade - the Libor was 0.25% in 2003 - was 
unable to guarantee price stability in an economy on the road to recovery.  In mid-2004, the BNS took 
the first steps towards adjusting interest rates.  At the end of the year, however, the uncertain 
economic situation led the BNS to suspend this process.  In December 2005, when the indicators 
showed signs of robust recovery, the BNS resumed its  adjustment policy.  The Libor continued to rise 
gradually up to mid-2007.  During this adjustment phase, the BNS increased the Libor's target range 
nine times. 
29. In the second half of 2007, the BNS was operating in a new environment.  The monetary 
situation was being managed in such a way as to ensure, on the one hand,  that the economy's strong performance did not jeopardize price stability in the medium term and, on the other, to prevent the 
turmoil on the financial markets from causing a shorta ge of liquidity.  In the autumn, tension on the 
money market pushed the Libor towards the ra nge's ceiling, tightening the money situation 
excessively in comparison with the inflation forecast.  The BNS then sought to make the market more 
flexible by bringing the Libor down from 2.9% to 2.75%, while increasing the target range by 25 basis points. 
30. During the first half of 2008, increased prices for raw materials, particularly oil and food, as 
well as an economy where the rate of capacity utili zation was high, caused inflation to exceed 2% for 
                                                     
 
11 See http://www.snb.ch/fr/iabout/monpol. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 the first time since 1993.  Accord ing to the inflation forecast published in September, mid-term 
inflation estimates nevertheless remained good (2009:   1.9%;  2010:  1.3%), with the BNS envisaging 
a downturn in the global economy and in Switzerland over the next few years.  In view of this, the BNS decided to retain the Libor target range fixe d in September 2007 and is aiming at a Libor of 
2.75%. 
31. The integration of international markets in ge neral and in Europe in  particular has not 
prevented the BNS from pursuing an independent monetary policy.  In 2001 and 2002, the BNS 
adjusted its reference interest rate - the Libor targ et range - more rapidly and to a greater degree than 
the European Central Bank (ECB).  In 2003, the BN S halted its shift towards lower interest rates 
before the ECB and in 2004 it also acted first.  While  it is true that economic trends in Switzerland are 
closely related to those in the euro zone, Swiss infl ation has always been significantly lower than that 
in the euro zone. 
32. The Government finance situation in Switzerland improved dur ing the last parliamentary term 
as a result of the efforts made to stabilize it, together with the positive economic situation.
12  At the 
Federal level, after the surpluses recorded in 2006 and 2007, the financ ial account (excluding 
extraordinary expenditure) for the current financia l year should once again show a large surplus.  
After reaching a peak in 2005, the debt has shown a marked decrease.  This performance can not only 
be explained by strong economic growth, but al so by the budgetary policies adopted by the 
Confederation.  The new budgetary rule, which is the debt brake , requires that Federal finances be in 
balance throughout an economic cycle and it has played a decisive role in improving the situation.  
This rule made it possible to take the rapid remedial measures needed to deal with structural deficits.  
The draft budget for 2009 and the financial plan  for 2010-2012 submitted by the Federal Council 
follow the same path to stabili zation, envisaging surpluses. 
33. It is the Federal Council's intenti on, in the medium term (2008-2015), to place a ceiling on 
the increase in ordinary expenditure equivalent to the rate of growth  in the economy, in other words, 
to stabilize the State's spending.  In order to do so, it is essential to determine strict priorities among 
the State's responsibilities and to undertake structural  reform.  These objectives are part of the current 
review of the Confederation's responsibilities.  Furthermore, the aim of the Federal Council's 
budgetary strategy is to stabilize the debt in nominal terms .  The debt brake ensures that ordinary 
expenditure does not exceed ordinary income in th e course of an economic cycle.  Nevertheless, 
extraordinary expenditure may become necessary in the future an d weigh upon the Federal debt.  In 
order to avoid such a situation, if no extraordinar y income is forthcoming, the Federal Council intends 
to achieve a surplus in ordinary income to cover the extraordinary expenditure.  To do this, it proposes 
to introduce into the legislation a budgetary rule supplementing the debt brake . 
(v) Economic outlook and risks 
34. Despite a noticeable decline , GDP should continue to grow in 2008 and 2009.  The 
preliminary indicators do not contradict this view.  Current forecasts are for growth of 1.9% in 2008, 
but only 1.3% in 2009.  The strength of internal demand , particularly persona l consumption, should 
enable this performance to be achieved.  The increase in foreign trade  should also remain positive in 
2008 (+2% for exports, +2.5% for imports) and be more dynamic in 2009 (+2.8% for exports and 
+3.2% for imports).13 
                                                      
12 See http://www.efd.admin.ch/dokumentation/zahlen/00579/00595/index.html?lang=fr;  
http://www.efv.admin.ch/f/themen/index.php. 
13 See http://www.seco.admin.ch/themen/00374/00375/00376/index.html?lang=fr. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 14 
 
 
 35. As is the case in other countries, the combination of lack of confidence in financial markets 
and sharply increasing energy prices are the main threats to Switzerland's economic development .  
The success of anti-inflationary policies in countries  with emerging economies is also one of the keys 
to stabilizing global growth. 
(2) BRIEF SUMMARY OF THE STRUCTURAL REFORMS  
36. Since the publication of the "2002 Report on grow th", 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 Stat e's efforts;  (4) maintaining a high rate of 
employment;  (5) competitiveness in training;  and (6) legal conditions that are attractive to companies.  In April 2008, the Secrétariat d'État à l'économie  - SECO (State Secretariat for 
Economic Affairs) published an evaluation of th e 19 measures taken to achieve these objectives.
14  
The conclusion was globally positive, inasmuch as only two measures were not implemented within 
the time-limits (namely, adoption of the measures during the last parliamentary term (2004-2007)).  
As far as the content is concerned, the most difficu lt reforms have been those sectoral reforms that 
affect well-organized pressure groups (for example, h ealth).  It is too soon yet to assess the impact 
which the growth package will ha ve because several important refo rms were only adopted in 2007 
and their effect will take some time to make itself felt.  Nevertheless, in the light of the information 
currently available, the programme will no doubt achie ve its objective of boosting structural growth of 
GDP by 0.5% annually over several years. 
III. MAIN FOCUS OF RECENT AND CURRENT STRUCTURAL REFORMS AND 
OTHER PRIORITIES OF SWITZERLAND'S ECONOMIC POLICY 
(1) DOMESTIC POLICY AREAS  
37. The cross-border opening up of markets following the signing of the bilateral agreements with 
the EU and internal reform (liberalization, giving consumers and the State more choice) all interact.  It 
would seem that the implementation of free move ment of persons has had the most impact on 
competition at the domestic level and on the competitiv eness of exports.  At the same time, revision of 
the law on the domestic market and of the law on fo reign nationals has made the mobility of services 
and workers within Switzerland easier.  Progress is being made in reforming public utilities such as 
electricity and postal services, thereby encouraging di rect investment.  Several other reforms, on the 
other hand, are of major economic importance but do not  have any significant direct effect on foreign 
trade (tax reform, streamlined administrative pro cedures, revision of disability insurance, better 
governance in business, revision of the patent law and reform of the financing of hospitals). 
38. The future priorities for trade-related structur al reform concern revision of the government 
procurement law, partial revision of the law on tec hnical barriers to trade, an agricultural free trade 
agreement with the European Union and continued lib eralization of the public utilities.  Other reforms 
should help to boost economic growth in Switzerland  without having any direct effect on trade, for 
example, reorganizing training policy, harmonized development of public infrastructure, a more 
streamlined administration and the revision of the law on bankruptcy. 
                                                      
14 See http://www.seco.admin.ch/themen/00374/ 00459/00460/index.html?lang=fr&download=NHzLp 
Zig7t,lnp6I0NTU042l2Z6ln1ae2IZn4Z2qZpnO2Yuq2Z6gpJCEeH53gmym162dpYbUzd,Gpd6emK2Oz9aGodet
mqaN19XI2IdvoaCVZ,s-. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 15 
 
 
 39. Some of the most important aspects of the reforms already completed or under way and 
intended to boost the competitiveness of the Swiss economy (Agricultural Policy 2011, revision of the 
Law on technical barriers to trade, new Law on electricity supplies, new Law on the Federal Financial Market Supervisory Authority, complete overhaul of the postal legislation, revision of the Law on 
government procurement, implementation of the am endment to the Law on cartels, revision of the 
Law on the domestic market and new intellectual pr operty-related developments) are described below. 
(i) Agricultural policy 2011 
40. The Agricultural Policy 2011 (PA 2011)  is part of the reform process launched in the early 
1990s with a view to enhancing the competitivene ss and sustainability of the agricultural sector.
15  
This reform is based on Article 104 of the Federal Constitution, adopted by a large majority of the 
people and cantons on 9 June 1996, according to whic h the Confederation ensures that agriculture, 
through production that meets the requirements of both sustainable development and of the market, 
contributes towards the population's food security, the conservation of natural resources, the upkeep 
of the landscape and decentralized occupancy of the land.  Although the context is that of a market 
economy, this Article recognizes that agriculture's responsibilities are multifunctional , that they go 
beyond simply producing food and should be  remunerated through direct payments. 
41. The key element in PA 2011 consists of ma king significant reductions in the financial 
resources now being used to support the market and to  reallocate some of the resources thus released 
to direct payments that are not production-related.   Furthermore, as of the end of 2009, Switzerland 
will abolish all export subsidies on all basic agricultural commodities .  The elimination of these 
subsidies, which are by far the most detrimenta l to international trade, underscores Switzerland's 
determination to contribute towards creating a more equitable trading system.  This can also be seen 
from the position taken by Switzerland during the Doha Round negotiations (see also Part IV of this 
report).  Lastly, there will be a sharp reduction in the customs duty imposed on cereals and animal feed.  Agriculture will thus be able to provide th e public with the goods desired and the adjustments 
will be made at a pace that permits socially acceptable development. 
42. The concept of direct payments having proved its worth, it remains at the heart of the future 
agricultural policy.  The review and future evolutio n of the direct payments system in the light of 
future developments in the framework conditions ar e rooted in the current constitutional basis.  A 
report will be submitted to  Parliament in 2009. 
43. On 14 March 2008, the Federal Council approved the adoption of  terms of reference for 
negotiations with the EU in the agri-food sector.  A  free trade agreement between Switzerland and the 
EU in the food and agriculture sector (AFTA) should help to open markets up to agricultural products 
and food.  It should lead to the elimination of ba rriers to trade, whether tariff (customs duties and 
quotas) or non-tariff (various regulations on producti on and approval).  Free trade will not only relate 
to agricultural raw materials (for example, milk or  livestock for slaughter), but also sectors upstream 
and downstream such as seeds, machinery or yoghourt .  The EU is by far the most important trade 
partner for Switzerland's agri-food sector.  The conc lusion of such an agreement will therefore be a 
major step forward in the reform of Swiss agriculture. 
                                                     
 
15 See http://www.blw.admin.ch/themen /00005/00044/index.html?lang=fr. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 16 
 
 
 (ii) Partial revision of the Law on technical barriers to trade 
44. Studies have shown that a large number of the t echnical barriers to trade between Switzerland 
and the EU, in particular, are a contributory factor in  the high level of prices in Switzerland.  This is 
why, in June 2008, the Federal Council adopted a me ssage addressed to Parliament proposing a partial 
revision of the Federal Law on technical barriers to  trade (LETC).  The expected revision envisages 
an impact of over 0.5% on GDP growth for the Swiss economy. 
45. Until now, two strategies have been followed in order to eliminate technical barriers to trade 
with our leading trade partners.  On the one ha nd, the increasing harmonization of Swiss technical 
requirements with those of the EU, our most impor tant trading partner and, on the other, the 
conclusion of bilateral agr eements with our main partners.  Desp ite these instruments, there are still a 
large number of technical barriers, particularly w ith regard to the EU.  These not only contribute to 
the high level of prices but also distort compe tition in Switzerland.  The Federal Law on technical 
barriers to trade therefore needs to be revised.  The purpose of the proposed revision is to lessen the 
disparity with Community law and to facilitate ac cess to the Swiss market for products that have 
already been legally placed on the EEA market in areas where technical regulations are not 
harmonized within the EU or are not yet fully ha rmonized.  Finally, the revision also provides for 
streamlined approval procedures for products that have already been approved in a country whose 
legislation is equivalent to that of Switzerland. 
(iii) Legislation on electricity supplies 
46. The Law on electricity supplies  (LApEl, RS 734.7) came into force in 2008 and represents an 
important step forward in the process of reforming the Swiss electricity market.16  It provides for open 
and non-discriminatory access to the network (regulated access for third parties).  It also creates an independent regulator and an ope rator independent of the transmission system.  The Law requires 
distribution entities to separate their distribution accounts from their accounts for other activities.  In 
order to overcome fears regarding electricity supp lies, the Law also includes provisions on protecting 
consumers and public service obligations.  The Law is  largely based on the relevant EU legislation. 
47. This Law will open up the Swiss electricity mark et to competition in two stages.  Final users 
whose annual consumption exceeds 100 MWh. may freely choose their supplier as of 1 January 2009.  
The first stage of opening up the market will cover approximately 50% of electricity consumption in 
Switzerland.  All final users (including households  and small and medium-sized enterprises, SMEs) 
will have access to the network as of 1 January 2 014.  Implementation of the second stage will, 
however, be the subject of an optional referendum. 
48. The Law on electricity supplies creates a regulator, the Electricity Commission (ElCom).  It 
will be the ElCom's responsibility to ensure complian ce with the Law.  In particular, it will monitor 
access to the network and the requirements for usi ng it.  The Law covers the methodology for setting 
tariffs for use of the network, through which the El Com will control ex post facto both the level of 
tariffs for the network and use of the revenue accruing  to the independent operator of the transmission 
system from the sale of cross-border capacity.  The Law creates a transmission system operator (Swissgrid) to operate and supervise the national hi gh-voltage network (220/380 kV.).  Pursuant to the 
Law, electricity companies must legally separate the transmission network from their other activities 
by 1 January 2009 and hand over ownership of the network to Swissgrid by 1 January 2013. 
                                                     
 
16 See http://www.bfe.admin.ch/themen/00612/00613/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 49. In parallel with the Law on electricity supplies, the Energy Law (LEne, RS 730.0) was revised 
in spring 2007 in order to increase the tariff for buying renewable electricity-generated output.  The 
revision came into force in 2008.  The tariff for buying renewable electricity is much higher than the market price because of the additional costs for produ cers.  If local distributors had to pay these costs, 
there would be additional costs for final users in  areas where a large proportion of the network is 
supplied by producers of renewable electricity.  In order to distribute these costs more fairly among all final users, the Law provides that they should  be financed through a surcharge on using the 
transmission network payable by all users. 
(iv) New Law on the Federal Financial Market Supervisory Authority 
50. The Federal Law on the Federal Fina ncial Market Supervisory Authority  (LFINMA) was 
approved by Parliament during its summer session in 2007.
17  The purpose of the Law is to 
amalgamate supervision of banks, private insura nce and financial intermediaries subject to 
surveillance under one of the laws on financial ma rkets.  The Federal Banking Commission (CFB), 
the Federal Private Insurance Office (OFAP) and the Anti-Money Laundering Control Authority 
(Control Authority) will be incorporated into a single entity, the Federal Financial Market 
Supervisory Authority  (FINMA) .  The creation of an integrated authority constitutes a new 
organizational approach, whose objective is to rein force Swiss supervision of financial markets and 
give the competent authority more power as a partner on the international scene. 
51. On 16 January 2008, the organizational provisions of the LFINMA came into force.  The 
definitive commencement of operations by the ne w FINMA will occur when the LFINMA is fully 
implemented, planned for 1 January 2009. 
(v) Complete overhaul of postal legislation 
52. The Swiss postal market  is currently divided into three components:  reserved services, for 
which the Swiss Post Office is obliged to provide uni versal services but also has the exclusive right to 
distribute letters weighing less than 100 g. (monopoly);  non-reserved services, which also form part of the Swiss Post Office's universal service obligatio ns but in competition with private operators;  and 
liberalized services.  The Federal Council recently  proposed to lower the limit of the monopoly to 
50 g, through an ordinance, on 1 April 2009.  As  part of the complete overhaul of the postal 
legislation currently under way, it is proposed to  open up the entire market as of 1 April 2012. 
(vi) Revision of the Law on government procurement 
53. Government procurement legislation  regulates an important sector of the Swiss economy.  
Total spending by communes, cantons and the C onfederation on procurin g construction services, 
goods and other services is close to Sw F 34 billion a year.  This expenditure - in which the shares of 
the Confederation, the cantons and the communes are, respectively, 19%, 38% and 43% - corresponds 
to around 25% of total government spending and 8% of the GDP.  There are both external and internal reasons for the current revision of the government procurement legislation with a view to achieving 
the objectives of modernization, flexibility, clarification and harmonization.
18 
                                                      
17 See http://www.efd.admin.ch/dokumentation/zahlen/00579/00607/00617/index.html?lang=fr. 
18 See http://www.bbl.admin.ch/bkb/00235/00362/00375/index.html?lang=fr. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 18 
 
 
 54. The current revision of the 1994 Federa l Law on government procurement (LMP, 
RS 172.056.1) consists of a series of structural measures adopted by the Federal Council to promote 
the growth of the Swiss economy.  This re vision should enable annual savings of around 
Sw F 400 million to be achieved.  On the basis of the findings of an analysis of the strengths and 
weaknesses of the current government procurement le gislation, in 2004, th e Federal Council decided 
to modernize, streamline, clarify and harmonize govern ment procurement legislation.  With regard to 
modernization , the objective is to utilize new information t echnology in government procurement.  An 
electronic version of the Swiss Official Trade Gazet te will henceforward be the official publication 
for the Confederation's governme nt procurement.  As far as streamlining  is concerned, the objective is 
to increase efficiency in order to speed up procedures , for example, in the case of procurement that is 
complex or where there needs to be dialogue be tween the procuring entity and the bidders.  As 
regards clarification , the revised draft law clarifies certain elements and concepts which, until now, 
were a source of uncertainty when implementing g overnment procurement legislation.  It designates 
those entities which, in the future, can be classified  as public sector contracting authorities and gives a 
precise definition of the concept of government procurement.  In relation to harmonization , the 
revision of the Law aims to attenuate the problem of  the disparity between Federal and cantonal rules, 
which currently affects legislation on government procurement.  The Federal Council's draft also 
takes into account the cantonal competence provided by the Constitution and ensures that cantons thus 
retain their margin of manoeuvre in  their respective areas of competence. 
(vii) Implementation of the amendments to the Law on cartels 
55. The revised Federal Law on cartels and other impediments to competition  (LCart, RS 251) 
came into force on 1 April 200419, with a transitional period up to 31 March 2005 to allow companies, 
where necessary, to adapt their activities to the changes introduced by the revised Law. 
56. The main objective of the revision is to impose direct sanctions when infringement of cartels 
legislation is particularly harmful, which should also  reinforce the dissuasive nature of the Law.  In 
2006 and 2007, the Competition Commission (Comco), fo r the first time, applied the new provisions 
of the Law and imposed a direct sanction against a company that had violated the LCart.  Zurich 
airport (Unique) was fined Sw F 101,000 for having abused its dominant position in relation to the car 
parks at the airport.  In 2007, the Comco imposed a sanction of Sw F 333,365,685 on Swisscom Mobile, one of the mobile telephone operators on th e Swiss market, for abuse of a dominant position.  
The same year, Comco also took a decision agains t Publigroupe, fining the company Sw F 2,500,000 
for abuse of a dominant position.  Appeals agai nst the latter two decisions (Swisscom Mobile and 
Publigroupe) are before the Federal Administrative Tribunal. 
57. The Comco also took advantage of the new me ans made available to it under the revised Law 
to dismantle unlawful agreements.  On the one ha nd, in 2006, the Secretariat conducted its first 
searches.  This investigative method was also used in 2007 on several occasions.  In addition, the 
severity of the sanctions imposed has probably had a di ssuasive effect on certain firms.  In the course 
of 2007, several of these had recourse to the cl emency programme established under the new Law. 
58. The Federal Law on the internal market  (LMI, RS 943.02), which entered into force on 
1 July 1996, has also been revised.
20  The purpose of this Law is to eliminate the public law 
restrictions on market access introduced by cantons  and communes.  It should facilitate professional 
mobility and economic exchange, t hus enhancing the Swiss economy's competitiveness.  Accordingly, 
it is a counterpart to the Law on cartels, which combats private law restrictions that distort 
                                                      
19 See http://www.weko.admin.ch/publik ationen/00213/index.html?lang=fr. 
20 See http://www.admin.ch/ch/f/rs/c943_02.html. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 19 
 
 
 competition.  The decision to revise the LMI was taken by the Federal Council in 2003.  The Council 
commissioned a group of experts composed of repres entatives of the Confederation and the cantons to 
draw up a draft text.  The final draft was put befo re Parliament and adopted in December 2005.  The 
revised Law came into force on 1 July 2006.  The revision of the LMI has a threefold economic, 
individual and institutional objective.   At the economic level, it is  intended to improve the operation 
of the domestic market by continuing to eliminate barriers set up by the cantons and local authorities.  
At the individual level, the objective is to reinfor ce the freedom to engage in a profession.  At the 
institutional level, the Comco's supe rvisory responsibilities should be reinforced by giving it a right to 
appeal against decisions and judgements that unduly restrict market access.  The Comco has already 
made use of this new instrument on three occ asions while awaiting the decision of the Federal 
Tribunal as the final appellate court.  Comco's intervention with cantonal and local authorities has on several occasions allowed individuals access to th e market and has incited certain authorities to 
review their decisions and adapt their legal provisions or practices to the requirements of the LMI.  It 
can be seen that the revised law is starting to yiel d results and that the legislator's determination to 
make the Swiss internal market even stronger is being achieved. 
(viii) Intellectual property 
59. The Swiss Government attaches para mount importance to protection of intellectual property 
with a view to constantly promoting research, de velopment and innovation in the corporate sector.  
Strong protection within a strict international framewo rk alone can justify the enormous research costs 
in a number of sectors concerned, inter alia, with the life sciences.  The protection of geographical 
indications is equally essential for both agricultural pr oducts and manufactures.  This is why 
recognition and international observance of geographi cal indications is a priority for Switzerland in 
order to encourage producers to focus on producing specialty products. 
60. With regard to intellectual property, Swit zerland affords protection over and above the 
minimum standards laid down in the TRIPS Agreemen t.  There have recently been three revisions of 
the legislation.  These concerned the Federal Laws  on patents, copyright an d the protection of new 
plant varieties.  The central element of the revision of the Federal Law on patents (which entered into 
force on 1 July 2008:  LBI, RS 232.14)
21 is appropriate protection for biotechnological inventions 
through patents.  Other essential aspects of the revi sion relate to approval of the Patent Law Treaty 
(PLT) with a view to harmonizing patent formalities and the implementation of the WTO Resolution 
on improving the availability of phar maceuticals in developing countries . 
61. With regard to the revision of the Federal Law on copyright (LDA, RS 231.1)22, which 
entered into force on 1 July 2008, the first object ive is to ratify two agreements of the World 
Intellectual Property Organization (WIPO).  The tr ansposition into Swiss law of the standard of 
protection provided by the WIPO Copyright Treaty (WCT) of 20 December 1996 and the WIPO Performances and Phonograms Treaty (WPPT) of 20 December 1996 allows copyright to be adapted 
to technological progress.  The disparity between copyright and technological developments has also 
made it necessary to revise the restrictions on copyright.  These were defined in the light of analog technology and were therefore not adapted to a digita l environment.  This revision has meant that the 
interests of users and consumers are better taken in to account in the legislation.  For example, the 
restriction allowing use of works for private pur poses has been revised and the royalties system 
adapted to avoid overcharging consumers who obtain the works from on-demand services. 
                                                     
 
21 See http://www.admin.ch/ch/f/rs/232_14/index.html. 
22 See http://www.admin.ch/ch/f/rs/231_1/. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 20 
 
 
 62. Lastly, the main objective of the amended text of the Federal Law on the protection of new 
plant varieties , which came into force on 1 September 2008 (RS 232.16)23, is to adapt the law to the 
1991 Act of the UPOV Convention.24 
63. Regarding the implementation of intellectual property rights , the Swiss authorities (notably 
the Federal Institute of Intellectual Property, IP I) and the economic circles concerned have set up a 
mechanism for combating infringement and piracy25 with the aim of providing information on the 
risks and consequences of such abusive practices a nd reinforcing coordination in  this area between the 
public and private sectors.  Furthermore, pr ovisions on combating counterfeiting and piracy 
(particularly border measures) have been devel oped and introduced into the legislation on the 
principal intellectual property rights (patents, co pyright, trademarks and industrial designs). 
(2) FOREIGN POLICY AREAS  
64. Switzerland's concern that policies on refo rm, liberalization and opening up should be 
mutually reinforcing can also be seen in the vari ous foreign policy measures taken by the Government 
during the period under review. 
(i) Relations between Switzerland and the EU 
65. As far as European integration is concerned, Switzerland has close relations with the EU.  
Contractually, this has meant the following treaties and agreements:  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 transport, agriculture, research, technical barriers to trade and government procurement.  These agreemen ts came into force on 1 June 2002, enabling 
Switzerland not only to open up its economy still fu rther 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 in to force has been promising. 
66. In the course of 2004, Switzerland signed nine additional agreements with the EU in order to 
strengthen its regional links with its main ec onomic 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 produc ts, the environment, statistics, promotion of 
films, pensions, education, vocati onal 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 agreem ent on combating fraud, which is a mixed agreement 
and therefore must be approved by all EU States (by 1 June 2008, eight of the 27 EU members had 
not yet ratified the agreement), the ag reements have entered into force.
26 
67. The Swiss Federal Council gives priority in its European policy to the comprehensive 
implementation of existing agreements, including their potential for development.  The next step will 
be to decide on continuation of the Agreement on the free movement of persons after seven years' 
experience of implementing it, as well as its extension to the two countries which acceded in early 
2007 (Romania and Bulgaria), in addition to those wh ich acceded in mid-2004.  This is a matter for a 
referendum so the people should be calle d upon to vote on it in spring 2009. 
                                                      
23 See http://www.admin.ch/ch/f/rs/232_16/index.html. 
24 International Union for the Protection of New Varieties of Plants. 
25 See http://www.stop-piracy.ch/fr/home/h1.shtm. 
26 See http://www.europa.admin.ch/themen/00500/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 21 
 
 
 (ii) Free trade agreements 
68. In the context of Switzerland's external economic policy, the free trade agreements with its 
non-EU trade partners, together with its membership  of the WTO and the bilateral agreements with 
the EU, constitute an indispensable contribution to maintaining and enha ncing competitiveness and 
the attraction of Switzerland as an economic centre.27  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 competito rs.  In addition, these agreements usually provide 
more legal security, as well as stability of the fra mework 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 trad e liberalization at the global level.  It remains 
a complement to Switzerland's commitment to the WTO process. 
69. Since 2004, Switzerland has expanded its networ k of free trade agreements by signing 
agreements with Lebanon and Tunisia (2004), the Republic of Korea (2005), the Southern African 
Customs Union - SACU (2006), Egypt (2007) and Ca nada (2008), bringing the number of free trade 
agreements within the EFTA framework up to 16.28  In addition to movement of goods, competition 
rights and intellectual property, the free trade agr eements negotiated within  the EFTA framework are 
increasingly covering services, investme nt and government procurement. 
70. As there is an ongoing trend towards the prolif eration of preferential agreements at the 
international level and in view of the Swiss ec onomy's interests, Switzerland intends to pursue its 
policy aimed at concluding free trade agreements with non-EU partners.  Switzerland and the other 
EFTA States  are currently negotiating with Algeria, India,  Peru and Thailand.  The negotiations with 
the States belonging to the Gulf Cooperation Counc il/GCC and Colombia have been concluded as far 
as substance is concerned.  The EFTA States are al so in contact with other countries and are even 
holding exploratory talks with a view to intensifying trade relations and drawing up the bases for a 
decision on initiating negotiations (notably with Alba nia, Indonesia, Russia, Serbia and Ukraine). 
71. At the bilateral level, in May 2007 Switzerland and Japan initiated negotiations on an 
economic partnership and free trad e agreement of broad scope.  In  addition, Switzerland and China 
have agreed to consider the possibility of signing a free trade agreement.  As a first step, it has been 
decided that internal feasibility studies should be conducted by both China and Switzerland. 
(iii) Cooperation with developing countries and countries with economies in transition 
72. Switzerland, as the site of international orga nizations such as the WTO, the International 
Trade Centre (ITC), the United Nations Conference on Trade and Development (UNCTAD) and the International Labour Organization (ILO), is destined to play a key role in trade-related technical 
assistance .  This is why since the commencement of the Doha negotiations the SECO has 
significantly developed its trade programmes and adapted them to the needs of its partners. 
73. Switzerland recognizes the importance of a trade policy that is consistent with development 
policy, and this influences both its position in negot iations on trade agreements and its trade-related 
technical cooperation programme.  Switzerland has therefore strengthened and better targeted its 
                                                     
 
27 See http://www.seco.admin.ch/themen/00513/00515/index.html?lang=fr. 
28 In mid-September 2008, the full list of EFTA's free trade partners was as follows:  Canada, Chile, 
Croatia, Egypt, former Yugoslav Republic of Macedonia, Israel, Jordan, Lebanon, Mexico, Morocco, 
Palestinian Authority, Republic of Korea, the SACU, Singapore, Tunisia and Turkey. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 22 
 
 
 existing trade cooperation while at the same ti me broadening it to include topics such as competition 
and investment , as well as other emerging issues such as capacity-building related to standards and 
technical regulations.  As a horizontal objective, the sustainability of programmes that give priority to 
the environmental and social dimensions of economic issues is 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 the challenge effectively.  Trade-related technical cooperation is based on 
the following: 
(a) Trade policy cooperation 
74. The growing complexity of world trade raises  important challenges in developing countries, 
notably for the least developed among them, which find themselves obliged to build up their 
institutional capacity  so as to make sure that their voice is heard during negotiations on multilateral 
and bilateral trade agreements and when implementing the outcome of the negotiations .  This is why 
Switzerland supports multilateral initiatives for the l east developed countries, for example, the 
Enhanced Integrated Framework and Aid for Trade.   The purpose of these initiatives is to integrate 
trade into national poverty reduction strategies as a t ool for development and better to coordinate the 
trade-related technical assistance provided by industrialized countries and multilateral agencies. 
75. At the same time, Switzerland provides assistance in understanding and implementing the 
WTO Agreements .  By acceding to the WTO, many developing countries have underlined the need to 
build up their trade policy-related capacity.  In orde r to achieve this objective, Switzerland's trade 
promotion involves a series of activities aimed at creating and supporting specia lized services for the 
authorities in partner countries (for example, Laos , Viet Nam, Lebanon, Tajikistan, Montenegro and 
Serbia).  Switzerland suppor ts programmes that target both the pa rtner countries and "the international 
role of Geneva", working closely with organizatio ns that specialize in WTO law, for example, the 
Agency for International Trade Information and Co operation (AITIC) - Switzerland was at the origin 
of the AITIC's creation - and the Advisory Centre for WTO Law (ACWL). 
76. In order to make progress on issues such as competition and investment, Switzerland is 
working in partnership with specialized nationa l and international organizations such as UNCTAD 
(competition policy) and the Federal Institute for Inte llectual Property (IPI).  Together with partner 
countries, it identifies needs in order to devel op cooperation programmes adapted to each level, 
thereby helping to build the capacity of public  and private sectors, notably by setting up an 
appropriate legal and in stitutional framework. 
(b) Trade efficiency/international standards 
77. One essential concomitant of demands for access to developed countries' markets is 
improving trade efficiency and producti on capacity in general .  Together with the ITC in Geneva, 
Switzerland is supporting the development of a co mprehensive range of services intended for SMEs 
in developing countries.  The purpose of these servi ces, which are provided by local suppliers (export 
promotion entities or chambers of commerce) is to increase the export cap acity and competitiveness 
of SMEs and to improve their integration into in ternational value-creation chains both for goods and 
services (for example, tourism).  These include, inter alia , trade information, training in foreign trade 
matters, development of products a nd markets, management of the logistic chain and of production. 
78. One other area of intervention intended to enhance 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 Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 23 
 
 
 Organization (UNIDO), Switzerland has programmes to  support local authorities in partner countries 
in improving quality systems, particularly as regard s standards and quality criteria.  Better metrology 
and the introduction of modern test procedures w ill allow partner countries to determine themselves - 
using methods recognized at the international leve l - whether their exports of agricultural products 
and intermediate products comply with inte rnational standards for consumer safety. 
(c) Market access 
79. The objective of Switzerland's economic development cooperation is the gradual integration 
of developing countries into the global trading system.  In order to facilitate access to the Swiss 
market , Switzerland gives developing countries large re ductions in customs duty on agricultural and 
textile goods and even exemption for all other goods.  These tariff preferences are of particular benefit 
to the LDCs, which have been able to export a ll their goods to Switzerland free of duty and without 
quotas since 1 April 2007.  The "zero tariff" initia tive was introduced gradually in three phases in 
2001, 2004 and 2007.  The Programme Suisse pour la pr omotion des importations - SIPPO 
(Swiss Import Promotion Programme) is intended for export-oriented SMEs in developing countries 
or countries with economies in transition.  It fac ilitates direct links betwee n exporters in developing 
countries and European importers, including those in Switzerland. 
(d) Sustainability of exports 
80. One horizontal objective  of particular importance is to promote the efficient use of resources 
in production, encourage transfer of technology that  respects the environment, convince firms to adopt 
core labour standards and human rights, give prio rity to exports manufactured using sustainable 
methods, and in particular in the agricultural sector organic certification and good agricultural 
practices (GAP).  As far as the protection of biologi cal diversity is concerned, several issues are dealt 
with:  access to genetic resources and sharing the benefits from exploiting them, traditional 
knowledge and geographical indications.  In the case  of the Climate Convention, Switzerland supports 
the promotion of pilot projects in the industria l sector through the clean production programme, the 
exchange of CO 2 emission rights and strengthening Kyoto Protocol related institutions. 
81. For many developing countries, the promotion of organic farming or fair trade products 
provides a good opportunity to penetrate agricultural markets in Switzerland and the EU, while at the 
same time helping to increase the local value added of basic and processed agricultural products.  In 
Switzerland, high-quality specialty products with r ecognized attributes are also a good trade outlet.  
This is why trade-related technical assistance projects aim to improve market access for such 
products.  In addition to promoting such niche pr oducts, Switzerland is taking further initiatives 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-creating 
chain (producers in developing countries, represen tatives of wholesalers, retailers and the agri-food 
industry) and with non-governmental organizations. 
82. Switzerland spends around Sw F 50 million a year on its trade-related technical cooperation 
programmes . 
(iv) Revision of the Customs Law and customs measures 
83. The new Customs Law of 18 March 2005 came into force on 1 May 2007.  It takes into 
account a number of changes and to a large extent provides consistency with customs legislation in 
the European internal market.  At the national level, it addresses the interests of trade and the 
economy and helps to improve the competitive capacity  of the Swiss economy within the European WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 24 
 
 
 context and in international trade in goods, inter alia, through measures on processing traffic.  It 
covers basic issues relating to customs and tax la w and creates modern customs procedures - similar 
to those in the EU Customs Code.  The new Law facilitates the implementation of legislative acts by 
the Confederation other than acts by the custom s.  Controlling the movement of persons across 
customs borders and in border zones receives the same attention as rapid and specific goods traffic 
procedures.  For this purpose, it provides better legal bases and the responsibilities of the Federal 
Customs Administration (AFD), particularly the Border Guard Corps, are the subject of new 
regulations.  The new Customs Law is published in the Classified Compilation of Federal Legislation 
(LD, RS 631.0).29 
84. The Protocol of amendment to the International Convention of 18 May 1973 on the 
simplification and harmonization of customs procedures  (RS 0.631.21)30, signed in June 1999 in 
Brussels within the framework of the Custom s Cooperation Council (now known as the "World 
Customs Organization"), was approved and ratified by the Federal Council in June 2004 and came 
into force on 3 February 2006.  This  Protocol is composed of two parts:   the first contains the Protocol 
itself and the second the revised Convention.  The revised Convention contains the body of the text, a 
general annex and ten specific annexes.  The body of  the text has general and final provisions.  The 
general annex sets out the basic principles for all the customs regimes that are the subject of the 
revised Convention.  The specific annexes each deal with a particular customs regime - arrival of 
goods in a customs territory, importation, exportati on, customs warehouses a nd free zones, transit, 
processing, temporary admission, offences, special procedures and origin - and set out the relevant 
provisions.  The specific annexes are the same as  those in the annexes to the 1973 Convention but 
take into account developments in customs regime s and customs procedures.  Switzerland has given a 
large place to these developments in its new custom s legislation.  Six specific annexes have been 
adopted as a whole, three in part only and one (A nnex H on offences) has been rejected as it is not 
consistent with Swiss law. 
(v) Government procurement 
85. Switzerland took part in the revision of the WTO Plurilateral Agreement on Government 
Procurement , which has been in force since 1 January 1996, and makes the Confederation and the 
cantons, as well as government-owned firms in the wa ter, urban transport and energy sectors subject 
to the WTO's rules on awarding government procurement contracts.   The revised version of the 
Agreement of December 2006 lays down the in ternational bases for a government procurement 
regime that is more modern, more flexible, clearer  and more comprehensible.  With the exception of 
the internal harmonization objective - in any case this is  linked to the realization of the internal market 
- the Agreement's revision is aimed at achievi ng the goals of modernization, flexibility and 
clarification at the internal level.  These new rul es under the Agreement will apply in due time to the 
bilateral agreement concluded betw een Switzerland and the EU in 1996, in force since 1 June 2002, 
so as to expand the scope of the 1994 Agreement to pr ocurement by local authorities, the rail transport 
sector and private firms holding concessions or operati ng on the basis of a special or exclusive right.31 
(vi) Export promotion 
86. The comprehensive revision of export risk insurance of the Confederation, which had been 
under preparation at the time of the previous review of the trade policy of Switzerland and 
                                                      
29 See http://www.admin.ch/ ch/f/rs/c631_0.html. 
30 See http://www.admin.ch/ch/f/rs/0_631_21/index.html. 
31 See http://www.beschaffung.admin.ch/de/beschaffungswesen_bund/recht_org_zahlen/ivoeb_ 
172.056.5.de.pdf . Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 25 
 
 
 Liechtenstein, has in the meantime been complete d.  Based on the Federal Law of 16 December 2005 
on Swiss insurance against export risks (LASRE;  RS 946.10), the Assurance suisse contre les risques 
à l'exportation  - SERV (Swiss Export Risk Insurance Scheme), an organization independent of the 
Confederation with its own legal status, replaced the Garantie contre les risques à l'exportation   - 
GRE (Export Risk Guarantee Scheme) of 1 January 2007;  the SERV32 is under Federal Council 
supervision, responsibility lying with the Federal Department of  the Economy (DFE) and the SECO 
being in charge of implementing it.  In addition to  amendments of a purely organizational nature, the 
necessary conditions for covering private buyers' risk s even without a bank guarantee have been put in 
place, thereby eliminating a significant disadvantage suffered by Switzerland's exports compared to 
those of its competitors in other industrialized countri es.  At the end of its first year of operation, the 
SERV's performance was positive33, thus proving that, as required by the legislator, it is able to 
provide insurance exclusively as a complement to  the private economy and is self-financing through 
premiums adapted to the risk in each particular case. 
87. Export promotion by the State is based on the Federal Law on export promotion of 
6 October 2000 (RS 946.14).34  Under this Law, every four years the Federal Assembly determines 
the ceiling for spending on measures to finance the promotion of exports.  In September 2007, it 
decided to continue promoting exports for the pe riod 2008 to 2011, setting an overall spending ceiling 
of Sw F 68 million.  Implementation of measure s to promote exports has been outsourced and 
entrusted to the Osec35 with the aim of helping firms in Switzerland and Liechtenstein, particularly 
SMEs, to pursue their current export activities a nd develop new ones.  Complementing private 
initiatives according to the principle of subsidiarity, the Osec provides firms with general information 
on markets, the various branches and certain aspects of external economic affairs.  It gives them 
advice on export matters and supports their marketing efforts abroad (participation in fairs).  In 
parallel with its everyday operational activities, th e Osec spent two years preparing the refocusing of 
the external economic promotion programme by 1 Ja nuary 2008.  The result of this refocusing has 
been to combine under the umbrella of Osec, which has become the "home of foreign trade 
promotion", export promotion, promotion of Sw itzerland as an economic centre and promotion of 
investment and imports for developing countries a nd countries with economies in transition in order 
to use existing synergies and enhance the effectiveness of various instruments. 
(vii) Other external policy priorities 
(a) Environment 
88. Switzerland plays an active role in a ll the international negotiations on the environment  in 
order to promote sustainable development  worldwide.  The relevant legal basis for this is the Swiss 
Constitution (Articles 2 and 54) and the Federal Law on protection of the environment as the principal 
legislation for environmenta l protection (LPE, RS 814.01)36, together with the Federal Council's 
reports on foreign policy (1993, 2000 and 2007) .  Switzerland considers that implementing 
trade-related measures that are both non-discriminat ory and non-protectionist within the framework of 
multilateral environmental agreements is, under certa in circumstances, the most effective way of 
ensuring that environmental objectives are met.  Th e implementation of envir onmental regulations is 
                                                      
32 See http://www.s erv-ch.com/. 
33 See the 2007 report of the SERV:  http://www.s erv-ch.com/fileadmin/serv -dateien/Ueber_uns/gb/f/ 
Geschaeftsbericht_2007_f.pdf. 
34 See http://www.admin.ch/ch/f/rs/946_14/index.html. 
35 See http://www.osec.ch/inte rnet/osec/fr/home.html. 
36 See http://www.admin.ch/ch/f/rs/c814_01.html. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 26 
 
 
 chiefly the responsibility of the Fede ral Office for the Environment (OFEV).37  The Office considers 
that environmental policy must also be desi gned as a policy for managing natural resources and 
long-term protection of natural capital.  Likewise, policies on agriculture, electricity, transport, trade 
and development aid must automatically incorporate environmental concerns. 
89. At the international  level, 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.  Switzerland cooperates with other governments in order to ensure that 
the laws governing import and expor t of goods that might be hazar dous to human health or the 
environment, including hazardous wastes, toxic chem icals, biocides and ozon e-depleting substances, 
are consistent.  In this connection, it advocates cl oser cooperation among the secretariats of the Basel, 
Rotterdam and Stockholm Conventions and the conc lusion of a binding agreement on heavy metals 
(mercury, cadmium and lead). 
90. Switzerland has ratified the major multilateral environmental agreements .  These cover the 
climate , biological diversity  and chemicals .  With regard to the  latter , the instruments are the 
Montreal Protocol on Ozone-depleting Substan ces, the Basel Convention on the Control of 
Transboundary Movements of Hazardous Wastes and their Disposal, the Rotterdam Convention on the Prior Informed Consent Procedure for Certai n Hazardous Chemicals and Pesticides used in 
International Trade (PIC), the Stockholm Conventi on on Persistent Organic Pollutants (POP) and the 
Cartagena Biosafety Protocol to the Convention on Bi ological Diversity.  In addition, in relation to 
climate , Switzerland ratified the Kyoto Protocol in  summer 2003.  Switzerland has undertaken to 
reduce its emissions of six greenhouse gases by 8% below the 1990 levels.  The pivotal element of 
Switzerland's climate policy is the law on CO
2.  This came into force in 2000 but is already being 
revised with a view to the post-Kyoto period, inter alia .  In order to achieve the objective of reducing 
consumption of fossil fuels (overall -10%, combustib le liquids -15% and motor fuels -8%), which are 
enshrined in the CO 2 law, the Federal Council has decided to introduce an incentive tax on CO 2 for 
combustible liquids.  This came into force on 1 January 2008 and for the moment amounts to Sw F 12/tonne of CO
2 equivalent.  Firms which reach agreement with the State on the reduction of 
their emissions of CO 2 may be exempt.  They then receive "CO 2 certificates", which can be exchanged 
in a similar way to the Community scheme fo r trading in greenhouse gas emission quotas.  
Collaboration with the EU as a complement to the domestic measures is also envisaged.  In 
connection with the Biodiversity Convention, a report similar to the "Stern" report should allow the 
economic value of biodiversity to be quantified wi thin two years.  Switzerland supports such an 
analysis, as well as the development of a resource mobilization strategy under the Convention that 
incorporates various sources of financing in a c onsistent manner and includes existing mechanisms 
such as the Global Environment Facility (GEF).  Sw itzerland is also considering the possibility of 
drawing up a national plan for biodiversity-related measures. 
91. Since July 2008, Switzerland has made biofuels  exempt from the tax on mineral oils provided 
that their ecological and social assessment is positive.  In the context of WTO negotiations, 
Switzerland also supports the establishment of a list of environmental goods for which trade would be 
facilitated.  It is of the view, however, that manufacturing procedures and processes should be taken 
into account when defining certain envi ronmental goods (biofuels, for example). 
                                                      
37 See http://www.bafu.admin.ch/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 27 
 
 
 (b) Core labour standards 
92. As regards the promotion of core labour standards , at the WTO Switzerland has emphasized 
the importance of this aspect:  it has called for the to pics of trade, on the one hand, and social issues, 
on the other, to be dealt with in a coherent fash ion (Singapore Consensus, reaffirmed at 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 th ose developed in other internati onal organizations, and vice-versa.38  
Both at the WTO and the ILO Switzerland advocates that horizontal issues such as trade and social 
standards  be dealt with consistently  and globally.  It calls for stronger and more effective cooperation 
between the WTO and the ILO and welcomes the fact that the ILO has observer status at the WTO. 
93. Switzerland has recognized the importance of the report by the World Commission on the 
Social Dimension of Globalization, published under the aegis of the ILO in 2004.  The social 
dimension of globalization is an important priority for Switzerland and is part of the follow-up to the 
Copenhagen Social Summit and the Millennium Summit.   In 2005, at the World Summit of the United 
Nations General Assembly, heads of State or gove rnment from over 150 countries undertook to strive 
for a broad international agenda on decent work wi th action to be taken at the global, regional and 
national levels.  This commitment was reaffirmed in July 2006 during a high-level discussion at the Economic and Social Council (ECOSOC), which led to a ministerial declaration.  The latter 
acknowledges the importance of the ILO's decent work  agenda both as a way of promoting full and 
productive employment and decent work for all.   The Ministers urged United Nations funds, 
programmes and agencies and invited international financing bodies and the WTO to incorporate the 
objectives of full and productive employment and de cent work for all in their policies, programmes 
and activities.  In order to implement the commitmen ts undertaken by the international community, on 
10 June 2008, the International Labour Conference a dopted a Declaration on social justice for a fair 
globalization.  Switzerland is strongly committed to this text and will continue to strive for its 
effective implementation.  With this instrument, Switzerland, like other Members, now has a tool for 
achieving decent work and the social dimension of gl obalization.  The ILO's decent work agenda is a 
balanced and integrated planned approach that  should allow the objectives of full and productive 
employment and decent work for all to be achieved at  the global, regional, national, sectoral and local 
levels.  This integrated approach brings togeth er macroeconomic and microeconomic policies.  It 
covers both supply and demand, co mpany development and not only quantitative but also qualitative 
aspects of employment.  On the basis of the ILO Decl aration on social justice for a fair globalization, 
Switzerland will be able to promote better adaptation of its trade policy and its international social 
commitments, while at the same time supporting a more consistent and joint approach to the 
ratification of interna tional labour conventions. 
IV. SWITZERLAND AND THE DOHA ROUND OF MULTILATERAL TRADE 
NEGOTIATIONS 
94. The key priorities of Switzerland's external  economic policy remain economic openness and 
continued liberalization of international trade at  the multilateral, regional and bilateral levels. 
95. At the multilateral level, the Swiss Government consider s that the trend towards accelerated 
globalization involves both opportunities and challenges fo r all stakeholders in international trade.  
                                                     
 
38 See also:  http://www.seco.adm in.ch/themen/00513/01122/01123/index.html?lang=fr&download= 
NHzLpZeg7t,lnp6I0NTU042l2Z6ln1ae2IZn4Z2q ZpnO2Yuq2Z6gpJCEeYR9hGym162epYbg2c_JjKbNoKSn
6A--. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 28 
 
 
 The resulting interdependence of economies mean s 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 internati onal trade, the establishment of rules, rights and 
obligations governing international tr ade, and the settlement of disputes.39  Switzerland also considers 
it necessary to promote consistency  between external economic  policy initiatives and other 
government policies both at the national and multilatera l levels.  This is why it intends to continue 
playing an active role in favour of a positive outcome to the current Doha Round negotiations. 
96. Switzerland believes that Members were close to agreement at the informal ministerial 
meeting of the WTO in July 2008 .  Even though negotiations on agricultural modalities and market 
access for industrial goods have not yet been successful, a great deal of useful and positive work has 
been done.  For example, the package put on the table on Friday, 25 July 2008, was a compromise 
acceptable to the majority of Members on a large numb er of aspects that were nevertheless difficult.  
In addition, Switzerland considers that the "services signalling conference" provided extremely useful 
indications on Members' intentions.  Switzerland also has the impression that the Ministers meeting in Geneva were determined to achieve results.  Unfo rtunately, a number of issues remained unresolved 
when the negotiations were suspended on 29 July 2008 so that, in the end, there was no time to reach 
solutions acceptable to all the parties.  Moreover,  the real value of the services signals remains 
uncertain. 
97. The challenge now is to ensure that the progress made in Geneva at the end of July 2008 is 
not called into question and to restore the basi s of trust among Members needed to allow the 
negotiations to be brought to a successful conclusion. 
98. Switzerland will continue to play an active role in the Doha negotiations so that an ambitious 
overall result can be achieved.  It is in favour of an expanded round that does not simply place 
emphasis on market access but also improves the current rules, creates new ones where necessary and 
ensures better consistency between the multilateral tr ading system and the policies followed in other 
areas such as the environment and development.  Switzerland's position on the various Doha Round 
issues can be summarized as follows: 
99. Switzerland first of all hopes for ambitious results as regards non-agricultural market access 
(NAMA) .  In general, it imposes very low customs duty  on industrial goods.  Its main objective is to 
improve effective access to United States markets (t he second outlet for its exports after the EU) and 
the markets of countries with emerging economies.  It  supports the application of an effective formula 
to lower customs duties and sectoral negotiations on customs exemptions.  Going beyond the issue of 
customs duty, it also considers it important to address non-tariff barriers (unnecessary certificates and 
controls, etc.). 
100. Further liberalization of trade in services  is in Switzerland's interests and it has already set 
ambitious objectives in that regard;  it would like to  see more opening up of specific services markets 
and the introduction of transparent and reliable regulat ory mechanisms whose operation is predictable.  
The requests addressed by Switzerland to around 50 other WTO Members (including the EU) mainly relate to the following areas:  financial services, logistics services, distribution, business services, 
transfer of managers and experts ("intra-corporate transferees") and access to the temporary market for installers of machinery ("installers and mainta iners").  To a large extent, the content of these 
requests takes into account the level of developmen t of the Member concerned and the size of the 
market.  They are addressed in particular to th e EU, the United States and other industrialized 
                                                     
 
39 See http://www.seco.admin.ch/themen/00513/01122/01124/index.html?lang=fr. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 29 
 
 
 Members.  Switzerland, for its part, is ready to consider any requests it receives and, where 
appropriate, to extend its market access and national treatment guarantees without however 
undertaking any commitments under the GATS that are not consistent with its legislation on public 
services.  Switzerland's revised offer in 2005 contai ns additional commitments in a large number of 
subsectoral services. 
101. Switzerland will also remain strongly committed to  ambitious results in the negotiations on 
trade facilitation.   It advocates streamlining of customs form alities at the global level to support the 
development of Members as a whole.  The result would be lower transaction costs that would also be beneficial to the Swiss economy, particularly to  SMEs.  Switzerland welcomes the progress made 
over the past three years and considers that the draft legal texts proposed by Members of the WTO 
constitute a sound basis for work.  In this area, th e major challenge is to de termine properly the terms 
for implementation of the future agreement (i ncluding flexibility for developing countries). 
102. In relation to rules , Switzerland has a systemic interest in strengthening rules in general.  It 
considers that they need to be regularly updated to  take into account new developments in the world 
economy.  Switzerland applies neither anti-dumping du ties nor countervailing measures.  In view of 
the large number of such cases, however, stronger ru les on their use are in Switzerland's interest.  
While Switzerland has no direct active or de fensive interests in the negotiations on anti-dumping , it 
nevertheless intends to ensure that, as a minimum, the existing disciplines on subsidies  are maintained 
and that there are no additional exceptions to  the current general rules.  Regarding regional 
agreements , Switzerland is in favour of examining their consistency with the WTO's rules.  This 
examination should not, however, lead to any limita tion of Members' margin of manoeuvre, including 
that of Switzerland, when concluding free trade agre ements so that Members can continue to maintain 
the specific features of their external economic po licy.  In this context, Switzerland welcomes the 
decision taken by Members in December 2006, wh ich has enabled the rul es on transparency in 
regional trade agreements to be defined.  This  new provisional mechanism represents an important 
step forward towards greater legal security and transparency and ensures more consistency and 
reciprocal support between regional trade agre ements and the multilateral trading system. 
103. Switzerland also considers that one of the co rnerstones of a rules-based multilateral trading 
system must be a dispute settlement mechanism that is both extensive and effective.  Switzerland will 
therefore continue to work towards a positive and rapid conclusion of the revision of the 
Memorandum of Understanding on Rules and Proce dures Governing the Settlement of Disputes.  
During the period under review, Switzerland was not i nvolved (either as a complainant, defendant or 
third party) in any dispute settlement at the WTO.
40 
104. Switzerland, together with the other members of the G1041, is also ready to continue 
liberalizing its agricultural sector provided that the non-trade aspects inherent to agriculture such as 
food security, maintaining the landscape and envir onmental quality, as well as better protection of 
geographical indications, are taken into account.  The outcome of the Doha Round agricultural 
negotiations should strike a balance among the three pillars of the negotiation, namely, market access, 
export subsidies and domestic support.   Switzerland is ready to make a very significant effort in 
relation to agriculture provided that it obtains satis factory solutions to its main problems.  The deepest 
commitment will be in relation to export subsidies with their total phase-out by 2013.  Switzerland has 
                                                      
40 The last time that Switzerland had recourse to  this mechanism was on 3 April 2002.  See DS253 
United States - Definitive safeguard measures on imports of certain steel products (Complainant:  Switzerland). 
41 Switzerland is coordinator of the G10, which comp rises members that are ne t food importers.  The 
members of the G10 are:  Chinese Taipei, Iceland, Isr ael, Japan, Liechtenstein, Mauritius, Norway, the Republic 
of Korea and Switzerland. WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 30 
 
 
 already unilaterally started to implement this refo rm.  The second most important element of this 
reform undertaken by Switzerland relates to domestic support.  In this area, distortionary measures 
have been significantly reduced. 
105. Switzerland is determined to implement these reforms and bind them at the WTO provided 
that a balanced outcome can be achieved as regards agricultural market access .  Switzerland  will be 
unable to accept such extensive co mmitments in this pillar as those in respect of export competition 
and domestic support.  Combining similar commitments on trade-distorting support and market access 
would not be politically acceptable at the internal level at a time when Switzerland's agricultural 
sector already has to deal with the important up heavals caused by the reform of subsidies.  
Switzerland continues firmly to reject the concept of " capping " agricultural customs duty.  A general 
limitation on customs duty cannot be reconciled with  the principle of different tariff structures for 
individual Members.  As the tariff structure refl ects the differences in the agricultural production 
conditions of Members, these must be taken into account.  Eliminating differences in tariff structures 
would have an unacceptable impact on whole sector s of Switzerland's agricultural production.  
Switzerland also attaches great importance to the issue of sensitive products , which should allow a 
balance to be achieved in market  access conditions, particularly in sensitive agricultural sectors. 
106. Switzerland has always stated that, in order to be able to accept the high price it will have to 
pay, and is ready to pay, in relation to agricultu re, a positive and concrete outcome will have to be 
achieved in trade-related aspects of intellectual property rights (TRIPS Agreement), particularly as 
regards geographical indications .  As over 100 WTO Members have already stated, the three issues of 
registration , extension of geographical indication protection , and the disclosure requirement  in the 
context of the TRIPS Agreement must form part of the horizontal negotiating process in the Doha Round.  The texts on the modalities must reflec t all the principal parame ters determined by the 
Ministers so that a balanced result can also be achieved in relation to each of these issues when the 
final legal texts of the Doha Round are negotiated. 
107. The foremost objective of the negotiations on trade and the environment is to make systemic 
improvements when there is a conflict between trade-re lated rules and environmental rules.  It is also 
a matter of promoting trade in so-called "e nvironmental goods" by lowering customs duty and 
reducing the non-tariff measures applied.  So- called "environmental services" should also be 
liberalized.  Lastly, there needs to be better ex change of information between the WTO and the 
secretariats of environmental agreements.  Swit zerland has ambitious objectives in these three areas 
and has submitted a list of 153 e nvironmental goods, in agreement with other countries which share 
its point of view. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 31 
 
 
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Swiss National Bank, Bulletin trimestriel  (Quarterly Bulletin), Zurich. 
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des accords économiques internationaux (Report on external economic policy 2004 and 
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139 pages. 
Swiss Federal Council, Rapport sur la politique économique extérieure 2005 et Messages concernant 
des accords économiques internationaux (Report on external economic policy 2005 and 
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102 pages. 
Swiss Federal Council, Rapport sur la politique économique extérieure 2006 et Messages concernant 
des accords économiques internationaux (Report on external economic policy 2006 and 
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lang=fr&download=NHzLpZeg7t,l np6I0NTU042l2Z6ln1ae2IZn4Z2qZpnO2Yuq2Z6gpJCEd4R3fGy
m162epYbg2c_JjKbNoKSn6A--. 
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(Government finance 2008:  Confederation, cantons, communes), Bern, 2008, 12 pages. 
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trends), Quarterly annex to " La Vie économique" , in the editions of February, April, July and October.Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
 Page 33 
 
 
 REPORT BY LIECHTENSTEIN 
 
 
I. INTRODUCTION 
1. Liechtenstein is firmly committed to the rules- based, transparent and open multilateral trading 
system of the World Trade Organization (W TO) and the successful conclusion of the 
Doha Development Agenda (DDA).  The trading syst em of the WTO is one of the main pillars of 
Liechtenstein's foreign economic policy since an  open and well-functioning multilateral trading 
system is fundamental to economic growth and development. 
2. Succeeding in a globalized world is the challenge  which Liechtenstein's economic actors have 
been facing for decades.  As Liechtenstein is poor  in natural resources and the local market is 
extremely limited, Liechtenstein's economic actors had to orient themselves outwards at a very early stage of economic development.  The dynamic global markets abroad forced them to improve their 
productivity and to increase their competitiveness.  Therefore, one of the main objectives of 
Liechtenstein's foreign economic policy is to ensure  and to extend non-discriminatory market access.  
Liberalization of trade at multilateral and region al levels (via WTO and European Free Trade 
Association (EFTA)) is a high priority of Liechtenstein's foreign economic policy. 
3. This third Trade Policy Review of Switzerland a nd Liechtenstein reflects the developments 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 the two countries.  This economic union 
has already existed for about 90 years and constitut es one of the important factors for Liechtenstein's 
access to the world markets.  The Trade Policy Review  presents at the same time the integration of 
Liechtenstein in the European Economic Area (EEA) - the most important pillar for Liechtenstein's 
economic actors to participate in the European markets. 
4. Since the last WTO trade policy review of Switzerland and Liechtenstein four years ago, the 
Government has discussed the n eed for structural reforms of the economic environment and 
developed visions in order to enable Liechtenste in's economic actors to keep fit in a changing 
globalized environment also in the years to come.  Liechtenstein had to incorporate newly adopted 
acquis communautaire  (more than 5,200 EU legal acts are relevant for the EEA) and expanded the 
network of free trade agreements together with the other EFTA Memb er States.  During the last few 
months topics around the financial centre dominated the discussions within and outside Liechtenstein. 
II. TRADE AND ECONOMIC POLICY ENVIRONMENT 
5. The Liechtenstein Government focuses on a lib eral economic policy with economic actors 
who have to act self-dependent and with state inte rventions that are limited to the necessary.  All 
changes of the economic environment that have ta ken place during the last four years are based upon 
these principles. 
6. In the years 2005-2008, the liberalization process initiated as a consequence of Liechtenstein's 
EEA-Membership in the second half of the nineti es continued and was mostly accomplished in the 
fields of postal services, telecommunications services and energy services (electricity and gas sector).  Structures have been adapted and optimized.  In the year 2007, the territorial scope of the Agricultural 
Agreement between the EC and Swit zerland was extended to Liechtenst ein.  Liechtenstein worked on 
a new agricultural law with a focus on sustainable agri culture with an entrepreneurial orientation.  In WT/TPR/G/208/Rev.1 Trade Policy Review 
Page 34 
 
 
 the year 2006, the Trade Act from the year 1969 was completely revised.  The aim of the revision was 
to adjust the Act to the needs of today's economy.  Great efforts have been put into the creation of new 
and the improvement of existing laws in the contex t of financial services in order to comply with 
evolving international standards.  Special emph asis has been placed on financial services - on the one 
hand with regard to supervision and on the other hand to establish a vision for the Liechtenstein 
financial centre (see below). 
(1) ECONOMIC GROWTH  
7. Liechtenstein's economy is small in absolute terms and export-oriented with a high share of 
value added in industry and financial services.  It looks back on four years of steady growth.  
However, several recent factors point towards a downw ard trend in growth figures.  With regard to 
industry these are the slowing down of economic growth of the OECD countries and the high exchange rate for the Swiss franc (Sw F) that  tend to decrease growth of demand also for 
Liechtenstein's economy.  In the field of financial services the international financial sector crisis and 
the tax discussions Liechtenstein has been facing since the beginning of this year curtail expectations 
for growth.  There are also internal constraints fo r further growth, namely the very low supply of and 
the high prices for land and property as well as the dried-out labour market. 
8. Since 2003, Liechtenstein's economy started to recover from the previous period of 
stagnation.  The GDP increased from Sw F 4,135 m illion (2003) to Sw F 4,29 6 million in 2004 and to 
Sw F 4,555 million in 2005.
1,2  From 2003 to 2004, GNP has grow n by 0.4% and from 2004 to 2005 
by 9.5%.  GNP reached in 2005 Sw F 3,892 milli on.  National income increased from 2003 to 2004 
by 0.5% and from 2004 to 2005 by 12 .1%.  In 2005, national income reached Sw F 3,095 million.  In 
2005, industry was responsible for 39% of the gro ss value added, general services for 25%, financial 
services for 29% and households together with the agriculture sector for 7%. 
9. The resident population in Liechtenstein grew from 34,600 inhabitants in 2004 up to 
35,356 inhabitants in 2007;  33.6% of the resident population do not have the Liechtenstein nationality;  32,435 employees worked in the year  2007 in 3,495 companies in Liechtenstein.  During 
the years under review, total employment in Liecht enstein steadily increased.  In 2007, 50.1% of 
employed persons in Liechtenstein were daily inward commuters from Switzerland, Austria and Germany.  In 2007, 1.1% of the employees worked in the agriculture and forestry sector, 43.5% in 
manufacturing and 55.4% in the services sector.  By international comparison, the very low proportion of agriculture and forestry is striki ng, as is the relatively high proportion of the 
manufacturing sector.  The services sector is considerab ly smaller than in other European countries. 
10. Industrial direct exports
3 increased from Sw F 2,877 million in the year 2003 to 
Sw F 3,203 million in 2004, to Sw  F 3,227 million in the year 2005 and to Sw F 3,604 million in 
2006.  The most important export country of Liech tenstein's industry and goods production sector is 
Switzerland followed by Germany and the United St ates.  According to the export sales of the 
members of the Liechtenstein Chamber of Commer ce and Industry by economic areas, the European 
Economic Area (EEA) with 46% ranks before Asia/P acific with 23% and America with 18%.  In 
2006, 167 branches of the Liechtenstein exporting industry outside of Liechtenstein employed 
                                                      
1 Liechtenstein does not have more recent GDP figures. 
2 Liechtenstein does not calculate GDP per capita based on population numbers in Liechtenstein as this 
would yield misleading results in comparison with other countries due to the fact that the Liechtenstein GDP 
derives to a considerable extent from work done by working personnel domiciled abroad.  In 2007, 50.1% of 
people at work in Liechtenstein were daily cross-border commuters from abroad. 
3 Direct exports without Switzerland. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 30,139 persons, almost as many persons as the to tal of workplaces that exists in Liechtenstein 
(32,435 in 2007). 
11. The total balance sheet of the 16 banks in Li echtenstein increased from Sw F 34,205 million 
in the year 2004 to Sw F 49,694 million in the y ear 2007.  The client assets under management of 
Liechtenstein Banks increased in parallel from Sw F 106,989 million in 2004 to  Sw F 171,448 million 
in 2007. 
12. Liechtenstein has the same inflation rate as Switzerland (2004:  0.8%, 2005:  1.2%, 
2006:  1.1%, 2007:  0.7%).  Interest rates remained stable with some slight increases in 2008.  There 
are no figures available reflecting private consumpt ion or investment.  The unemployment rate in 
Liechtenstein reached a maximum rate with 3.2% in  2006.  In the current year the unemployment rate 
is at 2.3% (398 persons in August 2008). 
13. The development of the Liechtenstein na tional budget in the period 2004-2007 was 
determined by several factors, including the perform ance on the stock exchanges, which had an effect 
on the capital reserves.  The current expenses surged from Sw F 676.6 million in 2003 to 
Sw F 853.0 million in the year 2007.  Tax income  steadily increased from Sw F 674.4 million in 2003 
to Sw F 856.9 million in 2007.  The overall state income increased from Sw F 793.9 million in the 
year 2003 to Sw F 992.3 million in the year 2007.  In the year 2007, Liechtenstein had for the third 
time in sequence a positive national budget (Sw F 69. 5 million and Sw F 50.9 million for the current 
budget and overall budget respectively).  The "own capital" amounts to Sw F 2.2 billion. 
(2) T HE ECONOMIC SECTORS  
14. Liechtenstein's economy is broadly diversif ied by sectors, businesses and products.  The 
average value added is very high, based on research  and development, qualif ied expertise, a wide 
range of high-tech and niche products, strong expor t orientation, and a hi ghly developed financial 
services sector.   
15. With a population of 35,356, Liechtenstein provides 32,435 jobs (2007);  16,242 (2007) 
individuals commute daily from the region (Switzerla nd, Austria and Germany) to their workplace in 
Liechtenstein.  This is 50.1% of the total work force. 
16. The primary sector employs 1.1% of the total workforce.  The number of employees in the 
primary sector decreased by 0.3% during the past four  years.  Two thirds of the gross agricultural 
return is produced by the dairy industry.  So me 90 farms produce 13 to 14 million kg. of milk per 
year. 
17. Liechtenstein agriculture is closely linked with Switzerland.  To ensure the same competitive 
advantages Liechtenstein has introduced in 2007 the sa me subsidy for dairy cows as Switzerland.  On 
1 January 2008 the Milk Quota Act has been replaced  by the Milk Volume Control Act.  This new 
Act constitutes a time-limited interim step between milk quotas and their complete abolition.  In the 
years under review a new Agriculture Act conso lidating numerous existing agriculture laws has 
passed Parliament.  It will enter into force on 1 Janua ry 2009.  With this new act Liechtenstein reacts 
to the increasing liberalization of the markets.   The agriculture policy focuses on sustainable 
agriculture with an entrepreneurial orientation.  In the year 2007, the territorial scope of the 
Agriculture Agreement between Switzerland and the EC of the year 2002 was extended to 
Liechtenstein. WT/TPR/G/208/Rev.1 Trade Policy Review 
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 18. As an average over the past four years about 40% of the GDP is the result of value added in 
industrial production and manufacturing, 26% in the financial services sector, 26% in general 
services, and the remainder in household, agriculture  and forestry.  The industry and manufacturing 
sector counts for 583 businesses (2007).  More th an 70% of these are small businesses (1 to 
9 employees) while 15 companies have more than 250 employees. 
19. Liechtenstein has evolved in the last fifty year s from an almost purely agricultural State into 
one of the most highly industrialized countries in the world.  The most important branches of the internationally competitive industrial sector are mechanical engineering, plant construction, 
manufacturing of precision instruments, dental technology, electronic control devices, vacuum, 
heating and lighting technology, dentistry and pha rmaceutical products and food-processing industry.  
The per capita value of exports is about five to  eight times higher than the corresponding value for 
Germany, Austria or Switzerland. 
20. Financial services also constitute an important economic sector in Liech tenstein.  15.2% of 
persons employed in Liechtenstein worked at the end of the year 2006 in the financial sector.  Private 
wealth management dominates the financial centr e today, offering a broad product portfolio.  
Fiduciary services and private banking account for a pproximately 80% of the added value generated 
by the financial centre, while the rest is generated by insurers, th e fund industry, independent asset 
managers and others.  The business activities of Liec htenstein financial intermediaries are becoming 
increasingly international.  Globalization has an im portant effect on the competitive situation of the 
Liechtenstein financial centre.  The most impor tant challenges include the worldwide opening of 
markets, rapid technological progress, and the accel erating cycles of innovation.  These challenges 
have changed the framework conditions and rul es of the game for international competition. 
21. In the years under review Liechtenstein's financ ial centre continued to grow.  However, both 
the subprime crisis on the financial markets - whic h has only indirectly affected the Liechtenstein 
financial centre - and the tax controversy in Germany are showing effects for the Liechtenstein financial centre in 2008.  At the end of 2007, Sw F 277.72 billion of net asset were managed by the 
financial sector Liechtenstein.  The 16 banks licensed  in Liechtenstein managed consolidated client 
assets of Sw F 201.3 billion of the end of 2007.  Inv estment undertakings also recorded growth.  They 
managed assets amounting to approximately Sw F 30.4 billion as of 31  December 2007.  Asset 
management companies managed Sw F 21.5 billi on (2007).  A total of 2089 financial market 
participants domiciled in Liechtens tein operated in the financial cen tre as of the end of 2007.  This 
represents an increase of 191 financial market particip ants over the previous year.  Most of the growth 
was attributable to domestic investment undertak ings (49%).  Asset management companies and 
insurance intermediaries also accounted for a large share of the growth, with 22% and 17% 
respectively.  The number of notified financia l market participants rose from 971 (2004) to 
1,634 (2007).  These are financial market particip ants from other EEA countries that operate cross 
border under the supervision of th e Financial Market Authority. 
22. The close treaty relationship with Switzerland,  the introduction of the Swiss franc as legal 
currency and the passing of the 1926 Act on Persons  and Companies, that allowed for a broad 
diversification of company forms, as well as an investor friendly tax system, are the foundation on 
which Liechtenstein's financial centre is built.  The accession to the European Economic Area in 1995 
acted as a catalyst for a series of fundamental cha nges and facilitated access to the markets of other 
countries. 
23. As an EEA member, Liechtenstein is obliged to implement relevant EU legislation.  
Accordingly, banking, insurance, securities and accounting legislation is based on the relevant Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 EU Directives.  Because of the cl ose monetary links with  Switzerland, financial institutions are also 
required to meet the accounting guidelin es of the Swiss regulatory authority. 
24. Liechtenstein has carried out sustainable refo rms in recent years.  Since 2000, far reaching 
legislative projects to strengthen and modernize the financial centre have been realized, including the 
creation of the Financial Intelligence Unit (FIU) in  2002 and the Financial Market Authority (FMA) 
in 2005.  Other key projects include the total revision of the Mutual Legal Assistance Act (2000), 
several amendments to the Insurance Supervision Act (2002 and 2005), the Mutual Legal Assistance 
Treaty with the United States (2003), the Counter-T errorism Package (2003), the conclusion of the 
Savings Tax Agreement with the European Commun ity (2004), the revision of the Due Diligence Act 
(2004) and the Investment Undertakings Act ( 2005), the creation of the Asset Management Act 
(2005) and Market Abuse Act (2006), various amen dments to the Criminal code, the Code of 
Criminal Procedure, the Narcotics Act, and the Mutual Legal Assistance Act in the course of 
implementation of the 2nd Money Laundering Directive and th e Palermo Convention (2006), key 
changes to the Banking Act during the implementa tion of MIFID and Basel II (2006 and 2007), and 
the total revision of the Prospectus Act (2007) .  In June 2008, negotiations on an Anti-Fraud 
Agreement with the EU were largely concluded.  Negotiations on the Qualified Intermediary (QI) 
status with the United States are ongoing.  At presen t Liechtenstein is preparing the necessary steps 
(amendments to the Due Diligence Act and Ordinan ce) for the transposition of the EU Third Money 
Laundering Directive. 
25. The FMA is an independent, integrated financia l market supervisory authority operating as an 
autonomous institution under public law.  It reports  exclusively to the Liechtenstein Parliament.  
Banks and Finance Companies, Investment Unde rtakings (funds), Insurance Undertakings and 
Pension Schemes, professional trustees, auditors , lawyers, patent attorneys, asset managers, 
Liechtenstein Postal Service, Currency exchange o ffices, Real Estate brokers, Traders in valuable 
goods and auctioneers are supervised by the FMA.  In  the third year of operation (2007) the entry into 
force of new laws (Pension Funds Act, Ma rket Abuse Act, Takeover Act, Financial 
Conglomerates Act) expanded the tasks of FMA. 
26. Liechtenstein has a vital interest in the worldw ide enforcement of internationally recognized 
standards to prevent abuse of the financial market s.  Liechtenstein's foreign policy therefore pays 
great attention to the development and internatio nal enforcement of unifor m rules to prevent and 
combat money laundering and the financing of te rrorism.  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 mone y laundering and financial transactions with a 
terrorist background. 
27. Traditionally, the Liechtenstein legal system attaches great importance to privacy.  Bank 
client secrecy protects the legitimate private sphere of every bank c lient, but not criminal 
machinations.  Liechtenstein is not interested in pr oceeds of crime, and it does everything in its power 
to keep criminal machinations away from the fi nancial centre.  There are no anonymous foundations 
in Liechtenstein.  Foundations are products on the fina ncial market like any other.  Strict "know your 
customer" rules apply to all financial intermed iaries and products in Liechtenstein without any 
exceptions. 
28. Liechtenstein will continue to do everything in  its power to remain an attractive business 
location and to fulfil the highest international standa rds.  With the "Futuro" project, the Government WT/TPR/G/208/Rev.1 Trade Policy Review 
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 has elaborated a vision for the financial centre th at takes into account the need of the overall 
economy.  The goal is to secure sustainable growth  for the long term.  The vision is based on the 
traditional strengths of the financial centre and focu ses on private wealth management.  In parallel the 
Government elaborated a revision of the Liechtenste in Tax Act with the goal of adapting the existing 
tax law to the changing economic and legal environment in Liechtenstein and abroad. 
(3) S TATE ACTIVITIES  
29. The Government of Liechtenstein does provide neither export subsidies, support of research, 
structural policy nor subsidies to companies wi th the exception of farms.  Furthermore, the 
Government has no possibility to influence an exch ange rate increase of the Swiss franc.  The main 
features of the playing field set by the Governme nt's economic policy are trade laws, sound (mainly 
positive) budgets, low taxes, stability and reliability  of the policy, the creation of high quality 
educational systems, low administrative burde n and a slim and customer oriented public 
administration. 
30. In order to maintain and expand the favourab le economic conditions in Liechtenstein the 
Government participated in the creation of a Competence Centre for Small and Medium-Sized 
Enterprises (SME) under the direction of the Liecht enstein University of Applied Science.  The 
Centre advises young professionals and compan ies in the growth phase on business planning and 
management, arranges contacts with financial institu tions, investors or pote ntial business partners.  
The most important EU programmes, of which Liechtenstein companies are beneficiary, are the 7
th Framework Programme for research, technologi cal development and de monstration activities 
(2007-2013) as well as the Competitiven ess and Innovation Framework Programme 
(CIP, 2007-2013).  Liechtenstein pays in total Sw F 19.9 million for the 7th Framework Programme 
and Sw F 1.3 million for the CIP-Programme.  As both programmes started only recently there are no 
data available on the extent to which Liechtenstein  companies benefit of projects funded under these 
programmes.  Liechtenstein has no other national assistance programme. 
31. Due to the country's small territory (160 square  kilometres) and in view of the high proportion 
of non-Liechtenstein citizens of the total resident  and working population, Liechtenstein regulates 
new investments (green field invest ments) and immigration.  By regul ating foreign direct investments 
(also for non-resident Liechtenstein citizens) the G overnment respects the limited territory with its 
rural character and preserves access to real estate fo r the resident population.  Compared to the last 
Trade Policy Review of Switzerland-Liechtenstein the portion of non-Liechtenstein citizens of the 
resident and working population has not changed.  Therefore, the Government does not see any 
leeway to ease restrictions concerning immigrati on and employment.  In view of this specific 
situation, Liechtenstein has, even in the EEA , been granted special rules concerning the free 
movement of persons. 
III. TRADE POLICY DEVELOPMENTS AND FUTURE POLICY DIRECTIONS 
32. The framework of the trade environment of Li echtenstein is outlined by the Customs Union 
Treaty with Switzerland, Liechtenstein's member ship in the European Free Trade Association 
(EFTA), the EEA and the WTO.  These vessels allow Liechtenstein to participate in the multilateral 
trading system but at the same time to join, as a complementary tool, deeper economic cooperation in 
regional agreements.  So far Liechtenstein has not  been involved in any WTO or EFTA dispute case. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 (1) THE WORLD TRADE ORGANIZATION (WTO) 
33. Liechtenstein is fully committed to the multila teral rules-based trading system and will 
continue to emphasise the importance of universal broad-based trade liberalization.  Liechtenstein 
strongly advocates the Doha Development Agenda  and the Doha Work Programme and remains 
firmly committed to its successful conclusion.  The WT O system has to respond with flexibility to the 
realities and needs of this century's globalized ec onomy and to the increasingly diverse situations of 
its members.  Improved market access means more trade, and more trade is beneficial to all, 
developed and developing countries a like.  Furthermore, it offers opportunities for an increase in trade 
among developing countries.  The Doha Round also has to be a development r ound to help developing 
countries benefit from these new opportunities, taking into account the different levels of their 
development.  The multilatera l trading system is a proven vehicle in promoting economic 
development and growth and is central to the futu re prosperity of our nations.  In the view of 
Liechtenstein there exists no alternative to th e WTO multilateral trading system.  The multilateral 
system has to be strengthened. 
34. Liechtenstein is a net food importer.  Agricultu re in Liechtenstein is more than just food 
production.  The Liechtenstein agricultural sector has in the last decades and years gone through 
tremendous structural changes.  This sector has to be looked at from political, social and environmental perspectives.  Non-trade concerns ha ve to be duly taken into account when talking of 
progressive liberalization steps of this sector.  WTO has to allow Members to pursue different objectives with their agricultural policy than only trad e.  Liechtenstein is of course ready to look into 
further agricultural reforms as part of  an overall liberalization package. 
35. As necessary flanking measures for Liechtenstein,  the extension of protection of geographical 
indications to products other than wine a nd spirits has to be part of WTO rules. 
36. Services form an important part of the overa ll package of the current negotiating Round.  
Services account for a large part of economic growth, both in industrialized and developing countries.  Liechtenstein has handed in a comprehensive revised offer in 2005 and participated in the plurilateral 
services negotiations meetings. 
37. As the outcome of the negotiations should be bene ficial to all, Liechtenstein welcomes that 
specific concerns of developing countries are addressed in all areas of the negotiations. 
(2) T
HE EUROPEAN ECONOMIC AREA (EEA) 
38. The Agreement on the European Economic Area ex tends the single market of the EU to the 
three EFTA countries Iceland, Liechtenstein and No rway.  This means that the four fundamental 
freedoms of the internal market of the EU, th e free movement of goods, services, capital and persons4, 
apply within the EEA mainly in the same way as in the EU.  In addition, the Agreement includes 
flanking and horizontal policies in order to strengt hen the internal market.  The membership entails 
the obligation to transpose EU single market legi slation into national law and to comply with 
supervisory law standards and principles applicab le to the entire EEA.  By mid 2008, the overall 
number of adopted legal acts amounted to more than 5,200 acts. 
                                                      
4 In the EEA Liechtenstein has special rules as far as  free movement of persons is concerned, by which 
nationals of EEA States are still subject to a permit from the Liechtenstein authorities to take up residence in 
Liechtenstein. WT/TPR/G/208/Rev.1 Trade Policy Review 
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 39. The EU is the most important market for Li echtenstein's economic operators and the EEA 
with its four freedoms has given them an appropria te legal framework.  As a consequence of this 
agreement, a large part of Liechtenstein's econo mic legislation is based on EU law.  Mid 2008, 
Liechtenstein had implemented 99.2% of the relevant  internal market rules, which is above the EU 
average.  Liechtenstein therefore meets Eu ropean standards in the respective areas. 
40. In the period 2004-2008, one important deve lopment for the EEA was its enlargement 
following the EU accession of Bulgaria and Rumani a.  An enlargement Agreement for the EEA was 
negotiated with the EU, its Member Countries and th e new EU Members.  Basically, the adaptations 
to the internal market rules negotiated for these acce ssions within the EU (transitional periods for the 
free movement of persons, etc.) have been taken over into the EEA Enlargement Agreement.  The 
three EEA-EFTA States, Iceland, Liechtenstein and Norway co-finance together with the EU projects 
for the development of Bulgaria and Rumani a through their own financial mechanism. 
41. The relationship between Liechtenstein and the EU is not limited to the EEA and in the 
coming years, the cooperation might widen in scope.  In 2004, Liechtenstein has concluded 
negotiations with the EU on the taxation of savin g interests.  In June 2008, the Liechtenstein 
Parliament approved the accession protocols si gned on 28 February 2008 for Liechtenstein's 
association in the so-called areas of Schengen and Dub lin (open borders, visa, asylum, etc.).  Due to 
delays arising prior to signature by the EU the or iginally planned association at the same time as 
Switzerland will no longer be possible.  Associat ion with Schengen and D ublin supplements and 
deepens Liechtenstein's integration in  Europe in the areas of justice, home affairs, and asylum.  With 
regard to tax matters, Schengen pr ovides the legal basis to grant legal assistance in cases of fraud 
relating to both direct and indirect taxes.  Th e negotiations on an Anti-Fraud 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 o ffences, with respect to both indirect and direct 
taxation.  The Contracting Parties will provide support to the tax authorities in cases of suspicion of 
tax fraud and similar offences and enhance tax coope ration in general.  In addition the agreement 
foresees the possibility of concluding more far-reach ing bilateral rules on cooperation with foreign tax 
authorities, in the framework of double taxation treaties. 
42. The EEA had shown in its past that it offers  a stable contractual framework for economic 
relations with the EU.  Adaptations might in pa rticular be necessary, should one or the other 
EFTA State change its integration policy towards the EU. 
(3) THE EUROPEAN FREE TRADE ASSOCIATION (EFTA) 
43. Liechtenstein became a full EFTA member on 1 September 1991.  Hitherto, Liechtenstein had 
been covered by the EFTA Convention through a par ticular Protocol under which the interests of 
Liechtenstein were taken care of by Switzerland. 
44. The EFTA-Ministers signed in June 2001 an updated EFTA-Convention that entered into 
force on 1 June 2002 in parallel with the bilateral Agreements between Swit zerland and the EU.  The 
revised Convention has, on the one hand, updated th e original provisions bringing them in line with 
current trade terminology and, on the other hand, in troduced substantive amendments to reflect recent 
developments such as in the WTO, the EF TA States' respective relations with the 
EU (EEA Agreement and the bilateral Swiss-EU Ag reements) and EFTA's free trade agreements with 
third countries.  The revised Convention has stre ngthened the cohesion in economic relations between 
the four EFTA Member States and provides for an enhanced common platform for developing their 
relations with trade partners around the world. Switzerland and Liechtenstein WT/TPR/G/208/Rev.1 
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 45. 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 16 Free Trade Agreements with a total of 20 partner countries and territories
 around the world:  with Canada (not yet in force), Chile (2003), 
Croatia (2001), Egypt (2007), Israel (1992), Jordan (2001), Lebanon (2004), Macedonia (2000), 
Mexico (2000), Morocco (1997), Palestinian Au thority (1998), Southern African Customs Union 
(SACU, comprising Botswana, Lesotho, Nami bia, South Africa and Swaziland) (2006), 
Singapore (2002), the Republic of Korea (2005), Tunisia (2004) and Turkey (1991).  In April 2008, EFTA and the six Member States of the Gulf Cooperation Council
5 (GCC) finalised their 
FTA negotiations and in June 2008 negotiations were concluded with  Colombia.  In addition, EFTA 
has also signed Declarations on Cooperation cove ring 11 countries.  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. 
46. EFTA is currently engaged in free trade negotiatio ns with Algeria, Peru, and Thailand.  In 
January 2007, Ministers from EFTA and Indonesia decided to set up a working group on trade and 
investment to prepare ground for negotiations on a free trade agreement.  In addition, based on the 
recommendations by a Joint Study Group, Ministers from the EFTA States and India decided in January 2008 to launch negotiations on a comprehe nsive FTA between both sides.  A Joint Study 
Group between EFTA and Russia examines the potential for closer trade and investment relations.  
The final report is expected in the course of autu mn 2008.  EFTA is also exploring the possibility of 
starting free trade negotiations with Ukraine, Alba nia and Serbia.  EFTA States continue to assess the 
need for updating and upgrading existing Agre ements with their free trade partners. 
(4) C
USTOMS UNION TREATY /ECONOMIC INTEGRATION WITH SWITZERLAND  
47. The close cooperation with Switzerland is reflected  in many (more than 50) bilateral treaties, 
the most important of them being the Customs Trea ty and the Currency Treaty.  The Customs Treaty, 
in combination with other agreements pertaining to the movement of persons, made possible the 
abolition of any border or customs control between the two countries.  Of equal practical importance 
to Liechtenstein's economy is the Currency Treat y which forms the legal basis for using the 
Swiss franc as the official currency in Liechtenstein. 
48. The provisions of the Customs Treaty stipulate th at the Swiss laws pertaining to customs as 
well as other federal legislation necessary for th e implementation of the customs--free zone are 
applicable in Liechtenstein.  In addition, trade and customs treaties concluded by Switzerland with 
third parties (with the exception of the EEA countries)  also apply to Liechtenstein on the basis of the 
Customs Treaty.  Switzerland is authorized to repres ent Liechtenstein in rele vant negotiations and to 
conclude such treaties with effect in Liechtenstein. 
49. The Customs Union Treaty facilitated the bilate ral 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 an d environment.  The entry into force of the 
EFTA Convention on 1 June 2002 (see above) has led to an additional integration step in the relations 
between Liechtenstein and Switzerland. 
50. In the period under review Liechtenstein, Sw itzerland and the European Commission agreed 
in a tripartite additional protocol to extend the terr itorial scope of the Agriculture Agreement between 
Switzerland and the EU as part of the Bilateral I treat ies to Liechtenstein.  This protocol entered into 
                                                      
5 Comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, United Arab Emirates. WT/TPR/G/208/Rev.1 Trade Policy Review 
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 force in September 2007.  As differences in sta ndards between Switzerland and the EEA have been 
further reduced in the past years, a workin g group has proposed to amend Annex I of the 
Customs Treaty concerning the Market Control a nd Surveillance Mechanism (MCSM) that applies to 
imports subject to customs tariffs or non-tariff requirements that are different in the EEA and 
Switzerland.  The necessary legal steps are expected for 2009. 
51. The integration policy both countries choose to wards the EU in future may have a major 
influence on the further development of the existing close links. 
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