Switzerland, a global industrial powerhouse, has limited agricultural resources and is highly dependent on imported raw materials. However, by establishing a tariff policy system characterized by “full industrial openness and targeted agricultural protection,” Switzerland has achieved the dual goals of fostering export advantages while protecting sensitive industries. This approach holds significant implications for the formulation of agricultural policies within China’s free trade zones.
Switzerland’s Agri-Protection Measures Under WTO
What measures has Switzerland implemented under the WTO framework to safeguard its domestic agricultural products?
First, Switzerland imposes high tariffs on agricultural imports to prevent cheap foreign agricultural products from impacting its domestic agricultural industry. According to WTO data, Switzerland’s overall tariff level is relatively low, but its average Most-Favored-Nation (MFN) tariff rate for agricultural products is 25.4%, ranking seventh globally. For example, the MFN average tariff rate for dairy products, one of its key products, reaches as high as 137.7%, with some products facing rates as high as 402%. Although agricultural products account for only about 5% of Switzerland’s total goods imports, their tariff revenue constitutes nearly half of Switzerland’s total customs tariff revenue, clearly demonstrating the high tariffs on agricultural products and the severity of its agricultural protectionism.
Secondly, Switzerland implements a tariff quota management system for 438 types of agricultural products across 28 categories, including grains, meat, fruits, and vegetables. Quota products account for 23% of the total agricultural product tariff schedule, and both in-quota and out-of-quota tariffs are very high. For example, the in-quota tariffs for beef, frozen chicken nuggets, fresh eggs, frozen legume vegetables, and apples are 24%, 68%, 26%, 36%, and 6%, respectively. while the tariffs outside the quotas are 160%, 981%, 192%, 110%, and 132%, respectively. This means that out-of-quota imports are virtually impossible. Additionally, Switzerland’s in-quota and out-of-quota tariffs are are presented as separate tariff codes, meaning the same product has two tariff codes. Calculating the average agricultural tariff rate based on this repeated tariff code count results in a relatively low rate, which to some extent masks the high tariffs on agricultural products. Finally, Switzerland’s agricultural tariff system is complex and flexible, enabling it to easily adapt to market fluctuations. Currently, most countries implement ad valorem tariffs, which are levied as a percentage of the goods’ value, while Switzerland primarily uses specific tariffs for agricultural products, which are levied based on weight, volume, or other units. This makes calculating and comparing tariff protection levels complex and opaque, but it provides more stable protection during price fluctuations. Additionally, Switzerland has flexible and diverse import control measures, such as adjustable tariffs, seasonal tariffs, and tariffs on processed agricultural products.
How Switzerland Balances Opening-up and Agricultural Lifeline
So, how does Switzerland manage to open up while protecting its “agricultural lifeline” despite signing so many free trade agreements?
Switzerland is not a member of the European Union, but it has a leading role in the European Free Trade Association (EFTA) with Norway, Iceland, and Liechtenstein. Most of the free trade agreements (FTAs) Switzerland has signed are based on the EFTA framework, while some are negotiated bilaterally. In total, Switzerland has concluded 37 FTAs with 77 countries and regions worldwide, covering over 70% of its total foreign trade volume. Switzerland views the development of free trade zones as a key strategy for promoting exports and expanding openness. It uses free trade agreements as an important policy tool for export growth, fully leveraging the terms of these agreements to foster trade and investment development. First, products with competitive advantages gain greater international competitiveness after tariff reductions. In the industrial sector, within three years of the entry into force of the Switzerland-Canada Comprehensive Economic and Trade Agreement, exports to Canada increased by 60%; within three years of the entry into force of the Switzerland-Japan Free Trade Agreement, exports of pharmaceuticals, watches, and jewelry to Japan increased by 40%. In the agricultural sector, following the entry into force of the China-Switzerland Free Trade Agreement, exports of Swiss agricultural products to China increased by 84.5%; Following the entry into force of the Switzerland-South Korea Free Trade Agreement, Swiss coffee exports to South Korea increased by 500 times, and non-alcoholic beverage exports to South Korea increased from zero to nearly USD 4 million. Secondly, by establishing free trade zones, Switzerland is building stable supply chains. For example, by implementing origin accumulation rules and simplified certification procedures with the EU and others, the cost of importing industrial raw materials is being reduced, thereby consolidating Switzerland’s position in the global value chain. Third, in recent years, Switzerland has focused on integrating “21st century issues” such as digital trade, green standards, intellectual property rights, and sustainable development into its free trade agreements.
In terms of agricultural market liberalization, Switzerland has consistently adhered to the principle of prioritizing agricultural protection in free trade negotiations, even with its “close partners” such as EFTA member states and the EU, where the scope of liberalization remains limited. Switzerland also adopts exceptions for over half of its agricultural products in free trade agreements with agriculturally rich Canada or limited agricultural resources like Japan. In contrast, China has secured relatively high market access for agricultural products from Switzerland, but the proportion of products subject to tariff reductions remains as high as 32.6%. Sensitive products such as beef, vegetable oil, wine, and mixed vegetables are also subject to exceptions. It is evident that a cautious approach to agricultural market opening has become a standard practice in Switzerland’s free trade negotiations.
For agricultural products of varying sensitivity, Switzerland has tailored differentiated opening strategies. Under free trade agreements, Switzerland categorizes agricultural products into three groups: exempt products, non-sensitive products, and export-advantaged products. Exempt products primarily include dairy products, meat, and fruits, vegetables, and grains produced domestically, which are rarely liberalized in free trade negotiations. Non-sensitive agricultural products are those processed using imported raw materials, such as coffee, cocoa, tea, tropical fruits, and seafood. These products do not directly compete with domestic agricultural industries, so Switzerland is typically willing to exempt them from tariffs or significantly reduce tariffs during free trade negotiations. Export-competitive advantage products primarily include cheese, wine, and other agricultural products with export advantages, for which Switzerland often seeks priority market access during free trade negotiations. In exchange, Switzerland may moderately open its market while ensuring that domestic industries are not unduly impacted.
