China Exempts 99.8% of Swiss Exports from Tariffs

China and Switzerland have agreed on a new trade deal eliminating nearly all tariffs on Swiss exports to China, strengthening Beijing's ties with Europe amid its global rivalry with the United States.

Bloomberg News reported that the Swiss government said in a statement released Thursday that the agreement grants 99.8 percent of current Swiss exports to China tariff-free treatment, while also providing better market access for Swiss investors to China.

The news of the agreement caused shares of Swiss companies—including Swatch Group and Richemont—to rise, as the benchmark SMI index narrowed its earlier losses and traded near stable levels by 5:10 p.m. Central European Time on Thursday.

A lifeline for the Swiss economy

The agreement offers some relief to Switzerland’s export-dependent economy amid ongoing risks, particularly due to U.S. trade policy.

The Swiss government had previously reached a preliminary agreement with Washington capping tariffs at 15 percent, but doubts remain about the deal’s finality, as the United States has so far avoided signing a legally binding agreement.

Last summer, the administration of U.S. President Donald Trump initially imposed 39 percent tariffs on Switzerland—among the highest levied on a developed nation at the time.

Under the new trade agreement with China, key Swiss exports such as watches, pharmaceuticals, and precision instruments will enter the Chinese market without tariffs.

China is Switzerland’s third-largest trading partner after the European Union and the United States, with bilateral trade reaching around 34 billion Swiss francs (43 billion USD) last year.

A deal after years of negotiations

Chinese Commerce Minister Wang Wentao and Swiss President Guy Parmelin shook hands Thursday following the conclusion of the new treaty, which caps years of negotiations to update the free trade agreement originally signed between the two countries in 2014.

The previous agreement exempted almost all Chinese exports to Switzerland from tariffs, but covered only about half of Swiss exports to China.

Under the revised agreement, China also committed to stricter rules on labor rights and environmental issues within a new sustainability chapter of the treaty.

Switzerland also said China agreed, for the first time in a free trade agreement, to include a reference to the Universal Declaration of Human Rights.

The new treaty is expected to be formally signed before the end of this year, followed by internal ratification procedures in both countries.