Switzerland signs free trade agreement: This is what the deal with India brings

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The agreement aims to facilitate trade between the EFTA countries (consisting of Iceland, Liechtenstein and Norway, as well as Switzerland). It includes concrete plans to reduce tariffs and simplify trade through other measures such as product regulations. It also includes a section on rules on patent protection and investment promotion.

India will remove tariffs on 84.6 percent of Swiss exports either immediately after entry into force or within the next decade. Tariffs will be halved for another 10 percent of exports. This alone reduces Swiss exports by around 167 million francs per year, especially for the machinery, pharmaceutical, chemical and watch industries. The food industry can also be happy: in ten years there will be no more tariffs on coffee capsules, chocolate, energy drinks and some agricultural products. Swiss banks and insurance companies should also be able to obtain licenses and receive investments more easily in India.

The deal is timely for the industry because the Swiss technology sector is currently going through a difficult phase: demand is stagnating in key sales markets and the strong franc is again influencing customers’ purchasing decisions. “Such agreements bring jobs from neighboring countries back to Switzerland,” believes Yannick Berner (31). He is a board member of Swissmem and sits on the board of the family business Urma. This produces precision tools for industry at Rupperswil AG. “If the 22 percent tariffs are suddenly abolished, the importance of the strong franc in choosing a location will diminish.”

Switzerland no longer imposes customs duties on industrial products. It provides certain relief for selected agricultural products. However, protection of Swiss farmers continues in the field of meat and dairy farming and seasonal vegetables. Farmers President Markus Ritter said the agreement still needed to be examined in detail. According to the Federal Council, agriculture is not much affected by this.

This was mainly due to patent protection. The generic drug industry is very important in India and the government is doing a lot to support it. For example, in 2013, an Indian court rejected Novartis’ patent for a leukemia drug. Pharmaceutical companies and civil parties then put pressure on the Federal Council: they would oppose the free trade agreement if it did not include important patent protection. According to the Federal Council, improvements have been achieved here. In the future, pharmaceutical companies can rely on the fact that India recognizes their patents and they cannot be easily challenged. The industry reacts cautiously: According to the umbrella organization of the pharmaceutical and chemical industry, the final evaluation of the free trade agreement will be possible only after the final draft text is prepared.

India is not only the most populous country in the world; 50 percent of the population is under 30 years old. An interesting market for products, services and investments. “The country wants to become an important industrial region. With the landing of the Chandrayaan 3 lunar probe last August, it showed that it can be at the forefront of high technology,” explains Jan Atteslander, head of foreign trade at the Economiesuisse association. “But for this to happen, India needs direct investment.” EFTA states undertake this in the agreement. The target is an additional investment of $100 billion from Efta and the associated creation of one million jobs in India over the next 15 years. This also offers advantages to Swiss companies, says Atteslander. India has a great need to catch up, especially in the field of industry and infrastructure. “At the same time, the World Bank and the Monetary Fund predict annual growth rates of 6 to 9 percent in the medium term. “It is really good news that Switzerland and other EFTA countries now have privileged access to the market ahead of the EU and Great Britain.”

Parliament still needs to approve the free trade agreement. The Federal Council wants things to be concluded as soon as possible and the agreement to be discussed in at least one chamber of the parliament. The agreement with India could come into force in the autumn of 2025 if a referendum is not held against it. And it’s entirely possible: Aid agencies and NGOs fear strengthened patent protection will mean India’s poor will no longer be able to afford important medicines. The free trade agreement with Indonesia shows that such organizations should not be taken lightly. This was only accepted by 51.6 percent in March 2021.

Source :Blick