00:00China and Switzerland have agreed to strengthen their free trade deal after two years of negotiations.
00:06The updated deal will remove tariffs on almost all Swiss exports to China
00:11and make it easier for Swiss investors to enter the Chinese market.
00:15The agreement will be formally signed at a later date.
00:19David Hennig is Director of the UK Trade Policy Project at the European Centre for International Political Economy.
00:26Great to have you on the programme again, David.
00:27So, look, this free trade deal has already been in place for over a decade.
00:33Why has it taken so long to widen it?
00:36Well, actually, by trade deal standards, this is actually quite swift to upgrade it within 10 years.
00:44I actually think both sides will be pretty pleased with this,
00:48that China has agreed to some pretty good concessions, I think, with regard to Switzerland,
00:54particularly given the mood around in global trade of a lot of protection.
01:01So, set against that, I think this is a pretty good achievement for both China and Switzerland,
01:07and I think they are both pretty pleased with it.
01:09Right now, almost all Chinese goods enter Switzerland tariff-free.
01:15But Swiss exporters only get that on about half of their goods going the other way.
01:19So, is that all being evened out now?
01:23Yes, I think that this is a good deal for the Swiss.
01:26So, when – and it shows the changing global economy.
01:30I think when the deal was first done, it did seem like a better deal for China.
01:38China, the Swiss agreed to remove tariffs on most things.
01:42They're pretty favorable to free trade, the Swiss, but they didn't get such a good deal in return.
01:47So, I think it's quite interesting that China has agreed to remove a lot of tariffs on Swiss products now
01:52to make it easier for Swiss companies to do business in China.
01:55Some very real concessions there.
01:57The first time, also, that China has signed up for certain commitments with regard to environment and labor.
02:02So, it's quite interesting to me that China has made these concessions now,
02:07and I think it shows a desire to show that they still want to proceed with existing trade rules.
02:14So, watches, pharmaceuticals, precision things like Swiss watches, those are the big sellers.
02:20Those are the big Swiss sellers into China.
02:22Which of those industries do you think are going to feel the benefit of the tweaks to the free trade
02:27policy first?
02:28I think the most obvious is going to be pharmaceuticals, although tariffs are quite low.
02:33I think the other area potentially is watches, obviously,
02:36but the Swiss have quite a good record in complex engineering products
02:42and have certainly exported a certain amount of those to China.
02:45So, I think that sector, some of which was already tariff-free,
02:48but I think that sector will also feel the benefit.
02:52But, obviously, watches is the biggest area of potential benefit here.
02:56Looking at the numbers, Swiss-China trade has grown by nearly two-thirds in the last decade.
03:04That's even before this upgrade.
03:06So, how much further room is there to grow those ties?
03:11It's always a little tricky to deal with trade figures for Switzerland
03:14because a lot of it comes down to gold transfers,
03:17and that can be kind of taken away.
03:20But, if I look at them, yes, because the figures have already gone up,
03:24I think this will be more of incremental.
03:26I think that the big boost has already come to Swiss-China trade
03:31with the signing of the original free trade agreement.
03:34I think this won't make such a big difference this time around,
03:37but it should serve to at least cement in place the existing trade numbers
03:43and perhaps increase them a little bit more.
03:45Also, for Swiss companies, this should improve services trade
03:50between Switzerland and China,
03:52and, obviously, that's an area where the Swiss will be particularly keen
03:55to expand their exports.
03:57David Hennig, thank you very much.
