China Swiss Trade Accord Defies Rising Global Protectionism Trends
Switzerland and China Sign Upgraded Trade Accord Amid Global Tensions
By Dave Graham and John Revill
ZURICH, Oct 30 (Reuters) - When Chinese President Xi Jinping meets his Swiss counterpart, Guy Parmelin, on Friday, the two will be marking one of the most favourable trade deals Beijing has granted a European country, bucking a broader global shift towards protectionism.
Xi and Parmelin are due to sign the upgraded trade accord in Beijing that gives Switzerland unusually free access to China and contrasts with barriers to trade put up not only by the US administration but also, increasingly, the European Union.
Chinese and Swiss officials announced their deal in August, a year after US President Donald Trump saddled Switzerland with the highest US trade tariffs in Europe.
Significance of the Trade Deal
"This gives Switzerland better market access to China, but it's also very important for China to show there's a country willing to lower barriers with China in the heart of Europe," said Bernardino Regazzoni, a former Swiss ambassador to China.
Parmelin is in China at the same time as Germany's president and follows the EU's top trade official, who went earlier this month. The leaders of the United States, Canada, Britain, France and Germany have all been to China in the past 12 months.
China's International Image and Free Trade Credentials
Three current Western diplomats saw in China's Swiss deal a bid to burnish Beijing's free trade credentials and project a more internationalist image as the Trump administration steps back from multilateralism under its America First policies.
Its degree of openness - 99.8% of Swiss exports will have duty-free access to China - surprised diplomats, even if it largely reciprocates terms Bern already grants China. Previously, just over half Swiss exports had such access.
Details and Reactions to the Accord
No New Advantages for China
The trade accord raised some US eyebrows, and US officials sought to discuss it with Swiss colleagues, according to two people familiar with the matter.
The Swiss State Secretariat for Economic Affairs said the government regularly discusses trade policy developments with partners and that no specific concerns had been raised about it.
It noted the deal does not grant Chinese industrial goods new tariff benefits, but tackles imbalances in the initial accord and expands Swiss market access to China.
The US State Department and the office of the US Trade Representative did not reply to requests for comment.
Level Playing Field and Institutional Safeguards
Roger Gschwend, a senior Swiss trade official, said the deal was targeting a level playing field for Switzerland and that China wanted to show its commitment to rules-based trade.
"It's China sending a signal they are opening up their markets a bit more," he said.
China's foreign ministry said the upgrade will provide more stable, transparent and predictable institutional safeguards for the long-term development of Chinese and Swiss enterprises.
"The imbalances in economic globalisation can only be properly resolved in the process of development," the ministry said about open cooperation in its reply to Reuters.
Navigating a Fragmented Landscape
Switzerland's Position Amid US and EU Trade Pressures
After coping with 39% US tariffs for months, Switzerland last November struck a provisional deal with Trump that cut those duties to 15%. Bern has been working to ensure its agreements hold and that it does not face new US tariffs.
The Swiss-China deal set off some alarm bells that the improved trading terms could make Switzerland a Chinese bridgehead in Europe just as many European firms are under increased competitive pressure from China, the sources added.
The Swiss government said the accord is not expected to have any impact on bilateral goods trade between Switzerland and the EU, the United States, or other partners.
Gschwend said Switzerland has not been a re-export hub for Chinese goods, nor did he see it happening in the future.
The deal had, however, piqued the interest of other countries eager to secure favourable terms from China, he said.
Swiss Industry Response
Swiss companies are delighted with it.
Jean-Philippe Kohl, vice director of Swiss industry association Swissmem, called it "a very, very good outcome."
The deal provides stability in a world where trade uncertainty has grown, something particularly important to export-dependent Switzerland, said Nicola Tettamanti, owner of Tecnopinz, a maker of components for factory machines.
He expects Tecnopinz's demand from China to rise, and also for customers such as watchmakers and robotics firms to benefit, saying the deal helped Switzerland in a fragmented geopolitical landscape.
"But we have to be careful about being caught in crossfire between the EU and China, and between Washington and Beijing."
(Reporting by Dave Graham and John RevillAdditional reporting by David Lawder, Yukun Zhang and Liz LeeEditing by Keith Weir and Raju Gopalakrishnan)
