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Free trade with Switzerland seen

BusinessWorld (Manila) | June 27, 2013

Free trade with Switzerland seen

By Emilia Narni J. David, Senior Reporter

A POSSIBLE free trade agreement (FTA) between the Philippines and Switzerland may push through as the two countries are set to sign a separate agreement creating a commission to lower tariffs and increase trade.

Swiss State Secretary for Economic Affairs Marie-Gabrielle Ineichen-Fleisch and Trade Secretary Gregory L. Domingo are expected to sign a memorandum of understanding today to create a Joint Economic Commission, which will discuss the possibility of lowering tariffs for many industries.

"We hope to be able to begin discussions as soon as possible. The goal is to lay down a framework for regular exchanges between officials, including the private sector, which will abolish tariffs ideally on both sides," said Ms. Ineichen-Fleisch yesterday, at a media roundtable held at the Mandarin Oriental Hotel in Makati.

She added the Swiss government will not dictate which sectors will benefit from the lower tariffs and will prefer to let the business community determine where firms will be able to do business.

The only sector which will remain protected is agriculture as Switzerland is bound by its law to not lower tariffs for the industry. Ms. Ineichen-Fleisch, however, said it is possible to have flexibilities, "but there will definitely be preferential treatment."

The Trade department could not be reached for comment.

Ms. Fleisch said there is no time frame for the negotiations, but the average length is usually one to two years.

If it pushes through, the FTA will be the Philippines’ first with a European country. The Philippines is currently in the scoping stage, or determining which sectors will be part of an FTA, with the European Union.

Switzerland has FTAs with Japan, South Korea, Hong Kong and Singapore and is in the process of negotiating with India, Malaysia and Vietnam.

The Philippines, on the other hand only has one bilateral FTA, the Japan-Philippines Economic Partnership Agreement (JPEPA). As a member of the Association of Southeast Asian Nations (ASEAN), the Philippines also enjoys the body’s economic agreements with Japan, China and South Korea.

"We are already negotiating with many Asian countries, and it made sense that the Philippines will be our next partner. There are already several agreements with the country, including investment protection and training, but not an FTA," said Ms. Ineichen-Fleisch.

Total trade between the Philippines and Switzerland reached 440.1 million Swiss francs or approximately $466 million in 2012.

Major exports of the Philippines to Switzerland are electrical machines, mineral compounds, medical instruments, textiles and apparel and other machinery.

Imported goods from Switzerland include pharmaceuticals, watches, agricultural products like cheese and chocolate and non-electric machines.

"I think its very possible that our agricultural trade be complementary. Personally, I’d very much want to have mangoes from the Philippines," said Ms. Fleisch.

The agreement is also hoped to contain provisions on export of skilled labor from the Philippines as Ms. Fleisch said Switzerland "needs workers in the health sector, engineering and natural sciences."

Technical assistance may also be a part of the possible FTA.

The agreement is envisioned to also lead to an FTA with the partner countries of Switzerland in the European Free Trade Area. These are Norway, Liechtenstein and Iceland.

"Political reform in the Philippines has certainly made the country very interesting," said Ms. Fleisch.

Swiss companies are also interested in investing in the Philippines, particularly in some infrastructure projects and in the financial sector. Swiss Ambassador to the Philippines Ivo Sieber said companies like the Zurich Airport are interested in public-private partnership projects.

Firms based in Switzerland that have operations in the Philippines include Nestle Philippines, Inc., Holcim Philippines, Inc., Zuellig Pharma Corp. and SGS Philippines, Inc.

 source: BusinessWorld