Free Trade and Economic Partnership Agreement Continues to Strengthen Japan-Switzerland Relations a Decade After
In spite of a population of just 8.5 million and a territory about the size of Kyushu, Switzerland may well be called an economic powerhouse. It ranks among the world’s top 20 economies in terms of GDP as well as of merchandise and services trade, and is among the top 10 when it comes to foreign direct investment. Switzerland regularly occupies top spots in international rankings such as the Global Competitiveness Report and the Global Innovation Index. All this makes Switzerland an attractive business location and economic partner.
Economic exchanges between our two countries have a long history and are substantial. Japan is Switzerland’s sixth biggest export market (counting the EU as one), while Switzerland is the fourth largest foreign investor in Japan (after the U.S., France and Singapore, on an “ultimate investor” basis).
Leading industries such as pharmaceuticals and machinery, plus automobiles for Japan and watches for Switzerland, naturally play a major role in Swiss-Japanese trade and investment. Yet our bilateral economic ties are much more diverse and cover a broad range of goods and services, often in highly specialized areas. Both countries are also major financial centers, with corresponding ties between them.
Swiss-Japanese economic relations are underpinned by several bilateral agreements. In 2009, our two countries entered into a comprehensive Free Trade and Economic Partnership Agreement, Japan’s first with a European partner.
In ten years since of operation, the Japan-Switzerland Free Trade and Economic Partnership Agreement has strengthened bilateral trade and investment. As usual among advanced economies, import tariffs had already been low or at zero for many product categories before the agreement took effect. Its main beneficiaries have thus been car exporters, on the Japanese side, and processed food and textile producers, on the Swiss side. Lower transaction costs have, of course, also benefited consumers in both countries.
The Japan-Switzerland Partnership Agreement still has potential to grow. On the one hand, its utilization rate may be increased, particularly among small and medium-sized companies. On the other hand, preferential trade and investment agreements have continued to evolve on both sides in recent years.
Switzerland and Japan both are innovative and competitive countries, with a highly trained workforce, first class infrastructures and political stability. This provides for favorable conditions for further growth of trade, investment and cooperation between our economies.
In Switzerland, around 150 Japanese companies are already active today and more are considering to set up a legal entity. In addition to Switzerland’s traditional strengths as a prime location for world and European headquarters, there is much interest internationally in R&D facilities in our country, taking advantage of its high density of top universities and research institutes. Medtech and biotech, artificial intelligence, robotics and blockchain technologies are among the most promising areas today.
With the Tokyo 2020 Olympic and Paralympic Games and the Osaka-Kansai 2025 World Expo, Japan will be hosting the world. As Ambassador of Switzerland in Japan, I look forward to further strengthening the excellent bilateral relations between our two countries, not least in the context of these unique events.
Leaders from the Swiss-Japanese business community chime in:
“Japan is one of Switzerland’s most important trading partners in Asia and is a priority country for Swiss export promotion. There have been smooth improvements in Swiss trade relations with Japan since the signing of the historic Free Trade and Economic Partnership Agreement ten years ago,” Martin Herb, President, Swiss-Japanese Chamber of Commerce
“The Japanese and Swiss share a similar mentality in that we both appreciate the ideals of trust, honesty, hard work and traditional values. We have a strong cultural bond and a deep friendship is shared between our two countries which both sides are keen to nurture. Our historical relationship is founded on an appreciation for one another and this will continue as we strengthen our ties,” Bernd Hoch, Managing Director MM Automobile Schweiz AG
‘The Switzerland-Japan Free Trade and Economic Partnership (FTEPA) has bolstered trade and investment between Switzerland and Japan in the last 10 years. Imports and exports between our two nations have been gradually increasing and we are looking at more opportunities to strengthen our ties,” Takashi Wada, Director General, Japan External Trade Organization (JETRO)
“Having a very small domestic market Liechtenstein’s banks have always needed to expand abroad. Thanks to its membership in the European Economic Area (EEA) and its customs union with Switzerland Liechtenstein benefits form an unrestricted access to all three markets. Some banks have also steadily grown their presence in Asia,” Dr. Gassner Hans-Werner, Chairman, Liechtenstein Banker’s Association
“The Asian market has always been a very important market for luxury goods. The Japanese in particular are probably one of the most sophisticated customer one can have. They have a passion for luxury, high craftsmanship and heritage, for which Switzerland stands,” Raphael Gübelin, CEO, Gübelin Group
“Though blockchain started as the technology enabling Bitcoin, the technology has progressed to allow various industries to automate and digitalise almost any process securely,” Daniel Gasteiger, founder and CEO of Procivis
“We have more interests with closer collaborations with the Japanese especially with regards to direct investments. The Swiss economy is doing a great job investing in other countries like Japan,” Prof. Dr. Rudolf Minsch, Chief Economist & Deputy Chairman of the Executive Board, Economiesuisse.