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IV. TRADE POLICIES BY SECTOR 
(1) INTRODUCTION  
1. Switzerland and Liechtenstein have followed a pi ecemeal approach to their trade reforms.  
The nature and pace of implementation have tended to vary according to sector.  Important reforms 
have liberalized market access considerably in several manufacturing and services subsectors.  The 
bilateral mutual recognition agreement with the EU , and amendments to co mpetition legislation and 
to sectoral regulations (e.g. on pharmaceutical produ cts and motor vehicles) have further liberalized 
the Swiss manufacturing sector since 2000, at least as far as Swiss-EU trade is concerned.  In Liechtenstein, the liberalization reforms in manufact uring and services have largely been spurred by 
its 1995 EEA membership. 
2. Several Swiss and Liechtenstein multinational companies are among the world's largest, and 
many competitive and innovative small and medium -sized export-based companies have developed 
with little or no government assistance.  The main ex ceptions are the electricity and gas subsectors, 
and certain industries with low productivity, no tably in food manufacturing, certain construction 
products and services, or salt production.  Despite re latively high tariff protection, the textiles and 
clothing and (particularly) the footwear industry, have recorded the strong est contraction in value 
added in Swiss manufacturers over the past decade. 
3. In agriculture, implementation of  reforms has slowed since 2000.   Switzerland (and through it 
Liechtenstein) continues to rank top among the OECD countries in terms of government support to agriculture, despite the ongoing gradual move away  from price support towards direct payments.  
High border protection has contributed to mainta ining domestic food prices high by international 
comparison.  The heavy reliance of food industrie s on incentives reinforces their effective tariff 
protection through strong positive tariff escalation.  Swiss export subsidies, when they were last 
notified in 1998, continued to be the second high est among WTO Members, and were likely to distort 
world markets of mainly cheese.   
4. Switzerland and Liechtenstein have pursued the liberalization of services;  the reforms have 
gone further than their multilateral commitments in ce rtain areas, such as financial services.  Certain 
Swiss insurance services, however, remain under monopoly.  The supervision of financial services is 
presently under review in both Sw itzerland and Liechtenstein, with  a view to regrouping their 
regulation under a single supervisory authority in  each country.  In addition, Liechtenstein has 
adapted its legislation to better combat money laund ering.  In telecommunications the positive effects 
of the liberalization for consumers are tangible;  prices for telephone calls have declined and are now 
relatively low, compared with the average ta riff in OECD countries and despite Swisscom's 
continuing de facto monopoly over certain telecommunications  services.  The number of postal 
services that remain unde r state monopoly in Switzerland and in Liechtenstein has been further 
reduced.   
5. The agreement on land transport w ith the EU has led to further liberalization of market access 
to Switzerland's road and rail transport services, albe it on a reciprocal basis.  As trade in professional 
services, and business services in general, relies to a large extent on the movement of physical 
persons, trade in professional services is likely to be stimulated by the substantial opening of 
Switzerland's labour market to EU/EFTA nationa ls since 2002. The tourism industry has also 
benefited from the opening of Switzerland's labour mark et; this is to contribute to reducing the high 
costs of labour resulting from quotas on the number of  work permits granted to foreign workers in 
hotels and restaurants.  Aside from the global air tr ansport crisis, the collapse of the Swiss holding 
company, SAirGroup, was ascribed to its past expansi onary strategy and, to a lesser extent, to the lack Switzerland and Liechtenstein WT/TPR/S/141 
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of access to the EU market prior to the signing of th e recent bilateral agreement on air transport with 
the EU.  Despite the Swiss government subsidies, the creation of a new national airline and the 2002 
agreement with the EU, the Swiss air transport subsector has yet to recover from the crisis.  
Construction services remain isolated from internat ional competition and their costs continue to be 
high by international comparison. 
(2) AGRICULTURE  
(i) Overview 
6. Agricultural production in Switzerland and Liechte nstein has continued to record a downward 
trend.  In Switzerland in particular, the gross va lue of agricultural production was Sw F 9 billion in 
2003, down from Sw F 10 billion in 2000 (Table IV.1).1  Switzerland and Liechtenstein are net 
importers of agricultural and food (agri-food) pro ducts;  imports of these products by Switzerland 
amounted to Sw F 8.5 billion in 2001.  Main impo rts are fish, alcoholic beverages, certain meat 
products, and out-of-season vegetables.  Agricultural exports by Switzerland reached Sw F 3.5 billion 
in 2001; they comprise mainly processed food pr oducts (HS Chapters 20 and 21), sugar, sugar 
confectionery, cocoa, coffee and their products (HS Chapters 9, 17, 18), tobacco and miscellaneous 
products (HS Chapters 13, 14, 24), and dairy products (HS Chapter 4).2  Three quarters of imports and 
two thirds of exports are with the European Union.  
Table IV.1  
Switzerland: agricultu ral production, 1997-03 
(Sw F million) 
Branch Value 
 1997 1998 1999 2000 2001 2002 2003 a 
Cereals 
Potatoes Sugar beet Vegetables Fruits Plants and flowers Wine 771 
229 162 509 532 916 336 750 
201 155 463 620 952 362 624 
191 139 444 573 900 401 619 
207 166 487 658 882 421 490 
192 137 505 552 819 429 513 
194 164 535 561 834 407 428 
178 151 536 534 790 388 
Total vegetable production 5, 056 4,932 4,462 4,797 4,348 4,576 4,067 
Milk 
Bovines Porcines Poultry Eggs 2,737 
1,028 1,227 
171 190 2,751 
1042 
1,112 
168 190 2,508 
939 
1,033 
168 171 2,559 
1,128 1,081 
178 173 2,605 
932 
1,085 
180 175 2,544 
963 
1,045 
192 185 2,360 
1,016 1,082 
202 184 
Total animal production 5,453 5,366 4,905 5,199 5,065 5,018 4,933 
Total agricultural production  10,510 10,298 9,367 9,995 9,413 9,593 9,000 
a Provisional figures. 
Source: OFAG (2003), Rapport annuel , Tableau 15.  
7. Switzerland formulates agricultural policy for the customs union.3  Public expenditure on 
agriculture is considerable compared with the valu e added generated by the sector.  The objectives of 
                                                      
1 Federal Office for Agriculture (2003). 
2 Federal Office for Agriculture (2003), Chapter 1, p.19. 
3 Liechtenstein has separate systems for direct payments (see below) and support of investment in the 
agricultural sector. WT/TPR/S/141 Trade Policy Review 
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the policy, unchanged since 2000, are to ensure the conservation of natural resources and the 
maintenance of rural areas, as well as a decentralized use of the territory;  to  allow rural enterprises 
that meet "sustainable development" and "econom ic performance" criteria to earn, on average, an 
income that is comparable to that earned by the population working in other sectors of a same region4; 
and to "contribute substantially to the security of  domestic food supplies", a constitutional priority 
generally understood as a high level of self-sufficien cy (domestic production relative to total domestic 
consumption).5  This last objective, given geographical a nd climatic constraints, applies only to goods 
that are produced domestically, and is pursued u nder relatively high market access barriers.  As a 
result, the self-sufficiency ratio s average about 45% for products of  vegetable origin, and 95% for 
animal products;  they have remained broadly unchanged since 1995 (Table IV.2).6   
Table IV.2  
Switzerland: self-sufficiency in basic food products, selected years* 
(Per cent) 
Product 1991 1995 1999 2000 2001 2002 
In digestible calories:       
Cereals for bread 126 134 99 89 102 82 
Cereals for fodder 62 75 70 76 69 67 
Total cereals 65 68 62 62 64 59 
Edible potatoes 107 99 82 102 93 94 
Sugar 44 42 58 63 47 61 
Fat and vegetable oils 24 20 18 19 20 20 
Fruits 60 71 68 80 71 76 
Vegetables 53 55 52 51 53 56 
Milk for consumption 97 97 97 97 97 97 
Butter 91 93 88 85 88 98 
Cheese 137 129 123 116 122 113 
Milk and dairy products 110 110 111 110 107 107 
Veal 99 97 95 92 98 98 
Beef 94 92 88 85 96 89 
Pig-meat 99 98 92 92 96 95 
Sheep 44 46 46 35 39 41 
Poultry 46 51 42 43 40 43 
Total meat 80 79 70 68 71 70 
Eggs and products thereof 44 45 47 48 47 42 
In digestible energy:       
Vegetable products 42 42 40 47 40 45 
Animal products, gross 97 96 95 91 94 94 
Total products, gross 62 61 58 62 58 61 
Total products, net 58 57 54 55 53 56 
In value:       
Total of food products 72 71 63 63 62 63 
* Self-sufficiency is defined as the ratio of domestic production to the sum of production plus imports less exports. 
Source: Information provided by the Swiss Authorities. 
 
8. Switzerland (and through it Liechtenstein) ranks  top among the OECD countries in terms of 
government support to agriculture, both as a shar e of gross receipts from production and on a per 
                                                      
4 Federal Law on Agriculture ( Loi fédérale sur l'agriculture, Lagr, recueil systématique 
(RS No. 910.1).  All federal laws are available online at: http://www.admin.ch/ch/f/r s/rs.html under their RS 
number. 
5 The Federal Constitution, Article 104. 
6 La Vie économique , September 2003, p. 22. Switzerland and Liechtenstein WT/TPR/S/141 
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capita basis.  In 2003, Switzerland provided support to producers (Producer Support Estimate (PSE)) 
equivalent to 74% of gross receipts from agricultura l products, almost two and a half the average of 
31% for OECD countries, and nearly twice the leve l in the European Union, Switzerland's main 
trading partner (Table IV.3).7  The PSE remained broadly unchanged between 1995 and 2001, but has 
increased in recent years mainly becau se of the Swiss franc's appreciation vis-à-vis  the euro and other 
major currencies, which resulted in a decline in eq uivalents in Swiss francs of prices set in foreign 
currencies, and a corresponding increase in border pr otection, as customs tariffs are specific. The 
OECD's Consumer Support Estimate for Switzerland is also among the highest of OECD countries, at 61% (in 2003) compared with an OECD average of 24%.  
9. There has been a gradual reorientation of farm assistance since 1993,  from price support 
measures towards direct payments.  The focus was on abolishing guaranteed and administered prices, 
separating price policy from income policy, and incr easing reliance on compensatory direct payments.  
Under the "Agricultural Policy 2002" (AP 2002) initia tive, adopted by the Swiss Parliament in April 
1998, further efforts were made to promote "envi ronmental sustainability" and "market-oriented" 
reforms. Under AP 2002, ecological production conditi ons were introduced as eligibility criteria for 
direct payments, and farmers must now comply with "integrated farming" techniques, i.e. specified 
basic environmental standards (including on pes ticide or fertilizer usage) and animal-friendly 
conditions.  In 2003, such techniques were being used on approximately 96% of the land area suitable 
for agriculture, up from 84% in 2000.  In addition, direct ecological payments, such as support for organic farming, increased significantly over the 19 99-02 period, but still repr esent a small part of 
total support to agriculture (see Tables IV.5 and AIV.1 below).  Organic agriculture as such is 
practised on a modest 11% of farms (10% of land area).
8 
10. While the authorities consider the ecological obj ectives of AP 2002 to have been partly met, 
this has not been the case of market-oriented reform s.  Despite a sizeable decrease in producer prices 
over the past ten years as a result of the reorienta tion away from price support measures, these remain 
on average twice as high as in the European Union,  and on average three times as high as on world 
markets.  High border protection (mainly by means of prohibitive out-of-quota tariffs and very low 
tariff quota volumes relative to domestic consumptio n) to support agricultural production at high costs 
has contributed to maintaining consumer prices  for most food products high by international 
comparison (Table IV.4), with effects on real incomes (mainly of the poorest segments of the 
population), as well as on other sectors of the economy, such as tourism.9  Furthermore, small falls in 
producer prices have not translated into lower c onsumer prices, and hence have not reflected the 
relative improvement in compe titiveness of domestic products.10  As a result, consumers in Swiss 
border regions continue to rely on cross-border pur chases of the most protected products (e.g. meat, 
alcoholic beverages, dairy products, and vegetable oils) for a large share of their food consumption.11    
                                                      
7 OECD (2003).  The PSE is an indicator of the annual value of gross transfers from consumers and 
taxpayers to agricultural producers, measured at the farm -gate level, arising from policy measures that support 
agriculture. In percentage terms, this value is expresse d as a ratio of the value of  total gross farm receipts, 
measured by the value of total production (at farm-gate prices), plus budgetary support.  The CSE is  an 
indicator of the annual value of gross transfers to (f rom) consumers of agricultural commodities, measured at 
farm-gate level, arising from policy measures which suppor t agriculture.  In percentage terms, this value is 
expressed as a ratio of the total value of consum ption expenditure on commodities domestically produced,  
measured by the value of total consumption (at farm-gate prices).  See Portugal (2002). 
8 Bio Suisse, Annual Press Conference, 23 March 2004. Further information is available online at:  
http://www.bio-suisse.ch. 
9 See WTO (2000) for details on why agricultural production costs are high in Switzerland and 
Liechtenstein. 
10 La Vie économique , September 2003, p. 17. 
11 See also WTO (1996) on "food tourism". WT/TPR/S/141 Trade Policy Review 
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Table IV.3  
Producer and consumer support estimates, selected countries 1995-03  
 1995 2000 2001  
2002 2003 
PSE, all products       
Switzerland (euros million)  5,094 4,910 4, 940 5,292 4,941 
  percentage of production  72 72 72 74 74
  per capita (euros) 724 684 683 732 683
European Union (euros million)  100,795 96,146 99, 295 100,577 108,251
  percentage of production  37 34 34 35 37
  per capita (euros) 272 256 269 272 293
United States (euros milli on) 17,538 53,901 57,170 43,343 34,675
  percentage of production  11 22 23 19 18
  per capita (euros) 67 196 203 147 122
OECD (euros million) 211,98 0 262,991 254,534 243,717 229,473
  percentage of production  32 32 31 31 32
  per capita (euros) 196 235 226 216 204
CSE, all products       
Switzerland (euros million) -3 ,837 -3,644 -3, 259 -3,569 -3,383
  percentage of consumption  -66 -63 -59 -62 -61
  per capita (euros) -545 -507 -459 -493 468
European Union (euros million) -52,223 -48, 585 -47,963 - 52,299 -55,450
  percentage of consumption  -28 -27 -25 -28 -30
  per capita (euros) -141 -129 -130 -141 -150
United States (euros milli on) -6,153 4,703 -642 6,741 7,732
  percentage of consumption  -5 3 -0 4 5
  per capita (euros) -23 17 -0.5 24 27
OECD (euros million) -142, 172 -160,374 -147,178 -148,400 -137,168
  percentage of production  -26 -25 -23 -24 -24
  per capita (euros) -131 -143 -129 -130 -122
Source : OECD, Agricultural Poli cies in OECD Countries, Monitoring and Evaluation , various issues. 
11. Since 2000, Swiss legislation on Agriculture h as undergone another par tial revision, under the 
heading Agricultural Policy 2007 (AP 2007).  The st ated objectives of AP 2007 are to improve the 
competitiveness of the agri-food industry, whilst guaranteeing its sustainability and multi-functionality.  As a result of this revision, the Federal Law on Agriculture (LAgr) was modified as of 
1 January 2004, together with 42 ordinances and other legislation.  AP 2007 continues the gradual 
move away from price support towards direct paymen ts.  It also provides increased tax benefits, new 
investment assistance measures, and financial as sistance for redeployment away from agriculture.  
Overall, the new regulations marginally reduce, to  Sw F 13.8 billion, the total financial package in 
favour of the sector over the 2004-07 period, from Sw  F 14 billion over 2000-03.  In Liechtenstein, a 
law on the support of investment in the agriculture  sector (in force since 1 January 2001) provides 
farmers with start-up loans for constructions that are "reasonable in price and flexible in use".   Switzerland and Liechtenstein WT/TPR/S/141 
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Table IV.4  
Consumer prices of an imal and vegetal pro ducts, selected years 
Product Countries 1990/92 2000 2002 2003 
Animal products      
  (SwF/litre)  
Milk  Switzerland 
EU-4 
- max United States 1.85 
1.30 
1.82 1.04 1.55 
1.09 
1.77 1.24 1.56 
1.13 
1.83 1.13 1.53 
1.16 1.96 0.98 
  (SwF/kg.)  
Cheese  Switzerland (Emmental) 
EU-4 (EU-4 with B, without F) 
- max United States (Cheddar) 20.15 
15.98 
20.68 11.14 20.18 
12.65 
17.13 14.26 20.33 
12.38 
17.00 14.47 20.89 
12.82 18.25 11.71 
Butter Switzerland 
EU-4 
- max United States 13.76 
9.04 
12.90 
5.96 11.76 
8.01 
12.01 
9.38 12.24 
7.64 
11.40 10.54 11.97 
7.94 
11.88 
8.34 
Roast beef Switzerland 
EU-4 
- max United States 26.34 
16.00 
24.32 
9.26 27.73 
14.92 
23.93 10.95 26.35 
14.40 
22.68 11.95 27.16 
15.37 24.20 10.94 
Roast pork Switzerland 
EU-4 
- max United States 18.43 
11.80 
13.67 
- 18.60 
10.99 
12.43 
- 19.35 
11.20 
13.25 
- 19.90 
11.44 14.05 
- 
Pork chop Switzerland 
EU-4 
- max 
United States 19.88 
10.62 
12.43 
10.02 19.80 
9.24 
10.36 
12.54 20.40 
9.39 
10.36 
11.67 21.32 
9.65 
10.88 
9.27 
Ham Switzerland 
EU-4 
- max 
United States 25.56 
22.13 
27.15 
8.85 27.13 
19.70 
23.17 
10.39 30.24 
20.20 
23.99 
9.67 29.99 
21.01 26.30 
8.57 
Fresh chicken Switzerland 
EU-4 
- max 
United States 8.41 
5.72 
6.17 
2.74 8.49 
4.93 
3.86 
3.99 9.35 
5.05 
5.90 
3.68 8.90 
5.20 6.65 3.07 
  SwF/0.25 litre  
Cream Switzerland 
EU-3 (EU-4 with B, without F and I) 
- max 
United States 3.58 
1.25 
2.53 
- 2.79 
0.95 
1.64 
- 2.79 
0.95 
1.59 
- 2.91 
0.95 1.69 
- 
  SwF/piece 
Eggs Switzerland 
EU-4 (EU-4 with B, without F) 
- max 
United States 0.57 
0.25 
0.33 
0.10 0.58 
0.25 
0.34 
0.15 0.61 
0.24 
0.34 
0.14 0.61 
0.26 0.37 0.12 
Vegetal products      
  SwF/0.5 litre 
White bread Switzerland 
EU-4  
- max 
United States 2.09 
1.49 
2.98 
1.12 1.83 
1.50 
2.98 
1.73 1.74 
1.47 
2.90 
1.74 1.80 
1.56 3.12 1.48 
  Sw F/litre 
Vegetal oil Switzerland (sunflower oil) 
EU-4 (EU-4 with B, without G) 
- max 
United States (salad oil)  5.05 
2.81 
3.56 
2.26 3.96 
2.34 
2.51 
3.25 3.88 
2.32 
2.46 
3.70 4.30 
2.48 2.71 3.37 
  Table IV.4 (cont'd) 
  
 WT/TPR/S/141 Trade Policy Review 
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Product Countries 1990/92 2000 2002 2003 
White flour  Switzerland 
EU-4 (EU-4 with B, without F) 
- max United States 2.05 
1.10 
1.67 0.75 1.75 
0.91 
1.00 1.08 1.60 
0.92 
1.10 1.07 1.71 
0.94 1.17 0.92 
Potatoes Switzerland 
EU-3 (EU-4 without B) 
- max 
United States 1.43 
0.92 
1.27 
1.04 1.87 
1.00 
1.50 
1.41 2.08 
1.06 
1.58 
1.69 2.16 
1.16 1.66 1.36 
Sugar Switzerland 
EU-3 (EU-4 with B, without G and F)
- max 
United States 1.65 
1.75 
1.89 
1.22 1.41 
1.54 
1.66 
1.52 1.47 
1.44 
1.60 
1.44 1.59 
1.51 1.66 1.25 
Apples Golden 
Delicious Switzerland 
EU-4  
- max 
United States 3.15 
3.16 
3.25 
2.58 3.40 
2.37 
2.72 
3.42 3.81 
2.59 
2.99 
3.25 3.67 
2.76 3.25 2.91 
Pears Switzerland 
EU-4 
- max 
United States 3.25 
3.43 
3.62 
2.52 3.36 
2.75 
3.17 
3.59 3.60 
2.87 
3.36 
3.42 3.69 
2.97 2.68 2.94 
Bananas Switzerland 
EU-4 
- max United States 2.52 
2.61 
3.56 1.45 2.83 
2.17 
2.46 1.87 3.06 
2.14 
2.51 1.74 3.06 
2.15 2.49 1.51 
Carrots Switzerland 
EU-5 (EU-4 with B) 
- max United States 1.91 
1.71 
2.32 1.35 1.78 
1.32 
1.55 
- 2.09 
1.43 
1.75 
- 2.26 
1.44 1.78 
- 
Onions Switzerland 
EU-5 (EU-4 with B) 
- max United States 1.86 
1.54 
1.75 1.29 1.94 
1.48 
1.92 
- 2.56 
1.65 
2.27 
- 2.39 
1.70      
2.42 
- 
Tomatoes Switzerland 
EU-5 (EU-4 with B) 
- max 
United States 3.73 
3.60 
4.41 
3.29 3.50 
3.37 
3.81 
5.15 3.75 
3.46 
4.45 
4.54 3.67 
3.60 4.72 4.48 
Note: EU-4 is Switzerland's neighbouring countries:  Austria (A);  France (F);  Germany (G);  and Italy (I).  B is Belgium, and  max is 
 the highest price recorded among the EU countries. 
Source: Federal Office for Agriculture (2003), Rapport annuel . 
12. The AP 2007 reforms focus essentially on dom estic support;  they include the gradual 
elimination of milk production quotas, introduce additional flexibility in the milk market, and aim to address over-production in the wine and horticu ltural subsectors through various conversion 
programmes.  In addition, they contain the necessary provisions that would permit the Federal 
Council to allow further shifts away from price support payments towards direct payments, for 
example in the context of WTO negotiations.
12  AP 2007 also plans the progressive introduction of 
auctions for meat tariff quotas as of 2005 (see below).  AP 2007 does not change the granting of export subsidies by Switzerland.   
13. In a decision that runs counter to the reduction of trade-distorting support, direct payments 
under AP 2007 are no longer to be a degressive functi on of cultivated land and number of animals.  
However, the authorities have indicated that, because  of budget cuts, this decision will not be put into 
                                                     
 
12 La Vie économique , September 2003, p. 6. Switzerland and Liechtenstein WT/TPR/S/141 
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practice during 2004-07.  In addition, the Fede ral Council has set a maximum amount of direct 
payments per unit of labour ( unité de main-d'oeuvre standard) .13   
14. Since 2001, Switzerland has liberalized its bila teral trade in certain processed agricultural 
products with the EU.  Few effective changes in mark et access or trade flow s have resulted so far 
from the bilateral agreement on trade in agricultural products with the EU, which entered into force in 
July 2002 (Chapter II(4)(ii)(b)).  The agreement pr ovides for reciprocal preferential treatment on, 
inter alia , cheese and some other dairy products, fruit a nd vegetables, and meat specialities.  In 
particular, full tariff and export s ubsidy elimination is scheduled for bilateral trade in cheese as of 
2007.14  In addition,  the bilateral agreement will fo rbid the mixing of Swiss red wines with foreign 
wines as of 2005, although the latter may continue to be mixed with other Swiss wines.  It provides 
for harmonization of Swiss and EU legislation on liquor.15 
15. The bilateral agreement on agriculture between Switzerland and the EU does not yet apply to 
Liechtenstein.  The authorities note that Liechtenste in now faces a situation where, because of the 
bilateral Swiss-EU agreement, imports of agricult ural products from the EU can be marketed in 
Liechtenstein, but exports of agri cultural products from Liechtenstein to the EU do not enjoy the same 
(preferential) customs concessions and technical re gulations as those applied to Swiss agricultural 
products.  The Liechtenstein authorities have indi cated that they intend to negotiate another 
supplementary agreement in order to solve this problem. 
(ii) Specific policy measures 
(a) Domestic support  
16. In Switzerland and Liechtenstein, domestic support encompasses product-related subsidies 
consisting mainly of product-rela ted (market) support, and other pr oducer subsidies (Table IV.5).  
Under the framework plan for government s upport, annual amounts of public expenditure on 
agriculture were to be gradually reduced16, but such a trend has not been visible since 2000.  However 
product-related support, with the most distortive impa ct on markets, decreased sizeably in 2003.    
17. Liechtenstein has a separate direct payments system. Under an Exchange of Notes 
(RS 0.916.051.41) between Liechtenstein a nd Switzerland, Liechtenstein reimburses some 
Sw F 2 million to Switzerland for access by its firm s to the Swiss processing facilities, mainly for 
milk. In Liechtenstein, direct payments increased fro m Sw F 8 million in 2000 to Sw F 10.6 million in 
2003;  this amounts to Sw F 42.742 per person employ ed in agriculture (full-time or part-time).  A 
new law regulating Liechtenstein's dairy market is  to enter into force on 1 January 2005, covering 
market research, quality control, development of infrastructure, processing and marketing. 
                                                      
13 Loi fédérale sur l'agriculture, modification du 20 juin 2003 . Available at 
http://www.admin.ch/ch/f/as/2003/4217.pdf. 
14 Federal Office for Agriculture (2003), p. 263. 
15 Ordonnance sur les denrées alimentaires (RS 817.02), Annex 7 and 8. 
16 WTO (2000). WT/TPR/S/141 Trade Policy Review 
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Table IV.5 
Switzerland:  financial support to agr iculture, and economic indicators, 1990-03 
(Million Sw F) 
 1990/92 1998 1999 2000 2001 2002 2003a 
Total public expenditure on agriculture 3,048 3,926 4,197 3,727 3,962 4,067 3,907 
    - price and market support 1,685 1,203 1,318 955 902 979 798 
          - of which support to the dairy  market 1,127 967 1,052 716 666 754 560 
    - direct payments 772 2,126 2,286 2,114 2,334 2,429 2,435 
         of which ecological payments .. 796 439 361 413 452 455 
    - Other expenditure a 590 597 594 658.3 727 660 674 
          - of which:  export subsidies 94 137 129 112 98 115 115 
Memo item:  non-produc t-related subsidies  878 2,343  2,582  2,386  2,609  2,714  2,696 
Agricultural income (factors income) 6,062 5,356 4,977 5,154 4,788 4,955 4,545 
Net value added at factor prices 5,228 3,323 2,728  3,091  2,506  2,573  2,177 
.. Not available. 
a Includes grants and loans for structural im provements, investment credits, and research.  
Source:  Federal Office for Agriculture , Rapport agricole , various issues;  and data pr ovided by the authorities. 
18. OECD estimates confirm that the reliance on both market price support, and on output 
payments, has decreased;  nevertheless, market pr ice support and output payments still accounted for 
68% of the total producer support estimate in 2002.  Th e share of input payments remained stable at 
4% in 2002.  These three forms of support are th e most distorting, because they have the greatest 
effects in stimulating production a nd often contribute to environmental pressure; they are also the 
least effective in targeting income to farmers or in specific environmental benefits.17  The largest 
share of producer support in value terms is directed to the milk subsector18, followed by beef and veal, 
and pig meat.  Payments based on historical entitlements (e.g. area, animal numbers, yields) account for 17% of the value of producer support.  As they are not a function of output, their effects on production and trade are less trade distortive. 
19. The most recent notification of domestic s upport measures by Switzerland (on behalf of the 
Customs Union) to the WTO Comm ittee on Agriculture dates back to  1998.  This has led to an 
incomplete picture of domestic support trends (WTO methodology) for the years in which reforms 
were undertaken, reduced transparency, and hinde red a timely discussion of trends in support to 
agriculture.
19  The latest Swiss notification reported a total current Aggregate Measurement of 
Support (AMS, known as "Amber" support) of about Sw F 3.3 billion for that year.  The ceiling for 
such support, as committed to in the WTO, is Sw F 4.6 billion (Table IV.6). 
                                                      
17 OECD (2003), p. 22. 
18 Support to milk production consists of payments to  farmers for milk that is  converted into cheese, 
and of subsidies to processi ng companies that transform milk.  Ten companies receive 80% of overall payments 
(Sw F 343.9 million) to milk processing industries, the re mainder (Sw F 84.5 million) is allocated to other milk 
processing enterprises.  Commission de gestion du Conseil des Etats, Paiments de la Confédération en faveur de 
l'agriculture – une analyse des bénéficiaires des pr incipaux types de paiment, Rapport du 3 Juillet 200., 
Available at: http://www.admin.ch/ch/f/ff/2002/731.pdf. 
19 See, for example, WTO document G/AG/R/31, 27 August 2002. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 99 
 
 
Table IV.6 
Usage of domestic support categories, ex port subsidies and export credits, 1995-00 
(Sw F million) 
 1995 1996 1997 1998 1999 2000 
Total domestic support 7,006 6,635 6,533 6,449 .. .. 
 Green box 2,719 2,972 3,088 3,176 .. .. 
 De minimis  0 0 0 .. .. 
 Current total AMSa 4,287 3,663 3,445 3,273  .. ..
-     Memo item:  AMS commitment level 5,143 4,966 4,789 4,611 .. ..
Total export subsidies .. 456 429 423   436 318 
Of which : actually subsidized exports of 
dairy products  (tonnes) .. 60,021 57,562 53,916 73,660 61,690 
Annual commitment for dairy products  
(tonnes) .. 73,177 70,423 67,669 64,915 62,161 
Memo item: total exports of dairy products 
(tonnes) .. 66,700 68,008 72,116 99,013 68,590 
Export credits 0 0 0 0 0 0 
.. Not available. 
a Aggregate Measurement of Support. 
Source : WTO Notifications. 
(b) Tariffs  
20. Agriculture is the most tariff protected sector;  this resulted partially from the tariffication of 
quantitative restrictions during the Uruguay Round.   The simple average tariff for agriculture (Major 
Division 1 of ISIC, Revision 2) is 28.6% (down fro m 33.5% in 2000).  Using the WTO definition, the 
simple average is 36.2% (up fro m 34.3% in 2000).  These figures are to be compared with overall 
tariff averages of 9.3% in 2004 and 8.9% in 2000.   Some 28 tariff quotas (established under the WTO 
Agreement on Agriculture) apply to 282 tariff lines, i. e. 3.4% of all lines at the HS eight-digit level 
(section (d) below).  Simple average in-quota and out-of-quota tariffs on products subject to tariff 
quotas are currently 11.2% and 118.8%, compared with 13.2% and 116.1% respectively in 2000.  As all tariffs are specific, their ad valorem  equivalents (used to assess the level of tariff protection) may 
change as a result of fluctuations of various factor s, including import prices in Sw F (i.e. world prices 
and/or exchange rates).
20  
21. The average tariffs mask considerably higher tariff protection granted to products competing 
with domestic production:  the highest rates in 2004  are presented in Tabl e AIV.2.  The maximum 
applied rate (on an AVE basis) is 1,705.1% and a pplies to out-of-quota imports of edible offal of 
bovine animal (frozen), other than tongue or liver;  rates higher than 400% continue to apply to meat 
of bovine animals, meat of swine, edible offal, certain dairy products and live plants, and specified 
edible vegetables, roots, and tubers, such as leek .  Such levels of tariff protection have obvious 
consequences on consumer price levels,  and Swiss and Liechtenstein prices exceed average prices of 
a large number of agricultural products in neighbouring countries (Table IV.4).   
22. Sizeable volumes of imports of certain products  enter the country despite prohibitive tariff 
rates.  This apparent contradiction is the result of tariff concessions granted on a number of imported 
products (allègement douanier selon l'emploi ) on the basis of their end-use (Chapter III(2)(ii)(c)):  for 
example following the abolition of the state monopoly on bread flour, since 1 July 2001, this product 
                                                      
20 See WTO (2000) for details. WT/TPR/S/141 Trade Policy Review 
Page 100 
 
 
may be imported subject to payment of the MFN duty of Sw F 1.43 per kg. (i.e. an AVE of 382%) or 
a lower tariff of Sw F 0.40 per kg. (107%)  if imported under Swiss end-use provisions. 
23. Customs tariffs on most domestically produced  fruit and vegetable products are set on a 
seasonal basis to prevent imports during the periods  of domestic harvests, whilst allowing imports 
when domestic production is not available.  In so me cases, the "out-of-season" period can be very 
short.  For example, carrots impor ted during the two weeks from 11 to 25 May are subject to a duty of 
Sw F 4 per 100 kg.; during the rest of the year, the corresponding (out-of-quota) duty is Sw F 710 per 100 kg., except if imported within the WTO-bound quota of 166,076 tonnes that includes all vegetables, i.e. about 23 kg. annually per capita (see Table IV.7 below).   
24. Unilateral tariff reductions in favour of 49 l east developed countries (LDCs) in 2002 did not 
translate into any notable ch anges in agricultural imports.
21  The second round of tariff reductions in 
2004 could, according to the authorities, provide substantial tariff advantages to LDCs:  since 
April 2004, LDCs are entitled to MFN (out-of-quota , if applicable) tariff reductions by 55-75% on 
agricultural products.  As a result, the authorities ex pect larger quantities of products to be exported 
from LDCs, mainly tobacco, leather, sugar, and oilseeds.  Access under tariff quotas has also been 
expanded for LDC suppliers (see below). 
(c) Price controls 
25. In July 2001, the Government's involvement  in the bread-cereal market was reduced 
considerably.  The obligation to sell to the Gove rnment was abolished, as were the Government's 
obligation to purchase the crops and the guaranteed pr ices.  The bread and feed cereal markets were 
unified, and domestic prices are now market-deter mined under high in-quota and out-of-quota tariffs 
(see Table IV.7 below).  A target price for milk producers was abolished on 1 January  2004.22   
26. The complex system of "indicative" or "threshold" prices ( prix-seuils ) remains in place under 
the Ordonnance sur les produits agricoles - OIAgr (RS 916.01, Annex 2) with a view to maintaining 
the duty-inclusive import prices of certain agricultu ral goods within certain brackets (Table AIV.3). 
The ultimate objective of the system is to ensure stable domestic prices.  Accordingly, threshold 
prices combine estimated c.i.f import prices and cust oms duties to bring import prices into line with 
the local prices of the goods.  The Federal Depart ment of Economy also determines a permissible 
bracket for fluctuations of the actual duty-inclusive import prices around the threshold or the indicative prices.  Customs duties on the products are adjusted quarterly to keep duty-inclusive import 
prices within the price brackets.
23  In 2004, threshold prices were  5-10% lower than in 2000.   
27. The system currently applies to animal feeding stuffs and seeds, although any product may be 
included.  It insulates producers of the goods from world market price signals and negatively affects 
end-users if it contributes to maintaining high prices – as has generally been the case.24  In general, the 
quarterly modification of applied duties considerably reduces the pred ictability of the tariff.  The 
                                                      
21 Federal Office for Agriculture (2003), p. 263. 
22 RS 916.350.2. 
23 Federal Law on Agriculture, Article 20.  The methods for estimating the import price and the 
permissible bracket for fluctuations are determined by the Federal Council.  The current bracket is Sw F 3 per 
100 kg. (unchanged since 2000). 
 24 Federal Office for Agriculture (2003), p.176, and "Développement des mesures de politique agricole 
– Optimisation des mesures dans le domaine de la production et des ventes, Rapport intermédiaire du groupe de 
travail "marchés), à l'intention de la Commission consultative agricole, Bern, 30 March 2001.  This system has 
also drawn criticism from cereal producers (see Fédéra tion suisse des producteurs de céréales online 
information.  Available at:  http://www.bl w.admin.ch/aktuell/medien/f/0309093.pdf). Switzerland and Liechtenstein WT/TPR/S/141 
 Page 101 
 
 
annual average value of imports subject to the th reshold/indicative price system was Sw F 280 million 
over 2000-03.  According to the authorities, some 10% of the lines covered by this scheme are duty 
free. 
28. The Price Compensation Scheme is aimed at compensating for high domestic prices (of 
locally produced raw materials used as inputs by domestic agri-industries) resulting from agricultural 
policy measures.25  It consists of tariff protection for locally processed agricultural products, and 
"export refunds".  The refunds are granted to the exte nt of the price differences of the raw materials 
used in the production of processed agricultura l goods for exports.  For mainly imported raw 
materials, the refunds correspond to the border char ges paid.  Under the scheme, MFN import duties 
on the processed products consist of an industria l element and an agricultural element.  The 
agricultural element is designed to offset the difference between the domestic and world prices 
(generally the EU's). It is determined on the basi s of a standard recipe for each group of products 
within a tariff heading, and adjusted quarterly to pr ice differences.  The industrial element is fixed by 
the Swiss Federal Council for the customs territory .  If the sum of the agricultural and industrial 
element is higher than the tariff bound at the WTO, the latter applies.  Only the agricultural element is 
levied on imports from countries eligible for pr eferential tariff treatment under bilateral trade 
agreements covering processed agricultural products.  The processed agricultural products eligible for 
this type of tariff protection comprise:  yoghurt containing cocoa (HS Chapter 4);  frozen sweet corn (HS Chapter 7);  sugar confectionery (HS Chapte r 17);  chocolate and other food preparations 
containing cocoa (HS Chapter 18);  pastry cooks' produc ts and preparations of cereals, flour, starch, or 
milk (HS Chapter 19);  other food preparations (H S Chapter 21);  and mannitol (HS Chapter 29).  The 
raw materials are those used as inputs in the production of these goods, excluding:  raw materials that cannot be produced in the customs territory, such as rice, coffee and cocoa; mi xtures of raw materials; 
raw materials filled in retail packing;  raw materi als processed into unusual foodstuffs;  and imported 
mixtures not falling under HS Chapters 4 and 11. 
(d) Tariff quotas 
WTO tariff quotas commitments 
29. In the Uruguay Round, Switzerland and Liechtens tein committed to a total of 28 tariff quotas 
(Table IV.7).  In 2002, the three quotas covering wi ne were merged, although this has not yet been 
reflected in their WTO schedules.
26  In practice, some of the tariff quotas are allocated on the basis of 
sub-groups.  The fill ratios in 2001 well exceeded 100%  for several groups of products: bovine semen, 
potatoes, cut flowers, vegetables, products from fr uit with pips, egg products, and durum wheat.  
According to the authorities, this was in response to demand developments.   
30. Tariff quotas are administered by means of a non-automatic licensing system.  Tariff quota 
shares are allocated on the basis of, inter alia , a  prise en charge  system, traders' past imports, 
auctions, the first-come-first-served (FCFS) method, or pro-rata method (Table IV.8). Overall, there 
has been a shift towards the FC FS method, and away from the prise en charge,  which makes tariff 
quota allocations to importers conditional on the purchase of similar local products in a set proportion.  
Under the prise en charge system, imports may exceed tariff-quota quantities (i.e. a fill ratio 
exceeding 100%) if importers undertake to purchase sufficient quantities of local goods.  However, 
the proportion may be changed on a yearly basis,  notably in case of strong import pressure.  This 
system, given its local-content requirements, has b een the subject of debate in previous TPRs of 
Switzerland and Liechtenstein.    
                                                      
25 Ordonnance concernant les éléments mobiles et les taux des droits de douane applicables à 
l'importation de produits agricoles transformés, RS 632.111.722. 
26 RS 916.140. WT/TPR/S/141 Trade Policy Review 
Page 102 
 
 
Table IV.7 
Tariff quotas, 2004 
Product description Average tariff ratea 
2004 (%) Quota 
commitment b Fill ratio 
2001 (%) Fill ratio 
2002 (%)  
 In-quota Out-of-
quota   
 
1 Live horses, asses, mules and hinnies (units) 1.2 85.6 3,322  92 88 
2 Live bovines (units) 2.4 59.4 20  0 2,465 
3 Live swine (units) 4.2 226.0 50  0 0 
4 Live goats and sheep (units) 1.3 46.4 187 80 110 
5 Meat (beef, sheep, goat, horse) (tonnes) 20.6 173.5 22,500c 100c 
(a): 301  
(b): 198 
(c): 153 
(d): 117 115 
361 222 
155 
108 
6 Other meat (pork and poultry) 7.3 153.1 54,500 97 96 
7 Dairy products, in milk equivalent (tonnes) 6.5 71.7 527,000 102 84 
8 Casein (tonnes) 0.7 33.5 697  55 60 
9 Birds' eggs, in shell (gross tonnes) 26.7 34.2 33,735 81 81 
10 Dried egg products (tonnes) 26.8 36.8 977 85 90 
11 Other egg products (gross tonnes) 30.6 94.8 6,866 168 170 
12 Bull sperm (doses) 1.0 50.0 20,000 3,183 3,095 
13 Cut flowers (gross tonnes) 1.6 335.9 4,590 150 161 
14 Potatoes and products (tonnes) 13.0 80.7 22,250 193 132 
15 Vegetables (tonnes) 4.6 125.4 166,076 122 126 
16 Frozen vegetables (tonnes) 34.3 105.0 4,500 102 119 
17 Apples, pears, quinces, fresh (tonnes) 2.4 85.8 15,810 97 109 
18 Fresh apricots, cherries, plums etc (tonnes) 2.5 58.5 16,340 113 109 
19 Other fresh fruit (tonnes) 0.8 45.4 13,360 82 90 
20 Fruit for cider (tonnes) 4.2 78.4 172 100 62 
21 Products from fruit with pips (tonnes) 15.3 57.1 244 311 269 
22 Grapes for pressing and grape juice 
(hectolitres) 31.5 143.3 100,000 86 87 
23 White wine in bottles (hectolitres) 18.9 39.7 45,000 
24 Red wine, other than industrial wine 
(hectolitres) 13.6 13.2 1,620,000 
25 White wine, in bulk 25.0 58.0 30,600 }108 }106 
26 Durum wheat, undenatured (tonnes) 2.9 199.7 110,000 118 95 
27 Bread cereals and other cereals for human 
consumption (tonnes) 51.6 120.4 70,000 98 82 
28 Coarse grains for human consumption 
(tonnes) 12.3 112.6 70,000 73 60 
a Average based on ad valorem  equivalents. 
b WTO Schedule LIX – Switzerland and Liechtenstein Part I Section I-B (or I-A).  For HS codes, see WTO document 
 G/AG/N/CHE/28, 27 June 2002. 
c Of which at least: 
 (a) 2,000 tonnes from tariff items 0201.1011, 1091, 2011, 2091, 3011, 3091;  0202.1011, 1091, 2011, 2091, 3011, 3091;  
 0206.1011, 2110  (b) 1,200 tonnes from tariff items 0201.1011, 1091, 2011, 2091, 3011, 3091;  0202.1011, 1091, 2011, 2091, 3011, 3091 (high 
 quality beef) 
 (c)  4,500 tonnes from tariff items 0204.1010, 2110, 2210, 2310, 3010, 4410, 4210, 4310  (d) 4,000 tonnes from tariff item 0205.0010 
Source : WTO notifications in document series G/AG/N/CHE/ , and information provided by the authorities. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 103 
 
 
Table IV.8 
Administration of tariff quotas, , 2004 
TQ* 
Product Tariff quota Beneficiaries/eligibility 
requirements Allocation procedure 
1 Live horses, asses, mules 3,322 animal s No limitation First-come-first-serveda 
2 Live bovines 20 animals 
3 Live swine 50 animals 
4 Live goats and sheep 187 animals Breeders First-come-first-served, except live 
bovines (auction) 
5 Meat (beef, sheep, goat, horse) 22,500 tonnes No limitation Prise en chargeb; auction 
6 Other meat (pork and poultry) 54,482 tonnes No limitation Prise en chargeb;  auction 
7 Dairy products (milk equivalent) 527,000 tonnes Producers and manufacturers Prise en charge ; first-come-first 
served 
8 Casein 697 tonnes No limitation Unlimited 
9 Eggs in shell 33,735 tonnes First-come-first served 
10 Dried egg products 977 tonnes 
11 Other egg products 6,866 tonnes No limitation Unlimited 
12 Bull sperm 20,000 doses Recognized insemination 
organizations First-come-first-served 
13 Cut flowers 4,590 tonnes Past imports; prise en charge  
14 Potatoes and products 22,250 tonnes Prise en charge ; auction 
15 Vegetables 166,076 tonnes 
16 Apples, pears, quinces, fresh 15,800 tonnes Past importsc; prise en charge ; pro 
ratad 
17 Frozen vegetables 4,500 tonnes Prise en charge ; past imports 
18 Apricots, cherries, etc. fresh 16,340 tonnes 
19 Other fruit, fresh 13,360 tonnes Past importsb; prise en charge ; pro 
rata 
20 Fruit for cider production 172 tonnes 
21 Products from fruit with pips 244 tonnes No limitation 
Auction 
22 Grapes for pressing and grape 
juice 100,000 hl 
23 White wine in bottles 45,000 hl Unlimited 
24 Red wine 1,620,000 hl 
25 White wine in bulk 30,600 hl Licensed wine traders 
First-come-first served 
26 Durum wheat, undenatured 110,000 t onnes Unlimited, with conditions 
27 Bread cereals and other cereals 
for human consumption 70,000 tonnes Auction 
28 Coarse grain 70,000 tonnes Importers licensed by reserve 
suisse  
Unlimited, with conditions 
* Tariff quota category as notified to the WTO. 
a Except for horses other than for breeding (auction). 
b Prise en charge :  quota shares contingent upon purchases of local goods. 
c Past imports:  quota shares allocated as a function of comme rcial activity, purchases or imports during the preceding year. 
d Pro rata:  quota allocation depends on the quantities requested by individual importers. 
Source : WTO (2000), Trade Policy Review:  Switzerland and Liechtenstein . 
31. In 2002, allocation of the tariff quota for wh ite wine and for "asses, mules and hinnies" 
changed to a first-come-first served basis, from the auction system. An auction system was introduced 
for live bovines; for eggs in shell, the shares have been, allocated on a "first -come-first-served " basis 
since 2002, replacing the "prise en charge"  method.  Changes also took place in the method used to 
allocate the annual tariff quota of 70,000 tonnes of bread cereals and other cereals for human 
consumption:  since July 2001, the tariff quota has been auctioned off instead of being conditional on 
the "prise en charge"  system;  the authorities indicate that the allocation method will be changed to 
first-come-first-served on 1 January 2005.  The ta riff quota volumes for potatoes were expanded in 
2004;  however, with a quota commitment of less than 6 kg. per capita annually, access to this product 
remains limited;  this may explain the self-suffici ency rate of 100% and th e price difference of 100% 
with neighbouring countries (Tables IV.2 and IV.4).  WT/TPR/S/141 Trade Policy Review 
Page 104 
 
 
32. A number of additional changes were made  to the administration of tariff quotas in 
November 2003.27  In particular, Internet facilities are now in place to submit offers for tariff quota 
allocation by auction. Further, in the case of tariff quota allocation by auction, as from 
1 January 2005, a bank or other guarantee will replace the current system, which requires immediate 
full payment.  Also, requests for allocation of tariff quotas need no longer be submitted before the first 
working day of December preceding the period of the quota allocation.  In cases where an importer does not use up to 90% of the allocated tariff quot a, in the following period, the importer will be 
allocated only 50% of the quantity effectively impor ted.  The taxes levied for customs clearance of 
each consignment have also been modified. 
33. Specified quantities of the tariff quotas on wine, meat, and dairy products are reserved for 
individual supplying countries.
28  However, Switzerland and Liechtenstein have made less use of this 
type of reserved access by international comparison:  suppliers from WTO Members have in general equal access to most quotas. 
34. As noted above, AP 2007 provides for chang es regarding tariff quotas for all livestock and 
meat products.  In particular, auctions are being in troduced gradually for allocation of all tariff quotas 
by 2007, except for 10% of the sheep and b eef quota, which will remain conditional on "prise en 
charge" .  In 2005 and 2006, one third and two thirds of tariff quota volumes are to be auctioned off.  
This will not change the size of the tariff quot as.  Provisions for greater flexibility in the 
administration of the tariff quota for butter have also been included under PA 2007, with a larger 
number of importers authorized to import butter, and quota shares no longer reserved for downstream 
producers and for the food industry.
29   
Preferential tariff quotas 
35. The agreement on agriculture between the EU and Switzerland provides for complete 
liberalization of bilateral trade in cheese after a five-year transition period. It also provides for 
duty-free access, generally under tariff quota, for a ra nge of horticultural and meat products, and for 
cut flowers (Chapter II(4)(ii)).  Preferential tariff quotas are also in place on imports of feathers, soft 
drinks, and tobacco from Turkey; and of olive oil from Jordan.30 
36. The preferential (duty-free) tariff quotas on cane sugar from developing countries (opened in 
1997 in addition to WTO commitments) was increas ed from 5,000 tonnes per year to 7,000 tonnes, 
effective 1 April 2001.31  In March 2004, preferential quotas of combined 5,000 tonnes were opened 
for certain oilseeds and oil products  from least developed countries.32 
                                                      
27 Ordonnance générale sur l'importation de produits agricoles, modification du 26 novembre 2003 . 
Available at http://www.admin.ch/ch/f/as/2003/5397.pdf. 
28 See WTO document G/AG/N/CHE/13/Add. 1, 29 June 1999 for details on quantities of the products 
reserved for Benelux, France, Italy, the United States, and the European Communities as an entity. 
29 Under the current regime, butter producers hold the import rights;  they import only in case of 
domestic shortages. 
30 Administration fédérale des douanes , online information.  Available at http://www.afd.admin.ch/f/ 
firmen/import/kontingente.php. 
  31 Ordonnance du 29 janvier 1997 fixant les droits de douane préférentiels en faveur des pays en voie 
de développement, RS 632.911, as amended. 
32 RS 632.911. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 105 
 
 
(e) Special safeguards  
37. Switzerland and Liechtenstein have retained the right to invoke the special safeguard clause 
under Article 5 of the WTO Agreement on Agriculture for all imports subject to tariff quotas.  This 
allows the authorities to restrict imports by mean s of additional duties when prices fall below, or 
imports exceed, given thresholds.  Such a safeguard  duty was levied on imports of pig meat and its 
by-products from 1 May to 31 December 1999.  The special safeguard provisions were not invoked by 
Switzerland in 2000-01.  No information has been notified for the years 2002 and 2003.  According to the authorities, the special safeguard provi sions have not been invoked since 2000.   
(f) Import licensing and labelling requirements 
38. Imports of agricultural products are subject to licensing requirements for the purpose of tariff 
quota management, as well as for health, sanitary, phytosanitary, or compulsory reserve stock 
requirements (Chapter III(2)(v)(b)).  Imported goods produced in a manner prohibited in Switzerland 
must be labelled as such (Chapter III(2)(vii)).
33   
(g) Export subsidies and other export assistance 
39. Under the WTO Agreement on Agriculture, Sw itzerland and Liechtenstein have made 
commitments to reduce export subsidies on a number of products.  Accordingly, expenditure on these 
export subsidies has been capped since 2000: dair y products, Sw F 284 milli on in 2000;  cattle and 
horses, Sw F 22 million;  fruit, Sw F 17 million;  potatoes, Sw F 2 million;  and processed agricultural products, Sw F 115 million.
34 The export subsidies generally consis t of direct contributions to reduce 
export prices or, under the price compensation scheme,  refunds to reduce higher input costs (section 
(c) above).  The price compensation scheme has been described as expensive to administer and 
resulting in considerable amounts of expenditure on export subsidies.35  
40. Data from notifications to the WTO show that among WTO Members, Switzerland reports 
the second highest amount of export subsidies after the European Union.36  Over the 1996-00 period, 
about two thirds of the value of the export subsid ies notified were spent on dairy products, and most 
of the remainder on other processed agricultural pr oducts.  On average, over this period, 82% of 
Switzerland's dairy exports were carried out unde r subsidies.  In 1999, Sw itzerland had invoked the 
flexibility provisions under Article 9.2 of the WT O Agreement on Agriculture to exceed its annual 
commitment level on subsidized exports of dair y products by 8,745 tonnes.  Given Switzerland's 
position as the world's fifth exporter of dairy produc ts (with exports valued at Sw F 545.4 million in 
2002), Swiss export subsidies are likely to significantl y distort world trade in dairy products, notably 
cheese. 
41. Switzerland has not reported information on its export subsidies to the WTO for any period 
after the year 2000 (Table IV.6), thus precluding any meaningful recent analysis or comparison.  Data 
available from domestic sources indicate that export subsidies granted to cheese, other dairy products, 
                                                      
33 Article 18 of the Federal Law on Agriculture and Ordonnance relative à la déclaration de produits 
agricoles issus de modes de production interdits en Suisse.  
34 WTO Schedule LIX – Switzerland and Liechtenstein, 15 April 1994. 
 35 See Département fédéral des affaires étrangères, Fact sheets: négociations bilatérales II Suisse – 
UE, online information.  Available at:  http://www.europ a.admin.ch/nbv/expl/factsheets/f/index.htm#agri and   
[http://www.europa.admin.ch/nbv/expl/factsheets/f/agri.pdf.]. 
36 See, for example, WTO document G/AG/NG/S/12/Rev.1, 12 March 2001. WT/TPR/S/141 Trade Policy Review 
Page 106 
 
 
and livestock fell from Sw F 105 million in  2001 to Sw F 80 million in 2002.37  Those on "processed 
agricultural products" reached Sw F 115 million.   
42. Switzerland has reported that officially suppor ted export credits were not requested for 
agricultural exports during 1997-01.38  According to the authorities, no requests were made for the 
period 2001-03. 
43. According to the Liechtenstein authorities,  few Liechtenstein food processing companies 
benefit from the Swiss export subsidy scheme.  This  is due to the size of the Liechtenstein economy 
and that some of the subsidized goods are neither produced nor exported by Liechtenstein. 
(3) MANUFACTURING AND ENERGY  
(i) Manufacturing 
(a) Main features  
44. Several Swiss multinational companies are among th e world's largest;  they are mainly in the 
petro-chemical industry, including pharmaceutical s (e.g. Novartis, Roche), in machinery and 
electronics (e.g. ABB) , and in food (e.g. Nestle).  Thei r low-technology mass-production is now 
mostly carried out abroad.  In addition, many  competitive and innovative small and medium-sized 
companies also depend on exports and operate with  little or no government assistance, in subsectors 
such as, medical and pharmaceuti cal research-based industries, and precision engineering combined 
with high-technology electronics (see Chapter I).  Ho wever, there remain many small enterprises with 
low productivity, notably in food manufacturing,  or salt production, that depend on regulation for 
their survival.  Reflecting high domestic wa ges and other production costs, the tendency has 
continued in recent years to transfer certain  manufacturing activities to countries with lower 
production costs.39 There were concomitant shifts towards high technology branches such as 
biotechnology and high-precision medical equipment.   
45. There have been many legislative and regulatory changes since 2000 that are likely to 
facilitate Switzerland's trade in manufactured products.   The first is the bilateral agreement with the 
EU on mutual recognition in relation to conformi ty assessment, in effect since June 2002.  The 
agreement eliminates duplication in the field of conformity assessment procedures required for the 
marketing of products in Switzerland and in th e EU (Chapters II(4)(ii)(c) and III(2)(vii)(b)). In 
addition, the scope of the law on cartels has been extended so as to prevent intellectual property right 
holders from restricting parallel imports through  agreements between enterprises or abuses of 
dominant position.  There have also been legisla tive amendments affecting trade in food products, 
medical drugs and motor vehicles.  
46. In Liechtenstein, manufacturing accounts for around 46% of total employment;  some 599 
enterprises are operating.40  Almost all production is exported (abou t half to the EU). Metal-working, 
vacuum engineering, precision tools, food products , electronic systems, and artificial teeth and 
dentistry are the most important branches.  Most technical barriers to Li echtenstein's trade with the 
other members of the EEA have been eliminated sin ce the entry into force of the EEA in 1995.  The 
MCSM provides for parallel imports of patented produc ts (including drugs) or other products subject 
to EEA technical regulations that are different from those of Switzerland.  
                                                      
37 Federal Office for Agriculture (2003), Table A29. 
38 WTO document G/AG/W/56/Add.1, 3 February 2003. 
39 See for example Le Temps , 24 June 2004, "La chimie bâloise est morte". 
40 The figures correspond to the secondary sector as a whole. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 107 
 
 
47. In 2002, the Government set up a Competence Ce ntre at the Liechtenstein University of 
Applied Sciences (Fachhochschule Liechtenstein) to support SMEs in their start-up phase.  The 
Centre advises young professionals and compan ies in the growth phase on business planning and 
management;  arranges contacts with financial ins titutions, investors or potential business partners, 
provides financial support;  and promotes the transf er of technology and knowledge.  The Centre is 
financed by the Government and by Innovation Gr oup Liechtenstein.  Criteria for granting support 
include high added value, availability of know-how , and potential synergies with the Liechtenstein 
business community.  In addition,  the authorities indicate that Liechtenstein contemplates the 
establishment of cross-border regional "trade park s" for SMEs, taking into account the comparative 
advantages in the region, including on salaries, pr ofit taxation or availability of building sites. 
48. The level of MFN tariff protection in the Customs Union remains low at 2.3% for non-
agricultural products (WTO definition), and at 7.7% for the manufacturing sector (ISIC definition).  
These averages mask tariff peaks of 15-25% on, inter alia , salt, shampoo, tooth paste, bath 
preparations, wooden pallets, certain papers, and textile products.  Non-agricultural products with 
AVE tariffs exceeding 25% include fish fats and oils, certain fabrics and worn clothes (see below), 
and beryllium waste and scrap41 (Tables III.2 and AIII.1).     
(b) Food products 
49. Food manufacturing is the most protected activ ity of the Swiss and Liechtenstein economies 
(see section (2) above).  Tariffs are in many cases prohibitive;  strong positive tariff escalation ensures 
high effective protection of food industries. This is  reinforced by incentive schemes, including tariff 
exemptions on imports of specified inputs (Cha pters III(2)(c)), and IV(2)(ii)(c) and (g)).  
(c) Textiles and clothing, and footwear 
50. The textiles and clothing branch is domina ted by small enterprises producing high-quality 
yarns, fabrics, and silk products, industrial textiles, and luxury clothing.  The swiss footwear industry has been dominated by one world-class company (B ally);  in 1999, the company was sold and its 
production in Switzerland was terminated.  The clothing  and, particularly, the footwear branch have 
recorded the strongest contraction in value a dded among the Swiss manufacturing industries over the 
past decade.  In clothing, the 2003 level of employment was at slightly over one third of the 1991 level.  In 2000, the dollar value of Swiss exports of textiles, clothing and footwear was a third lower 
than its 1990 level (and a quarter lower when expr essed in Swiss francs).  Since then, the value of 
annual exports in Swiss francs has remained unchanged .  Imports of textiles, clothing, and footwear 
were of approximately the same value in 2003 as in 1990 (US$ 6 billion),  perhaps reflecting a 
combination of rising import volumes and falls in world prices.   
51. Textiles and clothing products are subject to relatively high duties, averaging over 8% for 
man-made filaments, and over 10% for knitted or cr ocheted fabrics.  Tariffs exceed 25% on certain 
woven fabrics of synthetic filament yarn, synthetic yarn twine, knit fabrics, embroidered table linen, 
and worn clothes.
42  Tariffs on footwear average 3.3%.  Furthermore, reductions and refunds of 
customs duties are granted on imports  of specified inputs.  Switzerla nd and Liechtenstein have never 
resorted to quantitative restrictions on imports of te xtiles or clothing, although they retained the right 
                                                      
41 HS tariff items (and corresponding AVE duties) are:  1504.1098 (74%), 1504.2091 (72%), 
5407.2000 (53%), 5607.4100 (35%), 5806.4000 (29% ), 6005.9000 (56%), 6302.4090 (50%), 6309.0000 
(153.4%), 7019.9090 (26%).   
42 HS codes are 5407.2000 (53%), 5607.4100 (35%), 5806.4000 (29%), 6005.9000 (56%), 6302.4090 
(50%), and 6309.0000 (153.4%).  The parentheses indicate the AVE tariffs on the products. WT/TPR/S/141 Trade Policy Review 
Page 108 
 
 
to use the transitional safeguard mechanism under Article 6 of the WTO Agreement on Textiles and 
Clothing.   
(d) Pharmaceutical products 
52. The high price of medical drugs in Switzerland by  European comparison h as been analysed in 
11 of the 13 annual reports published by the Price Inspector since 1991 (Chapter III(4)(iii)).  
According to recent estimates, Swiss pharmacists purchase medicines at factory prices 22% above the European average, despite the duty-free regime on the products.
43  Patented drugs show the highest 
price differences with neighbouring countries.44  Between 1997 and 2002, prices of medical drugs 
increased rapidly, mainly through the substitution of  old drugs with more expensive preparations.  
According to the Office fédéral de la statistique, e xpenditure on medical drugs as a share of household 
expenditure has increased from 1.37% in 1993 to  2.74% in 2004, mainly on account of price 
increases.   
53. Since 2000, considerable efforts have been made by the Swiss Government to combat anti-
competitive practices and stimulate trade as a way of  reducing price levels.  The law on compulsory 
health care insurance abolished th e system whereby retail margins of pharmacists were expressed as a 
fixed percentage of drug prices.  This percentage was an incentive for the sale of expensive drugs in 
particular. It was replaced by a system of compen sation based on service.  As a result, pharmacists are 
no longer discouraged from selling cheaper drugs, such  as through parallel imports, drugs sold in co-
marketing, or generic drugs.  The cartel of trad ing companies active in the medical drugs market 
(Sanphar) was abolished in 2001,  following a decision of the Competition Commission in 2000. 
54. The bilateral MRA with the EU is expected to facilitate trade in medicinal products, by 
providing for the mutual recognition of GMP (good ma nufacturing practice) certificates and of batch 
certificates (including officially released batch es) issued in the exporting party. Marketing 
authorizations, however, are not mutually recognized under this agreement and are, therefore, still 
required in Switzerland and in the EC.  Efforts have also been made since 2000 to increase transparency in the market for medicinal products, including through the publication of prices and of 
lists of substitutable drugs produced under licen ce under another brand (co-marketing).  A new law  
(LPTh), entered into force in 2002.
 45  
55. Until 2001, all pharmaceutical products (pre scription and over-the-counter) had to be 
approved and registered by an inter-cantonal drug commission before being placed on sale in 
Switzerland.  Under the LPTh, the regulatory comp etence for all products has been transferred from 
the cantons to the federal level for human a nd veterinary drugs and for medical devices. 
Pharmaceutical products now have  to be approved and registered by the Swiss Agency for 
Therapeutic Products (Swissmedic) before being pl aced on sale in Switzerland.  In Liechtenstein, the 
concept of parallel marketability prevails for ph armaceutical products: marketing approval can be 
obtained either according to EEA rules or according to the LPTh.46  
56. The LPTh has also facilitated parallel imports of  medicinal products that are not protected by 
a patent. It provides for a simplified authorization procedure for an application to place on the market 
a medicinal product that is already authorized in Switzerland, and imported from a country with an 
                                                      
43 Study by Interpharma, quoted in LeTemps , 18 June 2004. 
44 See Monsieur prix at:  http://www.monsieur-prix.ch. 
45 Loi fédérale sur les produits thérapeutiques (LPTh) , RS 812.21. 
 46 This Act is applicable in Liechtenstein under a special bilateral agreement (Exchange of Notes of 
11 December 2001 relating to the application of the Sw iss legislation on therapeutic  goods in Liechtenstein, 
LR 0.812.101, Law Gazette 190/2001.  Switzerland and Liechtenstein WT/TPR/S/141 
 Page 109 
 
 
equivalent authorization system. Swissmedic is responsible for th e granting of simplified marketing 
authorizations.  
57. Parallel imports of medicinal products protected by a patent, however, are not yet possible in 
Switzerland.47 In 2001, an analysis was carried out by the Price Inspector on the effect of national 
exhaustion in patent law on prices of medical drugs.48  The prices were found to be higher by 
international comparison for products protected by  a patent.  The Price Inspector has, on several 
occasions, called for the application of internatio nal exhaustion under patent  law as one of the 
conditions for lower prices of medical drugs in Switzerland, as it would improve price competition 
through parallel imports.  In November 2002, anot her study was carried out by the Federal Council on 
parallel imports and patent rights.49 It concluded that internationa l exhaustion was justified from the 
point of view of economical theory, but empiric evaluations had shown that the introduction of 
international exhaustion of patent s would only have a minimal effect on the economy as a whole, and 
decided against this introduction.     
(e) Motor vehicles 
58. Trade in motor vehicles has been limited by non-tariff barriers for many years, even though 
Switzerland and Liechtenstein do not produce motor vehicles on a commercial scale.  The trade 
restrictions consisted mainly of private business arrangements limiting competition.  The Competition 
Commission (Comco) launched investigations on deal er contracts for distribution of motor vehicles 
and spare parts, and published decisions in 1997  and 2001.  Subsequently, in November 2002, Comco 
published a communication specifically concerning motor vehicle distribution agreements50, which 
mirrors the corresponding changes in the EU "block exemption" (from competition law) Directive of 
2002.51  The communication was aimed at facilitating parallel imports of motor vehicles from EEA 
countries. 
59. In principle, the new regulation eliminates the main barriers limiting trade in motor vehicles 
by dealers other than official representatives of  manufacturers.  It provides a choice between an 
exclusive distribution system, whereby the distributor is allocated a given territory or group of clients, 
or a selective system based on predefined qualitative or quantitative criteria.  Distribution contracts 
with foreign manufacturers may no longer prohibit parallel imports.  Motor vehicles can now be 
imported by independent garages, private dealers or  customers, and no longer exclusively through 
representatives with exclusive rights conferred by manuf acturers.  In particular, EU dealers who were 
not allowed to sell into Switzerland may now do so.  Similar changes have taken place in the market 
for spare parts, and garages are no longer obliged to purchase all supplies through "official" channels 
at fixed prices.  
60. All vehicles and specified parts must still be homologated.  Inspection by the local Cantonal 
Automobile Office (after completion of custom s clearance for the motor vehicle) addresses, inter alia , 
pollutant emission, noise, brakes, lights and lighting, speedometer and tachometer readings, and make 
                                                      
47 In addition, the Ordonnance sur les dispositifs médicaux (RS 812.213) precludes parallel imports of 
medical devices. 
48 Price Inspector (2001), "P rotection par brevet sur le marché des médicaments", Rapport annuel 2001 
du Surveillant des prix , RPW/DPC 2001/5 p. 929. 
49 Importations parallèles et droit des brevets, Rapport du Conseil Fédé ral en réponse au postulat de la 
CER-N (00.3612) et concernant les diverses réglementations coexistant sur le marché des médicaments à usage humain. 
50 Comco online information.  Available at:  http://www.weko.ch/site/f/gesetze/ 
communications.Par.0001.Pic1.pdf.  
51 EU Directive 1400/2002. WT/TPR/S/141 Trade Policy Review 
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of tyres.  The inspection fee of around Sw F 50 to Sw F 80 (according to cantonal decrees) and, if 
necessary, costs incurred to bring the vehicle into compliance with the local regulations are borne by 
the owner.  Sales of motor vehicles are subject to a 4% motor vehicle tax, in addition to the standard 
VAT.  Import duties average 2% on an ad valorem  equivalent basis. 
61. The Swiss regulations on motor vehicles do no t apply to imports from the other EEA member 
countries to Liechtenstein (following its membersh ip in the EEA).  However, according to the 
authorities, there are no noticeable price differences between Switzerland and Liechtenstein, and most commercial vehicle importers are responsible for both countries and treat them in the same way.    
(ii) Energy 
62. Switzerland and Liechtenstein do not produce fossil fuel.  Therefore, around 81% of 
Switzerland’s primary energy supply (fossil and fissile  fuels) is imported. Swiss net energy imports 
amounted to 3.4% of total imports and 22.5% of  total energy expenditures (taxes included).  A 
detailed description of the measures affecting produc tion, distribution, and trade in energy products 
and services, notably electricity, is contained in th e previous TPR of Switzerland and Liechtenstein.  
In 2002, electricity market reform aimed at libera lizing the electricity market was rejected by popular 
vote after it had been adopted by Parliament.  Sinc e then, efforts continued to liberalize distribution 
whilst better regulating electricity transmission.  Th e Swiss Federal Office of Energy is responsible 
for policies involving trade in energy products.
52 
63. Switzerland and Liechtenstein have not made  any commitment with respect to energy 
services per se  under the GATS. However, under "Business services", both Switzerland and 
Liechtenstein have undertaken specific commitment s on "Services incidental to mining, excluding 
prospection, surveying, exploration and exploitation (part of CPC 883 and part of 5115)".53 Under the 
GATT, import duties have not been bound on gas, petroleum, and related products.   
(a) Oil products  
64. In Switzerland, crude oil accounted for 36% of total oil imports in 2003, oil products making 
up the difference.  Crude oil is refined in two pl ants, owned by Petroplus and Tamoil.  Seven large 
players (Agip, Avia, BP, Esso, Migrol, Shell and Ta moil) dominate the retail distribution market.  The 
oil price is freely set by the companies.  In Li echtenstein, oil products accounted for less than one 
quarter of the total value of energy imports in 2003, a decline from 27% in 1999.  The Liechtenstein 
petroleum sub-branch is also operated by priv ate companies, and the prices are also market-
determined.   
65. The same duties and taxes apply on energy in both Switzerland and Liechtenstein.  The 
average customs tariff (on AVE basis) on petroleum and coal products is at less than 1%.  The VAT is 
collected at the standard rate of 7.6% (up from 7.5% in 2000).  VAT revenue s on oil products totalled 
Sw F 0.85 billion. In addition, other duties and ta xes apply to specified products. The mineral oil tax 
(Sw F 2.92 billion of revenues in 2003) is levied on al l oil products and natural gas. A reform is being 
debated to allow for more differentiated rates based on environm ental impact and CO 2 content, with 
full exemption for biofuels. The surtax ( surtaxe sur les huiles minerales ) is levied on transport fuels 
only (Sw F 1.96 billion in 2003).  Together, these consumption taxes amounted to almost 10% of 
federal revenue in 2003. Tax reba tes are granted to agricultural a nd concessionary public transport. 
Half of revenue from the mineral oil tax and all the revenue from the surtax are allocated to the 
construction and maintenance of the road network.   
                                                      
52 Swiss Federal Office of Energy online informati on.  Available at:  http://www.swiss-energy.ch. 
53 WTO documents GATS/SC/83 and GATS/SC/83A, 15 April 1994. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 111 
 
 
66. According to the International Energy Agency (IEA),  Swiss heating oil prices are among the 
lowest in OECD member countries, due to the low tax component, thus discouraging energy saving or 
the use of alternative energies with lower CO 2 emissions. Gasoline prices in Switzerland are lower 
than in neighbouring countries. This coupled with the depreciation of the Swis s franc against the Euro 
in 2003, accentuated the so -called "fuel tourism".54 An estimated 10% of Swiss transport fuel sales are 
for foreign vehicles, many of them transiting.  Diesel, however, is more expensive in Switzerland than in neighbouring countries. 
(b) Natural gas  
67. Sales of natural gas in Switzerland approached GWh34,000 in 2003, and are on an increasing 
trend.  Imports from Germany, ot her European countries, and Russia  supply the entire consumption as 
no gas is produced in Switzerland.  Imports are dut y free.  Swissgas, a privately owned distribution 
company, is the major importer (72% of total impor ts of natural gas to Switzerland).  The natural gas 
market is mostly under the de facto monopoly of cantons and municipalities, which own the majority 
of gas companies, including the seven largest with  50% of the market share. Even though both the 
pipeline law and the competition law of 2004 provid e for third-party access, consumers are not in a 
position to choose their gas supplier because of lack  of new foreign gas suppliers.  The authorities 
ascribe this to the small size of the Swiss market  and the absence of large industrial customers.    
68. The prices of natural gas are either set or subject to approval by local authorities.  The 
International Energy Agency (IEA) estimates that  Swiss natural gas prices are among the highest in 
IEA member countries, owing to the topography, market size, low connection density and the 
fragmented market structure. These factors discourage ma rket penetration of natural gas (Chart IV.1).   
69. A state-owned company, Liechtensteinisch e Gasversorgung (LGV), distributes gas in 
Liechtenstein.  At the time of the 2000 TPR, LGV held exclusive distribution rights over gas and set its price.  The authorities have indicated, in the context of this review, that Liechtenstein has 
liberalized 35% of the natural gas market, and that  large consumers of more than 10 GWh can profit 
from this liberalization.   
 
                                                     
 
54 International Energy Agency  (2003). WT/TPR/S/141 Trade Policy Review 
Page 112 
 
 
140160180200220240260280300320340
1997 1998 1999 2000 2001 2002 2003Chart IV.1
Price of natural gas in selected OECD countries, 1997-03
End-use prices, industry
US$/tonne of oil equivalent (net calorific value)
Switzerland
Italy
OECD EuropeGermany
Austria
Source: International Energy Agency.France
 
 
(c) Electricity 
70. Electricity is the major source of energy produced  in Switzerland.  The majority of production 
is hydroelectric (about 56% of the total), from some  350 power plants.   In addition, five nuclear 
power plants produce 40% of total electricity.55 Other sources of electricity include waste, biomass 
(wood in particular), fossil-fired, solar, and wi nd energy.  Total energy production was GWh 62,373 
in 2003;  imports reached GWh 42,352 and exports GW h 45,464.  Trade in electricity is mostly with 
neighbouring countries:  imports are mainly from Fr ench nuclear power plants, and exports are to 
Italy.  Imports are duty-free. Imports or exports are not subject to licence.   
71. The electricity branch is 72% owned by cantons and municipalities.  Seven companies are 
vertically integrated and active mainly in produc tion, transmission, and trade;  300 companies are 
active in production and distribution;  200 are (mostl y) joint-owned by other utility companies and are 
active in production;  and around 700 companies are mainly distributors and operate at municipal levels.  Forty major firms account for more than 60% of total distribution.  Related production, 
transmission, and distribution activities are still under de facto monopolies.  Seven major electricity 
companies currently own the electricity grid.   
72. Electricity is also the major source of ener gy produced in Liechtenstein:  in 2003, total 
production of electricity was GWh 80,857 (some 25% of total electricity consumption).  There has 
been a considerable increase in the number of elect ricity-producing entities: electricity is produced by 
                                                     
 
55 Energie suisse online information.  Available at: http://www.energie-schweiz.ch/imperia/md/content 
/statistikperspektiven/elektrizittsstatistik/3.pdf. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 113 
 
 
six hydroelectric power stations (up from four in 1999); 17 solar power stations (up from 14 in 1999); 
and eight thermal stations using natural gas ( up from one  in 1999) and another using biogas.   
73. Swiss electricity prices are set either by cantona l or communal authorities, or by companies, 
subject to approval by the Price Inspector (Chapter III(4)(iii)(d)).  Therefore, the price differs between 
cantons and municipalities.  Competition is not forb idden by law but has been prevented in practice 
by the absence of a third-party access obligation ( see also below). This quasi-monopolistic situation 
and the imposition of various taxes, collected mo stly at cantonal and/or communal levels, have 
contributed to relatively high average prices for sm all and medium-sized enterprises and households.  
In March 2004, a distribution company announced the cancellation of its contract with its monopoly 
supplier, claiming that its electricity could be "up to 40% cheaper if purchased on a free market".56  
However, the authorities indicate that large consum ers with sufficient bargaining power are believed 
to have negotiated competitive prices.   
74. In 1997, the average electricity price to Swiss industry was the second-highest amongst 
International Energy Agency member countries.  In  2002, despite a considerable decrease, it was still 
the fourth highest, sizeably lower th an in Italy but higher than in, inter alia , Austria, France, and 
Germany.  In its 2003 review, the IEA still found elect ricity prices in Switzerland to be higher than 
the European average, particularly for sma ll and medium-sized enterprises (Chart IV.2).57  This was 
again ascribed to the taxes and charges set by th e cantons and municipalities. The IEA also expressed 
concerns about the efficiency of the operation of  many publicly owned small utilities companies and 
their considerable profits, noting that the current  price-setting mechanisms lack transparency and 
enable cross-subsidies from one cons umer group to another. In turn, high electricity tariffs potentially 
weaken external competitiveness of the Swiss industry. The authorities note that in contrast, 
household electricity prices are in line with the OE CD average in purchasing power terms, and lower 
than the prices in three of Switzerland's neighbouring countries. 
75. A major blackout occurred, in Italy and in certain  southern regions of Switzerland early in the 
morning of 28 September 2003;  it fuelled the debate  on the regulation of electricity transmission and 
trade in Europe.  Switzerland's cross-border trad e takes place on the basis of quotas, negotiated by 
national transmission regulators on the basis of both physical transmission capacity and commercial criteria.  Deviations of actual loads on cross-borde r transmission lines in excess of allocated trading 
quotas can lead to problems of the ty pe that occurred in September 2003.
58  Yet in the absence of a 
Swiss regulator and an independent Swiss transmissi on system operator, French and Italian regulators 
negotiate quotas directly with the various propri etors of Swiss transmission lines without involving 
the Swiss federal authorities (Federal Office of En ergy, SFOE).  In this context, the SFOE has 
recommended the creation of a regulator and an independent transmission system operator to negotiate with operators in ne ighbouring countries and the EU Commission, and the passage of a 
comprehensive federal law on the electricity industry.   
 
                                                     
 
56 Le Temps , "Un gros distributeur vaudois attaque les prix abusifs du Service lausannois de 
l'électricité" , 11 March 2004.  The distribution company is the Service Intercommunal de l'électricité de l'ouest 
lausannois. 
57 International Energy Agency  (2003). 
58 Federal Office of Energy (2003), Rapport concernant la panne de courant survenue en Italie le 28 
septembre 2003 , November.  Available at: http://www. energieschweiz.ch/imperia/md/content 
/energiemrkteetrgertechniken/elektrizitt/strompanne03/4.pdf. WT/TPR/S/141 Trade Policy Review 
Page 114 
 
 
200400600800100012001400
1997 1998 1999 2000 2001 2002Chart IV.2
Electricity prices in selected OECD countries, 1997-02
End-use prices, industry
US$/tonne of oil equivalent (net calorific value)
SwitzerlandItaly
OECD Europe
Germany
Austria
Source: International Energy Agency. 
 
76. Following the popular vote in 2002, the Supr eme Court ruled that existing competition 
legislation enables any electricity customer or produ cer to ask for access to transmission networks.  In 
order to prevent deregulation through case-by-case  court rulings or agr eements between utilities, 
efforts are being pursued to make the legal framewo rk for the electricity market more transparent. 
Two laws are planned: a new electricity supply law, and an urgent temporary amendment to the 
Electricity Law so as to embed Swiss electricity trade within the EU cross-border trade framework. 
Key elements of the new legislation are the lega l unbundling and operational merger of transmission 
operators into a single transmission system operato r (Swissgrid);  establishment of an electricity 
regulator;  and eligibility of all producers and consumers with annual consumption exceeding 100 
MWh (53% of the total Swiss market) to choose thei r supplier. The electricity supply law is scheduled 
to enter into force in 2007, subject to referendum.  
77. The state-owned company, Liechtensteinische Kraftwerke (LKW), produces, imports, and 
distributes electricity in Liechtenstein. It also sets electricity prices. LKW imports electricity exclusively from the north-eastern Swiss supplier.  The authorities indicated, in the context of this 
review, that a two-phase liberalization of the electricity market started in 2002, and that LKW no 
longer operates under exclusive rights. In the firs t phase, the market was opened for industries and 
large customers;  in the second phase (2005), the market  is to be liberalized for all consumers.  The 
authorities also indicated that price reductions have already been realized due to the opening of the 
electricity market.  Switzerland and Liechtenstein WT/TPR/S/141 
 Page 115 
 
 
(d) Measures to protect the environment 
78. Switzerland ratified the Kyoto Protocol in July 2003.  The Swiss Kyoto target is an 8% 
reduction in greenhouse gas (GHG) emissions below 1990 levels by 2008-12.   The CO 2 Law59 
provides for a 10% reduction of the 1990 levels of energy related CO 2-emissions (15% CO 2 emission 
reduction from heating and process fuel consumption,  and 8% from transport fuel consumption), by 
2010. The reductions are to be achieved primarily through voluntary action by the business community and consumers.  If voluntary measures prove insufficient to reach the targets, a CO
2 tax 
(maximum of Sw F 210/tonne of CO 2) can be imposed as of 2004 onwards, subject to parliamentary 
approval.  The oil industry association has proposed  a voluntary "climate cent" of Sw F 0.01-0.019 
per litre of transport fuels as an alternative to the CO 2 tax.  Revenues from the "climate cent" would 
not be spent on the business sector and households, but for domestic CO 2 reductions, for buying GHG 
emissions permits or to invest in projects as foreseen under the Kyoto Protocol.  
79. Based on the Energy Law60, the Federal Council in 2001 launched "SwissEnergy", a ten-year 
programme to promote energy efficiency and renewable energy.  Concerning fossil energies, it restates the 10% reduction target of the CO
2 Law.  During its first three years (2001-03), SwissEnergy 
has not fully reached its targets. Electricity demand continued to grow at a robust pace so that the 10-
year growth cap of 5% will probably be exceeded  by a large margin. Heat generation from new 
renewables was on track to meet its 2010 target, whereas electricity generation from new renewables 
was about one third below its target path.  Switzerland’s CO 2 emissions have stabilized at the 1990 
level (-1.7% as per 2002). Under SwissEnergy, some  Sw F 75 million of subsidies were spent 
annually in 2001 and 2002 (federal spending and cantonal co-financing).   
80. In Liechtenstein, the Clean Air Act regulates, inter alia , emission targets for stationary 
installations, maximum air pollution levels, measures to be taken if emission targets are exceeded, as 
well as fuel requirements. The revision of this Act, which entered into force in February 2004, 
represents a further commitment to reducing th e emission of greenhouse gases.  In 1996 Energy 
Conservation Act and its accompanying Ordinance we re introduced to provide a legal framework for 
the promotion of environmentally sound use of energy and the use of renewable energy. The 
promotion of energy saving is a central pillar of Li echtenstein’s energy policy. The authorities expect 
parliamentary approval of the Kyoto Protocol and its ratification before e nd 2004.  Financial support 
is provided to facilitate energy saving in buildings , particularly as regards the refurbishment of old 
buildings, and solar installations. 
(4) CONSTRUCTION  
81. Under the GATS, Switzerland has bound market  access and national treatment in all 
construction activities with the exception of certa in construction work for civil engineering 
(ex CPC 513),  special trade construction work (CPC 515),  and rental services for construction 
equipment (CPC 518).  Certain exemptions have b een scheduled, as well as qualification requirements 
reflecting access restrictions to the Swiss labour mark et.  The exemptions are:  assembly and erection 
of prefabricated buildings and installation work fo r energy, heating, water, communications, and lifts. 
A variety of activities in these areas require permits or authorizations by cantonal or local bodies. 
82. The WTO Government Procurement Agreement (G PA), the Inter-cantonal Concordat, and the 
bilateral agreement with the EU on government procurement have somewhat dismantled certain 
restrictions on construction activities in Switzerland (C hapters II(4)(ii) and III(2)(viii)).  Nevertheless, 
                                                      
59 Loi fédérale du 8 octobre 1999 sur la réduction des émissions de CO 2, RS 641.71.   
60 Loi sur l’énergie , RS 730.0.  WT/TPR/S/141 Trade Policy Review 
Page 116 
 
 
construction services are still among Switzerland's highly protected activities.61  Restrictions to trade 
in this subsector are fourfold:  standards and technical regulations have traditionally been both 
particularly stringent and specific to Switzerland;  several professions in the subsector continue to be 
regulated at cantonal level, with restrictions on work by out-of-canton suppliers;  in the past, there 
have been a relatively large number of restrictive arrangements and other anti-competitive practices 
among suppliers that limited entry of  new, including foreign,  suppliers;  and the limits on work permits 
for foreign employees limit the competitiveness of th is labour-intensive subsector.  Together, these 
factors have contributed to maintaining construc tion costs high by international comparison.  The 
authorities indicated that corrective measures were being implemented. 
83. Accounting for 6%  of GDP and 7.5% of employ ment (Table I.1), the construction industry is 
an important contributor to, and beneficiary of, over all economic activity in Sw itzerland.  The industry 
nevertheless recorded negative growth rates fro m 1999 to 2002 (Table I.2).  Construction spending over 
the past ten years has not been dynamic and, at SwF 45 billion, was lower in nominal terms in 2003 
than in 1995 (Chart IV.3).  Imports of construction serv ices appear to be particul arly small, representing 
less than 0.5% of total activity in the subsector. 
 
05101520253035404550
1995 1996 1997 1998 1999 2000 2001 2002 2003Chart IV.3
Construction spending by  project, Switzerland, 1995-03
SwF billion
a
Source:Provisional.
Swiss National Bank online: 
http://www.snb.ch/f/publikationen/publi.html?file=/f/publikationen/monatsheft/aktuelle_publikation/html/f/inhaltsverzeichnis.htmlOther private sectorIndustry and commerce
HousingPublic sector
a
 
 
84. The construction industry has in the past suffe red from various restrictive arrangements and 
other anti-competitive practices among suppliers.  Inquiries by the Competition Commission (Comco) 
have covered kitchen and bathr oom equipment, cables, bricks and construction stone, wallpaper, 
cement, concrete and road surfacing.  Since 2000, the Comco has found four construction companies 
                                                      
61 WTO (2000). Switzerland and Liechtenstein WT/TPR/S/141 
 Page 117 
 
 
guilty of collusion on prices when tenderi ng for renovation of the National Library.62  In addition, an 
agreed regulation was reached with the Swiss Association of Builders ( Schweizerische 
Baumeisterverband ), which guarantees that the design of its competition rules is in conformity with 
the competition legislation.  Another interventi on concerned the new system of honoraries of the 
Swiss Society of Engineers and Architects (SIA).   
85. The SIA, a member of the Swiss Associati on for Standardization (Chapter III(2)(vii)), 
initiates most standards for the construction industr y.  The SIA also issues reference wages, although 
these are ultimately negotiated between employer s and employees.  Stringent building zoning 
prescriptions cover areas such as land use ratios, minimum size of rooms, ratio of windows to ground 
surface, insulation, floor heights, and availability of  bomb shelter.  Construction products have yet to 
be included under the bilateral MRA with the EU.  The authorities expect the new law on construction products
63, and the recent intercantonal agreement in this area, to help address these problems. 
86. The 1995 Federal Law on the Internal Market (Chapter III(4)(c)) was expected to establish a 
unified construction market in Switzerland, by e liminating barriers such as local residence and 
establishment requirements, and membership obligations  in local trade associations.  The LMI states 
that goods, services, and labour legally offered in on e canton may be offered in any canton.  As noted 
by the Federal Council in 2004, this law did not su cceed in creating the free movement of labour and 
services across cantons, and high entry barriers conti nue to limit competition in regulated professions 
of the construction industry.   
87. About two thirds of all employees in the Swi ss construction subsector are foreigners;  and 
about one third have temporary work permits.  The federal authorities determine an annual global 
quota of permits, distributed to cantons and down  to individual firms.  Under certain cantonal 
regulations (e.g. in Geneva), allocation to firms is made on a historical basis.  A company wishing to 
perform a construction contract in Switzerland must obtain a temporary permit for each foreign 
worker.  In general, these permits are valid only for the site for which they have been delivered.   
88. In Liechtenstein, the non-financial services regime applies to construction services 
(Chapter II(6)(ii)).  The GPA and the EEA regime s apply in the public sector.  Liechtenstein has 
included MFN exemptions under Article II of the GA TS to ensure "adequate" market access to local 
suppliers of construction and rela ted engineering services.  Market access for these services is thus 
contingent upon reciprocity.64 
(5) TELECOMMUNICATIONS  
Switzerland 
(a) Overview 
89. Switzerland has one of the highest telephone penetration rates in the world.  In recent years, 
as mobile telephone penetration has increased, ther e has been a decline in the teledensity, from 68 
main lines per 100 inhabitants at end 1997, to 56 lines per 100 inhabitants at end 2002.  By the end of 2002, there were 5.7 million cellular services subscriber s, i.e. a penetration rate of over 79%, up from 
                                                     
 
62 For further details, see " La Comco interdit le cartel des soumissions ". Available at 
http://www.weko.admin.ch/publikationen/pressemitte ilungen/00116/PC-181201-Submissionskartel-F.pdf? 
lang=fr. 
63 Loi sur les produits de construction,  RS 933.0, and related ordinance. 
64 See WTO document GATS/EL/83 and GATS/EL/83-A, 15 April 1994 for Final Lists of Article II 
(MFN) Exemptions for Switzerland and Liechtenstein, respectively. WT/TPR/S/141 Trade Policy Review 
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42% at the end of 1999 (3 million subscribers).65  Since 2001, the annual rate of increase in the 
number of mobile subscribers has declined, suggesti ng that the Swiss market is close to saturation 
level.66  At 32%, the rate of Internet users is among the highest by OECD standards.   
90. In October 1998, Telecom PTT was transformed into Swisscom, a limited-trading company. 
The Swiss Confederation, however, remains by la w the majority shareholder of Swisscom, with 
62.7% of the capital since April 2002.67  Conflict can thus arise between the competition objectives 
contained in the Swiss legislation and their enforc ement where they may be perceived as detrimental 
to the incumbent.  Furthermore, the privileges associated with public ownership can have anti-
competitive effects.    
91. The liberalization of telecommunications ser vices supply was followed by substantial 
increases in the number of firms, turnover, and the employment in the subsector throughout 1998-
01.68  New, including foreign, operators increased their shares of the Swiss national long-distance and 
international markets significantly.  Since 1998, close to 300 providers have been registered for fixed 
network services and 40 for mobile services;  several 3G licences were also awarded.  Foreign companies continued to invest in Switzerland, reflecting the liberal market access and national 
treatment granted by Switzerland in most tel ecommunications services. Vodafone for example 
expanded its interests in Switzerland by purchasing  shares in Swisscom mobile.  France Telecom 
invested in Orange. The second biggest operator TDC Switzerland (Sunrise) is an affiliate of Danish 
TDC.  The broadband service provider, Cablecom, is currently funded by an international group of 
venture capitalists.  However, since Swisscom still op erates over 99% of subscriber lines and 72% of 
local traffic, it still has a de facto  monopoly on the local loop, despite the new pro-competitive 
legislative environment, including an obligation to unbundle the local loop.  As a result, alternative 
providers (e.g. Sunrise, Tele2) operate mainly in  the regional and national markets, carrying more 
than half of the regional and national traffic.   
92. The failure to unbundle local loops put pressure  on fixed line operators, which could only 
resell existing products and thus  were dependent on small and even decreasing margins.  
Consequently, some (mainly smaller) operators, w ith limited resources, have left the Swiss market, 
due to increased competition and lower prices of telecommunications services.  This has raised 
concerns regarding the sustainability of competition in the Swiss market.
69 
93. The reforms increased competition and brought do wn prices of the fixed telephone services.  
For fixed telephony, the OECD's indicators for 2002 show that Swiss prices for both local and 
international calls are lower than the OECD average.70 This may reflect, not only the competition in 
some markets, but that the regulator establishes price caps for access to fixed lines (at a retail level) 
provided by the holder of the universal service licence, Swisscom. Price caps for fixed national calls are also foreseen by the law, but  in effect are unnecessary because of  the existing price competition in 
the fixed communications market. However, the fixed costs associated with the calls tend to be higher 
by international comparison, reflecting the de facto  monopoly that remains over access to lines.  For 
Internet dial up, prices in Switzerland are slightly above the average of OECD countries, for access at 
both daytime and evening discount rates.
71 The fixed parts of Internet dial up access costs are below 
                                                      
 65 OFCOM (2003). 
66 Ecole polytechnique fédérale de Lausanne (2003). 
 67 Département fédéral de l'environnement, des trans ports, de l'énergie et de la communication, Press 
Release of 11 March 2002.  Ava ilable at http://www.uvek.admin.ch. 
68 See WTO (2000) for details on the liberalization reforms. 
69 La Vie économique , January 2003, p.8. 
70 OECD (2003b), Tables 6.9 and 6.10. 
71 OECD (2003b), Tables 6.4 and 6.5. Switzerland and Liechtenstein WT/TPR/S/141 
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the OECD average but the usage costs seem to be hi gher than the OECD average. As a result of these 
relatively high prices, Internet dial up is cu rrently under competitive pressure by broadband access via 
DSL and cable modems (see below).  
94. According to a recent study, the rates charged in Switzerland for access to leased lines are still 
very varied and can be high in regions where Swisscom has the absolute de facto  monopoly over this 
service. This de facto  monopoly is not only due to a lack of competition but also to recent rulings by 
Swiss courts that, under the current law, prices of leased lines of the dominant supplier cannot be 
regulated.72  However,  in the main metropolitan areas wh ere alternative operators are competing to 
supply leased lines, the incumbent has already been  forced to decrease prices. By international 
comparison, average prices for leased lines in Switzerland are relatively low.73 
(b) Participation in the WTO and commitments 
95. Swiss commitments on basic telecommunications, attached to the Fourth Protocol of the 
GATS, largely reflect the market access situation that prevailed prior to the 1997 liberalization.74  
Following the passage of the 1998 Telecommunications Law ( Loi sur les télécommunications  – LTC, 
RS 784.10), Switzerland (in 1998) communicated revi sed commitments to the WTO. These provide 
for one of the most liberal and comp etitive environments among WTO Members.75  In particular, 
Switzerland has attached the Reference Paper to its WTO Schedule of commitments in basic telecommunications. Its commitments also incl ude the provisions of the WTO Annex on 
Telecommunications. The Reference Paper specifies  a number of competitive measures to prevent 
major suppliers from engaging in anti-competitive  practices.  The Annex contains disciplines 
regarding, inter alia , leased lines. Under the LTC, no restri ctions target foreign suppliers (in 
particular) in the Swiss telecommunications market.   
96. A number of important shortcomings in the area of competition safeguards persist;  these 
include the lack of enforcement power to preven t the dominant supplier, Swisscom, from engaging in 
any anti-competitive practice (section 1 of the Refe rence Paper) in "any" relevant market. These 
shortcomings may not fit in with the spirit of Switzerland's WTO commitments, and may affect both 
Swiss and foreign new entrant suppliers. The aut horities have pointed out, however, that under the 
revised Act on Cartels (Chapter III(4)(iii)), the Competition Commission is now empowered to impose direct sanctions for first-time infringeme nts. As under other competition regimes, an 
undertaking that has a dominant position and abuses its market power may now be fined directly. 
(c) Regulation of telecommunications services  
97. Under the Telecommunications Law (LTC) and the accompanying Ordinance ( Ordonnance 
sur les services de télécommunications  (OST)), as last amended in 2003, suppliers of 
telecommunications services have to obtain a licence from either the Federal Office of Communications (OFCOM), which belongs to the Fe deral Department of Environment, Transport, 
Energy and Communication (DETEC), or from the Federal Communications Commission 
(ComCom).
76 OFCOM has administrative competency for telecommunications regulation.  It grants 
radio licences that do not involve any telecommuni cations services (e.g. company radio and amateur 
radio licences), and licences to suppliers of fi xed network services (not subject to tendering 
                                                      
72 Ecole polytechnique fédérale de Lausanne (2003). 
73 OECD (2003b), Table 6.18. 
 74 These commitments are contained in WTO document GATS/SC/83/Suppl.3, 11 April 1997.  See also 
WTO documents S/C/N/271-296, 26-27 February 2004, on technical prescriptions. 
75 WTO document GATS/SC/83/Suppl.3/Rev.1, 28 January 1998. 
76 Licence applications are to be dealt with within six months of submission. WT/TPR/S/141 Trade Policy Review 
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procedures).  Suppliers of all telecommunications services in Switzerland must register with OFCOM.  
ComCom, which is an independent extra-parliament ary commission, is responsible for the assignment 
of telecommunication licences allocated by public  tendering (e.g. licences for supply of universal 
services), and for the approval of national frequency and numbering plans.  It also rules on 
interconnection disputes.  The stated objective of th e LTC is to ensure private and business users the 
availability of quality and affordable services, both nationally and internationally.  The law aims to 
also guarantee universal services, and efficient competition. 
98. Providers of telecommunications services are re quired to ensure portability of numbers and 
freedom of choice in the selection of suppliers of  national and internationa l connections. The Swiss 
interconnection regime is based on an ex post regul ation: suppliers interested in concluding an 
interconnection contract must first negotiate the terms (the principle of primacy of negotiations 
applies). If, after a three-month period, the negotia tions are unsuccessful, the parties may then appeal 
to ComCom, which, on the basis of OFCOM's r ecommendations, will settle the dispute and fix the 
conditions for interconnection. By  law, interconnection prices must be cost-oriented only in the 
presence of market dominance;  in the absence of  market dominance, they must follow market 
standards.  In both cases, appeal to ComCom is po ssible. Cross-subsidization of telecommunications 
services is not legally prohibited. 
Universal services 
99. Articles 16-18 of the LTC provide for, inter alia,  the availability of reliable universal services 
at affordable prices. Universal services comprise:  public telephony (connec tion and transmission of 
speech and data);  access to emergency call services  and localization of these calls;  an adequate 
network of public telephone kiosks;  access to directories of subscribers in Switzerland;  and special 
services for the hard of hearing and visually im paired. The Federal Council also determines the 
minimum quality criteria that the universal service provider must fulfil.  Following a public invitation 
to tender for the award of the universal service licence by Comcom, Swisscom is the only universal service provider until 2007.   
100. The Federal Council fixes upper price limits for telephone connection to users, and national 
calls.   From 1 January 2003, the universal serv ice guarantees everyone’s right to an analogue 
connection for a maximum of Sw F 23.45 per month (excl. VAT) or a digital connection (ISDN or a 
comparable technology) for Sw F 40.00 per month.  The upper price limits for national telephone calls 
were set at Sw F 0.11 per minute for daytime calls, Sw F 0.09 per minute for night-time calls and 
Sw F 0.06 per minute during the week-end.  In order to finance uncovered costs of universal services, 
ComCom may charge a licence fee on other telecommunications services but, according to the authorities, this has never been imposed.   
101. Since the liberalization in 1998, the Office of the Price Inspector (Chapter III(4)(iii)(d)) has 
initiated three actions against Swisscom.  In 1998, the Price Inspector refused the substantial price 
increase for access to Swisscom's telephone directory database. In a second case, the Price Inspector 
obliged Swisscom to detail the costs for interconnecti on provided to an alternative operator.  In a third 
case, in 2001, on Swisscom’s request, the Federal C ouncil looked into the possibility of raising the 
price of the fixed-line subscription from Sw F 23.45 to Sw F 29. The Price Inspector was consulted on 
the matter and advised the Federal Council to maintain the price at the same level. 
Dominant carriers and competition issues 
 102. The Competition Commission (ComCo) operates in close cooperation with OFCOM and 
ComCom (Chapter III (4)(iii)) in cases relating to telecommunications services.  Market dominance is Switzerland and Liechtenstein WT/TPR/S/141 
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examined by ComCo on a case-by-case basis as part of  interconnection procedures.  Cases relating to 
dominant position have proven difficult to handle, gi ven the provision of the LCart on this issue and 
the absence of sufficient power granted to regulator s. This situation has changed, however, with the 
new competition legislation that entered into force in 2004.   
103. Telecommunications services providers with a dominant market position (including suppliers 
of part of the universal services) must provi de interconnection to other suppliers without 
discrimination and in accordance with transparent an d cost-related principles. Interconnection prices 
of a market-dominant provider are regulated on the basis of the "long-run incremental costs" (LRIC) 
method applied by most European countries.  Domi nant providers must publish a basic offer every 
year. Recently, ComCom reduced Swisscom fixnet in terconnection prices by 25% to 35%. The parties 
appealed to the Federal Supreme Court, with the re sult that ComCom's decision is not legally valid.  
So far, ComCom has not determined mobile interconnection prices. 
Leased lines  
104. In the landmark case between Commcare and Swisscom in 2000-01, both ComCom and 
ComCo ruled that leased lines were subject to th e interconnection regula tions.  Accordingly, 
ComCom substantially reduced some of Swissco m's leased line prices.  Swisscom submitted a 
complaint against ComCom decision to the Federa l Supreme Court, and successfully contested the 
obligation to provide leased lines under interconnecti on conditions.  The Federal Court concluded that 
neither leased lines nor transmission media could be subject to the interconnection regime, since there 
was no adequate legal foundation for the regulation of leased line prices of the market-dominant 
provider.   
105. On 26 February 2003, the Fe deral Council amended the OST to put leased lines under the 
interconnection regime as of 1 April 2003.  Howe ver, as shown by the Commcare vs Swisscom case, 
without a law on the matter, the judicial powers ha ve the final ruling against the regulator’s pro-
competitive action. In order to achieve a solid politi cal consensus around further market liberalization, 
the Federal Council has decided to incorporat e leased lines into a revision of the Law on 
Telecommunications.   
106. Subject to applicable legal provisions, Swissco m determines the prices, availability, quality 
and capacity of its leased lines, mainly used by business customers. Since duplication of leased lines 
is costly and uneconomic especially in the last mile, Swisscom holds a de facto  monopoly in some 
parts of the leased line marked, although there is  no legal monopoly.  This has obvious negative 
consequences on Swisscom’s competitors who are, in practice, forced to rely  on these lines especially 
in the last mile.  
107. Swisscom also determines the prices, availabilit y, quality, and capacity of leased lines for 
Internet access using copper wires.  This amounts to a monopoly, because the use of cable TV and 
main power networks for the transmission of teleco mmunications services is not yet an alternative to 
copper wires everywhere in Switzerland. Internet via cable TV is a valid alternative for private 
Internet customers, but cable TV is still not ava ilable everywhere.  However, business customers can 
depend on leased lines for their data exchange, while  cable TV and other infrastructures are not well 
suited to provide an alternative.  The authoriti es have indicated that leased lines between major 
destinations (e.g. Geneva to Zurich) can neverthe less be purchased in a competitive situation, as many 
operators offer capacity.   WT/TPR/S/141 Trade Policy Review 
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Unbundling the local loop 
108. As of September 2004, Swisscom had yet to provide unbundled network elements on a non-
discriminatory basis, and exploited the connection netw ork exclusively, at a flat fee of Sw F 25.25 per 
month, the highest rate permitted by the law.  T hus, irrespective of their chosen telecommunications 
provider, customers in Switzerland must, in addition,  pay this amount to Swisscom on a separate bill.  
The OST (as amended) put three unbundling varian ts under the interconnection regime as of 1 April 
2003: bit stream access, shared  line access (where one supplie r would have voice frequency and 
another non-voice frequencies on a given line), and full access.    
109. In July 2003, TDC Switzerland (Sunrise) requested ComCom to oblige Swisscom to provide 
access to the local loop, after having attempted, as  required by the LTC, to negotiate the terms of 
inter-connexion with Swisscom. In February 2004, Co mCom announced that it considered the LTC to 
constitute a sufficient legal basis to unbundle the local loop.77  The next step in this ongoing procedure 
would be to determine whether Swisscom enjoys a do minant position, and if so , to fix the conditions 
of access to the local loop.   
Proposed changes to the legislation on telecommunications   
110. On 12 November 2003, the Federal Council proposed the amendment of the Law on 
Telecommunications (LTC).78 This amendment would give Swisscom's competitors direct access to 
households, and strengthen the instruments that gua rantee effective competition, improve consumer 
protection and protect personal data.  The main objectives of the amendment are to:  unbundle the local loop; eliminate the need for state authori zation for access to the te lecommunications market, 
while telecommunications services providers remain  subject to OFCOM supervision;  create a 
conciliation body to resolve simply and quickly any disputes between users and providers of 
telecommunications services;  and ban mass mailing of unsolicited advertising messages (spamming) 
by amending the law against unfair competition. Th e authorities indicate that the proposed bill is 
based, to a large extent, on the new legal framework of the European Union, which entered into force 
(in the Member States) on 25 July 2003.  In contrast with the EU legislation, Article 11 of the draft 
LTC foresees an ex post regulation, which gives pr imacy to negotiations regarding access to services 
and resources of the dominant operator. Furthermore,  the draft law does not provide for the control of 
retail prices except for value added services (Article 12b). 
Liechtenstein  
111. Under the 1921 Postal Treaty between Switzer land and Liechtenstein, which was terminated 
in 1999, the Swiss PTT operated the telecommunications  network in Liechtenstein for more than 75 
years.  Following Liechtenstein's membership  in the EEA, Liechtenstein enacted its own 
Telecommunication Law (TelG) in 1996, and an Ordinance on individual licensing for the provision of telecommunications services in 1998.  Liechtens tein TeleNet AG (LTN) was established in 1998 as 
a fully state-owned company to which the manage ment of the national pub lic telephone network was 
transferred. A National Telecommunication Policy w as formulated in 1997 and was amended by the 
government in October 2002 for fixed network operati on.  This amendment defines the framework for 
Liechtenstein's national telecommunication policy, and in troduced changes in the issuing of licences.    
112. In addition to its network mana gement (operation and maintenance) licence, the responsibility 
for network planning has also been transferred to  LTN.  LTN is required to make its infrastructure 
                                                     
 
77 Comcom Press Release, "Comcom makes a partail decision on unbundling", 20 February 2004. 
Available at:  http://www.fedcomcom.ch/comcom/e/communiques/2004/240.html. 
78 The draft law is available online at:  http://www.admin.ch/ch/f/ff/2003/7303.pdf. Switzerland and Liechtenstein WT/TPR/S/141 
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available to other licensees in a neutral, non-di scriminatory, and cost-based manner. LTN also 
provides certain non-basic telecommunications servic es to licensed retail entities.  The Liechtenstein 
Office for Communications is the national regulatory authority.  It processes applications for both 
individual and general licences.  With the exception of the basic services, and of certain types of services 
and equipment for which an individual licence is required, the supply of all other services is subject to a 
general licence.79  Interconnection regulations are based on the relevant EU principles.  The annual 
turnover of telecommunications services is currently around Sw F 90 million. 
113. In 2000, a fully Swisscom-owned Liechtenste in legal subsidiary, Telecom FL AG, was 
granted two licences for the supply of local and in ternational basic telecommunications services, as 
well as a continuity licence covering all other telecommunications services formerly provided by 
Swisscom.  The scope of the continuity licence wa s to be reduced upon entry of new suppliers in the 
market and the emergence of competition in the area concerned.  In October 2003, the state-owned 
LTN purchased Telecom FL AG, which became its s ubsidiary.  The licences where renewed in 2003 
for an additional three years.  Owing to limited av ailability of frequency r esources, the Liechtenstein 
Government has limited the maximum number of m obile telephone service suppliers to four;  three 
companies are in operation. 
(6) POSTAL SERVICES  
114. The supply of telecommunications and postal services in Switzerland remained under state 
monopoly until the end of 1997.  Upon the entry in to force of the Telecommunications Law on 
1 January 1998, the monopoly was split into Swiss Po st (in charge of postal services), and Telecom 
PTT (for telecommunications services) – Swisscom sin ce October 1998.  Swiss Post is fully owned 
and controlled by the Confederation.  At the time of the last TPR, in 2000, the Swiss postal market 
was divided into three distinct segments: monopoly of Swiss Post over domestic mail and incoming international mail up to 2kg; a non-reserved area (out going international mail, international parcels, 
domestic parcels between 2 and 20kg ., newspapers); and other, fully liberalized, services (e.g. courier 
services, express).  In addition, with a network of  2,722 post offices in 2003 (down from about 3,500 
in 2000) Swiss Post manages 2.6 million deposit acc ounts and is thus a significant participant in the 
financial services market (see also Chapter IV(11)).   
115. On 1 January 2004, parcel transport was fully  liberalized, thus abolishing Swiss Post's 
monopoly on postal services for parcels up to 2kg.  The "Loi fédérale sur la Poste",  as amended in 
2003 (LPO – RS 783), divides the Swiss postal services market into three (new) distinct segments:  
"reserved" services, offered exclusively by Swi ss Post as a monopoly under its universal services 
obligations;  non-reserved services, also offered by Swiss Post under its universal services obligations, 
but in competition with other suppliers;  and liberal ized services.  The universal services obligations 
are defined in the LPO.  Reserved services consis t of domestic and incoming international mail for 
letters, defined as any mail of dimensions not exceeding 353 x 250 mm, a thickness of 2cm and a 
weight of up to 1kg.    
116. The non-reserved services that can be offered by licensed private operators (in competition 
with Swiss Post) consist of outbound internationa l services for letters, as well as all postal services 
(domestic and international) for packages up to 2 0kg.  Licences are provided according to the revised 
"Ordonnance sur la Poste " (OPO - RS. 783.01);  they are required for all non-reserved services if 
sales exceed Sw F 100,000, except for newspaper and magazine subscription services.  All other 
services can be provided freely by private, includ ing foreign, suppliers, and are not subject to 
monopoly rights or licensing.  A lowering to 100 g of the maximum size of letters subject to the postal 
                                                     
 
79 See WTO (2000) for details on the licensing system, and for the pricing system for 
telecommunications services.    WT/TPR/S/141 Trade Policy Review 
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monopoly is foreseen for 2006, if a study to be co mmissioned in 2005, concludes that Swiss Post can 
finance the universal services obligations. 
117. Under the OPO, access and quality of universal services, as well as consumer satisfaction, are 
monitored by a regulatory authority (PostReg ), which is independent from Swiss Post.   PostReg also 
operates the concessions system and documents the li censing process.  If Swiss Post establishes that it 
cannot cover the cost of its universal services oblig ations despite market-based management practices, 
licensing fees of at most 3% could be levied on sales by other suppliers;  the re venue is to be allocated 
to finance its  non-reserved universal services. Licensed suppliers no longer wishing to pay the 
licensing fee must submit their services to an annua l quality evaluation and prove that they supply the 
entire territory uniformly, and that charges are i ndependent of distance.  In addition, they must 
communicate which quality standards that they commit to maintain.     
118. Following Liechtenstein’s membership in the EEA, it enacted its own law on postal services 
in 1999. Postal services are supplied by Liechtenste in Post AG, a fully state-owned company with 
exclusive rights over letters, in line with EU  directive (97/67/EC) on postal services. On 
10 June 2002, the EC adopted a new Directiv e (2002/39/EC) on postal services. Accordingly, 
Liechtenstein adapted its law on postal services in  March 2004. The new adaptation limits the 
exclusive rights of Liechtenstein Post AG to lette rs up to 100 g until 31 December 2005, and up to 
50 g subsequently. All other postal services (e.g. par cel transport, courier services, express delivery) 
have been fully liberalized, and Liechtenstein Po st AG provides them in competition with private 
operators. No private operators are established in Liec htenstein, but private Swiss operators also serve 
the Liechtenstein market.  
(7) OVERLAND TRANSPORT  
Switzerland  
119. The supply of international transport services (pa ssenger and freight), as well as transit traffic 
in Switzerland and Liechtenstein, takes place  under b ilateral or multilateral agre ements and is subject 
to reciprocity provisions.  In the WTO, Switzerla nd and Liechtenstein have maintained certain MFN 
exemptions on road transport under Article II of the GATS.   
120. Given Switzerland's location at the centre of  Europe, a large share of North-South 
merchandise trade transits through the country.  Th e Federal Office for Transport is the regulatory 
body for public transport; it grants licences a nd concessions, issues security certificates, and 
determines the pricing policy for access by compani es to the rail network. In the case of regular 
passenger transport, the concession is subject to proof  that the service "does not have any detrimental 
effect on the national economy".80 The concession is granted in principle for a period of  ten years 
renewable. 
121. Under the Swiss Constitution, the Federal Governme nt has the mandate to transfer the largest 
possible share of merchandise freight from road to ra il transport.  This mandate is to be achieved via 
three measures:  the first is the modernization of Switzerland's public transport infrastructure, at an 
estimated cost of SwF 30 billion over the next 20 year s;  the second is the introduction, since January 
2001, of the heavy vehicle fee, based on road use;  and the third is the reform of rail transport, 
expected to stimulate competition in this sub sector and thus facilitate the road-rail transfer. 
                                                      
 80 See also Switzerland's commitments in WTO document GATS/SC/83, 15 April 1994. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 125 
 
 
122. The first phase of the rail transport reform began in 1999, and included an obligation for 
companies to distinguish transport services from transport infrastructure for accounting and organizational purposes.  It also established access to the Swiss rail network for all companies, against 
payment.  The bilateral agreement with the EU on land transport extended this access to 
EU/groupings and to EU/railway undertakings (for co mbined transport) as of 1 June 2002. However, 
access can be granted to any railway company outsi de the EU on the basis of a bilateral agreement 
with the country where the railway company is estab lished and if certain conditions are met. In 1999, 
the Swiss Federal Railways (SBB) was transformed in to a joint-stock company and was granted more 
management powers.  However, the SBB is still fully owned by the Confederation and therefore 
remains under the supervision of the Federal Counc il.  The SBB still holds exclusive rights over 
long-distance passenger services.  In exchange for this privilege, the SBB is assigned specified basic 
tasks by the Federal Council (e.g. regular supply of basic rail transport services throughout the 
country).  The Swiss Confederation and cantons also  provide financial assistance to suppliers of rail 
transport services for services ordered by the public authorities.  
123. The authorities consider the first phase of the rail reform as successful.  This reform increased 
competition in freight transport.  Some 25 Swiss companies are now operating over other companies' 
networks.  A second reform phase, which has not star ted (as of mid-2004), has the main objectives to 
harmonize the financing of the rail infrastructure.  Rail freight was 61 million tonnes in 2000 (about 
34% of total tonne-kilometre freight transport);  ar ound 89% of the total revenue from rail freight was 
earned by the SBB. 
124. In parallel with its reforms, Switzerland has several bilateral agreements on market access in 
road transport. Bilateral agreements on the develo pment of rail infrastructure have been concluded 
with France, Germany, Italy, and Austria. The agreement between Switzerla nd and the EU on land 
transport (RS 0.740.72) led to further liberalization of  market access for international road and rail 
services, albeit on a bilateral basis (Chapter II(4)( ii)). However, it does not allow road transport 
between two points situated on the territory of a EU member state or on the Swiss territory (cabotage).  
This agreement replaced prior bilateral agreements  between Switzerland and individual EU member 
countries for market access in bilate ral road transport, and road transit traffic, and, from 2005, allows 
Swiss hauliers to carry goods between the EU members states.
81 
125. Since 2000, bilateral agreements on road trans port of both passenger and freight have also 
been concluded with a number of non-EU States.82  These agreements establish a legal framework 
designed to facilitate reciprocal acce ss to road transport services, as we ll as transit trade.  In addition, 
exchanges of letters with several countries sp ecify quotas authorizing merchandise transport in 
Switzerland using 40-tonne vehicles, as provided for by  the bilateral agreement on land transport with 
the EU.83   
126. Public road transport services are provided by companies that are majority publicly owned 
(cantons and townships) and by the Swiss Post. 
                                                      
81 Switzerland has concluded bilateral agreements on road transport with 44 countries, including EU 
Member States (WTO document GATS/SC/83, 15 April 1994). 
82 Belarus, Bosnia-Herzegovina, Kaza khstan, Lithuania, and Ukraine. 
83 The countries are Estoni a, Hungary, Latvia, Lithuania, Poland , Russia, Slovenia, and Turkey.  All 
except Russia and Turkey are now EU members. WT/TPR/S/141 Trade Policy Review 
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Liechtenstein 
127. The state-owned company, the "Liechtenstein Bu s Anstalt", which was involved in the public 
transport business, was liquidated in 2003.  Public  transport services are currently supplied by the 
Ministry responsible for transport. 
128. Liechtenstein has 250 km of highways and 18.5 km  of railways.  The railway track is owned 
and operated by Austrian Federa l Railways;  Liechtenstein has no rail company.  International 
transport services for goods and passengers are supp lied by private companies.  Carriers for road 
freight and passenger transport need a permit issued by the Office for Economic Affairs.  The permit is granted if certain criteria relating to, inter alia , reliability, financial standing, qualification or 
business establishment are met.  In addition, for in ternational transport in the EEA, carriers need a 
special licence issued by the Office of Customs A ffairs.  Bilateral agreements, concluded by 
Liechtenstein with Austria and France, provide fo r quotas on road transport of goods (directly from 
each party to the agreemen t) to third countries. 
129. In 2001, Liechtenstein also introduced the Sw iss Heavy Vehicle Fee (HVF) in parallel with 
Switzerland (see above). 
(8) A
IR TRANSPORT  
130. This section focuses essentially on Swiss policy on air transport services as, under an 
agreement concluded in 1950 and amended in 2003, the Swiss legislation on civil aviation applies to 
Liechtenstein. However, in 2002, as a result of its  EEA membership, Liechtenstein was required to 
establish basic legislation to comply with the EEA rules on civil aviation. This aviation legislation 
allows the continuation of Swiss regulation in Liechtenstein, in addition to the EEA rules on civil 
aviation, which entered into force in 2003.  
(b) Recent developments 
131. As noted in the 2000 TPR of Switzerland and Liechtenstein, air transport was among the 
industries likely to be the most affected by Switzerland's non-participation in the EEA.  Without EEA carrier status, Swiss companies could not gain cabotag e rights;  they remain restricted in their route 
strategies in the larger European market.  Swissair,  the former Swiss national airline, had estimated 
the cost of these measures in the EU  market alone at Sw F 200 million annually.  In turn, higher travel 
costs and fewer connections than among EEA member s had an adverse impact on user industries.  
The recent agreement with the EU, described below, largely addresses th ese issues, but its effects may 
be partly superseded by the external factors that  have affected the industry both in Switzerland and 
worldwide since 2000.    
132. Until September 2001, SAirGroup, a holding company,  was the major supplier of air transport 
services and had a dominant position in the Swis s civil aviation market.  At the end of 1999, 
SAirGroup employed nearly 20,000 persons in  Switzerland.  It was 18.3% owned by the 
Confederation, the cantons, communes, and cantonal ba nks;  16.8% by foreigners;  and the balance by 
Swiss nationals (including banks and insurance companies).  In September 2001, SAirGroup went 
bankrupt.  Aside from the general sectoral crisis re lated to the global economic slowdown, and to the 
11 September attacks in the United States, the collapse of SAirGroup was ascribed to its past 
expansionary strategy (the company had purchased a number of European airlines such as Sabena, 
LOT, and Air Liberté).   
133. The company sold its 70% participation in Cro ssair, the second largest Swiss airline, to two 
banks for Sw F 260 million;  Crossair took over two thirds of Swissair's airline operations; and the Switzerland and Liechtenstein WT/TPR/S/141 
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decision was taken to transform Crossair into a ne w Swiss airline, "Swiss International Airline", in 
which the Swiss Confederation invested Sw  F 600 million. The Federal Assembly, on 
17 November 2001, also approved a furthe r subsidy of Sw F1.45 billion under the Programme de 
redimensionnement de l’aviation civile Suisse .  The authorities indicate that this consisted of a loan 
(in 2 steps) that would allow Swissair to conti nue operations until the end of the winter schedule 
2001-02 when it would go out of business, thus re taining its vital air connections until the new 
company became operational. Furthermore, several critical services at Swiss airports were operated by subsidiaries of Swissair, and a sudden termina tion of the company would have totally disrupted 
their activities, thus impeding the operation of the main Swiss airports. 
134. The results for Switzerland's national airline Sw iss International Air Lines Ltd. (Group) in 
2003 showed continued losses of Sw F 498 million.  The company was undergoing restructuring, 
comprising the elimination of 3,000 jobs and a 30% reduction of the fleet, combined with a downsizing of the airline's geogra phical coverage.  The net loss for 2003, after restructuring costs, 
interest and taxes, amounted to Sw F 687 million;  the previous year's net loss was Sw F 980 million.
84 
135. The Agreement between the European Comm unity and the Swiss Confederation on Air 
Transport (the Agreement with the EU) entered in to force in June 2002.  Although it does not fully 
liberalize the air transport market, the agreement considerably improved market access for EU firms 
in Switzerland and for Swiss companies in the EU , and increased the attraction of Swiss airlines as 
potential members of international alliances. 
(c) Regulation of air transport 
136. Swiss legislation regarding civil aviation is  based on domestic law and international 
agreements, the latter being of pa rticular importance given the small size of the country.  The main 
domestic law is the Federa l Law on Air Transport ( Loi fédérale du 21 décembre 1948 sur l’aviation – 
LA, RS 748.0), together with its implementing ordinances, mainly the "Ordonnance sur la navigation 
aérienne" (OSAv, RS 748.01).  Policy implementation and enforcement takes place mainly at the 
Federal Office for Civil Aviation (OFAC), which ope rates under the Federal Depa rtment of Transport, 
Communications and Energy.  OFAC's tasks include  implementing and enforcing policies (including 
licensing and registration) on civil aviation, the drafting of legislation, and the negotiation of 
international agreements. 
Traffic rights 
137. Companies that provide commercial air transport services to, from, or within Switzerland 
must have an operating permit granted by the OF AC.  In order to obtain an operating permit, 
companies must have been granted an Air Operator Certificate (AOC) by OFAC.  Based on EU technical regulations, the AOC, inter alia,  testifies that, for each type of service (e.g. short haul, long 
haul), the company has sufficient financial means to  maintain flights for at least 24 months.  Once 
they possess an operating permit and an AOC, compani es may apply to OFAC to obtain route licences 
to serve particular routes.  OFAC's decision to grant both operating permits and route licences is based 
partly on ownership and control provisions.  Domes tic routes are in principle reserved for "Swiss-
based carriers" as defined below.  However, OFAC has discretion to admit foreign carriers, based on 
"the common interest".  For international rout es, OFAC admits Swiss or foreign carriers, in 
accordance with the relevant bilateral agre ements applicable to those routes.   
138. The Federal Council has authority to decide th e extent to which a commercial air transport 
company must be owned or effectively controlled by Swiss citizens to be considered as a Swiss-based 
                                                     
 
84 See Press Release of 23 March 2004 , available at http://www.swiss.com.  WT/TPR/S/141 Trade Policy Review 
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company (LA, Art.27).  As stipulated in the OSAv , the company must be registered in Switzerland, 
effectively controlled and majority-owned by eith er:  Swiss companies or nationals;  foreigners 
residing in Switzerland; or foreign companies assimila ted to Swiss citizens or companies by virtue of 
international accords (such as the Agreem ent with the EU described below).85  Crews engaged in 
domestic air passenger and freight services must be EU  or EFTA nationals or Swiss residents.  Crews 
from third countries can be employed if the seco deems their employment necessary. 
139. The "wet" leasing of aircraft (with crew and, typically, fuel, maintenance, and insurance) to 
Swiss carriers is not restricted to Swiss companies or citizens.  Commercial provisions on the wet or dry leasing of aircraft are generally included in b ilateral agreements concluded by Switzerland; these 
provisions range from a very liberal to a very rest rictive regime, depending on the requirement of the 
partner to the agreement.  Switzerland considers th e dry leasing of aircraft as a business service, along 
with the leasing of other industrial equipment w ithout operators, and therefore not subject to 
ownership and control restrictions.   
140. Since the entry into force of the Agreement with the EU, and partly reflecting the downsizing 
of the national carrier Swiss, a large number of new, mainly low-cost, airlines have been granted 
traffic rights on both domestic and international routes.
86  For example, in October 2003, OFAC 
granted the German carrier Cirrus the right to ope rate domestic flights betw een Geneva and Lugano 
for six months  because the service was no longer supplied by the national carrier Swiss; a Swiss company (Flybaboo) had announced its intention to  operate the service once it had the operating 
licence and AOC.  In addition, some of the carrier s already present in Switzerland have extended their 
offers. 
Airport services 
141. Liechtenstein does not have an airport.  Switzer land has three main international airports, at 
Zurich (the principal airport with almost two thir ds of air traffic), Geneva, and Basel-Mulhouse, and 
ten regional airports. All Swiss airports w ith commercial services are owned by cantonal 
governments.
87 All relevant functions are provided either  by the airport or by airport-controlled 
companies.  According to the authorities, no state s ubsidies are granted to the airports.  However, the 
cantons in some cases provide interest-bearing loans to their airports (e.g. a Sw F 300 million loan by 
the Canton of Zurich to Zurich airport outstanding in 2004). 
142. Airport services in Switzerland generate an  annual turnover ranging from € 60 million in 
Basel-Muhlouse to Sw F 200 million in Geneva, and Sw F 530 million in Zurich (of which 
Sw F 240 million in the non-aviation subsector). Th e revenues from airport charges, (weight-, noise- 
and emission-related landing charges, passenger char ges, parking charges and handling charges) are 
earmarked for the financing of all airport-related expenses. Airport charges are not formally approved 
by the aviation authority.  However, they are subj ect to the general supervis ion of the Federal Office 
for Civil Aviation and the Price Inspector. These bod ies apply ICAO Policies on Charges for Airports 
                                                      
85 For limited companies, over half of the voting shares must be nominal, and be owned by Swiss 
residents or companies, or by foreig ners who are associated with them by virtue of international accords. 
86 The new carriers from EU countries (as from 1 May 2004) serving domestic and international routes 
since 2002 are Air Berlin, Cirrus, City-Air Germany, European Air Express, Germania, Germanwings, Hahn 
Air, and Hapag Lloyd Expre ss (Germany); Air Nostrum (Spain); Blue 1 (Air Botnia) (Finland); British Midland 
Regional, British Airways CitiExpress, Duo Airways, a nd My Travel Light (UK);  Cimber Air (Denmark); 
Hellas Jet (Greece);  InterSky and Styria n Spirit (Austria);  SkyEurope (Slo vakia);  Transavia (Netherlands); 
Volare Airlines (Italy);  and Virgin Express (Belgium). Furthermore, Helv etic Airways is a new Swiss carrier. 
87 Basel-Mulhouse is a bi-national airport, owned by the Swiss authorities (Confederation and Cantons) 
and the French Government. Switzerland and Liechtenstein WT/TPR/S/141 
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and Air Navigation Services. A recent debate has em erged regarding the fees charged to airlines for 
services at the Geneva airport. The latter, in November 2003, announced the development of 
differentiated airport fees based on the type of servi ce provided, with a lower fee available in its old 
terminal building for low-cost carriers. 
Ground handling 
143. At the time of the 2000 TPR of Switzerland and Liechtenstein, airlines with passenger traffic 
shares exceeding 4.5% in Geneva and 1.5% in Zu rich were allowed to provide their own ground-
handling (including check-in); they were not a llowed to supply these ser vices to third parties.88 In 
January 2002, Swiss legislation on ground handling was harmonized with that of EU Directive 
96/67.89 This directive covers every aspect, including  mutual handling and third-party handling, for 
passenger and/or cargo operations.  According to th e authorities, a new system is now in place. 
Slot allocation 
144. Until 2002, the allocation of slots was generally based on "grandfather" rights.  Since then, 
the authorities have indicated that Swiss regulations  on slot allocation have been harmonized with EU 
regulation 95/93, and that Swiss slot-allocation re gulations for international flights follow the 
International Air Transport Association (IATA) Worl d-wide Scheduling Guidelines. Sales of slot are 
not permitted in Switzerland.  The authorities indicat ed that Verein Slot Coordination Switzerland is 
an independent, non-profit organi zation. It started activities on 1 April 2004. The OFAC oversees the 
organization. A slot coordination committee will be created for Geneva and Zurich airports by the 
autumn of 2004.  
Air traffic control  
145. In 2001, the public company Swisscontrol and th e Swiss Air Force, which formerly controlled 
civil and military air traffic within Swiss airspace , were merged into Skygui de, a new publicly owned 
company, in order to improve efficiency.  Sk yguide is responsible for the management and 
monitoring of civil and military air traffic in Swi ss airspace, at Zurich, Geneva, Berne, and Lugano, 
and military airports (but not EuroAirport Basel-Mulhouse-Freiburg), as well as in the sectors of 
adjoining non-Swiss airspace it has been assigned.90  Switzerland participates in the EU's "Ciel 
Unique" project. 
Repairs, maintenance, and measures relating to insurance 
146. Liechtenstein has one maintenance facility. In Switzerland, air carriers are not required to use 
domestic repair and maintenance facilities.91 
147. In October 2001, the Federal Council provided Swiss companies with third-party war and 
terrorism aviation liability, until 24 December 2001, following the cancellation of this coverage by 
several commercial insurance underwriters.  The State guaranty was not extended beyond that date . 
                                                      
88 WTO (2000). 
89 EU Directive 96/67 is referred to in the Ordonnance sur l’infrastructure aéronautique, 
RS 748.131.1. 
90 Additional information is available at:  http://www.skyguide.ch/e/ profil/mandat_e.html. 
91 The applicable regulations are: Ordonnance sur le personnel préposé à l’entretien des aéronefs , RS 
748.127.2, Ordonnance sur les licences du personnel d’entretien des aéronefs, RS 748.127.22, Ordonnance sur WT/TPR/S/141 Trade Policy Review 
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(d) International agreements  
Participation in the WTO 
148. Traffic rights, together with services directly related to the exercise of traffic rights, are 
currently outside the scope of the GATS, which cove rs only aircraft repair and maintenance, the sale 
and marketing of air transport services, and computer reservation system (CRS) services.  
Switzerland’s GATS commitments on air transport are limited to aircraft re pair and maintenance 
services. Switzerland's initial offer in the ongoi ng negotiations on services included sale and 
marketing of air transport services, computer reservation systems (CRS) services, ground handling services and airport management services.  The sale and marketing of air transport services, and CRS 
services are covered by Switzerland's MFN exemptions under Article II of the GATS.
92 
149. Under the GATS, Switzerland has bound measu res affecting cross-border supply, 
consumption abroad, and commercial presence of aircraft rented without operators, i.e. dry leasing, excluding for companies flying on regular schedule or on charter.  Switzerland has also bound measures affecting commercial presence for cargo handling services.   
150. In the ongoing negotiations on trade in services, calls have also been made for the multilateral 
liberalization of "hard rights", in other word s, the actual right to fly cargo and passengers.
93  In this 
regard, several WTO Members have argued the economic rationale for liberalizing air cargo, 
including the full range of traffic rights (e.g. cabot age), together with the removal of barriers to 
foreign ownership.94 Switzerland is open to the inclusion of services directly related to the exercise of 
traffic rights into the GATS negotiation, although ther e is no consensus at this stage on which services 
are covered by this definition.  However, Switzer land has expressed its reservations on the inclusion 
of traffic rights themselves. 
Preferences for EU and EFTA carriers 
151. Following the entry into force in 2002 of the Agreement between the European Community 
and the Swiss Confederation on Air Transport (the Ag reement with the EU), the regime applicable to 
foreign carriers wishing to operate commercial air services to and from Switzerland depends on 
whether the foreign companies are based in an EFTA/ EU country or not.  Carriers incorporated in 
Switzerland, or in any Member State of the Eur opean Union (EU) or of EFTA, may supply scheduled 
and non-scheduled services corresponding to 3rd and 4th freedom rights between the Member State 
and Switzerland. The Agreement with the EU pr ohibits all discrimination based on nationality 
between Swiss and EU/EFTA air companies that ar e based and licensed in either Switzerland or 
EU/EFTA. Accordingly, in this agreement, Switz erland has extended national treatment to EU and 
EFTA firms.   
152. An important advantage of the Agreement with  the EU for Swiss carriers is that, as of 
June 2004, they are also allowed to collect pass engers or cargo between any points in different 
countries within the EU (i.e. "seventh freedom").95  The agreement, however, does not allow cabotage 
                                                                                                                                                                     
les établissements chargés de la formation du personnel d’entretien d’aéronefs, RS 748.127.23, Ordonnance sur 
les entreprises d’entretien d’aéronefs, RS 748.127.3. 
92 WTO document GATS/EL/83, 15 April 1994. 
93 See, for example, WTO documents S/C/M/49, 1 December 2000 and S/C/M/50, 5 March 2001. 
94 WTO document S/C/W/181, 27 November 2000. 
95 The "fifth freedom" is defined by ICAO as "the right or privilege, in respect of scheduled 
international air services, granted by one State to another State to put down and take on, in the territory of the first State, traffic coming from or destined to a third St ate". The "seventh freedom" is defined as "the right or Switzerland and Liechtenstein WT/TPR/S/141 
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(eighth freedom), although it provid es for negotiations on these additiona l rights to begin five years 
after its entry into force (i.e. by June 2007).  In practice, the agreement appears to have generated new 
business, such as the operation of the Berne-Berlin route by Austrian carrier InterSky, which would 
have been impossible before the entry into for ce of the agreement. Many new carriers from EU 
countries have started serving Swiss domestic and in ternational routes since 2002;  one new Swiss 
carrier has started operations; and some of the ca rriers already present in Switzerland have extended 
their offer. 
153. Articles 8 and 9 of the Agreement with the EU  prohibit anti-competitive practices, including 
abuse of dominant positions, except those that aff ect only the Swiss territory and are covered by 
domestic law.  According to the authorities, the ra tionale for this exception was that, for internal 
political reasons, Switzerland was anxious to limit the scope of foreign legislation and powers to cases 
where it was justified. 
154. EU air carriers wishing to operate 5th or 7t h freedom passenger or cargo flights between 
Switzerland and a country outside the European Un ion (or EFTA) are required to apply for traffic 
rights to OFAC.  OFAC approval is subject to a declaration of reciprocity issued by the aeronautical 
authorities of the State where the applicant is incorp orated and has its principal place of business.  In 
addition, OFAC can request applicants to provide  so called ‘non-objection’ declarations from the 
Swiss air transport companies.  
155. In the 2002 revision of the EFTA Convention, a new annex, on air transport, contained a list 
of EU Acts to be applied. It is the same as the annex to the Agreement with the EU, with the 
exception of competition rules, which are not includ ed. On a reciprocal basis, Switzerland treats all 
EEA members alike;  some EEA members have made  some reservations (in particular, Iceland has 
made a reservation concerning the ownership of air carriers). 
Other air service agreements 
156. International traffic rights for passengers and fre ight of countries other than members of EU 
or EEA are generally governed by bilateral agre ements and contingent upo n reciprocity provisions. 
Some 45 agreements have been signed or modified since 2000.  In order to carry out operations in 
Switzerland, a foreign carrier must have been designa ted by its home country.  Agreements may be of 
a "single designation" type, allowing only for one ca rrier per signatory, or of a "multiple designation" 
type.  Most agreements are based on capacity shari ng, and specify frequency and rates;  some recent 
exceptions are the "open sky" agreements  with the United States and Pakistan.96  The authorities 
indicate that Switzerland's current policy is to seek  liberal agreements, including regarding ownership 
and control.  
157. In November 2003, Swiss International AirLin es announced the signing of an alliance with 
British Airways, and the joining of the One World al liance.  The alliance with BA included extensive 
code-sharing, and the integration of the frequent flyer programmes.  The alliance was subsequently 
cancelled.  Code-share arrangements between EU car riers and carriers from third countries that have 
implications for the Swiss market require an aut horization from OFAC. It is delivered according to 
the provisions of the bilateral agreements with the St ates concerned, or on the basis of an analysis of 
                                                                                                                                                                     
privilege, in respect of scheduled international air servic es, of transporting traffic between the territory of the 
granting State and any third State with no requirements to include, on such operation, any point in the territory 
of the recipient State, i.e. the servi ces need not connect to or be an ex tension of any service to/from the home 
State of the carrier". 
96 RS 0.748.127.193.36. WT/TPR/S/141 Trade Policy Review 
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the advantages and disadvantages for Swiss interests.  Reciprocal rights for Swiss companies in the 
State concerned are an absolute requisite. 
(9) TOURISM  
158. Tourism is the economic subsector that has suffered most from the high prices of agricultural 
products (mainly food products) and from the high energy prices resulting from state or private 
monopolies or exclusive rights over the supply of g as and electricity.  The Swiss authorities have 
noted that the high costs of labour resulting from quotas on the number of work permits granted to 
foreign workers in hotels and restaurants has been partly overcome by the abolition of the priority 
given to resident workers over EU nationals (see below (10)).   
Switzerland 
 
159. The Federal Government plans to provide suppor t of Sw F 200 million in the 2005-09 period 
(Sw F 40 million annually) in favour of a "results-o riented destination marketing" by Switzerland 
Tourism97, with results to be measured by the actual numbe r of tourists.  The existing instruments of 
support to tourism have been modernized and endowed with new funding.  A budget of 
Sw F 35 million for the 2003-07 period was adopted for Innotour, a governmental programme for the 
promotion of innovation and education in tour ism. The Swiss Society for Hotel Credit ( Société suisse 
de crédit hôtelier ), a public corporation, was grante d a new interest-free loan of about 
Sw F 60 million, which is to be allocated by the So ciety as credit to hotels in mountain regions.  The 
Society provides concessional loans and credit gu arantees to small and medium-sized companies 
investing in tourist areas, in accordance with a federal law on accommodation of 20 June 2003.98 
160. Switzerland signed a memorandum of understanding  with the People’s Republic of China on 
15 June 2004, under which, China will add Switzerla nd to the list of countries to which it permits 
group travel.  In particular, the MOU regulates the practical organization of travel for tourism on either side and institutes an efficien t procedure for the allocation of visas .  The authorities expect the 
number of overnights by Chinese visitors, about 120, 000 in 2004, to increase by a factor of three in 
the next ten years.  The Memorandum is  also applicable to Liechtenstein. 
161. Since 2004, the so-called " clause du besoin ",  anchored in the Federal Constitution
99, which 
regulates the licensing by cantons of the supply of restaurant services, has been abandoned, with a 
grace period of ten years.  Designed to safeguard existing restaurants, the licensing criteria include population density, and the number of restaurants in the neighbourhood.  At the end of the transition 
period, the location and operation of  restaurants should eventually be market-determined. Specific 
requirements still apply to the supply of tourist guide  services, but  the existing legislation was due to 
be revised:  for instance, in certa in cantons, the required tests for mountain guides or ski instructors 
are not open to foreigners;  in others, foreigners cannot ope rate independently.
  The reduced 
value-added tax rate of 3.6% on sales of accomm odation services was permanently enshrined in the 
Constitution in 2003.  Prices are still freely set by the companies in the tourism industry. 
                                                      
97 Switzerland Tourism is a public corporation in charge of communication and marketing in the 
tourism subsector. 
98 Loi fédérale sur l’encouragemen t du secteur de l’hébergement , RS 935.12. 
99 Federal Constitution, Article 196, Chapter 7. Switzerland and Liechtenstein WT/TPR/S/141 
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Liechtenstein 
162. The Liechtenstein Government provides financ ial support of some SwF 500,000 per year (on 
average) for tourism marketing activities.  Certai n marketing activities are coordinated with Swiss 
tourism associations.  Except for differences in rules governing acquisition of real estate, 
Liechtenstein's regulations on tourism are similar to those of Switzerland.   Liechtenstein Tourism was 
created by the Tourism Act, which entered into force on 1 September 2000,  to be in charge of 
marketing activities.100  Along with the enactment of the Tourism Act, an Administrative Board of 
seven members was appointed.  The Board formul ated a reorientation policy for the tourism 
subsector:  e.g. a business plan was drawn up and the mission statement for tourism was updated, with 
a view to giving more consideration to the subsector.   
163. Various measures have been implemented sin ce 2000.  A Tourism Day bringing together 
those involved in the tourism industry has been held annually since the Autumn of 2000.   New 
measures also include the creation of an Internet presence with reservation facilities, the award of Q1 
quality seal by Switzerland Tourism, introduction of a Partner Update, Internet newsletter for the 
media, a cooperation agreement with the munici palities of Vaduz and Triesenberg, a collaboration 
agreement with Switzerland, holding of an Inte rnational Tourism Market, opening of the Welcome 
Desk at Vaduz bus terminal, par ticipation in various working groups  and projects, and the launch of 
several products (e.g. "Winter-Hit Malbun"). A cl ose working relationship was also built up with 
various Liechtenstein private-sector operators to serve customers, and approximately 15 conference 
events are jointly organized each year.  
164. In its judgment of 17 November 2003, the State Court of the Principality of Liechtenstein 
found the application of certain provisions of the previous legislation (in particular, provisions 
concerning the tourism levy) unconstitutional.  The to urism legislation has subsequently been revised. 
165. The number of arrivals and overnight stays in Liechtenstein fell in 2001 and 2002.  In 2003, 
the number of arrivals increased by 1% but overnight  stays fell by 0.8%.  In addition to the growing 
trend for shorter stays, tourism in Liechtenstein has also been affected by, inter alia , the greater sense 
of insecurity on travel plans, the tense internati onal economic situation, increased price sensitivity, 
and events such as 11 September attacks, and SARS.   
(10) PROFESSIONAL SERVICES  
166. As trade in professional services, and business servi ces in general, relies to a large extent on 
the movement of physical persons, professional service suppliers are particularly affected by 
regulations limiting the movement of natural pe rsons (Mode 4 in GATS terminology).  Since the 
conclusion of Switzerland's bilateral agreement with the EU on the free movement of persons 
(Chapter II(4)(ii)(c)), there have been significant changes in the conditions affecting the general 
employment of foreigners by domestic firms and th e conditions for foreigners to work in Switzerland. 
167. Reflecting this ongoing process of European inte gration, Switzerland's labour market access 
policy now differs increasingly between EU/EFTA nati onals and other "third country" nationals.  The 
main labour market policy instrument is a system of annual quotas on the overall number of work permits granted.  The annual quota for third-coun try nationals in 2004 was 4,000 residency permits 
and 5,000 short-term permits.  The country-wide quot as are allocated per canton. In principle, first-
time work permits can only be issued exceptionally to foreigners if they are highly qualified, urgently 
needed, and special reasons justify an exception.   In the case of EU/EFTA nationals, the quotas are 
being abolished progressively.  The second main polic y instrument is a labour market test whereby 
                                                     
 
100 Liechtenstein Law Gazette No. 166, that entered into force on 1 September 2000. WT/TPR/S/141 Trade Policy Review 
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priority is given to indigenous (resident) manpower, irrespective of their nationality, before granting 
work permits to non-residents.  However, since J une 2004, priority can no longer be given to residents 
over EU/EFTA nationals. 
(i) Legal services 
Switzerland 168. The Federal Act on the Freedom of Movement of Lawyers (LLCA)
101, in force from 
1 June 2002, unified at federal level the previous ly disparate cantonal rules and requirements for the 
practice of law. However, cantons retain the right to determine the requirements for cantonal 
licensing, as long as they are not in contradiction w ith the LLCA;  there is no federal licensing.  The 
LLCA also introduced the free moveme nt of lawyers within the country, enabling them to appear in a 
court of law of a canton different from the one in which they are registered, without special 
authorization. In 2002, about 6,800 lawy ers were registered in Switzerland.    
169. As regards practice in Switzerland by lawyers of  EU countries, the amended Act was based 
on the bilateral agreement between the EU a nd Switzerland on the free movement of persons.102  As 
regards EFTA lawyers, the Act was based on th e Vaduz Convention betw een Switzerland and the 
other EFTA countries, which entered into for ce on 1 June 2002 (Chapter II(4)(ii)(a)).    
170. Under the LLCA as amended, a lawyer wishing to represent in court in Switzerland has to 
acquire a cantonal lawyer's licence and be registered in the registry of the canton in which he has his 
professional address (for legal consultancy, see below) .  In order to obtain this cantonal licence, a 
person must have followed a course of studies in la w leading to a graduate degree awarded by a Swiss 
university or an equivalent diploma awarded by a university of a country with which Switzerland has 
an agreement on mutual recognition of diplomas (i .e. EU and EFTA states), followed by practical 
experience of at least a year conducted in Swit zerland and success in an examination of juridical 
knowledge in theory and practice.  Registration requires the cantonal licence and specified personal 
qualifications.    
171. Nationals from member states of the EU or EFTA, who are entitled to practice the legal 
profession under one of the professional titles listed in  the annex to the LLCA, may represent parties 
before judicial authorities in Switzerland according to the freedom to provide services (for a maximum of 90 days a year, in compliance with Di rective 77/249/EEC); they cannot register in the 
cantonal registry.  Moreover, they can permanently represent parties before judicial authorities in 
Switzerland if they register (in the official list of nationals of member states of the EU or EFTA) with 
the cantonal supervisory authority for lawyers.  In the case of proceedings for which legal 
representation is mandatory, e.g. representation in court in penal proceedings concerning severe accusations, they must act in accord with a cantonally-registered lawyer. EU or EFTA lawyers who have been listed for three years in the official list and can prove that they were effectively and 
regularly active in the area of Swiss law may be listed in the cantonal register.  Lawyers who have 
obtained a diploma entitling them to practice in one of  the EU or EFTA member states, after a course 
of at least three years, and, if needed, have also completed the requisite professional training, may also sit an exam. Lawyers who are registered or w ho pass the exam have the same rights and duties as 
Swiss lawyers.  
172. Non-EU or non-EFTA lawyers who do not comp ly with the general requirements cannot be 
registered and can work only as legal consultant s.  As bound in its GATS Schedule, Switzerland 
                                                     
 
101 Loi fédérale sur la libre circulation des avocats (RS 935.61).  
102 Convention instituant l'Association Européenne de Libre Echange, Annexe K – App. 1, RS 632.31. Switzerland and Liechtenstein WT/TPR/S/141 
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imposes no restrictions on the provision of consu lting services by foreign lawyers in either home 
country or international law as regards cross-bor der supply, consumption abroad, and commercial 
presence (except in the canton of St.Gall, which re quires Swiss nationality for the establishment of a 
practice).   
173. Supervision of lawyers is exercised at the cant onal level.  Each canton designates an authority 
responsible for the supervision of the lawyers practic ing in its territory.  Appeals against its decisions 
can be filed to the cantonal court and then to the Federal Court of Justice. Members of a bar 
association are also subject to the supervision of th is association.  The relevant cantonal supervisory 
authorities must be informed of any viola tion of professional rules by licensed lawyers.103  There are 
24 independent cantonal bar associations, and a Swiss Bar Association, which acts as an umbrella 
organization.  Fees are generally in line with the gui delines of the relevant bar association, or fixed by 
cantonal legislation.   
Liechtenstein 
174. At the end of 2003, 103 (including 31 forei gn) lawyers,  27 law partnerships, 61 associate 
lawyers, 5 legal agents, 16 patent attorneys, and fi ve patent attorney partne rships were operating in 
Liechtenstein.  The main law regulating the lega l profession is the Lawyers Act and the corresponding 
Ordinance104;  it is supervised by the Financial Servic es Authority (FSA). Liechtenstein has not made 
any GATS commitments regarding legal services, except for the absence of restrictions on cross-
border supply and consumption abroad of lega l consultancy services in home country law and 
international law.105    
175. Registration in the national List of Lawyers is required in order to hold the title of attorney 
and practice law; it requires Liechtenstein or EEA nationality and domicile, success in the bar 
examinations and a law practice in Liechtenstein.  Participation in the examinations requires the 
completion of two years of practical experience in a court of justice or with a licensed lawyer106, or a 
law degree obtained in a recognized university.  Th e professional body of Liechtenstein attorneys is 
the Chamber of Lawyers, a public law body constitute d of all lawyers on the List of Lawyers or the 
List of Resident European Lawyers; the chambe r is supervised by the Government. Cross-border 
supply of services by EEA lawyers may be authorized temporarily by the Chamber of Lawyers, subject to certain conditions. 
176. Non-EEA lawyers may, under special circumstan ces, be permitted by the FSA to act as 
representatives or defence lawyers of a party be fore a Liechtenstein court or authority. 
(ii) Accounting and auditing services 
Switzerland 
177. Under its GATS commitments schedule, Swit zerland imposes no limitations on provision of 
accounting, auditing and book-keeping services as re gards cross-border supply, consumption abroad, 
                                                     
 
103 Article 14 of the LLCA. 
104 Law of 9 December 1992 on Lawyers, LLG 1993 No. 41. Ordinance of 25 March 2003 on 
Delegating Affairs in accordance with th e Law on Lawyers, LLG 2003 No. 94.  
105 WTO document GATS/SC/83A, 17 April 1994. 
106 At least one year with an atto rney (or administrative authority) of  Liechtenstein and at least six 
months with a Liechtenstein court of justice or the Liechtenstein public prosecutor's office. Article 2, 
paragraph 3 indicates that, as regards court of justice and public prosecutor's office experience, corresponding experience gained abroad is acceptable. WT/TPR/S/141 Trade Policy Review 
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and commercial presence for either market access or national treatment, with the exception that 
auditing services to a joint-stock company ( société anonyme ) or a " société en commandite  par 
actions" must be provided by at least one person with commercial presence in Switzerland.  
178. In 2001, 31,233 persons were employed in accounting and auditing.107 In general, accounting 
and auditing services are not regulated as such in  Switzerland, and a professional title does not confer 
the right to practice a reserved activity:  rather , the professional title is a sign of competence.  
Amongst exceptions, the canton of Ticino requires sp ecific qualifications and cantonal authorization 
for the practice of the professions of auditor, tax consultant and fiduciary, while the half-canton of 
Basle-Country only requires authorization for auditors.  The Federal Office for Professional Education 
and Technology (OPET) maintains a list of regulated professions.108 
179. The primary law governing financial statement of Swiss companies - the Swiss Code of 
Obligations109 - stipulates that auditors must possess the "necessary qualifications" in order to 
accomplish their work; at least one of the auditors must be domiciled in Switzerland, and its company 
or a branch registered in the commercial register.110 It is up to the auditor to decide "autonomously" 
on the professional capabilities required to fulfil the mandate.  This is also the case for foreign 
auditors. There is no authority that controls  the professional capabilities. The Federal Council 
proposed in its June 2004 message to move away from this autonomous regulation and switch to a 
system of accreditation.111 
180. Special qualifications are required of auditors if  a company is of significant size or has either 
outstanding bond issues or its shares are listed in a stock exchange.112  Such a company must be 
audited by "particularly qualified auditors".113  Qualifications required to become a particularly 
qualified auditor include a foreign certificate of prof essional capacity, declared to be equivalent to a 
Swiss qualification;  or authorization under the provisions of the 8th EU Company Law Directive114, 
and corresponding practical experience and know ledge of the necessary Swiss legal provisions.115 The 
OPET is responsible for recognizing foreign diplomas of particularly  qualified auditors. Article 3 of 
the Ordinance concerning the professional qualifications of particularly qualified auditors defines the 
responsibility of the company board.  However, as  mentioned above, the Fe deral Council intends to 
shift to a system of accreditation.  In addition, at least two thirds of practical experience must have been completed under a particularly qualified auditor.   
181. Under the SWX Stock Exchange listing requireme nts, listed companies must provide audited 
annual financial stat ements and reports.
116  For this purpose, companies must select auditing persons 
                                                      
107 Swiss Federal Department of Finance (2003b). 
108 OPET, online information.  Available at: http:// www.bbt.admin.ch/dossiers/anerkenn/eu/d/regl.pdf. 
109 Loi fédérale complétant le Code civil suisse (Livre cinquième: Droit des obligations ).  Available at 
http://www.admin.ch/ch/f/rs/220/a727b.html.  
110 Article 727 of the Swiss Code of Obligations. 
111 For more information on the message, see http://www.ofj.admin.ch/themen/rrg/intro-f.htm 
112 Defined as satisfying at least two of the followi ng requirements for two consecutive years: (1) total 
assets of at least Sw F 20 million, (2) turnover of at l east Sw F 40 million, (3) annu al average of at least 200 
employees. Article 727b of the Code of Obligations. 
113 Articles 727b, 727c and 727d of the Swiss Code of Obligations. 
114 84/253/EEC, Official Journal of the European Communities , L 126 of 12 May 1984.  
115 Ordonnance sur les qualifications profession nelles des réviseurs particulièrement qualifiés, 
RS 221.302. 
116 SWX Stock Exchange Listing Rules of 24 January 1996, as amended. Available at:  
http://www.swx.com/admission/02_reglement_e.pdf. Switzerland and Liechtenstein WT/TPR/S/141 
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or companies registered with the Admission Board of the Exchange.117  This makes the Admission 
Board a de facto licensing authority for auditors of listed co mpanies.  However, as noted, changes are 
foreseen in the 2004 message of the Federal Counc il. The Listing Rules contain the conditions for 
registration.118   
182. Companies that audit financial institutions  supervised by the Swiss Federal Banking 
Commission (Chapter IV(11)) must have gained SFBC authorization.119  Only two categories of legal 
entities can be recognized as bank auditors: (1) auditi ng associations affiliated with at least 12 banks 
and with capital, guaranteed capital or reserv es no less than Sw F 1 million, as well as an 
organizationally independent intern al auditing department;  and (2) fiduciary and auditing companies 
with paid-in capital of at least Sw F 1 million.120  Authorized auditors  must be Swiss certified 
accountants, or hold an equivalent foreign di ploma or demonstrate bank auditing skills.121  
Recognition of foreign-controlled auditing firms is d ecided by the SFBC;  so far, no foreign auditing 
firm has requested recognition.  
183. The Code of Obligations provides general guidelines for the preparation of financial 
statements.122 Usually, Swiss companies with internationa l presence use either International Financial 
Reporting Standards (IFRS) or U.S. Generally Accepted Accounting Principles (GAAP), while 
companies, with predominantly Swiss presence,  use the less restrictive Swiss GAAP ARR 
(Accounting and Reporting Recommendations).  Fore ign companies can also opt to use their home-
country standards.123  From 1 January 2005, however, only IFRS and US GAAP will be acceptable 
standards.124  Swiss GAAP ARR will continue to be  acceptable for SWX Local Caps (local 
companies), real estate companies, and investment companies. As of fiscal year 2002, 54% of SWX 
listed companies used IFRS, 33% Swiss GAAP ARR, and 5% U.S. GAAP.125 
184. The principal professional body representing Sw iss accountants is the Swiss Institute of 
Certified Accountants and Tax Consultants126;  members can be either natural persons or enterprises. 
In 2004, discussions were being held between the private sector and the Swiss Government as to the 
institution of a Swiss public accounting oversight boa rd. Moreover, the implications of the U.S. 
Sarbanes-Oxley Act of 2002 were still under discu ssion between Swiss and U.S. authorities.   
                                                      
117 Foreign companies listed in the SWX are exempt from the requirement of financial statements 
audited by SWX-registered auditors if their shares are traded primarily on a securitie s exchange in their country 
of domicile. 
118 SWX online information, "Directive on the Enforcement of Financial Reporting Regulations and the 
Registration of Auditing Bodies", 1 December 1999.  Available at:  http://www.swx.com. 
119 As at end 2003, nine auditing firms were recognized by the SFBC: Bankrevisions- und Treuhand 
AG; BDO Sofirom; Deloitte & Touche AG; Ernst & Yo ung AG, KPMG Fides Peat; KPMG Klynveld Peat 
Marwick Goerdeler SA; OFOR Revision Bancaire SA; PricewaterhouseCoopers AG;  Schweizer Verband der 
Raiffeisenbanken Inspektorat. 
120 Limited liability companies (GmbH) must al so consist of at least four associates. 
121 Article 35, Implementing Ordinance on Banks and Savings Banks (Banking Ordinance) of 
17 May 1972. 
122 General book-keeping rules can be found in Ordonnance concernant la tenue et la conservation des 
livres de comptes, RS 221.431. 
123 Only for companies domiciled in a EU/EEA coun try, Australia, Japan, Canada, New Zealand and 
South Africa. 
124 Including SWX New Market, Admission Board Communiqué No. 2/2003 of 10 February 2003. 
125 SWX online information.  Available at:  http://www.swx.com/admi ssion/publicity_accounting 
_en.html. 
126 More information regarding th e fiduciary chamber is availabl e online at: http://www.chambre-
fiduciaire.ch/. WT/TPR/S/141 Trade Policy Review 
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Liechtenstein 
185. In Liechtenstein, the auditing pr ofession is regulated and supervised by the Financial Services 
Authority. At the end of 2002, 19 auditors and 30 auditing firms held a Liechtenstein licence, while 
seven foreign auditing firms operated under the agre ements on free movement of services.  Under its 
GATS schedule, Liechtenstein maintains no restri ctions on cross-border supply, or consumption 
abroad regarding accounting, auditing, and bookk eeping services; certain market access limitations 
are specified for the supply of services through co mmercial presence.  No commitments have been 
made as regards the presence of natural persons to supply these services.127 
186. Auditing services are organized under the Law on Auditors and Audit Companies.128  A 
licence is required to obtain the legally protected professional title of auditor (Wirtschaftsprüfer) and 
gain authorization to conduct professional audits  and to provide relate d advice on accounting and 
finance, tax, organization, and information technology .  The criteria to be met are: Liechtenstein or 
EEA citizenship and domicile, the holding of the lega lly prescribed academic qualifications, practical 
experience of at least three years under a licensed auditor and success in the a uditors examinations.  
The professional domicile must be in Liechtenstein . Auditing activities (as defined above) may also 
be undertaken by legal entities (auditing firms – Revisionsgesellschaften ) with head office in 
Liechtenstein. In order to be granted a licence, the ma jority of the capital and of votes must be held by 
Liechtenstein-licensed auditors, the majority of the members of the admi nistrative body of the 
company must be licensed auditors, and management  must include a full-time managing director who 
is a Liechtenstein-licensed auditor. 
187. EEA member-state citizens or citizens of count ries with which Liechtenstein has concluded a 
reciprocity agreement, who are licensed in thei r home state to pursue auditing activities, enjoy 
freedom of establishment in Liechtenstein.  Li cence requirements for these categories of foreign 
auditors are:  academic qualifications and professional  experience equivalent to those requested from 
domestic lawyers, and success in special qualification examinations  for foreigners;  and liability 
insurance and membership of the home-country professional organization.  EEA citizens holding an 
auditing licence from their home country may exercise  auditing activities temporarily in Liechtenstein 
under their home-country professional title, without a Liechtenstein licence.    
188. Non-EEA auditors wishing to undertake auditi ng in Liechtenstein temporarily under their 
home-country professional title must conform to the following requirements: domicile in the home country, academic qualifications equiva lent to those required of domestic auditors, three-year relevant 
practical experience gained abroad , success in the Liechtenstein qualification test, membership in the 
relevant professional association in the home country, and liability insurance.  
189. The auditing professional body in Liechtenstein is  the Liechtenstein Association of Auditors, 
a public law association comprising all Liechtenstein -licensed auditors and auditing firms.  The 
Association is supervised by the Government. 
                                                     
 
127 WTO document GATS/SC/83A, 17 April 1994. 
128 Law of 9 December 1992 on Auditors and Audit Companies, LLG 1993, No. 44. Switzerland and Liechtenstein WT/TPR/S/141 
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(iii) Engineering and architectural services 
Switzerland 
190. About 33,000 architects and 45,000 engineers work in Switzerland.129  The market is highly 
fragmented, with the type of business ranging from i ndependent specialists to large architectural and 
engineering offices and companies.  The main professional societies in Switzerland are the Swiss 
Society of Engineers and Architects, and the Technical Union of Switzerland (UTS/STV).  
191. In most cantons, professional names such as "arc hitect", "engineer" or "technician", are not 
legally protected; thus, no licence is required for th e exercise of those professions.  Anyone, Swiss or 
foreign, can practice these professions. The exceptions  are the cantons of Fribourg, Geneva, Lucerne, 
Neuchatel, Vaud, and Ticino, which regulate th e professions of architect and civil engineer.130  Aside 
from these six cantons, no registration is required in  the Swiss Register of Engineers, Architects and 
Technicians (REG).  The usual requirement in those six cantons is registration in the REG, or in the 
cantonal register.  These registers are open to foreig n professionals if they have been exercising their 
profession in Switzerland generally for two to three year s.  In line with the liberal approach adopted by 
Switzerland as regards the architectural and engineer ing professions, no limitations on market access or 
national treatment are (in general) imposed.   
192. One country-wide exception is that official land measurements  can be carried out only by 
licensed surveyors ( ingénieur-géomètre breveté ); the licence is conferred to holders of a recognized 
Swiss degree from one of the two federal technical universities (in Zürich and Lausanne) or from a 
higher or a specialized Swiss school, after succ ess in state-organized theory examinations.131  Foreign 
diplomas are accepted if they provide the necessary  education at university level in the 13 subject 
matters specified in the ordinance (RS 211.432.261). Tw o of these subjects are typically Swiss (Swiss 
official land measurements and Swiss languages an d culture).  Swiss nationality is also required.  
However, foreign surveyors can work under the responsibility of a licensed Swiss surveyor.  
193. In addition to a diploma, REG registration (in the six cantons where it is required) typically 
requires at least three years of professional experience (two years for technical school graduates); 
foreigners may also be registered under the same  conditions as Swiss and Liechtenstein citizens, 
provided they have been working in Switzerland for at least two years.132  Access appears to be liberal 
for foreign suppliers even in  the cantons that regulate.  Under the bilateral agreement on the free 
movement of persons with the EU133, the REG is entrusted with recognizing foreign architecture, 
engineering, and technical university degrees as e quivalent to Swiss qualifications.  Approval of 
                                                      
129 UBS, "Swiss sectoral trends". Availabl e at: http://www.ubs.com/e/about/research/ 
wealth_management_research/branchenspiegel.html [2 March 2004]. Another estimate, from the European Federation of National Engineering Associations (FEANI) elevates the number of declared Swiss engineers and 
architects to 127,000. FEANI online information.  Available at:  http://www.feani.org.   
130 A comprehensive list of regulated professions in Switzerland, compiled by the OPET, available 
online at: http://www.bbt.admin.ch/dossiers/anerkenn/eu/d/reg l.pdf.  For conditions in Lucerne, see Article 63 of 
the cantonal ordinance on planning and construction SRL 736.  The canton of Vaud has similar provisions. See CMAC online information.  Available at:: http://www.cmac.vd.ch/camac_ciev/doc_lib/printdoc.asp?tmpl= 
ART106&id=0);  for Geneva see http://www.ge.ch/legislation/L 540, Article 4). 
131 Ordonnance du 16 novembre 1994 concernant le brevet fédéral d'ingénieur géomètre, 
RS 211.432.261. 
132 REG online information.  Availble a t:  http://www.schweiz -reg.ch/reg_f6.htm. 
133 Agreement on free movement of persons between the European Community and its Member States, 
on the one part, and the Swiss Confederation, on the other. WT/TPR/S/141 Trade Policy Review 
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foreign (non-university) technical and professional degrees is un der the jurisdiction of the Federal 
Office of Professional Education and Technology.134  
194. On 1 January 2003, new structural design st andards, known as Swisscodes, were introduced, 
replacing the Swiss Society of Engineers and Architect s (SIA) codes.  Swisscodes, an SIA project in 
collaboration with the Federal Office of Construc tion and Logistics, and educational and industry 
institutions, constitutes a compressed form of Euroc odes, the harmonized EU standards, which will be 
introduced within five to ten years.135  EU compatibility is expected to  enhance bilateral market access 
because of the common basis of calculations and contractual provisions.    
Liechtenstein 
195. About 175 architects and 115 engineers are registered in Liechtenstein. There are both 
independent specialists and ar chitectural and engineering offices and companies. The main 
professional society in Liechtenstein is the Liechtensteinische Ingenieur-  und Architektenvereinigung , 
representing architects, civil engineers, electrical engi neers, technical engineers, rural engineers, and 
surveying engineers.  Professional names such as "a rchitect", "engineer" or "technician" are legally 
protected. Requirements to obtain a licence to work as an engineer or architect are, in addition to a 
diploma, at least three years of professional experience, and an office in which to carry out the 
profession. Citizens from non-EEA-member countries or Switzerland need 12-years prior residence in Liechtenstein.  Permanent domicile in Liechtenstein  is required for non-EEA or non-Swiss citizens.  
To conduct engineering services as a surveyor of  activities in the public sector, Liechtenstein 
nationality is required; however, foreign surve yors can work under the responsibility of a 
Liechtenstein surveyor. 
(11) F
INANCIAL SERVICES  
196. By virtue of the 1980 Currency Treaty be tween Switzerland and Liechtenstein, Swiss 
monetary policy is also applicable to Liechtenste in; the Swiss franc has been used as legal tender in 
Liechtenstein since 1924. The Swiss National Bank (S NB) has the same powers over, and obligations 
to, Swiss and Liechtenstein banks .  The SNB is owned by both p ublic and private shareholders.136 Its 
main role, aside from being the sole note-issuing au thority, is to exercise monetary policy and to 
facilitate payment transactions.137 As a result of Liechtenstein's participation in the EEA all its 
banking, securities, insurance, and accounting legi slation is based on EU legislation, although 
financial institutions (mainly banks) are also obliged to meet the accounting rules of the Swiss Federal 
Banking Commission due to the monetary union between the two countries. 
197. In their specific commitments under the GATS,  Switzerland and Liechtenstein have, with 
certain limitations, made commitments in all subsectors included in the Annex on Financial 
Services.138  In line with the Understanding on Commit ments in Financial Services, both countries 
have gone further in terms of liberalization of cro ss-border supply, by expanding the sectoral coverage 
                                                      
134 Federal Law on Professional Education (BBG) of 13 December 2002. 
135 Office fédéral des constructions et de la logistique online inforamtion.  Available at:  
http://www.kbob.ch. 
136 SNB was founded by law on 16 January 1906. Approximately 55% of the (half paid-up) capital of 
Sw F 50 million is held by public bodies such as cantons and cantonal banks and the rest is held primarily by private persons; no shares are held by the Federal Government. 
137 SNB jointly operates the Swiss Interbank Clearing (SIC) system, a real-time gross settlement system 
in which more than 22 0 commercial banks cu rrently participate. 
138 WTO document GATS/SC/83/Suppl. 4, 26 February 1998. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 141 
 
 
of commitments made under mode 1 for banking and other financial services (excluding insurance).139  
In the case of insurance, however , commitments on cross-border s upply remain limited to marine, 
aviation, and transport (MAT); reinsurance; and auxiliary services (as stipulated in the 
Understanding). 
(i) Banking services 
(a) Banking and securities services in Switzerland 
198. Switzerland is one the most important financial centr es in the world.  This is largely the result 
of the country's political and economic stability.  The Swiss franc is the world's fifth most-traded currency.  Financial services account for about 11% of the country's GDP.
140  In 2002, the Swiss stock 
market was ranked eighth in the world in terms of market capitalization. The most important line of 
business for Swiss banks is asset management , which accounts for over 50% of their output141; 35% of 
the world's private wealth is estimated to be dom iciled in Switzerland. As Switzerland has adopted the 
universal bank system (i.e. no separation of commercial and investment banking activities), securities and investment fund activities are also dominated by banks. 
199. At the end of 2003, the banking system of Sw itzerland consisted of 342 banks, with total 
assets of Sw F 2,237 billion (of which Sw F 921 domes tic and Sw F 1,316 foreign), total earnings of 
Sw F 13 billion, and total pe rsonnel of 112,915 (of which 13,455 at banks' offices abroad).
142 In recent 
years, the banking sector has been heavily consolid ated, with the number of banks 45% lower in 2003 
than the 1990 level of 625 banks.  Specifically, the Swiss system comprised two big banks, 24 
cantonal banks, 83 regional and savings banks, the Union of the Raiffeisen Banks, 15 private banks, 
26 branches of foreign banks, and 201 other banks  (122 foreign-controlled and 55 stock exchange 
banks). The two biggest banking groups of the country, UBS AG and the Credit Suisse Group (CSG), account for 63% of total assets and dominate all aspects of the Swiss banking system. UBS is the sixth largest bank in the world by shareholder equity (Sw F 42.5 billion, with assets of Sw F 851 billion), while CSG is 20
th (Sw F 22.6 billion equity, Sw F 689 billion assets).143 PostFinance is the financial 
services arm of Swiss Post, the fully state-owned postal system.  PostFinance had assets of Sw F 39 
billion in 2002, spread over 2.6 million accounts.  In February 2002, the Board of Directors of 
PostFinance decided that the company would also arrange loans on behalf of a Swiss bank because 
the Postal Act does not allow PostFinance to direc tly grant loans (i.e., PostFinance is not a bank). 
200. The Union of Raiffeisen Banks is an associa tion of 471 small regional banks, each of which 
operates independently, pooling local savings and le nding money to local businesses.  Cantonal banks 
are (semi-)governmental organizations (most of th em universal banks), while  stock exchange banks 
are banks specialized in securities trade in stock exchanges. Private banks engage primarily in 
portfolio and wealth management for privat e individuals and institutional investors.  
                                                      
  139 A footnote to mode 1 commitments for Banking and Other Financial Services (excluding insurance) 
states: "Are covered not only transactions indicate d in paragraph B.3 of the 'Understanding' but the 
whole range of banking and other financial serv ices transactions (excluding insurance)." 
140 16% of pension funds are included. See Federal Department of Finance online information, "Swiss 
Financial Centre", June 2003. Available at:  http ://www.efd.admin.ch/e/dok/faktenblaetter/finanzplanz 
/finanzplanzch.pdf [24 February 2004]. 
141 Swiss Bankers Association. Available at: h ttp://www.swissbanking.org/en/jb_02_03_e_def.pdf 
[24 February 2004]. 
142 Swiss National Bank (2004d). 
143 The third largest Swiss bank is the Cantonal Ba nk of Zurich (Zürcher Kantonalbank), with 
Sw F 3.2 billion of equity and Sw F 67 billion of assets ( Euromoney , Vol. 34, No. 410, June 2003). WT/TPR/S/141 Trade Policy Review 
Page 142 
 
 
201. Cantonal banks, defined as banks in which more than a third of the share capital and votes are 
controlled by the canton in which they are estab lished, enjoy two main privileges. The canton 
typically assumes full or partial liability for the de bt of its cantonal bank; and cantonal banks also 
benefit from preferential treatment regarding capital requirements and taxation.  However, the special 
legal status of cantonal banks is being examined.  Only two institutions have the right under the 
Mortgage Bond Act of 1930 to issue Swiss mortga ge bonds: the Central Bond Issuing Body of the 
Swiss Cantonal Banks ( Pfandbriefzentrale der schweizerischen Kantonalbanken ) and the Mortgage 
Bond Bank of Swiss Mort gage Institutions ( Pfandbriefbank schweizerischer Hypothekarinstitute ). 
Only cantonal banks may participate in the former, while  participation in the latter is limited to banks 
whose head office is in Switzerland and for which Swiss mortgage loans represent at least 60% of 
their balance sheet assets.   
202. Banking activities are organized under the Banking Act.144  On 1 May 2004, the new Federal 
Act on the Swiss National Bank entered into force.  It clarifies the monetary policy mandate of the 
SNB. The new Act specifies that "the National Bank shall pursue a monetary policy serving the interests of the country as a whole. It shall ensure price stability. In so doing, it shall take due account 
of the development of the economy".  In addition, the SNB has to contribute to the stability of the 
financial system. The new Act and the corres ponding ordinance also clarify the oversight 
responsibilities of the SNB as regards payment and securities clearing, and settlement systems. By 
overseeing these systems, the SNB supports the saf ety and efficiency of financial market 
infrastructures in Switzerland. 
203. Bank secrecy is an important aspect of the Swiss banking system; it covers all business 
relations between the bank and its customers and is  not limited in time. Furthermore, breach of bank 
client confidentiality by bank employees is a criminal offence under Swiss law.
145 However, bank 
secrecy is lifted in criminal cases (such as guns or  narcotics trade, corruption, terrorism, money 
laundering, and tax fraud) and can  be lifted in civil cases under certain conditions (such as 
inheritance, divorce or bankruptcy).146 In the case of tax evasion, bank secrecy is upheld, even after a 
request from foreign authorities, as tax evasion is not considered a crime under Swiss law. 147 
204. Bank supervision is exercised by an independent  federal authority, the Swiss Federal Banking 
Commission (SFBC).148 The SFBC supervises all financial ins titutions that are active in licensable 
activities, i.e. the acceptance of deposits from the public on a professional basis, and the management 
of those deposits under a corporate name.  Thus, SFBC supervises banks, securities dealers and stock 
exchanges, investment funds, the two mortgage bo nd institutions, and the disclosure of shareholdings 
and public takeover bids.149 As PostFinance is not a bank, it is not subject to the Banking Act and is 
directly supervised by the Federal Council. 
205. To obtain a licence from SFBC, a bank must provide evidence of clearly defined business, 
adequate organization, and good re putation of the managers; the latter must be domiciled in a place 
                                                      
144 Swiss Federal Law on Banks and Savings Banks of 8 November 1934, as amended, RS 952.0. 
145 Banking Act, Article 47. 
146 Usually, the plaintiff has to prove the existence of the account. 
147 Swiss law distinguishes between tax evasion and tax fraud; the former is the omission to declare 
income or assets to the tax authorities, while the latter is  any tax-related fraud, such as the submission of forged 
documents to the authorities. 
148 Administratively, the SFBC is integrated in the Federal Department of Finance; however, it is 
independent of the directives of the Federal Counc il.  See SFBC online information.  Available at:  
http://www.ebk.admin.ch/ 
 149 Foreign exchange dealers, indepe ndent asset managers who do not keep accounts under their name 
and brokers who are not employed by foreign se curities dealers are not supervised by the SFBC.  Switzerland and Liechtenstein WT/TPR/S/141 
 Page 143 
 
 
allowing them to ensure "responsible  management".  Natura l persons or legal entities holding, directly 
or indirectly, at least 10% of the capital or votin g rights, or which otherw ise significantly influence 
the bank (qualified participation), must guarantee th at their influence will not adversely affect the 
bank's activity.  They must notify the SFBC before  acquiring or selling a qualified participation or 
when their participation crosses (upwards or dow nwards) the threshold of 20%, 33% or 50%. The 
minimum, fully paid-in share capital is Sw F 10 million.150  
206. The establishment of all branches or subsidiaries or agencies of foreign banks in Switzerland 
requires a licence by the SFBC.  Once established, they enjoy the same status as Swiss banks.  Access 
remains subject to reciprocity, except in cases cove red by international oblig ations, such as the WTO 
Agreements.  The SFBC is empowered to supervise foreign establishments in Switzerland, but it also 
permits foreign authorities to c onduct inspections at Swiss esta blishments of foreign banks. 
207. In 2000, the SFBC started licensing Internet-exc lusive banks and securities dealers, i.e. 
without physical presence.  Regulation is identical  to that of institutions with physical presence, 
including regarding due diligence and money laund ering provisions.  A Swiss bank account cannot be 
opened online; documents have to be pr ovided to the Bank in physical form. 
208. The main stock exchange in Switzerland is SWX Swiss Exchange, founded in 1993 and 
converted to a stock company  in 2002.151 Eurex, a derivatives exchange, is also part of the SWX 
group.152 The main law governing stock exchange operati ons is the Stock Exchange Act (SESTA) and 
the relevant ordinances.153 Under the SESTA, stock exchanges mu st ensure sufficient self-regulation, 
and are subject to approval by the SFBC.  In orde r to be granted a licence, securities dealers must 
provide information and ensure internal separati on of their trading, portfolio management, and 
settlement business; the minimum fully paid-up cap ital is Sw F 1.5 million.  Stock exchanges 
organized under foreign law are granted authorization to operate in Switzerland if they are subject to 
"appropriate supervision". Foreign securities dealer s can receive SFBC authorization to establish a 
Swiss branch if they provide information and ev idence of sufficient organization and resources. The 
consent of foreign supervisory authorities to cr oss-border operations, as well as their agreement to 
provide administrative assistance and information to the SFBC, is also required. Commercial presence 
(other than representative office) in Switzerland or Liechtenstein is  required in order to lead-manage 
Swiss franc denominated issues.  
209. Collective investment funds ar e subject to the Investment Fund Act (IFA) and ordinance.154 The 
fund manager must be a limited company exclusively devoted to fund management and have a principal 
centre of administration in Switzerland. Foreign investment funds can only be marketed or distributed 
publicly through a licensed representative agent resident in Switzerland. The IFA is currently under an 
extensive revision process aiming to extend its scope significantly. According to the authorities, this 
revision will not negatively affect ma rket access or national treatment. 
                                                      
150 Banking Ordinance of 17 May 1972 (as amended on 4 October 1999), Article 4. 
151 In 2003, the total foreign and domestic securities (equities, funds, bonds, derivatives) turnover was 
Sw F 1,056.8 billion. 
152 Eurex is jointly operated by SWX Swiss Exchange and Deutsche Börse. 
153 Federal Act on Stock Exchanges and Securities Tr ading (SESTA) of 24 March 1995, Ordinance on 
Stock Exchanges and Securities Trading (SESTO) of 2 December 1996, Ordinance of the Federal Banking 
Commission on Stock Exchanges and Securities Trading of 25 June 1997, Ordinance of the Takeover Board on 
Public Takeover Offers of 21 July 1997.  
154 Federal Law on Investment Funds of 18 March 1994, Ordinance on Investment Funds (RS 951.311). 
Under the 1994 Law, an investment fund is defined as "a pool of assets raised from investors, as a result of 
public solicitation, for the purpose of collective investment, and managed by the fund management company for the account of the investors, generally in accordance with the principle of risk diversification". 
 WT/TPR/S/141 Trade Policy Review 
Page 144 
 
 
210. The supervision of the financial sector is presently under review. In December 1998, a 
commission was established to analyse the Swiss Fi nancial Market Supervision.  The "Zufferey 
Report" issued by the commission in November 2000 advocated, inter alia , the establishment of a 
single banking, securities, and insurance supervisory authority in order to enhance coordination. In 
November 2001, the Zimmerli Commission was est ablished to work on the necessary legal 
framework for the creation of the new integrat ed authority.  The IMF, in its 2002 assessment, 
supported this creation, noting that "a single supe rvisory authority would have several advantages", 
especially regarding the supervision of congl omerates and large financial institutions.155 In July 2003, 
the first part of the "Zimmerli Report" was publis hed for public consultation, suggesting that SFBC 
and the Federal Office of Private Insurance should be brought under a new Federal Financial Market 
Supervisory Authority (FINMA).  The results of th e consultation were publishe d in June 2004.  The 
dualistic (indirect) supervision model of Switzerland, whereby banks rely mostly on external auditors 
for supervision, was also examined by the Nobel Co mmission, created by the SFBC in February 2000.  
The commission confirmed that the system yields satis factory results, a view also held by the IMF in 
its 2002 assessment.  Under FINMA, the dualistic syst em would be retained, with FINMA directly 
supervising in exceptional cases. 
(b) Banking and fund management services in Liechtenstein 
211. Financial services accounted for 30% of Liechtens tein's GDP in 2000 (or Sw F 1.3 billion).  
Activities are mostly related to asset management, investment funds and insurance. In recent years, the financial sector has registered burgeoning growth, primarily as a result of Liechtenstein's 
accession to the EEA in 1995; the number of banks has increased from 3 to 17. Political stability, 
close ties with Switzerland, and a favourable tax re gime have also encouraged the level of the 
country's financial system. 
212. In Liechtenstein, at the end of 2003, there were  16 banks (with total assets of Sw F 35 billion, 
about 1.5% of the total balance sheet of Swi ss banks); 2 finance companies;  107 investment 
undertakings; 99 authorized trustees; 287 authorized  trust companies); 103 lawyers, legal agents, 
patent attorneys, and patent attorney offices;  48 auditors and auditing companies;  and 21 
Liechtenstein-chartered insurance undertakings.
156  The banking sector is highly concentrated, with 
three banks accounting for 90% of total banking asset s; two of these are quoted on the Swiss Stock 
Exchange and one is owned by th e Foundation of the Prince of Liechtenstein. Ten of the remaining 
banks are subsidiaries of foreign banks, and the ot her four belong to local interests. Assets under 
management reach about to Sw F 100 billion. 
213. The principal law governing the banking sector a nd finance companies is the Banking Act of 
1992 and the corresponding Banking Ordinance, as amended.157 Supervision of banks, finance 
companies, investment undertakings, trustees, lawyer s, accountants, and auditors is carried out by the 
Financial Services Authority (FSA). Banks and fi nance companies require a government licence in 
order to commence operations and can only ta ke the legal form of limited companies 
(Aktiengesellschaft), although exceptions may be granted by the Government.158  The head offices 
and the principal management must be domiciled in Liechtenstein. The minimum required fully-paid-
up capital is Sw F 10 million for banks and Sw F 2 million for finance companies, although the 
Government deems the former insufficient and, in  practice, requires Sw F 20 million for banks. At 
                                                      
155 IMF (2002). 
156 Data for 2003 are available at the following website: http://www.afdl.llv.li/. 
157 Law of 21 October 1992 on Banks and Finance Companies (LLG 1992 No. 108), as amended, and 
Ordinance of 22 February 1994 Implementing the Law on Banks and Finance Companies (LLG 1994 No. 22), 
as amended. 
158 Article 18, paragraph 1, of Banking Act. Switzerland and Liechtenstein WT/TPR/S/141 
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least one member of the board of directors and one member of the management board must be 
domiciled in Liechtenstein. They must be duly authorized to fully represent their company.159  
214. The establishment of a branch or subsidiary of a non-EEA bank or finance company also 
requires a licence;  in addition to satisfying the af orementioned requirements, the institution must be 
subject to home consolidated supervision comparab le to Liechtenstein s upervision, and the home 
authorities must raise no objection. A foreign inst itution wishing to establish a representation in 
Liechtenstein requires a licence by the FSA;  this is granted if it is superv ised in its home country 
(consolidated supervision in the case of a gr oup) in a manner comparable to Liechtenstein 
supervision, the home supervisory authorities do not object to the presence of the bank in 
Liechtenstein, and the managers of the represen tation "guarantee irreproachable business activities". 
The 1992 Banking Act applies (by analogy) to Liech tenstein branches of foreign banks, finance 
companies, and securities undertakings.  No reciprocity  requirements exist.  So far, no foreign banks 
have established branches in Liechtenstein.    
215. As a result of EEA membership, finance comp anies and securities undertakings domiciled in 
an EEA member-state obtain the right of free moveme nt of services for the activities covered by their 
home licences without requiring a Liechtenstein li cence; their operation in Liechtenstein must, 
however, be supervised by their home authorities. Th e same applies to the establishment of branches 
of EEA financial institutions in Liechtenstein .  Suppliers from non-EEA countries must obtain a 
Liechtenstein licence. 
216. Investment undertakings are governed by th e Law on Investment Undertakings (IUG).160  
Before initiating business activities, any inv estment undertaking requires a licence from the 
Government.  Investment undertakings are divide d into investment funds on a contractual basis 
(which have the legal form of a trusteeship), and i nvestment companies (which have the legal form of 
limited company).  The minimum required fully paid-up capital is Sw F 1 million. Investment companies must be incorporated as limited liabilit y companies, with fixed or variable capital. 
Regardless of form, investment undertakings are ob liged to have both a board of directors and a 
custodian bank, which must be registered in Liechtenstein.
161 Furthermore, the principal 
administration of an investment undertaking must be  domiciled in Liechtenstein.  The marketing of 
mutual funds can be made only by banks, fund ma nagement companies or trustees with commercial 
presence in Liechtenstein. No secondary market s or underwritings exist in Liechtenstein. 
Liechtenstein banks can, participate in secondary markets, however, through their Swiss operations. 
Units of foreign investment undertakings may be so ld in Liechtenstein under licence or, if reciprocity 
exists, after notification. 
Money laundering 
217. Liechtenstein is a party to the Conventi on of 8 November 1990 on Laundering, Search, 
Seizure and Confiscation of the Proceeds of Crime (Strasbourg Convention).  It also participates in 
the Select Committee of Experts on the Evalua tion of Anti-Money-Laundering Measures (also known 
                                                      
159 Banks are obliged to adopt a dual management structure, with a board of non-executive directors 
and a management board; internal auditors, directly reporting to the board of directors, must also be appointed. 
160 Law of 3 May 1996 on Investment Undertakings (IUG), which entered into force on 10 July 1996, 
LLG 1996, No. 89. 
161 Article 40 of the IUG. WT/TPR/S/141 Trade Policy Review 
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as Moneyval).162 Liechtenstein also supports the Unite d Nations Global Programme against Money 
Laundering.  
218. In Autumn 1999, following allegations that Li echtenstein had fallen short in fighting money 
laundering, Moneyval conducted a peer review. Th e Financial Action Task Force (FATF) undertook a 
unilateral review in Spring 2000. These assessments confirmed the existence of an extensive money 
laundering problem, mainly owing to difficulties in the enforcement of the relevant legislation and the 
inefficient and overly bureaucratic character of th e mutual legal assistance provisions.  In June 2000, 
the FATF included Liechtenstein on the list of non-cooperative countries.   
219. In response, numbered accounts, whereby the identity of the account holder was known only 
to a restricted circle, were abolished by law, a nd "know your customer" rules were put in place for 
financial and legal activities; other measures in cluded revision of the Due Diligence Act and the 
release of a new Due Diligence Executive Order, a new law on Mutual Legal Assistance on Criminal 
Matters, an ordinance to establish a Financial In telligence Unit to which su spicious transactions 
should be notified; a Decree to establish the Du e Diligence Unit, which is responsible for the 
enforcement of the Due Diligence Act; and a revision of the Criminal Procedure and Narcotics Act of 
1993. As a result, FATF removed Liechtenstein from the list of non-cooperative countries in 2001 and 
ceased further monitoring of the country in June 200 2.  In its 2003 report, the IMF noted "a high level 
of compliance" with FATF standards. 
220. In 1998, the OECD, concerned about "harmful  tax competition" by both preferential tax 
regimes and "tax havens", established a framework  in order to identify and address the problems 
caused by such tax regimes.163  In 2000 and again in 2003, Liechtens tein was maintained on the list of 
non-cooperative tax havens.164   
221. The Government of Liechtenstein is endea vouring to create an integrated financial 
supervisory authority, combining the current f unctions of the FSA, the Insurance Supervisory 
Authority, and the Due Diligence Unit. The new aut hority, to be called Financial Market Authority 
(FMA), is scheduled to initiate operations on 1 Ja nuary 2005.  It will be  independent from the 
Government and will have soverei gn powers over the supervision of all financial market activities. 
Supervision will continue to be dua listic in nature, combining direct (by the FMA) and indirect (by 
licensed auditors reporting to the FMA) supervision.   
(ii) Insurance services 
(a) Insurance services in Switzerland 
222. Per capita insurance expenditure in Switzer land reached US$5,660 in 2003 (of which 
US$3,432 on life insurance), the world's highest per capita expenditure.  The value added of the 
insurance sector corresponds to about 2.7% of Swiss GDP.165 On 30 September 2003, there were 198 
insurance companies operating in Switzerland (103 Sw iss insurance companies, 40 foreign, and 55 
Swiss reinsurance companies). 
                                                      
162 The role of Moneyval is to evaluate the implementation of both FATF recommendations and the 
provisions of the Strasbourg Convention for members of the Council of Europe that are not members of FATF. 
163 OECD (1998). 
164 OECD (2000). 
165 Swiss Re (2003).  Of the 143 direct insurance companies, 26 were life insurance companies (of 
which two foreign) and 117 were non-life (of which 38 foreign). Switzerland and Liechtenstein WT/TPR/S/141 
 Page 147 
 
 
223. Under the Insurance Supervisory Law (ISL) (RS 961.01), private insurance companies are 
supervised by the Federal Office of Private Insura nce (FOPI). FOPI monitors life insurance, accident 
insurance, insurance against damage, and reinsuranc e, and complements the Federal Social Insurance 
Office (FSIO) in the supervision of supplemen tal insurance coverage of health insurance 
companies.166  Among recent developments, both the life and damage insurance ordinances were 
revised, and entered into force in January 2004.167  The ISL and the other main law governing private 
insurance in Switzerland, the Federal Law on Insu rance Contracts of 2 April 1908, are currently 
undergoing a total revision, designed to strengthen solvency requirements and improve insurance 
supervision and consumer protection. 
224. Insurers (including reinsurers) with their pr incipal office in Switzerland require approval by 
FOPI before commencing business; foreign compani es with reinsurance as their only business in 
Switzerland are exempted and are not subject to FOPI supervision.  The classes of activity must be specified; as for each class,  separate approval is required. Late r expansion to additional classes is 
subject to approval.  Composite life and non-life or  non-insurance-related opera tions, are not allowed.  
There is a public monopoly on fire a nd natural damage insurance (on bui ldings) in 19 cantons. As part 
of its social security system, Switzerland maintains a monopoly on the insurance of workplace 
accidents in certain categories of industries ( Caisse nationale d'accidents) .
168  
225. The minimum fully paid-up capital requirements range from Sw F 600,000 to Sw F 10 
million for non-life insurers; from Sw F 5 to 10 mil lion for life insurers, depending on the required 
insurance class; and is Sw F 10 million for rein surance companies. The manager of the foreign 
company must be resident in Switzerland and the ma jority of the board of directors of the Swiss 
company must have EFTA citizenship and be domic iled in Switzerland. To cover costs and losses in 
the initial years of operation, an organizational asset  fund available at short notice, equal to between 
20% and 50% of minimum capital, must be formed. Furthermore, class-specific levels of reserves 
must be available.169  
226. As a general rule, cross-border supply of insu rance services is not possible.  Representative 
offices cannot engage in business or act as agents.  Foreign insurers establishing in Switzerland must 
have been in operation for at least three years.  The manager of a foreign insurance company must be 
domiciled in Switzerland and, apart from the organiza tional fund, the branch must have unrestricted 
access to assets equal to 50% (for non-life insurance) or 100% (for life insurers) of its minimum 
guarantee fund.  
227. As a result of a 1989 bilateral agreement gr anting EU non-life insurers the right of 
establishment, regulations for EU non-life insurance companies are somewhat less restrictive than for 
non-EU companies. In particular, in contrast with other non-life foreign insurers, EU non-life insurers 
are not required to deposit part of their assets with  the SNB.  Following Liechtenstein’s accession to 
the EEA, the existing cooperation between the supervision authorities of Switzerland and 
Liechtenstein was codified in a 1996 b ilateral agreement on direct insurance.170 
228. Basic health insurance is compulsory for a ll residents (including foreigners) and can be 
provided by either recognized non-profit health or ganizations or private insurance companies; it 
                                                      
166 On 30 September 2003, FSIO supervised 56 institutions.  See FSIO online information.  Available 
at:  www.bpv.admin.ch. 
167 Ordonnance sur l’assurance-vie (RS 961.611) and the Ordonnance sur l’assurance dommages 
(RS 961.711). 
168 For information on the Caisse nationale Suisse en cas d'accident, see RS 832.20.   
169 WTO, GATS/SC/83/Suppl.4. 
170 RS 0.961.514. WT/TPR/S/141 Trade Policy Review 
Page 148 
 
 
covers sickness, maternity and accident (if not covered by accident insurance).171 Optional insurance 
may also be purchased, but this falls under private in surance law. All insurers offering the basic health 
insurance scheme are obliged to provi de identical services, defined by law; there is no specific list of 
benefits, but only benefits that ar e "effective, appropriate and efficient" are covered. Each insured 
person may choose any health insurer;  the latte r does not have the option to refuse insurance, 
regardless of age or state of health, or to  impose any reservations  or qualifying period.172 Under the 
Health Insurance Act, insuran ce companies must offer a uniform premium within each canton, 
without consideration of the age of new insured entrants. The insurer can only distinguish three 
categories of premiums within the canton and a llow reduced premiums to children and young people 
in education (between 18 and 25 years). Under the Act, the Confederation and the cantons subsidize 
insurance premiums. The financial contribution from the Confederation is allocated to the cantons 
according to their population, their respective financial capacities, and the amount of the premiums. All other complementary insurance services are regulated by private laws under the Insurance 
Contract Act.  As of 1 January 2004, all matte rs concerning sickness and accident insurance have 
been transferred from FSIO to the Swiss Federal Office of Public Health.  
229. Social security consists of old age and widower 's pension, disability insurance, unemployment 
insurance and loss of earnings benefit and workplace accident insurance. Ther e are three pillar: the 
AVS/AI – Assurance-vieillesse et survivants/Assurance-invalidité
173, a highly redistributive, public 
scheme, which is compulsory for all persons living or working in Switzerland (including children); 
the Prévoyance professionnelle, an occupational pension scheme that is compulsory for employed or 
self-employed persons earning more than Sw F 25,320 per year, designed to enable the insured to 
maintain current living standards after retirement; and a third pillar, which consists of individual 
saving measures. In order to participate in the basic health insurance sch eme, health insurance 
suppliers are obliged to be organized as an associa tion, mutual association, foundation or joint-stock 
company;  pension schemes must be either a mutual association or a foundation.  
230. A federal tax of 8% is levied on settlements from life insurance or 15% on private annuity 
insurance.  A stamp duty of 5% applies to insurance premiums;  a lower rate of 2.5% is levied in the 
case of single-premium life insurance with a repurch ase option.  Insurance services are not liable to 
VAT. 
(b) Insurance services in Liechtenstein 
231. At end 2003, there were 23 insurance undertaki ngs operating in Liechtenstein (six non-life 
insurance, 12 life insurance and five reinsuran ce companies).  Gross premiums amounted to over 
Sw F 1,475 million, 94% of which in life insura nce.  Total capital investments reached Sw F 
3.73 billion in 2003, 75% of which in life insura nce and 22% in reinsurance.  Seven of those 
companies (four non-life and three reinsurance) operated as captives.  In addition, 28 foreign 
insurance companies (27 Swiss, one EU) have est ablished branches in Liechtenstein. By end 2003, 
over 180 EEA and Swiss insurance undertakings had regi stered their intention to provide cross-border 
insurance services, although these undertakings very rarely become active. 
232. Insurance activities in Liechte nstein are governed by the Insurance Supervision Law174, and 
the associated ordinance.175 All insurance undertakings are subject to government licence for each 
                                                      
171 Foreign insurance companies are allowed to invest in real estate up to the value of technical reserves 
required.  See online information.  Available at: ww w.bsv.admin.ch; www.bag.admin.ch; www.edi.admin.ch. 
172 Compulsory health insurance is based on the Fede ral Law on Health Insurance of 18 March 1994, in 
force from 1 January 1996; its purpose is to ensure solidarity among the insured. 
173 Old Age and Survivors' Insurance/Disability Insurance. 
174 LLG 1996, No. 23, Law of 6 D ecember 1995 on the Supervisio n of Insurance Undertakings. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 149 
 
 
individual insurance branch. Insurance undertakings  are supervised by the Insurance Supervisory 
Authority, which also administers the social securi ty system. Insurance undertakings must adopt the 
legal form of a limited company or a coopera tive. Aside from minimum capital requirements 
(Sw F 5 million to 10 million for both life insurers and reinsurance companies;  and Sw F 0.5 million 
to 1 million for each class of non-life insurance), an organizational fund amounting to 20-50% of the 
minimum capital is required.  
233. Non-insurance activities by insura nce companies are forbidden.  The main administration of 
the company (including accounting) must be situated in Liechtenstein; both a board of directors and a management board are required, with at least one member of each being a Liechtenstein resident and 
having sufficient authority to represent the company vi s-à-vis state authorities.  However, in the case 
of a branch office or an agency of a non-EEA unde rtaking, the general representative of the company 
is deemed to satisfy that requirement.  Undertak ings domiciled and licensed in an EEA country may 
conduct direct insurance business in Liechtenstein without requiring a Liechtenstein licence;  the 
single-licence principle applies to the country after its accession to the EEA.   
234. Cross-border provision of services by EEA compan ies is also possible, provided the company 
is capable of conducting business outside its domicil e country and has the neces sary solvency margin.  
On the basis of a bilateral agreement in for ce since 1997, insurance undertakings domiciled in 
Switzerland or Liechtenstein are granted freedom of establishment and operation in the other country.  
Other non-EEA-country insurance undertakings requi re authorization in order to operate in 
Liechtenstein; they must establish an agency or a branch office (including assets equal to 50% of the 
statutory minimum guarantee fund) in Liechtenstein . Insurance undertakings, with head office in a 
foreign country and engaged in solely reinsu rance activities, are exempt from Liechtenstein 
supervision.  
235. Premiums are freely set by the companies;  they  are not subject to approval.  Liechtenstein 
imposes a special tax on foreign insurance companies;  the rates are 1% on premium receipts from life and old-age insurance, and 2% on all other premiu m receipts.  Insurance services are not liable to 
VAT. 
                                                                                                                                                                    
 
175 Ordinance of 8 April 1997 on the Insurance Supervision Act (LLG 1997, No. 85), in force from 
24 January 1997. Switzerland and Liechtenstein WT/TPR/S/141 
 Page 151 
 
 
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