WORLD TRADE  
ORGANIZATION  WT/TPR/M/141 
16 February 2005 
 (05-0640) 
Trade Policy Review Body 
15 and 17 December 2004  
 
 
 
TRADE POLICY REVIEW 
 
SWITZERLAND AND LIECHTENSTEIN  
 
Minutes of Meeting  
 
Chairperson:  H.E. Mrs. Puangrat Asavapisit (Thailand) 
 
 
Page 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3  
II. OPENING STATEMENT BY THE REPRESENTATIVE OF SWITZERLAND  4 
III. OPENING STATEMENT BY THE REPRESENTATIVE OF LIECHTENSTEIN 7 IV.
 STATEMENT BY THE DISCUSSANT 9  
V. STATEMENTS BY MEMBERS 10  
VI. REPLIES BY THE REPRESENTATIVES OF SWITZERLAND AND 
LIECHTENSTEIN, AND ADDITIONAL COMMENTS 17  
VII. CONCLUDING REMARKS BY THE CHAIRPERSON 24
 
Note:   Advance written questions by WTO Members and the replies provided by Switzerland and 
Liechtenstein are reproduced in document WT/ TPR/M/141/Add.1 and will be available online 
at:http://www.wto.org/english/tratop_e/tpr_e/tp_rep_e.htm. WT/TPR/M/141 
 Page 3 
 
 
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 
1. The second joint Trade Policy Review of Switzer land and Liechtenstein was held on 15 and 
17 December 2004.  The Chairperson (H.E. Mrs. Pu angrat Asavapisit) welcomed the delegations of 
Switzerland, headed by H.E. Mr. Luzius Wasescha, and Liechtenstein, headed by 
H.E. Mr. Norbert Frick, and the discussant H.E. Mr . Ujal Singh Bhatia (India).  As usual, the 
discussant would speak in his personal capacity and, in accordance with established procedures, had 
made available in advance a broad outline of the themes he intended to raise (document 
WT/TPR/D/115). 
2. The Chairperson recalled the purpose of the Trad e Policy Reviews and the main elements of 
the procedures of the meeting.  The Reports by Switzerland and Liechtenstein were contained in 
document WT/TPR/G/141 and that of the Secret ariat in document WT/TPR/S/141.  Copies of 
advance written questions, submitted by:  Canada ;  Japan;  Costa Rica;  Hong Kong, China;  
New Zealand;  the United States;  the Republic of  Korea;  Australia;  the European Communities 
(EC);  Mexico;  Singapore;  the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu;  
Colombia;  Thailand;  and Brazil had been tr ansmitted to the delegations of Switzerland and 
Liechtenstein.  These questions and the replies provided by the delegations of Switzerland and 
Liechtenstein were reproduced in WT/TPR/M/141/Add.1.  
3. The Chairperson stated that the documentati on prepared for the Review highlighted the 
importance of external trade for Switzerland and Liech tenstein, as well as importa nt steps taken by the 
countries since 2000 to further liberalize their tr ade regimes, mainly through closer regional 
integration.  Their non-agricultural markets remain ed largely open and their services sectors generally 
liberalized.  Switzerland had strengthened its compe tition policy and had been further liberalizing its 
internal market. 
4. The report by the Secretariat emphasized the dualism in the Swiss and Liechtenstein 
economies.  In contrast with non-agricultural goods , agricultural products remained highly protected 
by various measures, including tariffs, and benefited from broad support.  This policy, together with 
state monopolies in several utilities, contributed to  the non-competitiveness of some industries, such 
as those producing food.  
5. The Chairperson was sure that Members woul d be interested to learn more about the 
multilateral effects of the reforms implemented by Switzerland and Liechtenstein, and about their 
plans for further reforms, as well as for taking up the challenges faced by them.  WT/TPR/M/141 
Page 4  
 
II. OPENING STATEMENT BY THE REPRESENTATIVE OF SWITZERLAND 
6. The representative of Switzerland
 thanked the Chairperson, and underscored the high quality 
of the Report by the Secretariat.  This needed  to be updated, however, because there had been 
progress in various reforms since it was drafted.   
(i) Role of international trade in the Swiss economy  
7. He reiterated the great importance that Switzer land attached to the WTO and the multilateral 
trading system.  The Swiss economy was specialized in key sectors, high technology, industry, finance, and insurance.  Many Swiss companies e xported over 90% of their production.  They bought 
raw materials and semi-finished goods at the best conditions on very competitive international 
markets, and tended to concentrate on the high-tech  and high value-added activities in Switzerland.  
Imports were facilitated by quick and efficient cu stoms procedures, and an average tariff on non-
agricultural goods of only 2.3%.  
8. Switzerland had not resorted to anti-dumping or  countervailing measures, nor to safeguards.  
It had never had, and would ne ver have, quotas on textiles and clothing;  a strong structural 
adjustment had taken place in this sector, which had lost 40% of employment in the last 15 or 
20 years, and which had received no state interven tion or support  The Swiss market was small 
(7 million consumers), and therefore several key manufacturing sectors,  banks, and insurance 
companies had to expand abroad.  Switzerland wa s trying to reinforce the competitiveness of its 
economy by pursuing macroeconomic policies aimed at fiscal consolidation and price stability.  The disappointing economic growth performance for over a decade, however, had shown that good 
macroeconomic policies and trade liberalization were  not sufficient to ensure sustained growth.  
(ii) Main aim of the structural reforms:  to strengthen Swiss economic growth  
9. After its failure to join the European Economic  Area (EEA) in 1992, Switzerland had had to 
pursue autonomous reforms, which was more difficult than implementing an international treaty.  The 
reforms concentrated on four factors of growth.  First, competition had been strengthened and public 
infrastructure liberalized progressively.  Second, was the increase of supply and quality of labour. 
Third, framework conditions for innovation had been improved through better contacts between 
universities and business, and an increase in resourc es for research;  in addition, the Law on Patents 
and the taxation of employee stock options had b een reviewed, and the legal framework for major 
corporations modernized.  Fourth, the impact of the State on the economy had been reviewed.  As a 
result, a debt brake, analyses of the impact of  regulations, and a reform of corporate taxation were introduced.  
10. Despite these reforms, the weakne ss of growth had remained a pe rsistent problem.  Therefore, 
in 2004, the Government had approved a new refo rm package that contained 17 measures to boost 
economic growth.  These measures were aimed at improving the underlying conditions for the dynamic, productive, and competitive parts of the economy, and guaranteeing them access to more 
resources.  
(iii) Links between trade, the WTO, and domestic policies  
11. The new Competition Law (an amendment to the Law on Cartels) had entered into force on 
1 April 2004;  the transition period would end in Ap ril 2005.  Penalties could now be applied directly 
to certain types of infringement, and a lenien cy programme had been introduced, aimed at 
encouraging companies to reveal cartel activities in which they participated.  
12. Further reforms had been made in telecommunica tions;  liberalization of access to the "last 
mile" was debated in Parliament.  Complete libera lization of parcel transport for postal services had  WT/TPR/M/141 
 Page 5 
 
 
been effective from 1 January 2004.  The first ph ase of railway reform ha d begun in January 1999, 
and a second would be discussed soon;  companies had been obliged to separate the functions of 
transportation and infrastructure;  and access to the network had also been opened.  
13. A new Customs Law was before Parliament;  the present law had been in force since 1925.  It 
laid down customs procedures, whereas the Customs Tariffs Law set out how customs tariffs were 
determined.   The draft law harmonized the Swiss cust oms legislation with rele vant international law, 
in particular with the work of the World Customs Organization and the EC.  
14. The dichotomy between the Swiss manufacturing and services sectors, on the one hand, and 
the agriculture sector, on the other hand, was justifie d by the need to pursue non-trade concerns in 
agriculture.  But the Government's policy was to phase out trade-distorting measures, in conjunction 
with the EC and WTO negotiations;  and agriculture  now had to be included in the overall budgetary 
cost-cutting effort.  Switzerland and the EC had a bilateral agreement on agriculture that improved 
market access on a reciprocal basis;  they woul d have free trade on cheese in 2007.  This agreement 
also included reciprocal commitments on phytosan itary and zootechnical provisions, geographical 
indications, and marketing standards recognition. 
15. As to Switzerland's WTO commitments, the reform of agricultural policy had reduced 
production-related support and liberalized the domes tic market.  Direct payments, decoupled from 
production, were increasingly replacing market support.   Once all elements of the Agricultural Policy 
2007 were in place, the State would hardly interven e in the market, aside from customs protection.  
For example, the milk quota system (the last govern mental intervention in the dairy sector) would be 
abolished by 2009.  Switzerland was also prepari ng future agriculture reforms to implement the 
results of the Doha Round.   
16. Three developments in financial services were of  interest:  progress in the establishment of an 
integrated Financial Market Supervisory Authority;   implementation of the revised recommendations 
of the Financial Action Task Force on Money Launderi ng;  and work to completely overhaul the Law 
on Mutual Funds.   
17. Protection of intellectual property rights was important;  trade in counterfeit goods 
represented 10% of world trade, while agriculture re presented only 8.5%.  In an environment of weak 
economic growth, it was necessary to stimulate res earch, development and innovation efforts.  Only 
strong protection, within a strict international frame work, could justify enormous research costs.  The 
protection of geographical indications was essentia l for agricultural and non-agricultural products;  
recognition and international respect of these was a priority for Switzerland.  Three laws on IPRs (the 
Federal Law on Copyright and Neighboring Righ ts, the Law on Patents, and the Law on the 
Protection of New Varieties of Plan ts) were being partly revised.   
18. Government procurement represented about 25%  of total public expenditures and 8% of 
GDP.  Overall, the federal legislation on governme nt procurement had proved its worth.  However, 
the Confederation was reviewing certain provisi ons that made for cumbersome procedures, 
complicated management, or impeded the use of new technical facilities. The Confederation was 
seeking to broaden, in a competitive way and lim ited to complex offers, the dialogue between 
agencies and suppliers involved in government procur ement.  Adjudication rules needed to be made 
more flexible so that procedures could be quicker  and more efficient. It was also essential to 
harmonize requirements at the national level.  Sinc e 2000, the Swiss Alcohol Board (which aimed to 
limit high-degree alcohol production and consumption for public health reasons) was the only 
remaining state-trading enterprise in the agriculture sector.   
19. The Law on the Application of Genetic Engineer ing had entered into force on 1 January 2004 
to regulate the use of GMOs in food production;  it had been notified to the WTO.  Requirements for the labeling of foodstuffs and animal feed containi ng GMOs would be amended to take into account WT/TPR/M/141 
Page 6  
 
the new Law relating to Non-Human Ge ne Technology;  this amendment s hould come into force on 
1 February 2005.  On technical barriers to trade, further steps had been taken to harmonize the Swiss 
legislation with international requirements or standards.  
20. Environment and core labour standards were im portant priorities in Swiss domestic policy.  
Switzerland participated actively in international negotiations on the environment with the goal of 
promoting sustainable development, and had always stressed the importance of core labour standards, 
also in the WTO.  Switzerland believed that enviro nment and core labour sta ndards regulations had to 
be mutually supportive with WTO regulations.  
(iv) External relations and development 
21. Economic openness and trade liberalization were  major priorities for Switzerland.  These 
factors would allow the most dynamic economic sect ors to develop, which in turn would facilitate 
necessary structural adjustment.  Switzerland's po licy in the manufacturing and services sectors was 
liberal;  their performance, and Switzerland's high st andard of living, showed that this policy had 
succeeded.  Since external compe titiveness was never fully achieved, Switzerland had maintained its 
efforts towards further liberalization and market openness.   
22. The acceleration of globalization provided oppor tunities and challenges for all parties in 
international trade.  For the opportunities to predom inate, it was important that gradual liberalization 
was governed by correctly applied international rul es.  This was particularly important for small 
countries, which were more fragile because of thei r strong dependence on external trade.  Switzerland 
supported the strengthening of the multilateral trad ing system by better integrating developing 
countries;  therefore, it desired a successful conclusion of the Doha Round.   
23. Switzerland was also involved in further liberali zation through regional or bilateral free-trade 
agreements.  Its policy within EFTA resulted from th e need to safeguard market access in partner 
countries and eliminate discrimination against Swi ss exporters resulting from preferential agreements 
entered into by trading partners.  Switzerland was strengthening its free-trade network in the 
Mediterranean area, south-east Europe, and with so me countries outside Eur ope.  On 1 June 2002, 
Switzerland began to implement the first seven bila teral agreements with the EC, and a second series 
of agreements was under preparation.   
24. Switzerland strongly supported the integration of developing countries, countries in transition, 
and LDCs in the global economy through trade an d investment.  The Swiss authorities favoured 
market opening measures in favour of LDCs, specia l actions for acceding countries, and a reinforced 
of technical assistance activities to assist developi ng countries to improve their capacity to benefit 
from integration into the multilateral trading system.   WT/TPR/M/141 
 Page 7 
 
 
III. OPENING STATEMENT BY THE REPRES ENTATIVE OF LIECHTENSTEIN  
25. The representative of Liechtenstein  stated that Liechtenstein was committed to the 
multilateral trading system and to further strengthening its rules, as well as greater trade liberalization.  
A strong, rule-based system provided stability,  security, transparency, and predictability.  
Liechtenstein depended heavily on international trade and open markets, and was convinced that a 
strong and fair multilateral trading system benefite d Members, and all nations.  Liechtenstein was 
therefore strongly committed to the Doha Development Agenda (DDA). 
26. Liechtenstein belonged to the EC internal market through the European Economic Area 
(EEA) Agreement, and had become part of the Sw iss internal market through the Customs Union 
Treaty.  Trade policy measures affecting imports and exports were formulated by Switzerland and 
applied in Liechtenstein.  Commerc ial treaties and trade agreements concluded by Switzerland applied 
also to Liechtenstein.  In the WTO, Liechtenste in was represented by Switzerland for matters under 
the Customs Union Treaty.  However, Liechtenstein  acted independently in other matters, such as 
services or public procurement. 
27. The Swiss competence in trade matters did not apply for imports of products covered by the 
EEA Agreement, originating from the other EEA me mber states and destined for Liechtenstein.  
Therefore, Liechtenstein had established a Market  Control and Surveillan ce Mechanism.  The EEA 
Agreement did not include the EC common agricultur al policy, and its annex on veterinary matters 
did not apply to Liechtenstein.  Therefore, trad e in agricultural goods was covered by the Customs 
Union Treaty, even in relation to the EEA members.  
28. Economic indicators for 2000-03 had reflected a period of stagnation;  the economy had 
begun to recover since 2003.  Despite the econom ic slowdown, employment had increased steadily 
from 26,797 in 2000 to 29,055 in 2003, and was expected  to reach 30,000 in 2004;  this was a high 
figure in relation to the resident population (about 34,500).  Non-agricultural exports had decreased 
during 2000-02, but had increased by 8.2% in 2003 to around their 2000 level.  The expected growth 
rate in exports for 2004 was about 10%.  Exports to Switzerland remained at around 12% of the total;  
in 2003, exports to EEA members had increased by ove r 10% (43% of the total) as had exports to 
other countries (44% of all exports).  The main expor t destinations were the United States;  Germany;  
Switzerland;  the Separate Customs Territory of Taiwan, Penghu, Kinmen, and Matsu;  Hong Kong, 
China;  and Japan.  In 2003, the export industry had not increased employment in Liechtenstein itself, 
but had opened 18 branches abroad.  
29. Liechtenstein's inflation rate was the same as Swit zerland's.  Interest rates remained stable.  
Unemployment was traditionally very low, with a  ma ximum rate of 2.4% in 2004.  In 2002 and 2003, 
Liechtenstein's current account had been negative for the first time in many years. 
30. Liechtenstein was highly dependant on external re lations:  virtually all raw materials, inputs, 
and products had to be bought abroad, and virtuall y all goods produced were exported.  Therefore, 
Liechtenstein's economic prospects depended highly  on economic developments in its main trading 
partners.  Liechtenstein also had internal constrai nts for further growth, such as the very low supply 
of, and high prices for, land and property, and a dried-out labour market.  However, the broad 
diversification of businesses and products, and the sp ecialization of its enterprises in niche and high-
technology products should enable Liechtenstein to match intern ational economic developments. 
31. In 2003, 53.7% of all employees worked in services, 45% in manufacturing, and 1.3% in 
agriculture and forestry.  About 45% of the total work force commuted daily from the region (Austria 
and Switzerland) to Liechtenstein.  Although ag riculture was not of great economic importance, 
Liechtenstein attached great importance to su stainable agricultural activity necessary for the 
preservation of natural resources and the landscape.  WT/TPR/M/141 
Page 8  
 
32. For decades, the Government had followed a ve ry liberal economic policy aimed at keeping 
state intervention to a minimum.  Liechtenstein had neither public funding for private undertakings (except in agriculture), nor a public policy to attr act new FDI.  The Government's main goal was to 
preserve the existing positive framework  conditions for economic operators.  
33. Due to international and EEA standards, Liech tenstein had started to liberalize postal, 
telecommunication, and transport services in the 1990s.  Since 2000 this process had continued and 
structures had been adapted and optimized.  The Parliament had approved the first steps towards 
privatization of the electricity and gas sector. 
34. The EEA Agreement had extended the EC inte rnal market to Norway, Iceland, and 
Liechtenstein.  The agreement covered the free move ment of goods, persons, capital, and services.  Its 
common rules were continuously upda ted by adding new legislation;  since 1994, more than 4,000 EC 
legal acts had been incorporated.  Liechtenstein had become a member of the EFTA in 1991.   
35. The representative emphasized the importance of  the TPR mechanism as an opportunity for 
dialogue between Members on their trade policies,  enhancing transparency and strengthening 
disciplines.  In the long run, it contributed to mo re disciplined economic policies and to a faithful 
implementation of the WTO Agreements.   WT/TPR/M/141 
 Page 9 
 
 
IV. STATEMENT BY THE DISCUSSANT 
36. The discussant  said that the Review of Switzerland and Liechtenstein presented interesting 
opportunities for a discussion of their economic mode l.  They were among the most prosperous 
countries in the world, and had maintained genera lly liberal trade regimes in the manufacturing and 
services sectors.  Recent reforms had added to the co mpetitive edge of these sectors.  In contrast, the 
agriculture sector continued to be protected;  the Swiss level of financial support to agriculture had 
remained unchanged since 2000. 
37. Since 2000, Switzerland had experienced a diffi cult economic period.  However, signs of 
recovery had been evident since 2003;  a growth ra te of around 1.8% of real GDP was expected in 
2004.  Considering the strongly export-led nature of the Swiss economy and the direction of trade 
heavily converging towards Europe, sustained r ecovery would also hinge on the EC's economic 
environment.  During the same period, Liechtenste in's economy had been growing rapidly, with a 
boom in employment.  The major difference in tr ade and economic policy between the two countries 
was Liechtenstein's membership of the EEA sinc e 1995.  The discussant was interested to hear 
Switzerland's and Liechtenstein's perceptions ab out their differing economic trajectory during the 
2000-04 period. 
38. Somewhat untypically for a high-income and mature economy, Switzerland was still 
undergoing major institutional and regulatory tran sformations.  There were two main impulses 
towards change:  the progress of integration (economic and regulatory) with the EC;  and the emerging contours of new WTO disciplines in agriculture.  These ongoing changes presented major challenges for policymakers;  their task was all the more difficult as the economy was slowly 
emerging from a period of contraction and sluggish gr owth.  Changes had also to be achieved within 
the framework of Switzerland's internal structur es and procedures, includi ng frequent referenda on 
public policy issues.  He believed that a full assessme nt by the Swiss Government of the prospects, 
from the standpoint of internal constitutional proce dures, as well as of the short and long term impact, 
of the ongoing integration project with the EC would be of interest in this Review. 
39. Although Switzerland and Liechtenstein remained  committed to the multilateral trading 
system, they participated actively in regional trading arrangements and had many FTA and RTA 
partners.  These arrangements were said to be n ecessary to eradicate discrimination against Swiss 
exports resulting from preferential arrangements with  third countries by trading partners.  However, 
this presented a major systemic issue:  if all Me mbers acted on the logic of competitive regionalism, 
FTAs/RTAs could proliferate ad infinitum;  ther efore, there was a case for some restraint.  
40. Swiss agricultural policy remained of much inter est to its trade partners.  It was predicated 
upon the multifunctionality of agriculture and non-trade concerns, such as the preservation of the environment and the rural landscape.  Since 1999, th e Swiss Government had abolished all price and 
sales guarantees, and had steadily moved towards dir ect payments.  However, the Agricultural Policy 
2002 had not affected the overall levels of produc tion and self-sufficiency, although the production of 
individual commodities/crops had changed.  Financ ial support to Swiss agriculture had remained 
unchanged since 2000, despite continuing fiscal pressu res.  There appeared to be some concern 
among trading partners that some direct payments  remained linked to factors of production (for 
example, the number of farm workers).  The disc ussant noted Switzerland's intention to virtually 
phase out state intervention under Agricultural Polic y 2007 and asked for some elaboration on this 
policy, as well as the proposed direction of reform beyond 2007.  Other features of the trade and 
economic policies of the two countries also merited discussion, including the high incidence of 
agricultural tariffs, the issue of specific duties acro ss all tariff lines, the impact of exchange rate 
fluctuations on foreign trade, and the issues of  deregulation and promotion of competition.   
 WT/TPR/M/141 
Page 10  
 
V. STATEMENTS BY MEMBERS 
41. The representative of the United States
 said that Switzerland and Liechtenstein were two of 
the world's richest countries and that trade was importa nt in generating and sustaining this wealth as it 
equaled almost 80% of Swiss GDP and almost 120% of Liechtenstein's.  The two countries were home to some of the world's most competitive enterprises in insurance, banking, medical and 
pharmaceutical products, and precision machinery.  Swiss imports from the United States had 
declined and were increasingly concentrated in  Europe, due to European economic integration 
through preferential arrangements. 
42. Switzerland and Liechtenstein actively supporte d the multilateral trading system.  Despite 
some disagreements, the United States shared with them important objectives, such as non-
agricultural market access (NAMA), services, the pr otection and enforcement of IPRs, and ensuring 
the continued success and vitality of the WTO system.  The United States commended the Swiss 
commitment to, and engagement in, trade cooperation programmes. 
43. There was a glaring disparity between the op enness of the two countries to trade in non-
agricultural products and their high level of protecti on for agriculture.  While simple average tariff 
rates were around 2% for non-agricultural products, they were 36% for agriculture, which remained 
sheltered from competition.  Since the agriculture  sector had been largely excluded from coverage 
under preferential agreements, food was expensive,  and even the most competitive agricultural 
exporters had trouble exporting to these markets.  Switzerland and Liechtenste in relied on non-trade 
concerns to justify their high levels of agricultu ral support and protection, including promoting food 
security, protecting the environment, and preserving  a rich farming heritage, but these objectives 
should not distort trade.  The United States wondered whether such barriers faced by U.S. agricultural 
exporters were really excuses for old-fashioned protectionism. 
44. The representative asked for more information on the administration of tariff-rate quotas, and 
on how the authorities prevented domestic producers from obtaining quotas and not filling them.  The prise en charge  system remained for important commodities (meat, fruit, and vegetables), and was a 
cause for concern given its local-content aspects. 
45. The representative of Canada
 congratulated Switzerland for its commitment to the multilateral 
trading system, and underlined its constructive role , also representing Liechtenstein, at the WTO.  
Canada and the two countries shared objectives for a tangible result of the Doha Round in improving 
market access for goods and services, strengthening th e rules, and integrating developing countries in 
world trade.    
46. Switzerland and Liechtenstein attached importanc e to opening up their markets for goods and 
services.  The Swiss objectives of increasing internati onal competitiveness, fiscal consolidation, price 
stability, and a return to economic growth were  commendable, given the rather hostile economic 
conditions.  Canada also welcomed the revised Law on Cartels.  He asked why there was public 
monopoly in certain sectors of the insurance sector, and further details on the prerequisites for foreign 
banks and brokers to access the Swiss market.  Desp ite the new competitive legislative environment, 
telecommunications affected by the reform could suffer from the contradiction between the objectives 
set in the Swiss legislation and their implementation;  the representative wished to know how Switzerland planned to avoid this.  
47. He asked about the expected impact of the la belling of genetically modified food products;  
the limit of 0.9% set to identify genetically modi fied food seemed to cause practical problems.  
Canada asked for clarification on the way Switzer land planned to carry out sampling and testing of 
food products.    WT/TPR/M/141 
 Page 11 
 
 
48. Canada highlighted Liechtenstein's preventiv e measures to fight money laundering and the 
financing of terrorism;  its strong adhesion to th e Financial Action Task Force standards had been 
recognized by international organizations, including the IMF.  
49. The representative of Japan  said that Japan and Switzerland depended highly on the 
multilateral trading system and suppor ted free and fair trade.  The geographical characteristics of the 
two countries, as well as Liechtenstein, and the impor tant multifunctional role played by agriculture, 
partly explained why they shared similar positions  in the DDA negotiations, including on agriculture. 
50. In 2002, Switzerland had enforced its bilatera l agreement with the EC in seven areas 
(including free movement of persons), and had si gned the second sets of agreements in 2004.  Since 
enforcement, cases of unfavourable treatment for Japanese applicants had been reported regarding 
free movement of persons.   
51. Switzerland was proceeding autonomously with trad e liberalization and structural reforms;  
Japan hoped that Switzerland would continue this and undertake further commitments in the ongoing 
negotiations.  Japan was particularly interested in th e elimination of the requirement that the majority 
of the board of directors of a stock corporation had to be Swiss citizens with domicile in Switzerland.  
52. The representative of Hong Kong, China  agreed with Switzerland that the July Agriculture 
Package had provided fresh impetus to the negotia tions, and had laid the groundwork for the next 
stage.  Switzerland's and Liechtenstein's commit ment and active engagement in the negotiations 
would aid their progress and successful conclusion. 
53. Switzerland's and Liechtenstein's tariffs on non- agricultural products were generally low, but 
those on agriculture were very high.  Applied tariffs  on textile and clothing products had been reduced 
autonomously in January 2002.  Hong Kong, China en couraged the two countries to continue their 
active participation in the ongoing negotiations, and to substantially reduce, if not, eliminate their 
tariffs, in particular on agricultural products, and si mplify their tariff structure, in particular the 
application of specific duties on all tariff lines.  It al so encouraged them to ta ckle the remaining tariff 
peaks on selected non-agricultural products, such as papers and textiles. 
54. Switzerland and Liechtenstein did not have any anti-dumping, countervailing or safeguard 
measures on regulations in place.  Other Members sh ould learn from this since such regulations were 
not relevant in a globalized economy.  Some 92%  of the standards in force in Switzerland and 
Liechtenstein were international;  however, there was still strong reliance on national standards for 
watches and road construction, and Hong Kong, China encouraged the two countries to harmonize 
these with international standards.  Sanitary and phytosanitary requirements by Switzerland and 
Liechtenstein on imports of plants and plants produc ts from the EC and certain third countries were 
different from those on other Members.  Hong Kong,  China encouraged the two countries to accord 
the same treatment to all Members to reflect the MFN principle.   
55. The representative of Costa Rica  said that his country and Switzerland shared the objectives 
of strengthening the multilateral trading system, and improving existing rules, in particular in anti-
dumping, trade facilitation, and strengthening the Dispute Settlement Mechanism.  Costa Rica 
thanked Switzerland for its contri bution to technical assistance.  
56. Costa Rica was concerned about Switzerland's and Liechtenstein's agricultural policy, and its 
disparity with the services and manufacturing sectors.  Switzerland was among the OECD countries that gave most assistance to agriculture compared  with the value of its production.  Costa Rica asked 
how Switzerland ensured that these trade-distorting mechanisms did not affect the interests of 
developing countries;  which processed agricultural products were granted export subsidies;  and how 
much was granted to this type of assistance.  Costa Rica was also interested in regulations applied to WT/TPR/M/141 
Page 12  
 
GMOs.  Switzerland applied specific tariffs;  their use should be reduced  to avoid inequalities in 
tariffs applied to like products.   
57. The representative of New Zealand
 said that Switzerland's economic success had been built 
upon the hard work and ingenuity of its people,  and the continuing competitiveness of its key 
economic sectors.  Switzerland had achieved competitiveness in non-agricultural products by 
eschewing the protection and subsidies that hampered the efficient allocation of capital to the most 
competitive industries.  This explained why many of the most competitive Swiss industries were in the most open areas of its economy.  However, ther e was scope for improvement;  for instance, it was 
difficult to see the value for Switzerland and Liechtenstein of the high number of nuisance tariffs, which were a feature of the Swiss regime for i ndustrial products.  Conversi on of the Swiss specific 
tariff regime to an ad valorem regime would provide transparency, coherence, and predictability.   
58. The success of Switzerland's unprotected sect ors highlighted the problem of its highly 
protected agriculture sector, which was a significan t cost to the Swiss economy itself.  Switzerland 
was the second highest user of export subsidies, whic h should be of particular concern for Members;  
as it was the fifth largest dairy exporter, these s ubsidies were likely to distort world markets, 
particularly those for cheese.  The scale of the subs idies involved and their likely effect on the world 
markets were strong arguments for unilateral reduction.   Switzerland also operated a highly restrictive 
market access regime for agricu ltural goods, with generally prohibitive out-of-quota tariff rates for 
domestically produced products.  The problematic natu re of this regime was highlighted by the Swiss 
Price Compensation Scheme, which implicitly recognized  the extra cost the agricultural policy put on 
its food processing industry.  This then required furthe r protections to the point that it was one of the 
most protected activities of the Swiss and Liech tenstein economies, although Switzerland had well-
established food processing companies that could operat e competitively in a liberalized environment.  
Therefore, Swiss food prices were significantly higher than those in neighbouring countries, with an impact on the Swiss economy, in particular tourism. 
59. Switzerland was likely to maintain that its el aborate subsidy schemes and prohibitive market 
access restrictions were necessary to  meet non-trade concerns, particularly for farmers in a marginal 
Alpine environment.  However, these could clearly be achieved in a less trade-distorting manner.  It 
was then disappointing that the Agricultural Polic y 2007 had moved back towards trade distorting 
subsidies, although, apparently, these would not  be put into place during the 2004-07 period. 
60. The representative of the Republic of Korea
 said that Switzerland and Lichtenstein shared 
many views with Korea in the ongoing DDA nego tiations (for example, agriculture, NAMA, and 
trade facilitation).  Korea and the EFTA countries had established a joint Study Group to evaluate the 
feasibility of an FTA;  a Record of Understanding at the Ministerial level launching the Korea-EFTA 
FTA was to be signed, with a view to co mpleting the negotiation at the end of 2005. 
61. The representative of Australia  said that while Swiss imports to Australia had increased over 
the last five years, Australian exports to Switzerla nd had declined by almost 60%.  While this trend 
could be attributable to a number of factors, some  significant import barriers in areas of Australia's 
competitive advantage, most notably agriculture, impeded the growth of their two-way trade. 
62. Switzerland was renowned for its openness and innovation in the services and manufacturing 
sectors.  Australia welcomed the reforms in financ ial services, telecommunication, and postal services 
since 2000.  Unfortunately, for many trading part ners, these developmen ts were overshadowed 
because Switzerland retained one of the world's mo st distorted and heavily protected agriculture 
sectors.  The Agricultural Policy 2007 had introdu ced reforms, but Australia questioned their real 
impact, when:  the level of financial support fo r agriculture had remained unchanged since 2000;  
reforms in the beef sector involved the auctioning of tariff rate quotas, which Australia regarded as 
inconsistent with the GATT and WTO Agreements;  some direct payments to farmers remained 
linked to factors of production, despite moves to  decouple domestic support from production;  and the  WT/TPR/M/141 
 Page 13 
 
 
entire tariff schedule for agriculture consisted of non- ad valorem duties, which had adverse counter-
cyclical effects on the level of protection, and we re less transparent.  He asked for details on the 
progress of the agricultural reforms. 
63. Switzerland and Australia enjoyed a close and productive working relationship in the DDA, 
particularly in services, NAMA, and trade facilitati on.  However, agriculture and Switzerland's pursuit 
of non-trade concerns, especially in trade and envi ronment, and geographical indications, was a point 
of departure for Australia:  it was difficult to see how economic and developm ent gains from the Doha 
mandate could be realized if Members remained preoccupied with exceptions for sensitive products, 
flexibilities, and non-trade concerns. 
64. Australia noted that Switzerland and Liechtenste in had entered into a network of FTAs, both 
as EFTA members and separately with other countri es on agriculture.  Australia remained concerned 
about how these agreements could c over "substantially all trade" when  Switzerland maintained such a 
high level of protection in agriculture. 
65. The representative of the European Communities  said that Switzerland and the EC had had an 
FTA since the early 1970s;  Liechtenstein had ta ken a further step and had institutionalized its 
cooperation with the EC within the EEA.  Switzer land and the EC were lying the foundations for a 
closer economic relationship with sev eral bilateral agreements that had been signed and others that 
had been negotiated.  The pursuit of a common re gulatory policy between Switzerland, Liechtenstein 
and the EC/EEA would also facilitate trade with the rest of the world.  
66. The EC welcomed reforms aimed at increasing tr ansparency and promoting competition.  The 
Electricity Supply Law was scheduled for 2007, but it s earlier entry into force would benefit the Swiss 
industrial consumers.  Further steps could also be taken in the agriculture sector, thereby also reducing 
the cost of living.  
67. The two countries had taken actions to promote growth and sustainable development.  They 
had put into place extensive measures aimed at assi sting developing countries and at furthering the 
social and environmental dimensions of globalizati on.  Switzerland had called for the trade and social 
issues to be dealt with cohesively.  The EC not ed the Swiss contributions to trade cooperation 
programmes that placed the need of developing countri es at the core of negotiations.  The EC wished 
to continue the work with Switzerla nd and others to ensure that all, in particular the poorer developing 
countries, enjoyed the increase in prosperity through participation in global trade.  The EC was convinced of Switzerland's and Liechtenstein's impor tant contributions for a successful outcome of 
the DDA, and welcomed their constructive engagement in NAMA and services. 
68. The representative of Mexico
 said that his country considered  the TPR as the most objective, 
transparent, and functional mechanism to iden tify the congruency of the measures adopted by 
Members with the WTO rules.  This mechanism help ed to identify areas that could be improved.  He 
highlighted two important areas of concern for Mexi co:  the high level of protection in agriculture, 
which impeded fair competition, and the remaining export subsidies for agricultural products;  and the 
harmonization of technical, sanitary, and phytosanitary rules with those of the EC, which could have a 
negative impact on MFN treatment.  
69. The representative of Singapore  joined others in complementing Switzerland for its reforms, 
technical assistance, and openness in the non-agricu lture sectors.  However, there was a dichotomy 
with agricultural support, which had resulted in very  high food prices at the expense of consumers.  
While Singapore acknowledged the two countries' right to  high levels of food safety, it urged them to 
use the least trade-restrictive measures to achie ve this.  Singapore believed that RTAs could 
complement the WTO negotiations, and ensure market  access on a reciprocal basis.  However, while 
common regulations between Switzerland and the EEA  might facilitate global trade and investment, WT/TPR/M/141 
Page 14  
 
Singapore urged them to avoid a Eurocentric bias in trade and investment flows and policies at the expense of non-European members. 
70. The representative of the Separate Customs Te rritory of Taiwan, Penghu, Kinmen, and Matsu
 
(Chinese Taipei) congratulated Switzerland and Liech tenstein on their substantial economic recovery 
over the past year.  Chinese Taipei appreciated the active role of Switzerland and Liechtenstein in the 
WTO.  Chinese Taipei shared with them views on DDA issues, such as agri culture, trade in services 
and non-agricultural goods, trade facilitation, rul es issues, and trade and environment, but was 
concerned that market access achieved on a bilateral or regional basis could adversely affect trade and 
investment at the expense of Members outside of these agreements. 
71. The representative of Colombia  pointed out the paradox between the broad liberalization in 
manufacturing and services, and the excessive protection in agriculture.  Switzerland and 
Liechtenstein had expressed their support for th e DDA and she was interested in hearing what 
changes they might make in favour of developm ent.  She called for changes to Switzerland's 
agricultural policy and agri-food policies, which n eeded to be more tran sparent and exposed to 
competition.  A move towards ad valorem  tariffs would be a very good contribution, as would the 
elimination of import prohibitions.  A comprehensiv e development vision was important in order for 
developing countries to gain better market access in the developed world.  While Switzerland was the 
second largest European investor in Colombia, Co lombian export products, su ch as sugar and sugar 
derivatives, faced high barriers on the Swiss market.   
72. The representative of Thailand  focused on a few major areas of concerns, including 
agriculture with its high level of protection (i .e. high tariffs, export s ubsidies, various support 
programmes, tariff quotas that required the purchase of similar local products in a set proportion);  
and specific duty rates, and tariff peaks.  Tha iland commended Switzerland's and Liechtenstein's 
commitment to the multilateral trading system and their active and constructiv e roles in the WTO and 
in the DDA.  Thailand also appreciated the autonom ous reduction of tariffs on textiles and clothing 
products in 2002, the reforms in the services sector , the absence of trade re medy measures, and the 
support to integrate developing countries, transition economies, and LDCs into the multilateral trading 
system.   
73. The representative of Norway  noted that Switzerland and Liechtenstein were among the most 
liberal countries in the world, and congratulated Switzerland for recent reform initiatives, notably to 
eliminate the remaining discriminations between cantons that limited free circulation of services and professionals.  Norway had very strong ties with  Switzerland and Liechtenstein in foreign trade 
policy.  Since 1960, Switzerland and Norway had been partners to the EFTA.  Through the EFTA, 
they negotiated FTAs together.  Liechtenstein was a member of EFTA and a close partner of the EEA.  
These agreements ensured solid cooperation and importa nt trade flows.  In the WTO, Norway and the 
two countries shared a common position on sensitive produc ts and non-trade concerns in agriculture.   
74. The representative of Benin
 congratulated the two countries for their efforts and reforms 
under way, and hoped that during the WTO agricultural  negotiations, they would make a major effort 
to eliminate agricultural subsidies.  Switzerla nd had shown solidarity with poor and vulnerable 
countries by understanding their situation and seeking with them approaches and solutions that would 
enable them to extract themselves from difficu lty.  Benin benefited from dynamic and fruitful 
cooperation with Switzerland. 
75. The representative of Bulgaria  joined previous speakers in commending Switzerland's and 
Liechtenstein's support for the multilateral trading sy stem, as well as their contribution towards higher 
standards of sustainable development in devel oping countries and LDCs.  Trade relations with 
Bulgaria, traditionally very good, were based on a 1993 FTA between the EFTA states and Bulgaria, 
which covered goods, intellectual property, compet ition, state aid, dispute settlement, government 
procurement, services, and investment.    WT/TPR/M/141 
 Page 15 
 
 
76. The representative of India  said that Switzerland and Liechtenstein maintained a generally 
liberal trade regime.  However, the level of support in  the agriculture sector continued to be one of  
the highest among Members.  The use of specific duties, which targeted low priced imports and 
depended on factors such as world prices and exchange  rate variations, added further complexity to 
the agricultural trade regime.  For one agricultural product the ad valorem  equivalent was as high as 
1,700%.  He hoped that the two countries could progress towards agricultural reform, both through 
the ongoing DDA negotiations and autonomously. 
77. India agreed with Switzerland that special a nd differential dispositi ons should be better 
adapted to needs of developing countries, and that  the provisions should be made more effective, 
precise, and operational.   
78. The representative of Pakistan  said that Switzerland and Liechte nstein were role models for 
growing economies.  Switzerland was a hub for the wo rld's financial and insurance services, a source 
of precision technology, and had great potential fo r generating enough capital for investment abroad.  
Pakistan appreciated the very low tariff of around 2% on non-agricultural goods;  however, high protection in the agriculture sector still hindered fa ir competition in international trade flows.  
Pakistan, an agriculture-based economy, was seriously looking forward to an ear ly softening up of the 
agriculture import regime. 
79. The representative of Turkey
 noted the recent macroeconomic reforms, and said that 
Switzerland had pursued several structural reforms of  its trade and related policies (including energy, 
telecommunications, cartels, standards, IPRs, a nd government procurement) to overcome its 
economic stagnation since 2000 and to increase produc tivity, innovation, and competition.  Turkey 
thought that the new Law on Cartels was important  to enhance the competitiveness of the economy, 
and wished to have more details on this new Law.  Liechtenstein had also used its integration process 
with the EC to make further reforms.   
80. Turkey shared previously expressed views on Switzerland's active role in the DDA 
negotiations, and substantial technical assistance programmes, as well as on its highly protected 
agriculture sector.  Turkey believed that further lib eralization by Switzerland and Liechtenstein in the 
agriculture sector was in their own interest to boost economic productivity.   
81. The representative of Uruguay  noted Switzerland's important role in the WTO, and its 
commitment to the multilateral trading system.  The representative said that the level of the Swiss 
agricultural subsidies had remained unchanged si nce 2000, despite a gradual reduction in price 
support in favour of direct payments;  export subs idies (mainly for powder milk and certain cheeses) 
continued to be the highest among Members.  Uruguay and Switzerland shared similar position in 
various DDA issues, and would continue to work  to achieve these objectives and strengthen the 
multilateral trading system.  However, important diff erences still remained in other important areas, 
for example in agriculture.   
82. The representative of Malaysia  referred to the reliance of the Swiss trade regime on specific 
duties.  The level of AVEs on agricultural products remained high, with an average of 36%, while 
AVEs on non-agricultural products averaged 2.3%.  A high proportion of tariff lines carried nuisance rates of 2% or less.  Malaysia believed that the DDA was a good platform for Switzerland to convert 
its tariff lines to ad valorem  duties and to remove nuisance duties.   Noting the new agreements with 
the EC, Malaysia urged the two countries to contin ue to strengthen trade and investment ties with 
Asia and the rest of the world through multilateral trade liberalization. 
83. The representative of Burkina Faso
 expressed his Government's support to Switzerland and 
Liechtenstein.  In particular, Burkina Faso a ppreciated Switzerland's efforts in favour of 
decentralization, education, and pove rty reduction in  Burkina Faso.   WT/TPR/M/141 
Page 16  
 
84. The representative of Brazil
 joined others in commending Switzerland's improvement of its 
economic situation, supported by  budgetary consolidation and s upportive monetary policy, after 
persistent economic stagnation and recession.  Br azil also commended Liechtenstein for the positive 
developments in its economy, i.e. the positive flow of investments, healthy budgetary situation, and 
employment growth.  
85. The simple average applied MFN tariff rate ( ad valorem  equivalent) of 9.3% masked a 
considerable dispersion of rates.  Ad valorem  equivalents on agricultural products averaged 36% but 
could reach up to 1,705%;  this partly reflected  the protection of agriculture and food processing 
industries.  The two countries had reserved the ri ght to use the special safeguard clause under the 
WTO Agreement on Agriculture for many agricultural  products.  Because of this protection, trading 
partners were affected, the efficiency of the Swiss and Liechtenstein economies was undermined, and 
their consumers and exporters were  penalized.  Their agricultural e xport subsidies were the highest 
among Members.  Brazil thus encouraged the two countries to promote structural reforms in the 
agriculture sector, which would contribute to bette r resource allocation and benefit more competitive 
trading partners.    WT/TPR/M/141 
 Page 17 
 
 
VI. REPLIES BY THE REPRESENTATIVES OF SWITZERLAND AND 
LIECHTENSTEIN, AND ADDITIONAL COMMENTS 
86. The representative of Switzerland  considered that the TPR was a good opportunity to learn 
about other Members' actions and appreciated this exercise in internal cohe rence.  Switzerland also 
used the Reports prepared for the Review for public  relations purposes, to stimulate discussion.  He 
was surprised to have seen the entire documentation de restricted on the first day of the meeting;  
Switzerland was used to following the practice that everything was published at the end of the second 
day;  the handling of public relations had been sub-optimal. 
87. Switzerland was very satisfied with the positive comments from many Members on the 
development of its trade policy and commitment to  the multilateral trading system.  Since 2000, many 
changes had been introduced to reform the Sw iss economy.  Between 1990 and 2003, the value of 
agricultural production had decreased by 26%, while  consumption prices had risen by 24%;  the 
number of farms had decreased (-13%) as had employment in the sector (-24%).  He wondered whether any other country had undertaken such an ad justment without stalling its reform process.  
The main Swiss farm trade union had already jo ined the bodies expressing criticism towards the 
WTO.  In a country where every change in legisla tion was likely to be subject to a referendum, this 
criticism should not be underestimated.   
88. The EC member states were Switzerland's main trading partners.  The process of European 
integration had an economic, trade, cultural, and political dimension.  The priorities of the Swiss 
Government with regard to the EC were:  (i) in the short term, implementation of the seven bilateral 
agreements with the EC;  (ii) in the medium term, th e entry into force of the new bilateral agreements  
that were signed in October 2004;  these applied to  nine areas, including the taxation of savings, 
combating fraud, and cooperation in justice, police,  asylum, and migration;  and (iii) in the longer 
term, Switzerland's accession to the EC.  The conditions  for accession negotiations to start were:  first, 
assessing the experience of implementing the 1999 b ilateral agreements;  se cond, considering the 
consequences of accession for some key political ar eas (federalism, people's rights, the organization 
of the government, the financial regime, economic an d monetary policies, the policy on migration and 
aliens, agriculture, and foreign and security polici es), and carrying out any necessary reforms;  third, 
the Federal Council's integration policy depend ed on wide domestic support.  Switzerland's 
participation in European integration required th e majority of Parliament and of over 2.5 million 
voters, and of the 26 cantons.  Since these conditions  were currently not fulfilled, the Federal Council 
had decided not to begin membership negotiations  during the 2003-07 period;  however, it would 
report on the advantages and disadvantages of memb ership.  There were other important questions, 
such as the future of the Swiss franc, the diffe rences in exchange and VAT rates, and the net 
contribution to the EC budget.  Switzerland a nd the EC were WTO Members and guaranteed a 
coherent development of their legislation in areas under the WTO competence. 
(i) Economic environment 
89. Switzerland had met its objective to stabilize pr ices through an active and vigilant monetary 
policy, despite the shocks over the last few year s.  Switzerland was ready to make the remaining 
efforts to consolidate public finances;  budgeta ry adjustment had to be progressive to avoid 
jeopardizing the economic recovery.  Efforts to reduce public debt should enable Switzerland to 
balance its budget by 2007.  The Swiss authorities we re determined to continue the reforms necessary 
to promote more vigorous growth. 
90. Several Members had noted the high cost of living in Switzerland.  Since 2000, several 
studies had showed that high prices had become an obstacle to growth.  But, high prices were only a symptom of a major problem, i.e. the weakness  of growth.  The Swiss exporting sector was 
competitive, but the lack of competition in domestic sectors (for example, in retail trade, agriculture, 
handicrafts, and health) led to low productivity;  this explained why Switzerland was so expensive.  WT/TPR/M/141 
Page 18  
 
The OECD noted that Swiss prices were amongst the highest in the world, and that the difference 
between Swiss and EC averages had hardly decr eased since the 1990s and was still around 40% in 
2000.  The OECD had assessed that liberalization of the domestic market foreseen in the 17 point 
growth package proposed by the Federal Council would enable economic growth in Switzerland of 
around 0.7% per year over ten years.  While the figure was arguable, the effects would be 
considerable at any rate.   
91. This growth package was aimed at combating high  prices.  One of the first six measures, the 
law on the internal market, would provide better circ ulation for Swiss professionals between cantons.  
Paradoxically, indeed, thanks to the bilateral agre ements, EC and EFTA citizens were freer to move 
around Switzerland than Swiss professionals.  Othe r reforms included health, agriculture, the 
electricity market, and other services, such as posta l services, the railways, banking, and insurance.  
He was confident that despite the difficulties expe cted in implementing these reforms, his country 
would report substantial progr ess at its next Review.   
92. The strengthening of Swiss links with the EC  had prompted questions and comments from 
certain Members about a Eurocentric  bias in trade and investment flows and policies.  He assured 
them that Switzerland was also looking towards areas of growth outside Europe.  It would also 
continue to show solidarity with developing coun tries to help their integration into the world 
economy.  
93. Some of the difference in growth between Swit zerland and Liechtenstein could be due to the 
non-accession of Switzerland to the EC or the EEA.  But some of the disadvantages resulting from this autonomous approach would be eliminated  through the implementation of the bilateral 
agreements with the EC.  The growth differential could also be explained by the specialization of 
Liechtenstein in a very high -value-added financial sector.  
94. Switzerland considered that its RTAs were fu lly compatible with the requirements of GATT 
Article XXIV.  In Doha, Members had agreed to improve the WTO disciplines on RTAs.  RTAs 
agreed in the context of EFTA were aimed at re ducing or eliminating the discrimination towards 
Swiss goods on third markets.  This was particularly the case given that its main trading partners had 
already signed RTAs with third countries.  Switzer land did not consider that a concentration on non-
agricultural products, combined with agricultu ral concessions, was incompatible with the 
"substantially all trade" criteria.   
95. Even in agriculture, access for developing Member s to the Swiss market was generally very 
satisfactory.  Around Sw F 600 million of more than  Sw F 1.1 billion of imports of agricultural 
products had entered duty-free or with low tariffs in 2003.  However, existing tariff preferences might 
not be sufficient for them to compete against expor ts from more competitive countries when the tariff 
reductions on agricultural products scheduled in the DDA took place.  
96. The Director of the Trade Policy Review Division
 (C. Boonekamp) referred to the timing of 
the distribution of documents refe rred to by Ambasador Wasescha.  A mistake had been made and he 
apologized for this.  He explained that the rele ase of documents was currently a problem, and 
suggested that this issue should be dealt with dur ing the course of the coming appraisal of the TPR 
mechanism.  A General Council Decision said that a ll documents should be distributed immediately, 
without restriction, and this was at odds with the present rules and procedures of the TPRB. 
97. The representative of Liechtenstein  referred to the discussant's comment that a major 
difference between the two countries was Liechtens tein's membership of  the EEA since 1995.  
Entering the EEA Agreement had been one of the mo st important decisions for Liechtenstein, which 
had led to far-reaching internal legal and organiza tional adjustments, and market opening.  During the 
1995-04 period, employment had increased by over 40%, and manufacturing exports by over 80%;  
the financial services sector had expanded;  and a ne w insurance services sector had been developed.   WT/TPR/M/141 
 Page 19 
 
 
EEA membership had contributed to new investme nts, and to maintaining and strengthening the 
strong and competitive manufacturing sector (45% of  employment).  Economic operators worked 
under the same regulatory framework and with the sa me standards as other EEA countries.  Access to 
EEA markets for exports, imports, and investments were guaranteed.  Employers had obtained easier 
and guaranteed access to an expanded labour marke t;  the number of cross-border workers had 
practically doubled.   
98. The discussant  began with the issue of the competitiveness of the Swiss economy.  He 
pointed out the impact of exchange rate fluctuati ons on trade;  the Swiss franc-euro relationship was 
certainly a significant factor in Swiss trade.  Ther efore, he asked whether exchange rate fluctuation 
was a major issue for the Swiss authorities.  He also  invited Liechtenstein to share its experience of 
ensuring competition in its economy where there was no national competition law, since competition 
issues fell under the EEA-EFTA regime. 
99. The representative of Switzerland  said that whenever the Swis s franc became too strong, the 
Swiss export industry and tourism experienced problem s.  However, it also allowed a reduction of the 
cost of energy and other imports.   
100. The representative of Liechtenstein  said that her country was preparing its own competition 
law.  So far, due to the small size of the Liechte nstein market and due to the open borders towards 
Switzerland in practice there had been no real need  for Liechtenstein to have its own competition 
legislation.  Furthermore, EEA competition regulations applied directly.   
101. The representative of Australia  noted that Switzerland now had 12 bilateral agreements that 
covered agriculture as well as bilateral agreements wi th third countries that covered just agriculture, 
and asked whether this was consistent with GATT Ar ticle XXIV.  He asked whether it was possible to 
obtain information on a consolidated basis of the tariff lines covered under FTAs and bilateral 
agreements.  Australia also noted that agricultu re was covered by the new Competition Law, and 
asked how the Law would apply to price regula tions for certain agricultural commodities.   
102. The representative of Switzerland  stressed that GATT Article XXIV spoke about free-trade 
areas and not agreements, which meant that the co mbination of a plurilateral agreement on goods 
under EFTA and bilateral agreements on agriculture were fulfilling this requirement.  He noted that 
even Australia, in a recent agreement with one not minor trading partner, had excluded a certain 
number of agricultural sectors, which underlined th e sensitivity of the agriculture sector for all 
Members.  Regarding competition, there was no dis tinction between agriculture and the other sectors 
in the law.  Administered prices would disappear in  the dairy sector in 2007;  this sector would then 
be open to national and in ternational competition. 
(ii) Trade policies 
103. The representative of Switzerland  said that the system of specific duties was well known to 
economic operators and did not give raise to any problem.  The possible shift to an ad valorem  system 
was under discussion in the DDA and Switzerland, like other Members, would implement the 
decision taken by all Members at the end of the negotiations.  Reducing or removing tariff peaks and 
eliminating nuisance tariffs would be undertak en as part of the ongoing negotiations.   
104. Switzerland attached great importance to protec ting intellectual property at the domestic and 
international levels.  This was a major prerequi site to promote and de velop new and innovating 
industries worldwide.  Geographical indications were an opportunity to convince agricultural 
producers to turn towards production of speciality artic les, which could be exported.  This, in turn, 
would encourage imports of other products.   WT/TPR/M/141 
Page 20  
 
105. Regarding labeling for foodstuffs  and genetically modified an imal products, Switzerland was 
pleased that Canada shared its objectives of health  and food security.  However, Switzerland did not 
believe that only these two parameters shoul d be taken into account for labeling.   
106. The representative of Liechtenstein
 said that all questions on the trade policies of her country 
had been answered in writing.   
107. The discussant  said that the Swiss average applied tariff since 2000 had increased from 8.9% 
to 9.3%, and that around 39% of all tariff lines had nuisance rates of 2% or less.  The two countries 
did not have specific customs valuation legislatio n because of the application of specific duties.  
However, internal taxation was levied on an ad valorem  basis.  He invited the two countries to 
elaborate on their valuation process on imports and whether they applied the transaction value as 
provided in the Agreement on Customs Valuation to  assess the VAT on imports.  Swiss jurisprudence 
applied the international exhaustion principle, wh ich permitted parallel imports for copyright and 
trade marks;  Switzerland applied the national exha ustion principle for patents.  He asked what 
changes, if any, could be expected after the enac tment of the new Law on Cartels.  In Liechtenstein, 
EEA exhaustion seemed to be allowed for patents. 
108. The representative of Australia  considered that there was a connection between the 
assessment of customs value for internal taxation purposes and for the Customs Valuation Agreement.  
Paragraph 2 of GATT Article III created discipline w ith regard to national treatment in internal 
taxation pursuant to the objectives of non-discrim ination.  GATT 1994 provided for border tax 
adjustments to be made to implement internal taxation policies.  
109. The representative of Switzerland  answered that the specific duty remained constant, 
therefore, if the value of the goods decreased the ad valorem  equivalent of the tariff would increase, 
but the duty had not been raised.  The specific du ties remained generally at the same level and 
therefore, especially with inflation, they could st abilize import charges.  Regarding customs valuation, 
Switzerland would reflect further on the Austra lian comment about non-discrimination and would 
check whether it could give a supplementary answer to this question. 
110. There was no problem under the TRIPS Agreement in having different regimes of exhaustion 
according to the fields of intellectual property.  Switzerland used the national exhaustion regime for 
patents.  The Parliament had examined this ques tion and decided to maintain the present system of 
national exhaustion.   
(iii) Sectoral policies  
111. The representative of Switzerland  said that Swiss agriculture was of great importance for the 
population and many delegations had pointed to the political importance of this sector.  Agriculture 
contributed to food security, even in  a crisis situation.  It helped to maintain a natural and varied 
landscape, preserve the natural b asis for survival and livelihood, and ensure the decentralized 
occupation of the Swiss territory.  Deep reforms to wards greater competitiveness  had been carried out 
without major upheavals.  At the end of this Round, there would be less border protection, less 
domestic support, and no more export subsidies. 
112. The reform process was aimed at shifting ma rket support towards decoupled production 
measures that would have little or no distorting e ffect.  The 2002 reform programme had abolished all 
state guaranteed prices and outlets, and eliminated  parastatal organizations for butter, cheese, and 
bread wheat.  Direct payments to compensate for ag riculture's benefits to the public were based on 
ecological conditions (cross compliance).  These c onditions were severe and clearly stipulated.  
Market support amounted to 25% of all payments in 2004 compared with 63% in 1991.  WT/TPR/M/141 
 Page 21 
 
 
113. The 2007 reform programme would abolish the milk quota system – one of the most 
important in the agriculture sector – by 2009.  Switzerland and Australia were the only OECD 
countries to achieve this. 
114. The impact of reforms was clearly felt at the domestic level.  The production price index had 
decreased by 25% between 1990 an d 2003, although consumer prices for foodstuffs had increased by 
10%.  He stressed the need to address this "scissor ef fect" in the long term.  Nevertheless, Switzerland 
remained an expensive country, and agricultura l border protection and domestic support were 
therefore required.  Multifunctional agriculture had a cost.  As Swiss salaries were high, Switzerland 
had to allocate the necessary financial resources to ensure production of public goods.  It was 
therefore understandable that the average tariff pr otection for agricultural products was relatively 
high.   
115. Switzerland considered the prise en charge  system as consistent with its WTO commitments.  
Fill rates under this system were very high.  The Law on Agriculture guaranteed that the distribution 
of tariff quota shares was subject to competition, and measures could be taken to prevent abuses. 
116. Switzerland understood the concerns expressed by Members that it was the second highest 
user of export subsidies.  Substantial efforts had been made to reduce them, and they now represented 
45% of the WTO ceiling.  With regard to the cu rrent negotiations in the WTO, Switzerland did not 
plan to reduce or abolish these subsidies autonomously. 
117. Some Members were concerned about Swiss suppor t being product-linked.  This was not the 
case as some measures (environment and animal welfare) were financed in a manner consistent with green box criteria;  and for the rest, the only appropriate protection was at the border (labelling, GIs, 
food security, environmental standards, higher so cial environmental standards, and production 
methods).  
118. Switzerland had strengthened the competitiveness of its services sector through a series of 
reforms involving banks, postal services, telecomm unications, railways, and air transport.   
119. Regarding the granting of work permits to citi zens of countries other than the EC or EFTA, it 
was extremely important to distinguish between pe rsons seeking permanent entry to Switzerland with 
access to its labour market, and services providers seeking temporary entry.  There were two market access measures within the labour market policy:  a system of annual quotas on the overall number of 
work permits granted, and a labour market test .  First-time work permits were issued only 
exceptionally to foreigners, if they were highly qualif ied and urgently needed.  With the conclusion of 
the bilateral agreements with the EC on the free m ovement of persons, a dual recruitment system had 
become necessary;  priority was given to persons  from the EC and EFTA.  Therefore, Switzerland had 
momentarily reached its absorption capacity in the la bour market, and lost flexibilities with regard to 
other countries.  The agreement with the EC was politically very sensitive;  and Switzerland would 
only gradually open its borders to EC citizens. 
120. The dual system did not apply to work permits requested from third countries seeking 
temporary entry in services sectors and categories of services suppliers where Switzerland had made 
commitments under the GATS;  and, in this case Switzerland did not apply a labour market test. 
However, the high qualification requirement and th e annual quotas for the overall number of work 
permits remained.  For 2005, the annual quota for non-EC nationals would be the same as 2004:  
4,000 first time year-round one-year residence perm its, which could be extended every year;  and 
5,000 short-term residence permits, restricted to a period of one year for activities of limited duration, 
which could be extended up to a maximum of two years. 
121. Switzerland's present GATS schedule went beyond the rules and principles applicable to the 
general immigration scheme.  In the DDA nego tiations, Switzerland had improved its Mode 4 WT/TPR/M/141 
Page 22  
 
commitments, and was considering further impr ovements.  Switzerland acknowledged the importance 
of Mode 4 in the services negotiations.  
122. Switzerland had sectors that were subject to extensive legal frameworks pertaining to the 
implementation of public services.  It had already liberalized a number of sectors and was aiming to pursue its regulatory reform, and start reforms in  new sectors or segments as needed.  Switzerland had 
taken commitments in a number of public ser vice sectors (for exampl e, air transport, 
telecommunications, postal services, and gas and electricity). 
123. In December 2004, the Federal Council had propos ed that the Parliament modified the Law 
on Electrical Installations to settle the issue of tr ansit.  The Federal Council also proposed to open up 
the electricity market through the Law on Electric ity Supply in two phases:  first, non-residential 
customers would have access to the market;  and fi ve years later, the market would be opened up to 
residential customers.  The Federal Council had take n into account the refusal by the Swiss people of 
the Law on the Electricity Market in 2002.  The proposed new Law on Electricity Supply was aimed 
at enhancing the security of supply and public services, but no privatization was foreseen in the law.    
124. Monopolies on fire and natural damage insuranc e were in force in 19 Cantons.  They had 
been created when village houses we re built very close together and there was a risk that any fire 
would spread to the whole village.  Private insuranc e companies did not want to insure this risk, and 
the cantonal monopolies could offer more competitive premium rates.  The Law stipulated that the 
monopoly had to insure all permanent structures.  The 19 cantonal insurance est ablishments spent, on 
average, five times less than private insurers.   
125. The representative of Liechtenstein
 said that Switzerland had fully answered and commented 
on questions and remarks on the agricultural policy of  the Customs Union.  Liechtenstein's agriculture 
sector was small and the support to keep the sector  viable was broad and popular.  Nevertheless, 
Liechtenstein was preparing its agriculture sector for future challenges in an even more market-
oriented and competitive environment.  Liechtenste in's agricultural policy had to take into account 
non-trade concerns as well as the multifunctionality of agriculture.  The ambitious goals and the 
production conditions imposed on agricu lture could only be justified w ith financial support.  Without 
direct payments, the sector would simply disappear .  Liechtenstein was part of the G10 and stood 
firmly behind this policy. 
126. The discussant  commented that, under the prise en charge , imports could exceed the quota, if 
the importer undertook to purchase sufficient quantities of local goods.  This local content requirement helped to achieve a very impressive quot a fill rate, and did not seem to be in accordance 
with multilateral rules.  The discussant said that th e Swiss-EC agreement on agriculture did not apply 
to Liechtenstein.  EC agricultural imports could be marketed duty free in Liechtenstein through the 
customs union with Switzerland.  However, Liechtenstein agricultural exports did not enjoy the concessional tariff or equal treatment in the EC.   
127. The representative of the United States
 agreed with the discussant on the prise en charge  
system and considered this system to be a high barrier to trade, particularly the requirement for 
importers to procure domestic produc ts as a condition for the in-quota criteria.  In the context of 
ongoing initiatives, such as Agricultural Policy 2007, she asked whether any further liberalization or 
change in product coverage of the prise en charge  system had been contemplated. 
128. The representative of Australia  appreciated Switzerland's efforts on export subsidies.  
Domestic support was one of the centerpieces of th e agricultural policy reform, and decoupling was a 
step in the right direction.  However, border pr otection was still very high, and the representative was 
intrigued by Ambassador Wasescha's comments that part of the reason for this was to address certain issues that were not subject to international rul es (for example, labelling, production methods, and 
geographical indications).  The representative t hought that, as part of a reform process, border  WT/TPR/M/141 
 Page 23 
 
 
protection would have been high priority, and w as interested in knowing what contribution that 
element of agricultural reform was making toward s improving productivity and preparing for greater 
openness.  He presumed that the bilateral agreemen ts on agriculture were exposing Swiss agriculture 
to some international competition, and was intere sting to know to what extent this was helping 
towards greater competitiveness and potential MFN lib eralization or, at least, reductions in border 
protection. 
129. The representative referred to Switzerland's description of auctioning of tariff quotas as an 
internal measure.  In his view, internal measures ap plied after the entry of products into the customs 
territory of a WTO Member, and Australia wondere d whether the Swiss description of auctioning as 
an internal measure meant that tariff quota products  subject to auctioning could enter its territory 
without an import licence awarded through an auctio n.  Australia also wondered whether like products 
of Swiss origin were subject to auctioning in Sw itzerland before they could pass into the hands of 
internal distributors.  Australia was very interest ed in this issue and would examine Swiss response 
further.  There could be causes for concern, for example where importation was conditional upon 
payment of auction prices;  auction prices circumvented tariff commitments;  auction prices 
represented minimum import prices for purchases of tariff quota products subject to auctioning after 
they entered Switzerland;  starting prices for au ctioned tariff quota products represented minimum 
import prices;  auctioning resulted in terms of importation that were not fully known prior to 
importation;  and where appropriate standards of tran sparency and predictability had not been met.   
130. The representative of Liechtenstein  agreed that Liechtenstein was not covered by the EC-
Swiss bilateral agreement, whic h applied only to exports of Swiss agricultural products, and 
Liechtenstein was therefore disadvantaged.  She sa id that steps had been taken to negotiate the 
extension of this bilateral agreement to Liechtenstein.  
131. The representative of Switzerland  considered the prise en charge  system to be an internal 
allocation system with no infringement of WTO ri ghts or obligations.  It did not impose a trade 
restriction in excess of the limitations inherent in any TRQ.  The system had given rise to concerns, 
which was why Switzerland would move from the prise en charge to auctioning in the meat sector.  
132. The Agricultural Policy 2007 contained additi onal reforms, and would be followed by 
Agricultural Policy 2011 to hopefully implement the results of the DDA.  Switzerland's tariffs were 
high to satisfy certain non-trade concerns.  Switzer land would need border protection in agriculture;  
it would follow the traditional GATT and WTO approach  of progressive liberalization.  It was not 
possible to envisage this transition of Switzer land's agricultural system without some border 
protection.  However, Switzerland was moving fo rward with eliminating export subsidies, and 
decreasing production-linked support.  Therefore, it was foreseeable that "blue box" support could be 
phased out. 
133. The bilateral agreement with the EC would br ing free trade in cheese in 2007.  This was a 
heavy burden to implement in Switzerland.  The representative did not excl ude the possibility that 
such market opening could be multilatera lized, in full agreement with the EC. 
   WT/TPR/M/141 
Page 24  
 
VII. CONCLUDING REMARKS BY THE CHAIRPERSON 
134. The second joint review of Switzerland and Li echtenstein has been informative, open and 
thought-provoking.  The two delega tions, led by Ambassadors Wasescha and Frick, have been highly 
cooperative in their participation.  We have grea tly benefited from the perceptive remarks made by 
Ambassador Ujal Singh Bhatia, our discussant, a nd the active involvement of many Members.   
135. Members commended Switzerland and Liechtenstein  on their reforms, through both unilateral 
and regional initiatives, while maintaining the WTO as the foundation of their external trade policies.  
Members also appreciated Switzerland's technical cooperation efforts in favour of developing and 
acceding countries.  The two economies have experien ced differing trends in growth since their last 
Trade Policy Review (TPR), with employment in Liechtenstein growing rapidly, and Switzerland 
slowly recovering from a prolonged period of econom ic stagnation.  Liechtenstein has greatly 
benefited from its membership of the European Ec onomic Area;  Switzerland, too, has been taking 
steps to further integrate many policy areas with  the European Communities.  In this respect, 
Members enquired about progress in the two sets of bilateral agreements be tween Switzerland and the 
EC, particularly in harmonizing their regulations  on goods, services, and movement of persons.  
Concerns were expressed about potentially discrim inatory aspects of such regional integration for 
other WTO Members. 
136. Members noted that the Swiss and Liechtenstein tariff structure is complex.  Their common 
tariff consists entirely of specific duties.  Members enquired about plans to move to ad valorem  duties 
and to reduce tariffs unilaterally, as well as about valu ation of goods for internal taxation purposes.  
Members commended them for maintaining a generally  low level of protection on non-agricultural 
products.  While some Members share the countries' agricultural policy vision, others emphasized the 
contrast between their openness in non-agricultural tr ade and their high level of protection for many 
agricultural and food products.  Concerns were ra ised about broad agricultural policy prospects and 
specific measures, including export subsidies, direct payments, and tariff quotas and their 
administration through, inter alia , the "prise en charge" system.  Several Members look forward to 
progress in Switzerland's agricultural reform.  Dele gations also asked when Switzerland will provide 
its long overdue notifications on dome stic support and export subsidies. 
137. Several questions were asked about Switzer land's technical and sanitary/phytosanitary 
regulations, including labelling schemes, regulati ons on genetically modified organisms, and 
environmental measures;  and about intellectual property legislation, notably on geographical 
indications.  Members commended both countries for not  having taken any trade-remedial actions.  
Members welcomed the ongoing efforts to incr ease domestic competition, including the significant 
reinforcement of Switzerland's Law on Cartels, a nd called for greater competition in areas still under 
monopoly.  The importance of services to the tw o economies was noted, and questions were asked 
about policy developments in tel ecommunications, tourism, electric ity and gas, construction, and 
financial services, including the issues of bank secrec y, countering money laund ering and tax evasion. 
138. Members appreciated the responses provided by the two delegations, and look forward to 
receiving written answers on outstanding questions.   
139. This Review has given Members the opportunity  to gain a much better understanding of the 
policy developments in Liechtenstein and Swit zerland since 2000.  The wide interest shown by 
Members is reflected in the depth of the interven tions, the large number of advance written questions, 
and the comprehensive written replies.  The importa nce of further reform in the two economies on an 
MFN basis, both externally and internally, and of great er liberalization particularly in agriculture, has 
been emphasized repeatedly. I should like to th ank the two delegations for their willing and 
cooperative presence in this meeting, and Members for their active participation.  
__________