WORLD TRADE
ORGANIZATIONWT/TPR/M/77/Add.1
24 January 2001
(01-0360)
Trade Policy Review Body
4 and 6 December 2000
JOINT TRADE POLICY REVIEW
SWITZERLAND AND LIECHTENSTEIN
Minutes of Meeting
Addendum
Chairperson:  H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
ANNEX I ADVANCE WRITTEN QUESTIONS 3
ANNEX II COMENTS AND RESPONSES BY THE DELEGATIONS OF SWITZERLAND
AND LIECHTENSTEIN 29
ANNEX III WRITTEN ANSWERS PROVIDED BY SWITZERLAND
AND LIECHTENSTEIN 43WT/TPR/M/77/Add.1
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ANNEX I
ADVANCE WRITTEN QUESTIONS
URUGUAY
Report by the Government
Paragraphs 2, 6, 38 and 39
Paragraph 2 states that the Swiss Government attaches great importance to the openness of
world markets for goods and services.  Paragraph 6 notes that Switzerland firmly supports the
integration of developing countries into the global economy through trade.  Paragraphs 38 and 39
stress the importance that Switzerland attaches to strengthening the participation of the developing
countries and the least-developed countries in the multilateral trading system.  Bearing this in mind,
and considering that agriculture plays an essential role in the economies of the developing countries,does Switzerland not think that an essential contribution to the development and growth of the
developing countries could be made precisely by substantially improving market access for
agricultural products and doing away with the high level of protection and the enormous distortions in
that sector?
Paragraph 39
In paragraph 39, which refers to a possible new round of multilateral trade negotiations,
Switzerland stresses its interest in continuing liberalization in certain sectors such as industrial
products and services, among others.  However, in referring to agriculture it places emphasis on
Article 20 of the Agreement on Agriculture, on non-trade concerns and on what it calls the multi-
functionality associated with agricultural activity.  Does this mean that even in a new round ofnegotiations, Switzerland's position on agriculture would continue to be the same as for the on-going
agricultural negotiations of the built-in agenda, that is, based on Article 20 of the Agreement on
Agriculture?
Report by the WTO Secretariat
Summary observationsParagraph 12
We would be grateful for comments on paragraph 12, which states that the maximum rate of
678 per cent applies to out-of-tariff quota imports of meat and edible offal of poultry, and that rates
higher than 400 per cent apply to meat of bovine an imals, meat of swine, edible offal, certain dairy
products, live plants, and specified edible vegetables, roots and tubers.  In particular, it would be
interesting to know how such high tariff levels can be reconciled with the statements made inparagraphs 2 and 6 of the report by the Government concerning the importance which Switzerland
attaches to open world markets for goods and services and to firmly supporting the integration of
developing countries into the global economy.WT/TPR/M/77/Add.1
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Paragraph 22
Could Switzerland comment on the statement in paragraph 22 that the further liberalization of
certain sectors by Switzerland and Liechtenstein, mainly agricultural, might enhance the competitive
framework and contribute to lowering domestic prices, to the benefit of both economies?
Paragraph 23 and Box III.1 (page 33)
Could Switzerland comment on paragraph 23 which states, in relation to the applied tariff,
that a shift to ad valorem  duties may introduce more transparency in the tariff and reduce the
frequency of modifications, thereby increasing predictability?  We would also appreciate comments
on Box III.1 (page 33) concerning the difficulties ar ising from the system for determining the level of
protection afforded domestic producers, principally with  respect to the impact of the frequent changes
of specific duties by Switzerland and the incentives granted under various schemes designed to
enhance the positive escalation of the tariff on  the effective rate of protection.
Part I.  Economic Environment
Paragraph 12
Could Switzerland explain why, if economic grow th has induced a rise in imports in recent
years, the share of agricultural products in total imports has recorded a downward trend despite the
reforms launched in 1993, and why that share has remained under 10 per cent of total imports?
Part III.  Trade Policies and Practices by Measure
(ii) Tariffs, other duties and taxesParagraph 18
Could Switzerland comment on the statement in paragraph 18 that the simple average tariff
on imports of agricultural products (WTO definition) is 34.3 per cent, while the average for
manufacturing products is 2.3 per cent?
(iii) Import prohibitions, licensing and controls
Paragraphs 32 and 48 (and paragraphs 3 and 26 of Part IV, Trade Policies by Sector)
Could Switzerland comment on the tariff quota allocation mechanism based on the  "prise en
charge"  system – which makes the allocation of tariff quotas contingent on the purchase of like
domestic products from producers in Switzerland or Liechtenstein – as well as on the mechanism
based on participation in auctioning?
Part IV.  Trade Policies by Sector
2. Agriculture and related activitiesParagraphs 7 and 10 (and paragraph 4 of Part I, Economic Environment)
Could Switzerland please explain the assert ion in paragraphs 7 and 10 that although
agriculture only accounts for about 2 per cent of real GDP, employs some 4 per cent of the activepopulation, and contributes less than 4 per cent to the value of goods exports, Switzerland is one ofWT/TPR/M/77/Add.1
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the OECD countries which provides the most aid to farmers – equivalent to 73 per cent of gross
receipts from agricultural products in 1999, which is well above the average of 40 per cent for OECDcountries?
Paragraph 32
According to paragraph 32, Proviande, a private cooperative of producers', butchers' and
traders' organizations, has been commissioned, fo r a period of four years as from 1 January 2000, to
price live animals and meat in domestic markets, to monitor the live animals market, and to register
and control applications for tariff quotas on live animals and meat.  Does Switzerland consider that
this system and the expenses arising from such services will contribute to effectively improving
imports of the agricultural goods in question?
ARGENTINA
Questions on agriculture
According to page 72 of the Report of the Secr etariat (WT/TPR/S/77), the allocation of tariff
quota import licences for various agricultural products is based on the so-called " prise en charge "
system, which makes tariff quota allocation conditional on the purchase of similar local products.
This is one of the "trade-related investment measures" included in the Annex to the TRIMs
Agreement.  As such, it is considered inconsistent with the national treatment obligation and should
have been notified and eliminated before 31 De cember 1996.  Could Switzerland confirm that this
trade-related investment measure was not duly notified?  Could Switzerland explain the legal reasons
why it has continued to make use of this measure that is inconsistent with the TRIMs Agreement?
According to paragraph 24 on page 69 of the Report of the Secretariat (WT/TPR/S/77),
Switzerland applies a "threshold-price" system to regulate imports of certain agricultural products.Under this system, variable tariffs are imposed on imports of "groups" of products.  Article 4.2 of the
Agreement on Agriculture prohibits the use of "variable import levies" and "minimum import prices".
Could Switzerland explain the legal reasoning behind the maintenance of a tariff system that is
inconsistent with the Agreement on Agriculture?
Switzerland has notified a number of tariff quotas which include a "basket" of tariff lines.  For
example, the quota for meat mainly produced on the basis of green fodder covers 44 tariff lines, and
the quota for vegetables, 106 tariff lines.  This means that the administration of tariff quotas can
involve a considerable amount of discretion, and hence, can generate problems of transparency.  Has
Switzerland considered taking any initiative to make its system of tariff quota administration moretransparent?
Questions on TRIPS
1. In paragraph 112 of Section III(4)(iv) entitled Protection of Intellectual Property Rights, the
Secretariat points out that the Swiss Law on the Protection of Trademarks and Indications of Source
extends protection to indications of source in the fi eld of services, indirect indications of provenance,
and types or recipes that imply a geographical origin.  Could Switzerland explain what these "types or
recipes that imply a geographical origin" are?
2. In paragraph 118 of Section III(4)(iv) entitled Protection of Intellectual Property Rights, the
Secretariat notes that the Swiss Federal Tribunal upheld the principle of national exhaustion inWT/TPR/M/77/Add.1
Page 6
relation to patent rights.  Could Switzerland provide details on this ruling (case, year, content)?  We
would also like to know whether parallel impor ts involving patent rights are authorized.
3. In paragraph 116 of Section III(4)(iv) entitled Protection of Intellectual Property Rights, the
Secretariat notes that changes were made to the Swiss Federal Law on Patents relating to "the
conditions for granting compulsory licences, and the circumstances in which a patent is considered to
be exploited".  It adds that "The law provides for the revocation of a compulsory patent if its granting'fails to satisfy the needs of the Swiss market' within two years".  Could Switzerland please clarify:
(1) Whether its Legislation envisages the granting of compulsory licences;  (2) the nature of the
changes introduced to modify the previously established conditions;  (3) the conditions for the
granting of compulsory licences;  (4) the criteria for de termining that the granting "fails to satisfy the
needs of the Swiss market";  (5) the system for the granting of compulsory licences?
4. With respect to the "Enforcement of Intellectual Property Rights", could Switzerland indicate
the occasions on which the Swiss courts have ordered precautionary measures?
5. In paragraph 15 on page 65 (Section IV(2) on Agriculture), the Secretariat points out that as a
result of the "Agricultural Policy 2002" (AP 2002) initiative, a new Federal Law on Agriculture was
adopted which came into force on 1 January 1999.  Footnote 99 (page 57 of the Report of the
Secretariat) in the section on intellectual property mentions this Law as one of the Swiss legislative
instruments protecting geographical indications.  (a)  Could Switzerland please indicate whether prior
to this Law agricultural products were protected in Switzerland as geographical indications?
(b) Given that the mentioned Law was passed in response to the initiative AP/2002, which, as stated
in paragraph 15 on page 65 is aimed at, inter alia , introducing structural improvements, cost cutting,
liberalization of markets, and State assistance predominantly through direct payments, we would like
to know how the protection of "geographical indicat ions" for agricultural products introduced by the
said Law fits into this policy;  (c) Could Switzerland indicate whether the agricultural products
protected by geographical indications enjoy any kind of agricultural aid different from that granted to
products which do not enjoy such protection (direct payments, ecological payments, financialcontributions, concessionary credits, price compensation, refunds, tariff protection, subsidies,
financial assistance, government involvement in marketing, price systems and guaranteed margins,
etc.)?  (d)  Does Switzerland consider that the protection of agricultural products by geographical
indications under the Federal Law on Agriculture will increase competitiveness in the sector, which is
one of the objectives of AP 2002?  Why?
6. Paragraph 19 on page 6 of the Report by the Government of Switzerland states that "The
protection of appellations of origin and geographical indications is also essential for both agricultural
and manufactured products", and adds that "Consequently, recognition and international respect for
geographical indications is a priority for Switzerland."  Could Switzerland explain why it essential toprotect agricultural and manufactured products by appellations of origin and geographical indications
at the national level?  How does this type of protection relate to the notion expressed in the previous
sentence that "Only solid protection in a strict international framework can justify enormous research
costs in a number of sectors"?
7. Paragraph 39 of the Report by the Government concerning the Swiss position in a new round
of multilateral trade negotiations indicates as one of the main negotiating topics "extending the
protection of geographical indications to food products other than wine and spirits, as well as to
specific industrial products".  (1) Could Switzerland please explain the consistency of this proposal
with the communication submitted by Switzerland, toge ther with other countries, to the Council for
TRIPS in document IP/C/W/204/Rev.1, which states that the extension of protection is part of the
built-in agenda of the Council for TRIPS?;  (2) Could Switzerland please confirm that it onlyconsiders necessary the extension of protection to "food products" and "specific industrial products"?;WT/TPR/M/77/Add.1
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(3) To what "specific industrial products" does Switzerland consider that protection should be
extended?
CANADA
QUESTIONS TO SWITZERLAND
WTO Secretariat Report (WT/TPR/S/77)
II. Trade Policy Regime: Framework and Objectives; (5) Agreements; (ii) bilateral
agreements; paragraph 37:
According to para 37, Switzerland has two years to eliminate the preferential treatment granted to
indigenous workers; five years to phase out its quota system for work permits to EU citizens; and
seven years to reintroduce the quota system for wo rk permits if it deems the resultant immigration
excessive.  Please explain your current regime with respect to temporary work permits for citizensoutside the EU.  Please explain the role, if any, of cantons in setting their own professional
qualification criteria.  What recent changes, if any, have been undertaken and what further reforms are
anticipated?
III. Trade Policies and Practices by Measure; (4) Measures Affecting Production and Trade
(iii) Competition Policy; (a) Legislation; paragraph 99:
According to para 99, the Law on Cartels and other Restraints on Competition "applies in principle to
all anti-competitive arrangements producing their effects in Switzerland....  Exceptions to the
application include... areas where the Federal Council may grant exceptional authorization on the
grounds of compelling public interest."  Has the Federal Council recently had the opportunity to make
such authorizations?  If yes, in which activities and on what "public interest" grounds?  Please providedetails on the criteria employed by the Federal Council in authorizing such exceptions?  Are the
decisions of the Federal Council challengeable in the Swiss Federal Court?
IV. Trade Policies by Sector;
-  Manufacturing; footnote 37
Footnote 37 states, "The textiles and clothing branch, dominated by small enterprises producing high-
quality yarns, fabrics and silk products, industrial textiles, and luxury clothing, has for decades
experienced strong pressures."  Has the textiles and clothing branch found strong niches that
Switzerland believes will survive the increased competition as of 2005, or are these industries seen assunsetting?
-  Energy; paragraphs 57 & 59
According to para 57, the Electricity Market Law (EML), will provide a phased opening of the
electricity market (21% in 2001, 34% in 2004 an d full opening in 2007).  However, this market
opening schedule is still under discussion.  Please provide an approximate timeframe as to when
discussions will conclude and a final decision on the market opening schedule can be made.WT/TPR/M/77/Add.1
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-  Banking and Fund Management Services; paragraph 67
According to para 67, Swiss Federal Banking Comm ission (SFBC) approval is required before a
foreign bank, having established a Swiss subsidiary, may open branches.  Please outline the
substantive and procedural requirements for obtaining such approval from the SFBC.
- Insurance; paragraph 80
Para 80 outlines the minimum share capital requirements for foreign insurance companies, based on
the type and expected volume of insurance contracts.  Do these requirements also apply to Swiss
insurance companies?  If no, what are the requirements for Swiss insurance companies?
- Air Transport; paragraph 106
According to para 106, Airlines with passenger traffic shares exceeding 4.5% in Geneva and 1.5% in
Zurich are allowed to provide their own ground-handl ing (including check-in).  Does this mean that
foreign-owned airline companies are not permitted to establish their own ground-handling facilities at
the airports of Geneva and Zurich if their share of total traffic is below a these percentages?
- Overland transport; paragraphs 109 and 110
According to paras 109 and 110, Switzerland has a rail network of 5,041 km, of which about 3,007
km are owned by the Swiss Federal Railways (SBB), a State-owned company, and 2,034 km by
regional companies... The SBB still holds exclusive rights over regular passenger transport (along themain railways).  Is there a timetable for the privatization of passenger rail services along the main
railways?
- Tourism; paragraph 118
According to para 118, the Swiss Corporation for Hotel Credit (Société suisse de crédit hôtelier)
provides concessional loans and credit guarantees to small and medium-sized companies investing in
tourist areas.  Are these concessional loans and credit guarantees available to foreign companies
investing in tourism areas?
- Construction; paragraph 123
Para 123 states that in order to acquire land, foreigners, who are not permanently established in
Switzerland, must receive prior authorization from both cantonal and federal authorities.  Please
outline the procedures and criteria for obtaining such authorization.  To what extent is theauthorization to acquire real estate holdings at the discretion of individual cantons?
General Question on Services
While the Secretariat Report does not refer to professional services, we are interested in obtaining
information in this area.  What are the recent deve lopments in terms of regulatory reform in the area
of professional services?
General Question on Investment
Please describe Switzerland's investment regime w ith respect to the division of powers between the
federal government and that of the cantons?  In what areas does the federal government retainWT/TPR/M/77/Add.1
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authority?  To what extent do individual cantons have discretion in applying differential investment
policies?
QUESTIONS TO LIECHTENSTEIN
WTO Secretariat Report (WT/TPR/S/77)
IV. Trade Policies by Sector;
-  Banking and Fund Management Services; paragraph 75
Para 75 states that a license is required to establish a bank or finance company in Liechtenstein.
Please outline the criteria and procedures for granting such a licence.
- Insurance; paragraph 85
Para 85 states that foreign insurance companies that do not have their head office in either a European
Economic Area (EEA) member state or in Switzerland must have authorization to take up insurance
activities in Liechtenstein.  What are the requirements for obtaining such authorization?
Additional Question on Services
While the Secretariat Report does not refer to professional services, we are interested in obtaining
information in this area.  What are the recent deve lopments in terms of regulatory reform in the area
of professional services?
EUROPEAN UNION
1. T RADE POLICY REGIME : FRAMEWORK AND OBJECTIVES
Switzerland mentions in paragraph 38-39 of its Government report in relation to the launch of a new
round that, "La Suisse soutient la reconnaissance au sein de l'OMC des objectifs du développement
durable et de la protection de l'environnement".  In this respect the EU would like to ask: What means
does Switzerland use to make its trade policy supportive of sustainable development?  To what extent
does Switzerland use, or is planning to use, instruments such as sustainability impact assessments, as
a tool in this sphere?  In particular, what other mechanisms is Switzerland using to promote synergies
between its trade policy and its environmental policy?
What are the priorities of Switzerland in relation to consultations with domestic stakeholders? How
does Switzerland consult with civil society (NGOs, business community, etc) on the formulation of its
trade policy? What are Switzerland's views on improving WTO transparency?
2. S TANDARDIZATION , TESTING AND CERTIFICATION ISSUES
On page 43, paragraph 52 of the Secretariat report, it is stated Switzerland has concluded a MRA with
the EU. Has Switzerland concluded a parallel mutual recognition agreement on conformity
assessment with the EFTA-EEA States as referred to in the preamble of the MRA with the EU?
Is Switzerland involved in any other MRA negotiations?WT/TPR/M/77/Add.1
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3. T ELECOMMUNICATIONS AND POSTAL SERVICES :
On page 97, in paragraph 91 of the Secretariat report, it is stated:  " subject to international obligations
and in the absence of reciprocity, the licence may not be granted to enterprises incorporated under
foreign law" : Could Switzerland indicate if there are licences granted to foreign entities pursuant to
such reciprocity rules? As regards allocation of licenses by ComCom and OFCOM, what is the delay
for decision?
On page 97, in paragraph 92, it is stated that providers of telecommunications services that have a
dominant market position are subject to interconnecti on rules.  Is the list of such dominant operators
public? How often is it reviewed?
On page 97, in paragraph 93: The EU would like to know if the universal service only covers prices of
certain services and their quality, but not the availability? Furthermore, which services are mandated
by the universal service? Also it is stated that "Cross-subsidization of telecommunications services is
not legally prohibited."  How is this compatible with paragraph 1 of the reference paper? More
generally, what are the legal provisions to prevent anti-competitive practices as per paragraph 1 of thereference paper (cross-subsidisation, share of information, ...)?
4. P
HYTOSANITARY MEASURES
Switzerland bans imports of fresh pork of Spanish origin under the pretext of the possible
existence of Aujeszky's disease, although this is not a case envisaged by the International Office of
Epizootics.
Does this not represent an arbitrary application of phytosanitary standards?  Does Switzerland
intend to take steps to remedy this situation and allow European products normal access to its market?
CHILE
Report by the Secretariat (WT/TPR/S/77)
I. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES1. Paragraph 10 on page 18 in the subsection entitled "Policy formulation and implementation"
of the Secretariat Report states that intern ational laws, including the WTO Agreements, take
precedence over Swiss national legislation, but that the Swiss Federal Court has not so far held any
WTO provision as directly applicable.  What implications does this have for the implementation ofeach one of the Agreements, in particular those with "minimum standards" like the TRIPS
Agreement?  Is the confirmation of the Swiss Federal Court needed?
2. Regarding "Regional and other agreements" on page 24 of the Report of the Secretariat,
paragraph 41 mentions that under EFTA Switzerland and Liechtenstein are negotiating bilateral freetrade agreements with six countries.  We understand that with Mexico this process has already been
completed.  Could you please indicate the areas included in the negotiations on services, government
procurement, investment, anti-dumping, safeguards, intellectual property, agricultural products and
others?  With respect to agricultural products, what sectors are involved?WT/TPR/M/77/Add.1
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II. TRADE POLICIES AND PRACTICES BY MEASURE
3. With respect to "Health, phytosanitary and environmental protection regulations",
paragraph 55 on page 44 of the Report of the Secretariat states that imports of fruit susceptible of
being infected are banned.  What scientific criteria are used to determine the fruit's susceptibility of
being infected?
trade policies by sector
Agriculture
4. Table IV.7 on page 72 of the Report of the Secretariat, entitled "Market-access commitments
via tariff quotas", includes "Apples, pears, quinces, fresh", with a tariff quota of 15,800 tonnes,allocated under the "prise en charge" system.  What is the degree of utilization of this quota?  What is
the percentage of like domestic products that must be purchased for the import quota to be allocated?
Is this percentage the same for all of the products affected by this measure.
5. Paragraph 24 on page 69 of the Report of the Secretariat mentions that the "threshold-price"
system is maintained on imports of certain agricultural products, currently fodder products.  What
other products are likely to be included?  How is the overall estimated import price calculated?  Every
how often is it calculated?  Why is it defined as a "variable tariff" on imports of "groups of products"?
Services
Concerning the general aspects covered in the introductory section, we would appreciate
further information on the following:
6. Table AIII.5 shows State or private enterprises with monopolies or exclusive rights.  Is there
any indication that there may be a change of policy in the future in any one of these industries with a
view to enhancing competition?  Under what conditions would this be done?  Is there any possibilitythat they could be opened up to competition from foreign suppliers?
7. According to the TPR, the measures relating to the presence of natural persons (mode 4) are
not bound.  What are the main measures applied to professional services and other business services
such as advertising and services relating to agriculture and mining?  Are there any plans to bind thesemeasures in the future?  In what sectors?
8. With respect to commercial presence and cross-border trade, limitations and conditions are
imposed on a variety of services.  Is there any plan to reduce such limitations?  In what sectors?
9. Switzerland maintains a number of reservations with regard to MFN treatment on various
grounds, and even requires reciprocity in areas such as construction and engineering services.  Can
changes be expected in the future in any of these industries?
(a) Banking10. According to the Report of the Secretariat, the minimum capital requirement for foreign
banks is Sw F 10 million.  What is the amount for Swiss banks?  Can branches of foreign banks be set
up in Switzerland without resident capital requirements?
11. According to the Report, "In general, the same  regulatory requirements apply to Swiss and
foreign banks."  What are the regulatory differences for Swiss and foreign banks?WT/TPR/M/77/Add.1
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(b) Insurance
12. In the case of insurance, risks that are physically located in Switzerland must be covered by
local firms (there is no cross-border trade for these serv ices).  Is there any plan to change this in the
future?  Switzerland is a major cross-border supplier of insurance services.
(c) Telecommunications13. Would it be possible to introduce a process of disaggregation of networks in order to foster
competition in the interrelated services of telephony, the Internet and data transmission?  Technically,
the spectrum used for radiocommunication could be enlarged.  Does the Government plan to take this
measure?
(d) Air transport14. Paragraph 106 (page 101) of the Report of the Secretariat states that only certain airlines are
allowed to provide their own ground-handling services in the airports, but may not supply theseservices to other airlines.  Who provides such support services to airlines who cannot or do not wish
to provide their own ground-handling services?  Can any enterprise, national or foreign, which is not
an airline, offer ground-handling services, including catering?  What is the situation in the aircraft
maintenance sector?  Are there any plans to liberalize ground-handling and aircraft-maintenance
services in the short term?
15. The same paragraph states that the new Law of 1998 repealed the monopoly of Swissair over
international traffic.  Why was an exception made until 2008 for the destinations for which Swissair is
actually operating and what are they?  Does this monopoly include routes that are not operated
directly by Swissair, but rather by one of the ai rlines of the Qualiflyer Group or on the basis of
code-sharing as with American Airlines?
(e) Others
16. Does Switzerland have any kind of agreement recognizing education, experience, licences or
certificates for the supply of professional services with third countries?  If so, with which countries?
17. Are the Swiss Professional Associations public  or private bodies?  Is it mandatory for Swiss
professionals to belong to a professional association?  What is the situation of foreign professionals in
this respect?
18. According to press reports published today, 1 December, the Swiss authorities have decided
to prohibit the use of meal of animal origin in animal feedingstuffs.
19. We understand that this is an emergency measure designed to deal with the serious situation
caused by the transmission of Creutzfeld-Jacobs disease in connection with BSE (bovine spongiform
encephalopathy) in the use of animal meat and bones used in the preparation of such meal.
20. However, we have learned that this measure would also be extended to fishmeal.  Our
question is as follows:  What is the scientific basis for including fishmeal in this measure?  Is there
any scientific evidence to show that the BSE pathology that can be found in bovine animals can also
be found in fish?WT/TPR/M/77/Add.1
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HONG KONG, CHINA
General
(WT/TPR/S/77, p. 19, para. 18)
1. It is mentioned that the establishment of various forms of commercial presence in Switzerland
(joint-stock company, co-operative society, enterp rises without juridical personality) is subject to
residency requirements.  Would Switzerland consider relaxing the requirements so as to encourage
foreign participation in investment?
(WT/TPR/S/77, p. 19, para. 19)
2. We note that harmonization of differential investment requirements among cantons is under
way.  We would be interested in knowing the progress of the harmonization.
Foreign Investment Regime
(WT/TPR/G/77/CHE, p. 4, para. 7 and WT/TPR/S/77, p. 10-11, paras. 18-22)
3. It is observed that Switzerland recognizes th e need for inclusion of investment in the WTO
framework with a view to promoting further liberalization of investment.  In line with this broad
objective, does Switzerland envisage any specific plans to further liberalize its current domestic
framework to encourage foreign investment?  If yes, what are the details?
Economic Environment
(WT/TPR/G/77/CHE, p. 5, para. 12)
4. In order to achieve a stable macroeconomic policy environment, a constitutional amendment
to balance the budget during the business cycle is mentioned.  We would be interested to know how
the constitutional amendment is to be implemented;  e.g. how to determine whether it is fulfilled?How to define a business cycle?
Free-Trade Agreements (FTAs)
(WT/TPR/G/77/CHE, p. 8, para. 30, and WT/TPR/S/77, p. 24, paras 40-41)
5. As Switzerland is involved, through EFTA, in a number of ETA initiatives, we would be
interested to know if there is any specific target or objective, applicable across the board, as to the
sectoral coverage of trade liberalization under such agreements, bearing in mind the necessity to fulfil,
among others, the requirement of "substantially all the trade" under GATT Article XXIV.
Tariffs
(WT/TPR/G/77/CHE, p. 9, para. 33)
6. Switzerland has proposed that the new round of negotiations should aim at achieving a zero
tariff rate by 2010 for a substantial proportion of tariff headings for manufactured products.  While2010 is the ultimate target, we would like to know whether Switzerland envisages any phasing-in
arrangement apart from this ultimate target?  What is the scope of "substantial proportion" as
envisaged by Switzerland?  Why not target at eliminating tariffs for all manufactured products?WT/TPR/M/77/Add.1
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Financial Services
(WT(TPR/S/77, p. 94, para. 81)
7. While we appreciate the prosperous development of the insurance market in Switzerland, we
would be interested in knowing wh ether Switzerland has any plan to terminate or liberalize in a
progressive manner the state monopoly on fire, natural damage, and insurance against workplace
accidents.
(WT/TPR/S/77, p. 96, para. 87)8. It is noted that Liechtenstein imposes a special tax on foreign insurance companies.  We
would like to know the objective of this arra ngement and whether Liechtenstein would consider
removing this differential arrangement.
Rules of Origin
(WT/TPR/S/77, p. 41, para. 45)
9. It is mentioned that under a tolerance rule of the preferential rules of origin of the EU/EFTA,
the incorporation of semi-manufactured inputs from third countries, up to a percentage threshold, is
allowed.  Yet, textiles and clothing are excluded.  We are interested to know the rationale for the
exclusion.
AUSTRALIA
Question 1
The Secretariat Report highlights the fact that agriculture in Switzerland and Liechtenstein is the most
highly protected sector domestically and the most highly protected agriculture sector amongst OECD
countries, involving, inter alia,  export subsidies for a number of products (including diary products,
cattle, and fruit), high average tariffs, tariff peaks and tariff escalation, and high levels of direct
support payments.
(a) Given the well documented damage that export and production and trade distorting subsidies
inflict on third countries, including developing countries, in what ways do Switzerland and
Liechtenstein consider that these policies contribute to a fair and equitable multilateral trading
system?
(b) The Secretariat Report also noted that the development of sectors such as tourism have been
negatively impacted by policies adopted in the highly protected sectors such as agriculture.
Does Switzerland acknowledge that protectioni st agricultural policies can also undermine
non-agricultural activities in rural areas?
(c) Is Switzerland prepared to make a commitment to avoid such domestic and international
outcomes by ensuring that any policies intended to address non-trade concerns are targeted,
transparent and non-trade distorting?
Question 2
The Secretariat Report notes that the existence of the "prise en charge" system under which allocation
of tariff quotas for certain agricultural products is contingent upon domestic purchases.  CanSwitzerland explain how this system is consistent with Article 4.2 of the Agreement on Agriculture?WT/TPR/M/77/Add.1
Page 15
Question 3
What role does science-based risk assessment play  in the Swiss regulatory framework and strategy for
genetically modified organisms?
NORWAY
The Secretariat Report mentions that the Swiss and Liechtenstein General System of
Preferences was revised in 1997 and that certain former beneficiaries were graduated on the basis of
criteria developed in the OECD Development Assistance Committee (DAC).  Norway wouldappreciate it if you could expand on the information provided on this issue.
During the last TPR of Switzerland the New Competition Law of 1996 was welcomed.  This
year's Government Report (para. 18) mentions a statutory amendment to the 1996 law.  Will this
amendment provide the authorities with new inst ruments for enforcing the law or provide new
prohibitions on restrictive practices?
THAILAND
All questions are based on the Report by the Secretariat (WT/TPR/S/77)
(2) Agriculture and Related Activities, (ii) Policy objectives and instruments
Page 66, Table IV.3
1. We note that the Government of Switzerland subsidizes its farmers through direct payments
programme of which social payments are also included.
- We are interested to know more detailed information on the social payments, especially child
allowance for farmers which constituted a subsidy of US$79 million in 1999.
- We would also like to hear the view from the Swiss delegation on how this measure is
consistent with Annex 2 of the Agreement on Agriculture.
Page 67, para. 17
2. We note that the Swiss Government grants interest-free loans of a maximum duration of
20 years to farmers who improve conditions for animal welfare.  Although Thailand does not oppose
any financial contributions or credits granted for animal welfare by developed countries, we are of the
view that this measure should not be used as the condition for imports especially from developing
countries.  Moreover, we do not agree to incl ude this measure under the Green Box provision.
- In this regard, we would like to seek more information on the amount of budget granted for
animal welfare for the last three years, types of animals, and whether Switzerland notified this
measure under the Committee on Agriculture or not.WT/TPR/M/77/Add.1
Page 16
Page 72, para. 26
3. We note that the Swiss Government applies "prise en charge" allocation system for imports of
several products under tariff quota.  It is also mentioned that the "prise en charge" system makes tariff
quota allocation conditional on purchase of similar local products.
- We would like to seek more detailed information of this allocation system, i.e., how the
system works, which authority is in charge of this system, and what proportion of each local
product purchased per each import.
- We would also like to hear the view from the Swiss delegation on this allocation system.
Does Switzerland consider this system consistent with the TRIMs Agreement?  If yes, how?
(IV)  Trade Policies by Sector, (4) Services, (iii) Transport
Page 100, para. 103
4. We would like to seek more detailed information on the bilateral agreement between
Switzerland and the European Union on Civil Aviation, especially on the gradual liberalization plan.
In fact, we are interested to know whether the agreement will affect the air transport services of other
countries or not.
(a) Air transport
Page 100
5. We are interested to know the conditions or criteria of both Switzerland and Liechtenstein for
foreign direct investment on air transport services, especially the conditions on:
- domestic and international scheduled air services for passengers and cargo planes;
- domestic and international non-scheduled air services for passengers and cargo planes;  and
- other related activities such as ground-handling services, the computer reservation system,
catering, and others.
6. Do Switzerland and Liechtenstein have any plans to reduce/remove the conditions on these
activities?  If yes, when?
Page 101, para. 106
7. Please provide details of Switzerland's criteria for slot allocation.
Page 101, para. 107
8. Please provide details of Switzerland's procedure and criteria for tariffs approval.WT/TPR/M/77/Add.1
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JAPAN
Questions and Comments on Report by the Gove rnment of Switzerland (WT/TPR/G/77/CHE)
Agriculture
(p. 7, paragraph 21)
1. The Report states that Switzerland adopted a regulatory framework for genetically modified
organisms and has developed a strategy based on the use of precautionary measures, together with
some other factors.  Please explain in concrete terms how such “precautionary measures” are reflected
in its domestic regulations.
(p. 7,  paragraph 25)
2. Switzerland believes that “agricultural tasks are multifunctional and go beyond the mere
production of foodstuffs”.  Japan thinks this is an important point of view.
(pp. 10-11, paragraphs 38-39)
3. Japan supports the Swiss view that a new round of multilateral trade negotiations should
cover a broad area, including not only market access but also the strengthening of rules.  Japan also
shares the view that agricultural negotiations are to be conducted on the basis of Article 20 of the
Agreement on Agriculture, taking into account non-trade concerns.
Questions on Report by the Secretariat (WT/TPR/S/77)
II TRADE POLICY REGIME: FRAMEWORK AND OBJECTIVES
(4) LAW AND REGULATIONSInvestment
4. Are there any information centers to respond to inquiries concerning the laws and system of
investment or trade in Switzerland? Please explain what measures the Swiss Government intends totake in order to improve the transparency of its laws and system (for example, inviting public
comments, etc.)?
Movement of persons
5. What conditions are to be satisfied when Swiss and foreign companies wish to proceed in
joint research and development?  When a fore ign company establishes a research institute in
Switzerland, for how long and under what conditions ca n a foreign researcher stay in Switzerland?  In
general terms, on the movement of persons, for how long and under what conditions does the Swiss
Government permit foreigners to stay in Switzerland?WT/TPR/M/77/Add.1
Page 18
(5) AGREEMENTS
Bilateral and regional agreements
6 What prospect and motivation does the Swiss Government have for concluding free trade
agreements or regional integration agreements with other countries?  How far is the Swiss
Government considering liberalizing its trade beyond tariff liberalization through these agreements?Does such liberalization include areas of services (such as financial services), IT(such as e-commerce)
and the exchange of persons?
(p. 22, paragraph 34 of Chapter II)
7. As a result of concluding bilateral agreements between Switzerland and the EU, a drastic
liberalization would be realized in seven sectors (i.e. agriculture, government procurement, technical
barriers to trade, road transport, air transport, free movement of persons and research).  Are all these
agreements consistent with the WTO agreements?  Upon the conclusion of these agreements, can
countries other than the EU enjoy the same treatment as the EU member countries? If not, suchcountries would suffer a disadvantage due to unequal treatment.  For example, in the cases of the
mutual landing of air transportation, the liberalization of the movement of persons and the facilitation
of tendering in government procurement, can such a situation happen as countries other than the EU
member countries would not enjoy the same treatment as the latter?
(p. 22, paragraph 34 of Chapter II)
8. In footnote 31, it is stated that, “Swiss relations with the EU members on trade in services are
currently regulated by bilateral agreements on an individual basis”.  Why are these bilateral
agreements not notified under the Article V of the GATS?  Does the Swiss Government have any
intention to make these agreements consistent with Article V of the GATS?
(p. 23, paragraph 35 of Chapter II)
9. The Report states that “[T]he agreement (with the EU) on agriculture will provide for gradual
liberalization (dismantling of tariffs and non-tariff measures) of bilateral trade in certain products”.  Is
this agreement consistent with Article XXIV of the GATT?  What percentage of all the agriculturaltrade between Switzerland and the EU will  be liberalized by this agreement?
(p. 24, paragraph 41 of Chapter II)10. According to the Report, EFTA members are negotiating bilateral free-trade agreements with
Canada, Mexico and some other countries.  With regard to the agreements with Canada and Mexico
respectively, when will these be concluded?  What  is the date of their entry into force?  Please
indicate details on each agreement.WT/TPR/M/77/Add.1
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III TRADE POLICY AND PRATICES BY MEASURE
(2) MEASURES DIRECTLY AFFECTING IMPORTS
Tariffs
(p. 32, paragraph 17 of Chapter III)
11. According to the tariff schedule, Switzerland imposes specific duties on all products,
regardless of whether they are agricultural or industrial products.  Imposing such specific duties
should be decided after due consideration of the character of the respective products.  Japan would
like to seek the explanation by the Swiss Government how such consideration has been carried out
regarding each product subject to specific duties.
12. As the value of the specific duty is in proportion with the amount of imports, it has the
advantage of not being influenced by the fluctuation of import prices compared with the ad valorem
duties.  On the other hand, it is often claimed by exporting countries that these specific duties are not
transparent and conceal high duties.  What is the Swiss Government’s view?
13. According to the Swiss tariff schedule, all th e tariffs are indicated per 100kg.  Is 100kg the
minimum unit for imposing tariffs, or, can tariffs be imposed on products less than the 100kg in
proportion to their weight?  For example, for a cassette deck (HS8519) weighting 1kg, is it correct to
understand that a 0.84 CHF tariff is imposed when the tariff schedule indicates a duty of 84 CHF per
100kg?  If not, and the 100kg is the minimum unit fo r imposing tariffs, Japan thinks that a smaller
minimum unit should be used. Japan is under the impression that the retail price of products such ascolor televisions, is higher in Switzerland, than in Asian countries.  Please explain, using the examples
of the following specific products, what procedures the import goods have to undergo when entering
Switzerland, and at what price such goods are sold:
(a) color televisions produced in Asia (20kg, 1,000CHF)
(b) color televisions produced in Holland (20kg, 1,000CHF)
(c) automobiles produced in Asia (1,000kg, 10,000CHF)
Government procurement
(p. 47, paragraph 66 of Chapter III)
The Report states that “Switzerland concluded a bilateral agreement on government procurement with
the EU (Chapter II(5)(ii)).  The agreement is to come into effect on 1 January 2001 at the earliest,
subject to ratification by the EU Member States.  The agreement provides for the extension of the
GPA to purchases by communes, the railways, the telecommunications services, institutions operatingin the areas of energy, and by private companies operating with exclusive or special rights in the areas
of water, electricity, and transport. A best endeav our clause encourages purchasers not to discriminate
against suppliers from other parties to the agreement in procurement below the relevant threshold
values”.  In this regard:
14. Please indicate in a concrete manner which companies can be regarded as “private companies
operating with exclusive or special rights in the areas of water, electricity, and transport”.  Japan asks
Switzerland to submit detailed information in accordance with Article XIX of GPA.
15. What is the condition to judge whether a company has an “exclusive and special right”?WT/TPR/M/77/Add.1
Page 20
16. How is “a best endeavour clause” implemented in practice?  Is it correct to understand that
suppliers as well as their products and services from other parties, including Japan, can enjoy thesame treatment as those from the EU?
(4) MEASURES AFFECTING PRODUCTION AND TRADE
Subsidies and adjustment assistance
(p. 52, paragraph 92 of Chapter III)
17. The Report states that “Swiss cantons may also grant subsidies (on an individual basis) to the
extent that these do not distort competition between firms located in different cantons”.  Please
indicate, in concrete terms, examples of such subsidies (i.e. the conditions, the sectors to whichsubsidies are granted, etc.) that the Swiss cantons supply.
IV TRADE POLICIES BY SECTOR
(2) AGRICULTURE AND RELATED ACTIVITIESAgriculture
(p. 65, paragraphs 14-16 of Chapter IV)
18. Japan commends the efforts by Switzerland to promote agricultural reform, emphasized in its
gradual reorientation of farm assistance, from price support measures towards that of direct payments.
In addition, the “Agriculture Policy 2002” initiative, adopted by the Swiss Parliament in April 1998,is aimed at sustainable and market-oriented agricultural production that should contribute
substantially to a safe supply of food, the preservation of natural resources, the maintenance of the
rural landscape, and the decentralized use of land.  Japan supports this position.
Under the “Agricultural Policy 2002”  (AP 2002), the production methods used by farmers eligible for
direct payments must comply with “integrated farm ing” techniques, i.e. specified basic environmental
standards and animal-friendly conditions.  Please pr ovide a detailed explanation on the environmental
standards which have to be satisfied for benefiting from the direct payments.
(4) SERVICES
Finance
(p. 92, paragraph 77 of Chapter IV)
19. According to the Report, Liechtenstein is proceeding with various amendments to its
legislation, as well as with strengthening its supervisory authority.  Japan thinks that what is important
is how well the amended legislation will be implemented. Japan is, therefore, interested in monitoring
its implementation as of January 2001 when the amendments will come into force.  Does
Liechtenstein have any comment on the matter?
Telecommunications
(pp. 96-97, paragraph 89 of Chapter IV)
20. The Report states that the “PTT was split into Swiss Post (in charge of postal services) and
Telecom PTT (for telecommunications services).  In October 1998, Telecom PTT was transformed
into a stock corporation called Swisscom AG”.  How much did it cost to call Tokyo from Geneva, for
example, at 3 p.m. on 28
th November 1995, when the PTT was still the operator?  How much is this
cost reduced today?WT/TPR/M/77/Add.1
Page 21
21. Under what conditions can foreign capital enter the mobile phone market in Switzerland?
22. Although several companies, including foreig n companies, participated in the tendering
process of UMITS (the third generation mobile phone license) in Switzerland, the process was
suddenly prolonged.  Does this mean that the procedure for market access taken by the Swiss
Government is not transparent?
Tourism
(pp. 103-104, paragraph 117 of Chapter IV)
23. The Report states that “in certain cantons, the required tests are not open to foreigners”.  In
which cantons are they not open to foreigners?  What kind of tourist guide services are not open to
foreigners in those cantons?
THE UNITED STATES
Report by the Government of Switzerland (WT/TPR/G/CHE)
I. Introduction
Para. 5
The report notes in the field of European integration, Switzerland has concluded seven
agreements with the European Union in 1999.  These agreements cover agriculture, government
procurement, technical barriers to trade, road tran sport, air transport,  free movement of persons and
research.  When will these agreements take effect?
Para. 6
The Unites States commends Switzerland for its commitment to opening its market to the
least-developed countries (LDC)  through reduced tariffs on their products.  Does Switzerland also
intend to simplify its complex procedures and requirements for  importing agricultural goods in orderto help the LDC’s gain access  to the Swiss market?  This complex process currently includes import
licenses, the compulsory reserve stock program, a complicated tariff quota management system, and
specific labeling requirements.
III. Recent Economic Policy Developments and Objectives, (1) Domestic Policy Areas
Para. 18
The report notes that since 1996, Switzerland has focused on action to combat  horizontal
price cartels or collusion in respect of quantities and market allocation.  How will Switzerland amendits laws to strengthen government authority in the area of competition?
Para. 21
How did the referendums define the use of “precautionary measures”?  Please provide
examples of how Switzerland applies “precautionary measures.”
Para. 22WT/TPR/M/77/Add.1
Page 22
The report notes that Switzerland pursues a very active environmental policy and supports
recognition within the WTO of the objectives of sustainable development and environmental
protection.  As part of this policy does Switzerla nd support addressing agricultural subsidies and the
liberalization of trade in environmental goods and services?
Could Switzerland provide more information on why certain production methods are banned?Is there any scientific evidence that these production methods endanger public or animal
health or the environment?
What antibiotics or combination of antibiotics has Switzerland banned?  How are these bans
applied to imports?  What scientific risk assessments has Switzerland conducted on banned
antibiotics?  What antibiotics for meats are permitted for use in Switzerland?  Do any restrictions
apply?
Para. 23
The report notes that Switzerland recognizes the key role of the International Labor
Organization, and that Switzerland has ratified the core ILO conventions. We understand that the
Swiss government is preparing legislation to co mply with ILO convention no. 87 on the Freedom of
Association.  When will it be introduced?
Para. 24
The report notes that Switzerland is gradually abandoning an agricultural policy of price and
marketing guarantees and protection from international competition, and that following the
introduction of all the elements of  “Agricultural Policy 2002,” the government will play a lesser role
in the market.  Will the level of government support to agriculture decrease as a result of thesechanges?
Para. 25
What tasks and guidelines were established within Article 104 of the Federal Constitution
specifically addressing non-commodity outputs of agriculture? How does Switzerland ensure that its
agricultural  tasks which are multifunctional are not trade distorting?
(2) Foreign Policy Areas
Para. 26-27
How will Switzerland’s agricultural reforms over the next few years be “eurocompatibile ?”
Does the government of Switzerland envision adopting the policies of the EU’s Common
Agricultural Policy much like the applicant countries of central and eastern Europe are currently
doing?
What portion of agricultural trade (in value and volume) is covered by the bilateral agreement
between Switzerland and the EU?   What percenta ge of tariff lines receive duty-free treatment?WT/TPR/M/77/Add.1
Page 23
Para. 28
What factors will determine the timetable for reactivating the request to open EU accession
negotiations?
Para. 29
The report notes that Switzerland and its EFTA partners have signed 15 free trade
agreements.  What percentage of Switzerland’s trade is covered by these trade agreements?  What
percentage of tariff lines receive duty-free treatment?
IV. New Round of Multilateral Trade Negotiations
Para. 38
The United States is pleased that Switzerland is committed to a new round of multilateral
trade negotiations, but is concerned that Switzerland is less committed to reform of agriculture -  itsmost protected sector.  Government support to agriculture still represents nearly three fourths of gross
farm receipts, and the average ad valorem equivalence of MFN tariffs on agricultural imports is 34
percent, nearly four times the overall average with a maximum of 678 percent. Is Switzerland
prepared to take significant steps to reduce domestic support and export subsidies in the next phase of
negotiations?
The report notes that Switzerland  believes that a new round would also serve as an essential
catalyst for establishing new internal reforms and accelerating the reforms under way in Switzerland
and in the economies of other WTO members.   What reforms does Switzerland see as most
important?
Para 39.
Switzerland states it is prepared to enter negotiations as foreseen in Article 20 of the
Agreement on Agriculture.  However, Switzerland’s  willingness to conduct further negotiations is
qualified by the statement  that “non-commercial interests and multifunctionality associated with
agricultural activity” are taken into account. Please clarify what Switzerland would consider assufficiently taking into account non-commercial interests and multifunctionality associated  with
agricultural activity.
Report by the Secretariat (WT/TPR/S/77)
Summary Observations(1) The Economic Environment, Para. 4
The report notes that the development of branches such as tourism has been negatively
impacted by high wages and input prices of hi ghly protected sectors (e.g. food products, energy,
construction and telecommunication services - at least up to 1998) and low productivity growth to due
to market rigidities.  What steps is Switzerland taking to reduce input prices and increase productivity
in order to boost the tourism sector?WT/TPR/M/77/Add.1
Page 24
(3) Trade Policy Instruments, Para. 11
The report notes that the main trade policy instrument is the customs tariff, consisting entirely
of specific duties. As a result the tariffs are highly dispersed, giving rise to a wide range of ad valorem
equivalents. What is the Switzerland doing to increase the transparency and predictability of these
tariffs?
(4) Sectoral Trade Policy Developments, Para. 20
Could Switzerland please explain the “prise en charge” system on imports  of certain agricultural
products under which the allocation of tariff quotas is contingent upon local purchase?
(5) Trade Policy and Trading Partners, Para. 22
The report notes that the steps Switzerland has taken to adjust its economy to the new
international economic environment have resulted in a  more efficient allocation of resources and
better trade performance.  Reforms are still incomplete in certain highly protected sectors likeagriculture. What is the Swiss government doing to make them more certain?
I. Economic Environment, (4) Outlook
The report notes that new reforms are planned in sectors such as energy.  When is the
electricity market law,  which allows third party access to the national grid,  expected to be adopted?
II. Trade Policy Regime:  Framework and Objectives, (5) Agreements, (iii) Regional and
Other Agreements
What percentage of Switzerland’s imports are covered by preferential trade agreements, such
as Regional Trade Agreements and the Generalized System of Preferences?
III. Trade Policies and Practices by Measure
(2) Measures Directly Affecting Imports
(vi) Rules of Origin
Para.  44
Please confirm that inputs or materials imported into Switzerland that originate outside the
pan-European cumulation system of origin – and used in the manufacture of goods originating under
the cumulation system and subsequently exported – are not eligible for drawback or exemption of
customs duties.
Please provide the specific date or dates that Switzerland implemented the “no drawback”
rule for trade with each country involved in the pan-European cumulation system of origin, along with
the annual amount of trade in such inputs or materials affected by this change in treatment.
Please describe any exception  Switzerland may allow to the “no drawback” rule in its
preferential protocols for agricultural products or other inputs if exported to Switzerland from
countries  participating in the pan-European cumulation system.WT/TPR/M/77/Add.1
Page 25
(viii) Standards and Other Technical Requirements
Para. 50
Please explain the process by which representatives of foreign private associations and
institutions can participate in the Swiss Association for Standardization.
(4) Measures Affecting Production and Trade
(iii) Competition PolicyPara. 103
The Secretariat’s report states that the Secretariat of the Competition Commission has
submitted proposals to the Federal Council concerning the introduction of “direct penalties,” and that
a decision is awaited from the Federal Council.  What sanctions is the Competition Commission
seeking with respect to hard core cartels, and when will the Federal Council adopt these sanctions?
(iv) Protection of Intellectual Property Rights
Para. 112
How is ex officio protection provided for geographical indications?  Please provide examples
of instances where the geographical indications of non-Swiss nationals have been protected ex officio.
Please provide the contact information, mailing address, and fee information regarding
application, maintenance and any other fees necessary for non-Swiss nationals to apply for and
maintain protection of geographical indications in Switzerland.  If no centralized point for receipt of
requests for protection exists, please explain why.
How is Swiss recognition of a foreign geographical indication achieved?  For example, does
“protection in the country of origin” require that the country of origin have in place national laws
describing a particular geographical region and a quality standard for the goods?
May  only a governmental organization/entity apply for recognition of a geographical
indication in Switzerland?
How does Switzerland implement its obligations under Article 22.2 of the TRIPS Agreement?
For example, how may interested parties, as required under Article 22.2 of the TRIPS Agreement,challenge the validity of a geographical indication after recognition has been granted?
Please reference the relevant Swiss law/regulation(s) which address the means by which
interested parties may request termination of a geographical indication based on non-use or failure to
maintain the criteria identified.  If no relevant laws/regulations are available, please explain why.
Please explain how Switzerland complies with its obligations under Article 24.5 of the TRIPs
Agreement.WT/TPR/M/77/Add.1
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IV. Trade Policies by Sector, (2) Agriculture and Related Activities
(ii) Policy Objectives and Instruments
Para.  15
What are the criteria for “enhancing the [agricultural] sector’s competitiveness” under
“Agricultural Policy 2002?”   What is the target da te for achieving this objective?  What commodities
are covered by this objective?
Para.  16
Please provide estimates of the taxpayer costs associated with the policy measures.  How do
these costs compare with previous years’ taxpayer outlays for agriculture?
Table IV.3
Why were payments for farming under complementary direct payment in 1999 higher than
1998 payments – more than 400% higher?
Para.  17
What is the percentage difference between the concessionary rate of interest and the  market
rate of interest?
Para.  21 / Table IV.4
Switzerland’s total domestic support for agriculture  has declined since 1995.  However, the
share of green-box support has increased over the same period from 37.6 percent to 49 percent.
Green-box support for 1999 increased 5 percent from 1998.  What is the reason for the increase?
Para.  25
How are applied duties set?  What are the criteria?
Para.  26
Of the variety of tariff quota allocation mechanisms, including the non-automatic licensing
system, the “prise en charge” system, traders’ past imports, auction procedures, the first-come-first-
served principle, the order of customs clearance, th e pro-rata principle, and “historical right,” what is
the basis for selecting which mechanism or combination of mechanisms is used for each product?
Table IV.8
A few agricultural products registered lower than 100 percent-filled tariff-quota rates –
ranging from 26 percent (casein) to nearly 70-80 percent (coarse grains and wheat) filled rate in 1998.
What were the reasons for this shortfall?WT/TPR/M/77/Add.1
Page 27
(iii) Policy by Type of Product
(a) Livestock and related products
Para.  30
How has the “target-price” system reduced surpluses of milk and dairy products?
Table IV.9
What are the reasons that the notified export subsidies for dairy products (quantity), fruit
(value and quantity), and other processed products for 1999 were greater than the levels in 1998?
Please provide detailed information on export subsidies by commodity, in addition to the
previously supplied information on subsidies by aggregate category.
(b) Other products
Cereals and oilseeds
Has the guaranteed-price system for oilseeds been eliminated?
(3) Manufacturing and Energy
Para. 50
The level of tariff protection in the manufacturing sector has remained relatively low.
However, owing to the imposition of specific duties, tariff dispersion is more pronounced in
manufacturing than other sectors, since the value of manufactured goods is not generally proportionalto their weight.   In addition to the Informati on Technology Agreement, the Pharmaceutical Initiative
and the Plurilateral Agreement on Trade in Civil Aircraft, what is Switzerland doing to promote
further liberalization in this area?
(4) Services
Para. 2
Please describe the restrictions Switzerland maintains on legal services.  What restraints are
there on foreign lawyers providing legal services and advice or forming partnerships?
INDIA
1. Paragraph 4 of the Summary Observations in the Secretariat Report notes that even though
agriculture accounts for only around 4% in total exports and also employment and contributes to only
2% of the GDP, it has remained highly protected.  further, it notes that development of branches such
as tourism have been negatively affected by high wages and input prices of highly protected sectors
like food products, energy, construction and telecommunication services.
The delegation of Switzerland is requested to give its reaction to these observations.  We
would also like to know if it has any plans for autonomous liberalization of the agricultural sector.WT/TPR/M/77/Add.1
Page 28
2. Paragraph 10 notes that keeping in mind its strategic objective of EU Membership,
Switzerland has concluded a package of seven bilateral agreements on sectors such as agriculture andgovernment procurement which would come into effect in 2001 upon ratification by the EU Member
States.  It is further stated that Switzerland and Liechtenstein offer non-reciprocal tariff preferences to
developing countries.
We would request the delegation of Switzerland to indicate the present position concerning
ratification of the bilateral agreements by EU Member States.  We would also be interested if anymore bilateral agreements are envisaged with th e EU.  Keeping in view the current proposals for
enlargement of the Membership of the EU, does Switzerland plan to have any bilateral agreement
with some of the candidates for EU Membership?  We are interested to know the details of the GSP
scheme as well as the percentage of imports into Switzerland and Liechtenstein under the GSP.
3. Paragraph 11 states that while the overall tariff protection measured by ad valorem
equivalents averages around 9%, the tariffs are highly dispersed and the imposition of specific duties
give rise to a wide range of ad valorem  equivalents.  Paragraph 12 suggests that the maximum rate of
678% applies to out-of-tariff quota imports of meat and edible offal of poultry while a rate higher than
400% applies to some products including dairy products, live plants and specified edible vegetables.
Paragraph 13 notes that the ceiling bindings on mostly agricultural products and clothing, with boundduties reaching 770% provide an unpredictable climate for the exporters from trading partners.
Paragraph 23 suggests that shifting from the existing system of specific duties with provisions
for modification every quarter, to a system of fixing ad valorem  duties on agricultural products would
ensure transparency and predictability.
We would like to hear the reaction of the delegation of Switzerland.  We would also like to
know if any tariff simplification/rationalization programme is under way to address these issues which
affect the market-access possibilities of its partne rs, especially those from developing countries.
4. Paragraph 13 further notes that at the end of June 2000, the applied duties were found to be
higher than the bound tariffs for three tariff lines at the HS eight-digit level.
Switzerland may clarify the position.  We may also be informed if any corrective measures
are being taken so that such instances do not recur.
5. Paragraph 22 suggests that further liberalization of the highly protected sectors like
agriculture could enhance the competitive framework and contribute to lowering domestic prices, to
the benefit of the economies.
Keeping in view the comparative advantage of developing countries in the highly protected
sectors like agriculture and clothing, would Switzerland consider taking a lead in autonomous
liberalization of these sectors?
6. We understand that Switzerland's anti-trust laws are weaker than those of many other
industrialized countries.  We would like to hear details of the existing anti-trust laws and also whether
any corrective action is being envisaged.
7. Switzerland has been taking a keen interest in the Committee on Budget, Finance and
Administration and getting technical assistance activities of the WTO included in the regular budget.While this would depend on the views of the entire me mbership, we are interested to know the details
of technical assistance rendered by Switzerland to developing countries under the various agreements.
What is the position of Switzerland in making the best endeavour clauses in the existing WTO
Agreements on S&D and technical assistance mandatory, without linking them to any future
negotiations?WT/TPR/M/77/Add.1
Page 29
ANNEX II
COMENTS AND RESPONSES BY THE DELEGATIONS OF SWITZERLAND
AND LIECHTENSTEIN
SWITZERLANDPolitical environment
I have been extremely pleased to hear the positive comments from many Members concerning
the personal contributions by Swiss representatives as chairpersons of committees or working groups,
or indeed as panel members.   That commitment fu lly reflects Switzerland's enthusiastic support for
WTO activities.
There is no doubt that Switzerland has changed in four years and the efforts deployed to
improve the structures of our economy  have come to the fore.  Agricultural exporters have − and I
understand them − struck a contrasting note by underlining the insufficiency of the endeavours to
reform agriculture.  Although I shall be reverting to this topic, let me, at this point, ask three simple
questions.  In which country would a 30 per cent drop in revenue over four years endured by the
professionals of a single sector not have resulted in the paralysis of the reform process?  That did not
happen in Switzerland.  In which country would the forces of reform not have been disheartened byunrelenting criticism from some of its trading partners, regardless of the efforts made?  This risk of
discouragement is quite a real one in Switzerla nd.  The Swiss farmers' union has already joined the
coalition of organizations critical of the WTO.  In a country where any legislative change could be
subject to a popular vote, such discouragement must not be underestimated.
In which country must the workings of the WTO be explained to all the citizens?  We did this
successfully between 1993 and 1995 and were thus able to avoid a referendum.  After the next roundof talks, this will no longer be the case.  But we will not be alone.  Public opinion is now taking a
keen interest in the WTO, and while this is quite salutary from the standpoint of democracy, it means
that we will have to be more transparent and easier to understand.  This is why I advocate frank and
constructive dialogue.
NGOs
Our commitment to WTO values is beyond all doubt.  As far as we are concerned, integration
into the world economy entails WTO membership.  All candidate countries have also understood this.
And yet, membership is not enough in itself, and I would say that the ability to conclude  what are
known as regional agreements  is another means of integration into the world economy.  It is this
complementarity that we ourselves are also seeking by negotiating preferential agreements not only in
Europe and the Mediterranean region, but also in the Americas, in Africa and, not least of all, in Asia.
These agreements are consistent with the relevant WTO rules.  We have never shared the
opinion that concentration on industrial products in combination with specific agricultural concessions
was already proof of inconsistency with the "substantially all trade" criterion.  Here too, the history of
the GATT and the WTO teaches us that a pragmatic approach is the key to success and that a
dogmatic one leads to impasse (to answer the questions asked by the discussant, Ambassador
Hovorka, Australia and Japan).
The strengthening of our links  with the European Union  has also elicited certain
comments and questions.  From the economic and commercial standpoint, Switzerland is privileged to
have the European Union and its member States as its main partners.  The European integrationWT/TPR/M/77/Add.1
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process has a strategic, a political, and an economic and commercial dimension.  And that, Mr.
Chairman, is already an oversimplification!  The WTO Members as such are interested only in the
economic and commercial dimension.  Yet the strategic aim of the Federal Council − joining the EU −
has raised a number of questions.  Allow me therefore to make a brief political digression.
When the time comes, our political participation in European integration will have to obtain
the majority of the popular vote and be approved by a majority of the 26 cantons.  These majorities
must be won over.  They must be convinced of th e quality of the project.  And yet, our partner is
constantly evolving.  The EU is changing, expanding its responsibilities and intensifying its actions.
In politics it is no simple matter to portray the identity of a partner that is in constant flux.  That is our
first challenge!
Second, it is difficult to explain that in an inst itutional framework as complex as that of the
EU, a country such as Switzerland will be able to preserve the essence of its institutions by making a
number of adpatations.  That is our second challenge.
Third, there are more down-to-earth issues that are causing concern, namely, the future of the
Swiss franc, the interest rate differential, the difference in VAT rates, and so on.
The Federal Council's strategy rests on several pillars:
- First, the implementation of the 1999 bilateral agreements;- second, the negotiation of other agreements necessary to the development of our
relations with the EU;
- third, the continuation of domestic political and economic reform;- lastly, negotiating membership when the time comes.
In that regard, the membership of the EU and of Switzerland in the WTO represents a
guarantee of the coherent development of our laws in the areas within the WTO's sphere ofresponsibility.  So much for the political digression.
As regards developing  countries , we welcome whatever economic progress any country is
able to achieve.  Such progress serves the interests of all Members.  In response to India's question
concerning provisions on special and differential treatment, I would stress that in an ideal world, such
provisions should be applied only for limited periods until a country's development has reached a
stage that enables it to become fully integrated in to the world market.  Yet we must acknowledge that
the increase in the number of WTO Members has brought with it a greater diversity of situations.  We
believe that here too, the WTO provisions should make allowance for this diversity.
In that regard and in response to the question raised by the EU, New Zealand  and
Ambassador Hovorka  concerning specific measures that Switzerland reportedly intends to take so as
to improve market access for the LDCs, I should like to inform Members that Switzerland has started
to work at the domestic level to improve the system of tariff preferences in favour of the LDCs.  At
the very latest, we hope to be able to unveil this new regime at the United Nations conference on the
LDCs scheduled for May 2001 in Brussels.WT/TPR/M/77/Add.1
Page 31
I. ECONOMIC ENVIRONMENT
Having made these introductory remarks, I would now like to tackle the heart of the matter
and address the various topics suggested to us by the Chairman, beginning with the economic
environment.
Four years ago, the Trade Policy Review of Switzerland here at the WTO took place in quite
a different economic setting.  Economic growth had been weak for two years and the array of
structural reforms − comprising the recovery package devised by the Federal Council − had just
barely cleared discussion in Parliament.  Today, th e situation is markedly different.  Economic growth
is sustained, and has brought unemployment down to 1.7 per cent, companies having made
spectacular headway in adapting to the imperatives of economic globalization.
It is therefore hardly surprising that in contrast to the preceding review, most of the questions
were not related to the general framework of the Sw iss economy, but focused, rather, on specific trade
policy measures and on one sector in particular, agriculture.
I must say that this turn of events does not surprise me, and it reflects the fact that the WTO
Members have started negotiations on agriculture, an area that leaves no one indifferent, including
Switzerland.
Macroeconomic setting
At the macroeconomic level, with a growth rate of 3.3 per cent Switzerland has at last, in
2000, matched the rates of the other industrialized countries.  From the standpoint of the business
cycle, it is therefore safe to say, on this sixth day of December − St.  Nicholas day − that we have
successfully laid the groundwork for sustained growth through 2001 and beyond.  The slightappreciation of our currency vis-à-vis  the euro and a certain slowdow n in the growth of our main
trading partners eliminates the risk of inflation at a time when capacity under-utilization has
disappeared and oil price increases must be absorbed.  To answer a question from today's discussant ,
Ambassador Milan Hovorka, whose rigorous analysis and insightful comments have been useful in
guiding our discussions, the only risk we have been able to identify is a possible hard landing of the
United States economy, which could cause considerable exchange-rate instability and a world
economic downturn.
Structural reform, competition policy, FDI
Economic globalization is the outcome of three major developments, namely technological
progress in telecommunications, the reorientation of economic policies towards the market economy
and the emergence of new countries as clients and competitors on international markets.  It is
therefore with perfect justification that a good many countries ask us whether the reforms will
continue, not only in the realm of telecommunicat ions (EU), but in other sectors as well (USA).
With respect to telecommunications, Switzerland today is lagging by only a few months, but
the markets have already harshly penalised this slight delay in that the Confederation must sell its
operating licences for new generation mobile telephony at disappointing prices.  The rules of the
game were not changed in the course of the bidding procedure, as Japan  fears.  The operation had to
be halted so as to make sure that no illicit understandings had been reached amongst those competing
to acquire those rights.  As for the questions regarding the use of the Internet (discussant), we can
provide reassuring answers.  The rate of penetration among enterprises is very high and a good manyhouseholds replied to yesterday's population census by that means.WT/TPR/M/77/Add.1
Page 32
Canada  has correctly pointed out that the opening of markets can boost direct investment.
Indeed, while Switzerland has for many years attracted investment mainly in banks and holding
companies, the number of sectors attracting the inte rest of foreign investors has increased appreciably
since 1996.  Major French and German electric companies have acquired substantial stakes in Swiss
electric companies active on the international market, even before the final decision had been taken to
liberalize the sector.  Incidentally, that decision is expected by the end of this month (Canada) .  As
the question concerning the link between economic reform and foreign direct investment was raisedby Canada, mention should be made here of Bombardier's  interest in acquiring a Swiss railcar
manufacturing company, a purchase rendered interesting by the opening up of public procurement in
this sector.
As for competition policy, we would like to allay Canada's  fears that the practice of
horizontal understandings has not yet completely disappeared in Switzerland.  With its 1996 revision,
the Law on Cartels and other Restrictions on Competition made price understandings and the abuse of
dominant market positions illegal.  The main purpose of the current revision is to introduce direct
penalties for these offences.  It should also be pointed out that to date, only one application for the
exemption of an understanding on prices has been submitted to the Federal Council, based on publicinterest.  That application followed the ban on  the music score cartel issued in 1998 by the
Competition Commission.  The Federal Council did not grant the exemption being sought, and thus,
the ban on the cartel was upheld.
The United States  has asked what will be the sectors concerned by the forthcoming reforms
and the potential impact of future international negotiations in this regard, especially here in the
WTO.  First, the Swiss Government is aware of th e need to press ahead with reform.  It should be
borne in mind, inter alia , that the measures already taken in many sectors could induce further
reforms.  To cite but one example, the opening of the electricity sector will serve as a model for the
opening of the gas sector.
More generally speaking, and to reassure New Zealand,  which has pointed to an excessive
number of monopolies and exclusive rights, we can state that international price comparisons (such as
the PPPs calculated by the OECD) or the in-depth reviews of our trade regime (such as the present
Secretariat document) are being closely studied by  government departments and will inspire the
preparation of new reform proposals.
For still some time to come, the authorities will be concentrating on the  substantial reforms to
the domestic markets following the entry into force of the bilateral agreements concluded with the
EU.
II. TRADE POLICY MEASURES
Customs duties and administration of tariff quotas
Considering that tariff quotas are applied only to agricultural products, I shall address the
matter later when dealing more specifically with agriculture.
As regards the remaining questions, I shall begin by replying to the comments made by
Ambassador Hovorka , by Japan, the Czech Republic, the United States, Uruguay and New Zealand
regarding the application of specific duties.
Let me begin by recalling that the application by Switzerland and Liechtenstein of specific
duties has been a well-known fact within the GATT and the WTO for a long time now.  Besides, theseWT/TPR/M/77/Add.1
Page 33
duties are set out in the Switzerland/Liechtenstein schedule of concessions annexed to the Marrakesh
Protocol.  They were therefore negotiated in the framework of the Uruguay Round and were fully
accepted by the participants in the Round.  Moreover, Switzerland has also bound the ad valorem
impact of its specific customs duties on industrial goods.
In fact, when the question has been raised during consultations, the importers themselves have
so far never requested the competent authorities to ch ange the system, i.e.  to switch from a system of
specific duties to an ad valorem  system.  Clearly, the trade operators do not consider the use of
specific duties to be a barrier to trade.
Against this backdrop, Switzerland prefers to invest its resources in continuing the process of
trade liberalization within the WTO and in regional agreements, with a view to reaching a multilateral
solution as of 2010 − the principle of a zero tariff rate for industrial goods.
Indeed, the tariffs applied by the customs union between Switzerland and Liechtenstein in the
industrial sphere are relatively low (MFN incidence of the order of 2 per cent;  incidence of 0.3 per
cent including preferential trade), and the tariff system in use no longer plays a decisive role.  Evencheap and heavy goods pay a minimal tariff under this system.
The overwhelming majority of tariffs are not changed each quarter, contrary to what is stated
in the Secretariat report (paragraph 25).  Naturally, they have been reduced annually in pursuance of
the Uruguay Round commitments.  It is only the tariffs applied to fodder (about 1 per cent of tariffitems) that are apt to be adjusted periodically depending on the market situation.
Finally, in reply to yet another question by Ambassador Hovorka , the assessment of VAT
poses no specific problems, as the value of the goods must be shown in the customs declaration.
With regard to a comment by the Indian delegation concerning marine products , other than
fodder, the Switzerland/Liechtenstein customs union levies tariffs only on freshwater fish, trout and
eels.  Marine fish are admitted free of duty.  Fish preparations are generally exempt from customs
duty.
The matter of tariff escalation  has been raised, among others, by the delegations of  Malaysia
and Chile.  Paragraph 19 of the Secretariat report mentions escalation for several products, including
foodstuffs, textiles, chemical products, etc.  The following comments should be made in this regard:
- The tariffs levied on these products are generally low (except for processed
agricultural goods), so that the tariff differential would not represent protection for the
domestic processing industries;
- Switzerland's weighted tariff average for textiles and clothing is the lowest amongst
the industrialized countries;
- these tariffs have been lowered as part of the implementation of the results of the
Uruguay Round and will continue to be lowered until 2004 for textiles;
- Switzerland has taken part in a good many sectoral initiatives (pharmaceuticals, ITA,
chemical products, etc….).  For the products covered by these initiatives, Switzerland
has removed or harmonized (chemical products) its tariffs in keeping with itscommitments.  Thus, in those areas, tariff escalation has either disappeared or been
markedly reduced.WT/TPR/M/77/Add.1
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As for the products mentioned by Malaysia  (cocoa, rubber and wood), the system of
preferences is used and Malaysian exporters can benefit from it if they undertake the necessaryadministrative formalities.  Under the GSP, rubber a nd wood may be imported at a zero tariff rate into
the Switzerland/Liechtenstein customs union if accompanied by a certificate of origin.  For cocoa-
based products, the same treatment as for rubber and wood is applicable.  For other cocoa products,
the system of preferences grants significant reductions on import tariffs.
This brings me to the questions concerning the generalized system of preferences.  One of
them had to do with the criteria for removing a country from the list of beneficiaries of these
preferences.  Here, Switzerland has quite simply adopted the criteria set by the Development
Assistance Committee of the OECD.  A detailed written reply has been prepared, and delegations may
consult it.
Standards, technical regulations, sanitary and phytosanitary measures, MRAs
We have received written questions from Chile , the EU and the United States  concerning
standards, technical regulations, sanitary and phytosanitary measures and mutual recognitionagreements (MRAs).  We refer them to the written replies that we have drawn up.
I would nonetheless like to mention the question raised by Chile regarding phytosanitary
measures applied to imports of fruit that could be banned.  The Secretariat report points out that it is
imports of fruit susceptible of being infected that are banned, regardless of their origin.  In fact, the
said prohibition applies only to contaminated fruit.  The list of fruit species that could be concerned is
modelled on that drawn up by the European and Mediterranean Plant Protection Organisation(EMPPO).
Government procurement
Intellectual property rights
Switzerland is one of the countries offering maximum protection of intellectual property
rights, often in excess of the minimum standards envisaged in the TRIPS Agreement.  As such, it
offers the enterprises of WTO Members optimum conditions of protection of their rights, thereby
encouraging them to invest.  Indeed, Switzerland is of the opinion that a high degree of non-discriminatory intellectual property rights protecti on encourages investment, in particular in the new
technologies.  This is a guarantee of innovation, progress and increased overall wellbeing.  Only
effective protection of intellectual property rights can justify the considerable research and
development costs in some sectors, above all, the life sciences.
To ensure the best possible protection of intellectual property rights, Switzerland is now
reviewing its laws on patents, copyright and neighbouring rights, and on industrial designs − the
future law on industrial designs − so as to bring them into line with the new technologies.
Switzerland is also committing itself actively in that regard at the international level, and
more specifically within the framework of the Wo rld Trade Organization.  In the Council for TRIPS,
Switzerland intends to advocate the extension of additional protection for geographical indications to
products other than wine and spirits.  In a globalized world, geographical indications, as intellectualproperty rights that protect all types of products, contribute value-added to high-quality local
products.  This is in the interests not only of producers, regardless of the source country, but also of
consumers from all Member countries.  Geographical indications are an instrument that enables States
to promote trade through speciality products, without subsidies.  Countless delegations have alreadyWT/TPR/M/77/Add.1
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recognized this.  Still others need to do so.  As you are aware, this extension is a priority for
Switzerland.
III. SECTORAL POLICIES
Agriculture
The number of specific questions has diminished since the last report.  This is unquestionably
thanks in part to the WTO Secretariat, which has succeeded in portraying the complexities of
Switzerland's agricultural sector in a clear and understandable manner.  For its part, Switzerland has
endeavoured, by means of domestic reforms, to enhance the competitiveness of this sector of its
economy.  Other countries have acknowledged this.  We can assure Canada, Australia, the UnitedStates, Thailand, the Czech Republic and New Zealand that we have taken new steps.  In May 2000,
the Federal Council appointed an independent commi ssion to advise it on agricultural matters.  The
terms of reference of this commission are to devise measures aimed at further improving the
competitiveness of Swiss agriculture.  This should involve the partners contributing added value at all
levels of the market.  The commission's work is based on the relevant article of the Constitution(Article 104) and on the broad outlines and aims of the AP 2002.  All agricultural policy measures,
such as market support and export regulations, as well as direct payments and structural
improvements, will have to be reviewed with a view to tabling proposals for optimization.  Thus,
Switzerland stands ready, independently as well, to adapt the agricultural sector to the new conditions.
Hopefully, in doing so it will be possible to meet some of the expectations of Argentina and India in
the future.  Yet we would like caution against illusions.  A market of seven million persons would be
unable to receive, in an unlimited manner, all the foodstuffs that people would like to export.  Wewould surely gain weight, though not necessarily in the negotiations.
In terms of the national economy, Switzerland's agriculture has lost some of its importance.
Nevertheless, it remains of crucial importance to the Swiss population.  Other countries such as
Norway, Japan and Korea have also underscored the importance of this consideration in theirpresentations.  Agriculture contributes to food security even in crisis situations.  Besides, it
contributes to maintaining a natural and varied countryside, it preserves the natural sources of life and
helps to ensure the decentralized inhabitation of the territory.  The OECD PSE figure cited by many
countries − 73 per cent of public support for agriculture − would seem too high (stated in terms of
WTO categories, it covers at any rate the "amber box" and "green box" measures).  It is not possible
to have an agricultural sector in line with the objectives enumerated in Article 104 of our Constitution
without cost.  As nature has not been overly generous towards us, and we live in a high-wage country,
we must allocate more funding to the sector.
Yet Switzerland is endeavouring to achieve the aforementioned objectives as efficiently as
possible.  The elimination of product support will make it possible to avoid an untimely incentive to
increase the quantities produced.  In that same connection, the Government entrusts to private actors
tasks that they perform better and more cheaply.  We can assure the representatives of Uruguay that
public tendering is always done in conformity with WTO rules.  The United States and Japan may rest
assured that direct payments are subject to strict and clearly defined conditions.  Attempting to list allthe requirements would test your patience and my vocal chords to the limit.  Come with me to visit a
Swiss farmer.  He will show you the forms he is required by Swiss agricultural bureaucrats to
complete before he can receive a single cent;  and to judge by his account, he has hardly any time left
for production!
Within the framework of the Uruguay Round, Switzerland has improved market access by
means of a number of tariff quotas (transparency, no discretionary decisions on access).  They areWT/TPR/M/77/Add.1
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distributed in accordance with market organization, depending on the prevailing situation.  Chile,
Hungary and India have pointed out that it is not always easy, from the outside, to understand thedistribution criteria.  Switzerland has already made several corrections under the AP 2002.  Broadly
speaking, the AP 2002 has not resulted in a worsening of market access.  It is in the nature of trade
and the improvement of our competitiveness for certain changes in trade flows to occur over time.
India and Hungary have identified problems that arise for certain agricultural products in relations
with Switzerland.  We invite those countries to submit specific cases to us in writing so that we can
examine the practices in detail.  New Zealand would like to step up milk exports to Switzerland.  As
this concerns the partial tariff quota for butter, there are no country quotas.  The importers are private
enterprises that are free to choose the country of origin.  In contrast, the partial tariff quota for cheese
is largely limited to traditional cheese suppliers, in conformity with Article XIII of the GATT.  The
commitments under that agreement did not cease to be applicable with the adoption of new schedulesof commitments.  Argentina, as well as other countries, can obtain information as to the identity of the
importer and the amount imported for any tariff quota or any tariff item.  The relevant report is
published each year.  In terms of transparency, it is hardly possible to do more.
Switzerland considers the " prise en charge " system − among others − as an adequate means
of allocating tariff quotas.  We can guarantee Australia and Uruguay that we are acting in keeping
with our WTO commitments.  It is a method of domestic distribution with no restrictive effect
whatsoever on market access.  Experience shows us that the fill rate of the tariff quotas distributed by
this system (and by bidding) is very high.  This is a point we have in common with Australia.  It is in
Switzerland and in Australia that the tariff quotas are best filled.  When demand is lacking, as in thecase of the casein tariff quota, for instance, the fact that the quotas are not exhausted is the result of
low demand rather than government measures.
In the area of fodder, I acknowledge that the Swis s system is not easy to understand, either for
you or for me.  Argentina, Chile and Uruguay may rest assured that here, as well, we respect WTOrules.  The Federal Council sets a threshold-price for each group of feedstuffs.  That threshold-price
corresponds to the price at which an agricultural product must be imported after customs clearance.
Its purpose is to ensure that Swiss feedstuffs are sold.  The assessment of a variable tariff − that can be
rapidly adjusted to new conditions - −is designed to attenuate the domestic market impact of world
market price fluctuations.  These adjustments do not exceed the limits of our WTO commitments.  For
most of the feedstuffs, the customs duties applied are less than the bound tariffs.
With the foregoing explanations, we hope to have dispelled the doubts of the Untied States
and New Zealand, which seem somewhat sceptical about the matter of less government involvement
in traditional market interventions (but not in agricultural policy!).
Price interventions have been abandoned and trading partners must now make their own
arrangements.  Not everyone welcomed this newl y obtained freedom, but the partners have adapted
rapidly to the new situation.
Services
The importance of the services sector to my country has been underscored both in the
Secretariat report and in statements by Members.  I can only agree.  The importance to the country of
the services sector has rendered even more necessary the modernization of the relevant legalframework carried out in recent years.  Switzerland has in fact endeavoured to boost the
competitiveness of its services sector by means of a series of reforms, specifically in the banking
sector, postal services, telecommunication, rail trans port, and air transport, to name but a few.  I am
happy that these reforms have been fully appreciated by the speakers.WT/TPR/M/77/Add.1
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On this basis, Switzerland is happy to launch a new round of negotiations on services together
with its WTO partners, as had been decided in Ma rrakesh.   As you are aware, Switzerland believes
that these negotiations should form part of a broader round of multilateral trade negotiations and my
country will continue to work towards that goal in the coming months.
In the interim, however, the negotiations on services have started and Switzerland is taking an
active and constructive part.  Accordingly, my country only today submitted to a special session of theCouncil for Trade in Services its views concerning the drafting of negotiation guidelines as
contemplated in Article XIX of the GATS.  Switzerland believes that these negotiations should aim
to:
- Deepen and broaden existing commitments so as to ensure a higher degree of
liberalization in the trade of services;
- establish a framework of rules and disciplines that can adequately guarantee effective
market access, ensuring its transparency and predictability.
The negotiations on services should not, a priori , exclude any sector and should leave the door
open for recourse to alternative negotiation methods such as preparing model schedules of
commitments, alongside the traditional method of offers and requests.  The starting point for these
negotiations should be existing commitments and should include MFN exemptions.  Moreover,
Switzerland advocates the maintenance of a standstill during the negotiations, so that no Member may
artificially claim advantages during the course of the talks.  Lastly, considering the uncertainties
surrounding the launch of a broader round of multinational trade negotiations, Switzerland believesthat it is premature at this stage to set a target date for the conclusion of negotiations in the realm of
services.
Switzerland attaches paramount importance to completing the work under way, as regards
both GATS rules, and disciplines for domestic regulations.  It would like that work to progress handin hand with the negotiation of specific commitmen ts, as it is these rules and disciplines that will
ensure the effectiveness of the specific commitments.
Lastly, as is its custom, Switzerland will take due account of the specific situation of
developing countries within the framework of these negotiations and is prepared to implement fullythe principles agreed under Articles IV and XIX of the GATS in that connection.
Tourism
Tourism is still an important branch of the Swiss economy.  Although 1999 has been one of
the best years in terms of the number of overnight stays, that positive result should not mask the need
for structural reforms in the sector.  As experience in other branches of the Swiss economy has shown,
the future of the tourism sector cannot be assured by acting on prices alone.  It will also be necessary
to enhance the quality of the products being offered (reservation systems, innovative leisure activities,
hospitality and preserving an attractive environment − to which agriculture contributes thanks to its
multifunctional dimension).
As for costs, the share of food in the overall costs of the hotel and catering sector should not
be exaggerated, as the Secretariat report tends to do.  But is it true that it would be in the interests of
the sector to bring some agricultural prices more closely into line with world prices.WT/TPR/M/77/Add.1
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Energy
As we have stated in our Government report, Switzerland has and will continue to emphasize
its endeavours at liberalization in several areas dependent on infrastructure.  Therefore, decisive steps
have also been taken to prepare for the deregulati on of the electricity and gas markets, in order to
enable outside enterprises to gain access to the network and to separate the production, transport and
distribution services.
As a reminder, let me state that electricity is the major source of energy produced in
Switzerland, the electricity branch comprising some 1,200 companies of which six are vertically
integrated and mainly active in generation, transmission and trade.  Seven major electricity companies
currently own the electricity grid.  In contrast, the natural gas market is mostly under the monopoly ofcantons and municipalities as the majority of the gas companies are owned by cantons and
municipalities.
In order to achieve the deregulation of these two sectors, the Swiss Government has
introduced a law into Parliament, which will provide for regulated third-party access to the nationalgrid and a phased opening of the electricity market.  At this stage, the Swiss Parliament is in the final
phase of dealing with this Electricity Market Law (EML) whose main thrust has been outlined in the
Secretariat's report (page 84, §57).  Responding to  a written question raised by Canada requesting
more information about the market opening schedule, I can only inform you at this stage that this
opening schedule will probably be the following:
- 30 per cent opening during the first three years of entry into force of the EML
(ca. 2001-2003);
- 50 per cent opening during the following three years, i.e.  2004-2006;- and the sector should then be fully liberalized by 2007.
However, this schedule is still being debated in Parliament and, thus, changes may yet occur.
Further, the Law will be subject to a popular referendum which has already been announced by
opponents.  It is also foreseen to proceed similarl y with the gas sector, i.e. to achieve a gradual
opening and liberalization of this sector.
I would not like to conclude this meeting (my presentation) without thanking all the
participants for the interest they have shown.  It is also my sincere hope that our replies have satisfied
them and have contributed positively to the meeting.
LIECHTENSTEIN
Statements and responses to advance written questions and to other questions raised during the
meeting
I. ECONOMIC ENVIRONMENT
During the last five years Liechtenstein’s economy developed positively. The reasons for this
development are manifold. 1. There was a general upward trend in the economic development in
Europe. 2. Liechtenstein belongs to two internal markets, the European Economic Area and the Swiss
internal market. Therefore Liechtenstein’s goods and services providers profit from competitivemarket access conditions in both markets. 3. Liechtenstein’s exports are geographically broadlyWT/TPR/M/77/Add.1
Page 39
spread. Almost 40% of the exports are going outside Europe. Therefore, Liechtenstein’s industry does
not depend on the economic development of only one region of the world. 4. The low level ofgovernment activities in economic matters combined with the facts of scarcity of natural resources,
unfavourable topography for farming and the restricted availability of human resources led to an
internationally competitive and broadly diversified economy that concentrates on niche and high
technology products which depend to a lesser extent on international economic cycles. 5.
Liechtenstein’s membership in the EEA has led to se veral internal reforms, especially with regard to
liberalisation of some sectors. This produced further impulses for the positive economic development.
Our discussant, Ambassador Milan Hovorka has stated that it is difficult to notice to what
extent the growth of Liechtenstein’s economy was subj ect to some fluctuations and to what extent the
cycle in Liechtenstein is dependent on that of Swit zerland. Let me answer this question as follows.
Looking at indicators, such as the development of the unemployment rate, the yearly increase of the
number of jobs, the number of cross border commuters and the increase of the export volume of the
industry, the economic fluctuations have been minor during the past five years. Due to the deep
economic integration between the economies of Switzerland and Liechtenstein, Liechtenstein’s
economic cycle is of course also dependent on the development of the Swiss economy. Some 13percent of Liechtenstein’s industrial exports go to Switzerland. Any decrease of purchasing power in
Switzerland has consequences for economic operators in Liechtenstein. And of course exchange rate
developments of the Swiss Franc have implications on Liechtenstein’s economy as it uses the Swiss
Franc as legal tender..
Ambassador Hovorka also asked for the reasons of the lack of availability of GDP data. Until
the introduction of the value added tax in 1995 the necessary basic data for the calculation of GDPfigures were not available and the administration ha d no other possibility to collect them. After 1995
experts started to develop a concept for the GDP calculation. The development of a specific concept
was necessary as Liechtenstein has open borders with Switzerland and as the share of cross border
commuters (40% of the workforce) is extremely high compared to other countries. First provisional
results will be published soon.
Under this heading I would like to tackle a last item: regional, bilateral and preferential
agreements. As already mentioned at several occasions, Liechtenstein’s economy is deeply integrated
in international trade. For this reason, Liechtenstein is a strong advocate of the free trade principle.
Liechtenstein is a member of EFTA and the EEA. For Liechtenstein these two institutions areimportant instruments to allow its economic operators  to act in a legally regulated environment and to
trade under the same non-discriminatory conditions  as their competitors. As already mentioned on
Monday, in the view of Liechtenstein regiona l free trade agreements are complementary to
multilateral trade liberalisation steps, as the former can help to speed up further liberalisation steps on
the multilateral level. With regard to questions raised by various delegations concerning Free TradeAgreements of the EFTA-States I would like to refer to the respective Swiss answers. Liechtenstein
shares the same goals as Switzerland in this respec t. Also the factual information can be found in the
Swiss answers.
Ambassador Hovorka mentioned the evolving character of European integration, possible
challenges resulting therefrom and that Liechten stein does not seem to have any forward-oriented
integration strategies. He asks whether such strategies are under consideration and what are the main
factors which could bring further integration perspectives to greater prominence. Let me answer to
these questions in short as follows: For the time being and under the prevailing circumstances,
Liechtenstein considers its EEA membership to be an ideal form of integration which satisfies its
economic needs and political ambitions. This even more as it was possible for Liechtenstein to remain
at the same time in the customs union with Switzerland. We are of course well aware of the possibilityof profound changes of the EEA, in case the othe r two EFTA EEA States (Norway and Island) wouldWT/TPR/M/77/Add.1
Page 40
join the EU, or of Switzerland’s eventual entry into the European Union. The Liechtenstein
Government reflects on strategies how to react to possible challenges in this regard. For the timebeing EU membership is not on the agenda.
My statement covers in our view all questions addressed to Liechtenstein under the heading
of economic environment.
II. TRADE POLICIES BY MEASURES
I would like to begin my statement under this heading (Trade Policy Measures) by answering
the questions of the discussant, Ambassador Milan Hovorka, relating to the formulation of thecommon trade policy measures and objectives for the customs union, more specifically to the role for
Liechtenstein in the decision-shaping phases of the Swiss and therefore the union trade legislation.
The Secretariat report correctly describes the legal and practical relations between
Liechtenstein and Switzerland. Under the 1923 Cu stoms Union Treaty between Switzerland and
Liechtenstein, all federal laws necessary for the good functioning of the Customs Union (internal
market) are directly applicable in Liechtenstein (Art. 4 of the treaty). Liechtenstein became a integral
part of the Swiss customs territory. All trade policies and measures affecting imports and exports are
formulated by Switzerland. This provision has never been questioned by Liechtenstein, as this relation
has provided excellent framework conditions for  the development of Liechtenstein’s economy.
With this background in mind, you will understa nd why I would like to refer to the Swiss
answers with regard to the following two questi ons of Ambassador Hovorka, namely the question
relating to considerations of further market access improvements for products originating in least
developed countries and the question why our liberal economies do not have problems with external
unfair trade practices or substantially increased imports.
Let me now turn to the EEA which is the other internal market Liechtenstein belongs to. I
would like to explain the situation of belonging to two internal markets at the same time by directly
answering other questions of our discussant, Ambassador Hovorka. He asks us to explain to what
extent trade with other countries is governed by different rules. He also likes to know how the
objectives of the Market Control and Surveillance Mechanism are enforced in practice. Finally he
asks to what extent a new Swiss-EU agreement on technical barriers to trade may close the gapbetween EEA and Swiss rules and thus leading to  changes in the MCSM? These questions can be
answered in short as follows:
Liechtenstein has to guarantee within its territory the marketability of goods under both the
Swiss and the EEA rules. The Swiss legislation on trade in goods is applied in Liechtenstein in all
cases, except one, namely for imports of products covered by the EEA Agreement, originating fromthe other EEA Member States and destined solely for the Liechtenstein market. For trade with other
countries only the Swiss rules and legislation are applied. The specific EEA rules apply for the
following three categories of goods imported from EEA Member States:
- products on which the Swiss and EEA technical regulations are different;
- goods carrying different tariffs under the 1972 Swiss-EC free-trade agreement; and
- salt, because of the Swiss state monopoly for salt.
Imports falling under one of these categories are registered at any Swiss customs office and
reported to the Liechtenstein Office of Cust oms Affairs. The so-called Market Control and
Surveillance Mechanism (MCSM) is aimed at preventing goods solely destined for Liechtenstein
being put on the Swiss market (there is no physical border between Switzerland and Liechtenstein).WT/TPR/M/77/Add.1
Page 41
The MCSM contains a set of administrative steps and control measure described in detail in the
Secretariat report. The Liechtenstein administration is equipped to make physical controls on the spot.In practice, the system works to the satisfaction of everybody, not least because of Liechtenstein’s
small territory and the limited number of participants in the system. Infringers of the MCSM would be
heavily fined or imprisoned. Until now neither has been necessary.
The new Swiss-EU agreement on technical barriers to trade, once in force, narrows the gap
between EEA and Swiss rules even more and na rrows accordingly the scope of the MCSM. The
system as such would however remain unchanged and continue to be applied to the remaining
differences and categories.
I will now come to public procurement. Changes had to be made in our internal public
procurement regime as a consequence of both, our membership in the EEA and in the GPA.
Politically these changes were considered as major internal reform. The savings achieved byprocedures open to competition are considerable. Ambassador Hovorka raised the question of the
differences between the threshold values set by the EEA and the GPA. For this oral statement I will
limit myself to the information, that the thresholds are very close. In the written statement you will get
a more detailed overview.
Comparison of Thresholds in the EEA and in the GPA
Goods Services Constructions
EEA GPA EEA GPA EEA GPA
Government 224'836.00 SwF 248'950.00 SwF 224'836.00 SwF 248'950.00 SwF 8'647'523.00 SwF 9'575'000.00 SwF
local entities 345'901.00 SwF 383'000.00 SwF 322'780.00 -
345'901.00 SwF383'000.00 SwF 8'647'523.00 SwF 9'575'000.00 SwF
other Entities 345'901.00 SwF 383'000.00 SwF 322'780.00 -
345'901.00 SwF383'000.00 SwF 8'647'523.00 SwF 9'575'000.00 SwF
This answers the questions Liechtenstein got under this heading.
III. SECTORAL POLICIES
Almost all advance written questions and various statements made by delegations on Monday
refer in the case of Liechtenstein to the services sector. Therefore, I would like to limit my statement
with regard to agriculture and manufacturing to a few remarks. All trade policy measures of
Switzerland affecting trade in agricultural products are also applicable to Liechtenstein. In its internalagriculture policy Liechtenstein follows the principle of the multifunctionality of agriculture. For
these reasons, Liechtenstein also subscribes to the Swiss statements concerning the Swiss agriculture
policy.
As far as the manufacturing sector is concerned, I would like to repeat here that
Liechtenstein’s economy is deeply integrated in international trade and that it has a strong interest in
improving the possibilities of free trade even further. The Liechtenstein Government is convinced that
free trade is beneficial to the whole economy. Liechtenstein neither provides public funding forprivate undertakings nor has it a public policy specifically intended to attract new foreign investments.
In the services sector Liechtenstein has already undertaken some major liberalisation steps as
for example in the field of telecommunications or in the field of postal services. Further liberalisation
steps are foreseen. Details can be found in the written answer to the corresponding questions of Chile
and New Zealand.WT/TPR/M/77/Add.1
Page 42
Several delegations have welcomed in their oral statement on Monday the improved
supervision standards of the financial services branch. As in addition Japan has forwarded a writtenquestion in this regard, I will give a short overview of the recent developments.
Some years ago Liechtenstein adopted legislat ion to combat money laundering and organised
crime as transposition of relevant EU directives forming part of the „acquis“ of the European
Economic Area (e.g. criminalisation of money laundering in the Criminal Code, the Due Diligence
Act, the Law on International Legal Assistance in Criminal Matters). The legislation of Liechtenstein
was and is therefore in compliance with European standards. However, based on the experiencegained in these past years, various further measures to improve the current situation have been
initiated through 1999 with regard to legislation, to the control system and to law enforcement. All
improved legislation will be in force by 1 January 2001 at the latest. Liechtenstein has now legislation
of the highest possible international standards. Moreover, Liechtenstein is, inter alia, a State party to
the European Convention on Mutual Legal Assistance in Criminal Matters and has ratified theCouncil of Europe Convention No. 141 on money laundering.
Improvements in legislation
- new Law on International Legal Assistance in Criminal Matters (Law on International
Legal Assistance);
- new money laundering provisions in the Criminal Code;
- revision of the Due Diligence Act.
Control / enforcement
Capacities for enforcement of the prevention of and the fight against money laundering have
been strengthened as follows:
- additional judges have been employed for the Court and another four will be added in
the near future;
- the number of staff for the Public Prosecutor’s office for investigations into cases of
financial crime have been doubled, an Attorney General has been nominated and the
organisation of the office restructured;
- a new special unit for the fight against economic crime is currently being established
as part of the National Police. At the outset it will be staffed with six specialised
policemen and/or expert in this field (employed after an international call fortenders);
- a separate Financial Intelligence Unit has been established. It will be specialised in
intelligence work and investigations, essentially to prevent and combat moneylaundering.
The Government of Liechtenstein is convinced that by implementing all these measures a
very high level of prevention and combat of money laundering will be ensured and, furthermore, that
by implementing the measures mentioned with regard to legislation and enforcement, the issuescriticised by the Financial Action Task Force (FATF) will be eliminated.
In addition Liechtenstein received written questions concerning the services sector from
Canada, Chile, Hong Kong, China and Thailand. The written answers to these questions and to theremaining questions of the discussant are available.WT/TPR/M/77/Add.1
Page 43
ANNEX III
WRITTEN ANSWERS PROVIDED BY SWITZERLAND
AND LIECHTENSTEIN
Page
ANSWERS BY SWITZERLAND 47
TABLE OF CONTENTS
REPORT BY THE GOVERNMENT OF SWITZERLAND
I. INTRODUCTION 47
II. ECONOMIC ENVIRONMENT 48III. RECENT ECONOMIC POLICY DEVELOPMENTS AND OBJECTIVES 49
(1) D
OMESTIC POLICY AREAS 50
(2) F OREIGN POLICY AREAS 56
IV. SWISS POSITION IN A NEW ROUND OF MULTILATERAL TRADE
NEGOTIATIONS 57
REPORT BY THE SECRETARIAT
SUMMARY OBSERVATIONS 58
(1) T HE ECONOMIC ENVIRONMENT 58
(2) I NSTITUTIONAL FRAMEWORK 61
(3) T RADE POLICY INSTRUMENTS 63
(4) S ECTORAL TRADE POLICY DEVELOPMENTS 64
(5) T RADE POLICY AND TRADING PARTNERS 64
I. ECONOMIC ENVIRONMENT 66
(1) M AJOR FEATURES OF THE ECONOMIES 66
(2) E VOLUTION OF THE ECONOMIES 66
(3) T RADE PERFORMANCE AND FOREIGN INVESTMENT 66
(i) Trade in goods and services 66(ii) Foreign investment 66
(4) O
UTLOOK 67WT/TPR/M/77/Add.1
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Page
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 67
(1) I NSTITUTIONAL FRAMEWORK 67
(2) P OLICY FORMULATION AND IMPLEMENTATION 67
(3) P OLICY OBJECTIVES 67
(4) L AWS AND REGULATIONS 67
(5) A GREEMENTS 70
(i) Multilateral agreements 70
(ii) Bilateral agreements 70(iii) Regional and other agreements 74
III. TRADE POLICIES AND PRACTICES BY MEASURE 77
(1) O
VERVIEW 77
(2) M EASURES DIRECTLY AFFECTING IMPORTS 77
(i) Registration, documentation, and customs procedures 77(ii) Tariffs, other duties and taxes 78(iii) Import prohibitions, licensing, and controls 83(iv) Trade sanctions 83(v) Contingency trade remedies 83
(vi) Rules of origin 83
(vii) Local-content and local-purchase requirements 84(viii) Standards and other technical requirements 84(ix) Government procurement 85(x) Other measures 87
(3) M
EASURES DIRECTLY AFFECTING EXPORTS 87
(i) Registration 87
(ii) Prohibitions, controls, quotas, licensing, and voluntary restraints 87(iii) Export taxes, charges, and levies 87(iv) Export subsidies 87(v) Duty and tax concessions 87
(vi) Export promotion and finance 87
(vii) Export insurance and guarantees 87(viii) Other provisions 87
(4) M
EASURES AFFECTING PRODUCTION AND TRADE 87
(i) Subsidies and adjustment assistance 87(ii) Assistance for research and regional development 88
(iii) Competition policy 88
(iv) Protection of intellectual property rights 90
IV. TRADE POLICIES BY SECTOR 99
(1) I
NTRODUCTION 100
(2) A GRICULTURE AND RELATED ACTIVITIES 101
(3) M ANUFACTURING AND ENERGY 114
(i) Manufacturing 114
(ii) Energy 115
(4) S ERVICES 116
(i) Financial services 117(ii) Telecommunications and postal services 119WT/TPR/M/77/Add.1
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Page
(iii) Transport 122
(iv) Tourism 125(v) Construction 126
(5) O
THERS 127
ANSWERS BY LIECHTENSTEIN 131WT/TPR/M/77/Add.1
Page 47
REPORT BY THE GOVERNMENT OF SWITZERLAND
I. INTRODUCTION
Question (Uruguay)
Paragraph 2 states that the Swiss Govern ment attached great importance to the
openness of world markets for goods and services.  Paragraph 6 notes that Switzerland firmly
supports the integration of developing countries into the global economy through trade.
Paragraphs 38 and 39 stress the importance that Switzerland attaches to strengthening the
participation of the developing countries and the least-developed countries in the multilateraltrading system.  Bearing this in mind and consider ing that agriculture plays an essential role in
the economies of the developing countries, do es Switzerland not think that an essential
contribution to the development and growth of the developing countries could be made precisely
by substantially improving market access for agricultural products and doing away with the
high level of protection and the en ormous distortions in that sector?
Question (United States)
The United States commends Switzerland fo r its commitment to opening its market to
the least-developed countries (LDCs) throug h reduced tariffs on their products. Does
Switzerland also intend to simplify its complex procedures and requirements for importing
agricultural goods in order to help the LDCs gain  access to the Swiss market?  This complex
process currently includes import licences, the compulsory reserve stock programme, a
complicated tariff quota management system, and specific labelling requirements.
Answer (Uruguay and United States)
Switzerland, with only seven million consumers, imports many agricultural products from the
developing countries, including tropical fruit, spices, cocoa, tobacco, coffee and tea.  In recent years,
the developing countries have been successful in steadily increasing their exports of agricultural
products to Switzerland.  Their exports rose from 1 billion francs in 1995 to 1.2 billion francs in 1999.
The developing countries markedly increased their sh are in the final output of agriculture at current
prices, which rose from 10 per cent in 1990 (11 per cent in 1995) to 16 per cent in 1999.  Moreover,
Switzerland is now looking into possible ways of granting, on an autonomous basis, better access to
agricultural products from the least-developed countries.  For more details, please consult document
WT/COMTD/N/7, which notifies the list of pr eferences granted to products from developing
countries for the whole of the customs tariff.
As to the customs administration and technical requirements, there is no special treatment for
LDCs.  On the other hand, a special import promotion service is available to all developing countries,
including assistance with technical regulations.
Question (United States)
The report notes in the field of European integration, Switzerland has concluded
seven agreements with the European Union in  1999.  These agreements cover agriculture,
government procurement, technical barriers to trade, road transport, air transport, free
movement of persons and research.  When will these agreements take effect?WT/TPR/M/77/Add.1
Page 48
Answer (United States)
It is foreseen that these agreements take effect as from 1 July 2001.
II. ECONOMIC ENVIRONMENT
Question (Hong Kong, China)
In order to achieve a stable macroeconomic policy environment, a constitutional
amendment to balance the budget during the business cycle is mentioned.  We would be
interested to know how the constitutional amendment is to be implemented e.g. how to
determine whether it is fulfilled?  How to define a business cycle?
Answer (Hong Kong, China)
The "debt brake" system establishes a rule that limits, for each year, the amount for central
government expenditures, as a function of current revenues and the position of the economy in the
economic cycle.  The aim is that total central government expenditures should remain relativelyindependent of economic cyclical variations, whereas tax revenues would act as automatic stabilizers.
Simulations suggest that the expenditure rule would ensure a balanced budget over the economic
cycle.
The new rule defines for any year t+1 a maximum level of expenditures equal to the estimated
revenues in t+1, adjusted by a factor which takes account of the cyclical situation in that year.  The
rule uses as a cyclical factor the deviation of projected real GDP from its trend value, which isapproximated by statistical methods (time-series decomposition).  The rule can be written as:
Maximum level of federal expenditures in year t+1 = expected revenues in year t+1 * (trend real GDP
in t+1/expected real GDP in t+1).  As a consequence of the rule, projected real GDP higher than its
trend value results in a cyclical factor lower than 1, which keeps the ceiling for expenditures below
expected government revenues, thus leading to an ex-ante budget surplus.  The opposite holds in thecase of a recession;  then the rule allows federal expenditures to exceed projected revenues,
supporting aggregated demand.  Hence, over the economic cycle, the rule restrains the level of
expenditures to the level of revenues, while it requires surpluses or allows deficits each year,
depending on the cyclical position of the economy.  In the case of exceptional events, such as a
particularly severe recession, natural catastrophe or important inflows of asylum seekers, it isproposed that the rule can be temporarily abrogated by a qualified majority in Parliament.
The proposed institutional mechanism for im plementing the rule can be summarized as
follows:  the budget moved to the Parliament by th e Government must respect the expenditure rule for
that particular year.  In principle, the Parliament shall also respect the expenditure rule, unless itforesees certain extraordinary events.  In any case, the Parliament shall only be able to pass a budget
that violates the expenditure rule by a qualified majority.
If actual expenditures exceed the limits set by the rule, then the excess expenditures will be
debited to an "equalization account".  Errors in the estimations of revenues which result in too high ortoo low expenditure ceilings for t+1 will also lead to debits or credits in the equalization account.
These debits or credits need to be taken into acco unt when setting the new expenditure ceilings for the
following year.  Debits in the equalization account which exceed 6 per cent of the expenditures of the
previous budget are to be eliminated within the following three years.WT/TPR/M/77/Add.1
Page 49
Question (Discussant)
How will a new fiscal equalization framework, which is under preparation, contribute to
the harmonization of tax rates across cantons and to what extent is tax competition between
cantons beneficial?
Answer (Discussant)
The new equalization system provides for equalization of the canton's resources.  (Under the
present system, only the Confederation redistributes a share of this revenue to the cantons – 3.4 billion
francs in 1999).  In other words, the new system provides for direct redistribution between the cantons
with a low financial capacity and those with a high  financial capacity.  It would involve an amount of
about 1 billion Francs.  The resulting reduction in the disparities between poor and rich cantons
should enable the poor cantons to reduce their tax burden somewhat while forcing the rich cantons to
maintain, even increase theirs, bringing the tax rates between the various cantons closer.
Tax competition between the cantons is useful because it tends to oblige each canton to
maintain fairly low tax rates to ensure that their taxpayers do not move to a neighbouring canton.
Thus, it encourages the cantons to economize and make the best possible use of their financial
resources rather than spending.  Consequently, it serves both the interests of Switzerland as a financial
centre and the interests of its inhabitants.  In all likelihood, it is because of the tax competition
between the cantons that the tax burden in Switze rland is relatively low compared with other
countries.
In this context, the differences in the tax burden in the various cantons should not go beyond
certain limits.  And it is here that the new financial equalization scheme is designed to intervene by
bringing about a redistribution of resources, thereby creating a new basis for tax competition between
the cantons by granting each one of them enough funds of its own.  It will be for Parliament to decide
the degree of horizontal equalization between the "strong" cantons and "weak" cantons.
III. RECENT ECONOMIC POLICY DEVELOPMENTS AND OBJECTIVES
Question (Discussant)
Elaborate on the Government's report statemen t that "Following the introduction of all
the elements of the 2002 agricultural policy, the State will play handly any further role in the
market".
Answer (Discussant)
The production of food and fibres is, in principle, regulated by the market.  However, the
State makes direct payments for non-commercial services in agriculture (in connection with public
goods), which are generally unrelated to production.  In the case of public goods, the State will always
and necessarily be involved.  This is a constitutional mandate that is fulfilled independently of the
existence of customs tariffs.  Moreover, State agricultural trading has been abolished in Switzerland.The private promotion agencies which benefit from government assistance support sales promotion
projects in the product introduction phase.WT/TPR/M/77/Add.1
Page 50
(1) D OMESTIC POLICY AREAS
Question (Norway)
During the last TPR of Switzerland the New Competition Law of 1996 was welcomed.
This year's Government report (paragraph 18) mentions a statutory amendment to the 1996
law.  Will this amendment provide the authorit ies with new instruments for enforcing the law or
provide new prohibitions on restrictive practices?
Question (United States)
The report notes that since 1996, Switzerl and has focused on action to combat
horizontal price cartels or collusion in respect of quantities and market allocation.  How willSwitzerland amend its laws to strengthen government authority in the area of competition?
Answer (Norway and United States)
The provisions currently in force under the Law on Cartels and Other Constraints on
Competition (LCart) do not directly penalize unlawful restrictions on competition.  In other words, the
LCart does not provide for any major means of prevention.
The draft amendment to the Law on Cartels and Other Constraints on Competition (LCart)
has two main purposes.  The first is to introduce direct penalties, particularly for hard-core cartels.
The enterprise concerned will have to pay a fine amounting to not more than 10 per cent of the
turnover in Switzerland during the past three years.  There will also be a leniency programme.  If theenterprise cooperates in revealing and doing away with the restriction on competition, it may be
wholly or partly exempted from any penalties.
The second purpose is to cut down on the number of members of the Competition
Commission, currently 14.  A minority of the members represent various interest groups (employers,trade unions, etc.).  The idea is to have a commission consisting of seven independent members.
This draft revision is now the subject of a consultation procedure.  It will be submitted to
Parliament in 2001.  If it is adopted, it will enter into force in 2002 at the earliest.
Question (United States)
How did the referendums define the use of “precautionary measures”?  Please provide
examples of how Switzerland applies “precautionary measures.”
Question (Japan)
The report states that Switzerland adopted a regulatory framework for
genetically-modified organisms and has developed a strategy based on the use of precautionary
measures, together with some other factors.  Please explain in concrete terms how such
“precautionary measures” are reflected in its domestic regulations.
Answer (United States and Japan)
The referendum on biotechnology of 1998 did not address the issue which comes up now in
the debate of a new set of legislation (GENLEX).  This GENLEX was notified to WTO under
G/TBT/Notif.00/49.WT/TPR/M/77/Add.1
Page 51
It is the Swiss Government's objective to strengthen research and development in gene
technology and to use the advances of this technology in a sustainable way.  Therefore, the Swiss
Government has discussed the implementation of the precautionary principle specifically in relation to
the application of gene technology and the placing on the market of products containing
genetically-modified organisms.
The definition of the precautionary principle is given in the Swiss Federal Law relating to the
Protection of the Environment.  It states that "early preventive measures" have to be taken in order to
"limit effects which could become harmful or a nuisance" to human health or the environment.  With
respect to gene technology, this implies that adequate measures against harmful effects have to be
adopted when releasing genetically-modified organisms.  Such measures have to be defined on thebasis of well-founded assumptions that specific effects might eventually result in a damage for human
health or the environment.
The precautionary principle has to be taken into account in every application for the
deliberate release of genetically-modified organisms into the environment.  As a result of the riskassessment, and taking into account uncertainties related to lacking of specific scientific knowledge,
the applicant has to define a risk management plan to prevent possible damage to human health and
the environment.  The measures defined in the risk management plan have to be based on the
precautionary principle and have to fulfil the following criteria:
- They have to be proportionate to the degree of safety necessary;
- they have to be comparable to measures required for releases of genetically-modified
organisms with comparable risks;
- they have to be adequate with respect to the cost/benefit ratio and public acceptance;
- they have to be adapted by the applicant in case new scientific knowledge is
available.
Authorization of the release of genetically-modified organisms in field trails or as products
have to be based on the risk management plan and can only be denied if human health and theenvironment cannot be protected sufficiently.
It can be concluded that the Precautionary Principle – as applied by Switzerland in the context
of biotechnology – is relevant only once a risk assessment based on sound science has been made and
if at that stage a degree of uncertainty attached to the results of the evaluation of the availablescientific information remains.  Thus, as an assessment based on sound science is the prerequisite for
triggering the Precautionary Principle – the Precautionary Principle stands in no contradiction to but is
based on sound science.
Question (United States)
The report notes that Switzerland pursues a very active environmental policy and
supports recognition within the WTO of the objectives of sustainable development and
environmental protection.  As part of this policy does Switzerland support addressing
agricultural subsidies and the liberalization of trade in environmental goods and services?WT/TPR/M/77/Add.1
Page 52
Answer (United States)
The ecological and social aspects of agriculture have become much more prominent over the
last decade.  But for many farm products and services, environmental ones in particular, there is no
functioning market.  This is why Switzerland has begun to make direct payments for such public
goods that benefit everybody.
Sustainability has an economic aspect.  Agriculture that cannot survive competition is not
economically sustainable.  Greater market influence and thus increased competitiveness on the one
hand, and ecological and social sustainability on the other, mutually supplement and reinforce each
other – assuming that the external costs and benefits are reflected in the market price of agricultural
produce, and that the production of public goods is paid for directly by the Government.
Question (United States)
Could Switzerland provide more information on why certain production methods are
banned?
Answer (United States)
The meat production with hormones, antibiotics and other antimicrobial substances used as
performance stimulators is prohibited on the basis of Article 13 of the Ordinance concerning Meat
Hygiene and Article 160 of the Agriculture Act.  The egg production in battery cages is not allowed
on the basis of Article 4 of the Animal Welfare Act.  Consequently, in order to provide consumerswith adequate information, Parliament introduced a new Article 18 in the Federal Law on Agriculture
(1999) requiring the Federal Council to enact measures for the declaration (labelling) of products that
are produced according to methods prohibited in Switzerland. (TBT-Notification,
WT/TBT/NOTIF/90/318).
Question (United States)
Is there any scientific evidence that thes e production methods endanger public or
animal health or the environment?
Answer (United States)
There is no fully established scientific evidence providing or disproving health or
environmental dangers.  This being said, the labelling of the above-mentioned production methods is
not concerned with human or animal health or safety issues.  Its ultimate aims is rather consumerinformation and freedom of choice.  That is why Switzerland notified the Ordinance under the TBT
Agreement.
Question (United States)
What antibiotics or combination of antibiotics has Switzerland banned?  How are these
bans applied to imports?  What scientific risk assessments has Switzerland conducted on
banned antibiotics?  What antibiotics for meats are permitted for use in Switzerland?  Do any
restrictions apply?WT/TPR/M/77/Add.1
Page 53
Answer (United States)
Under Article 160 of the Federal Law on Agricu lture (LAgr), it is forbidden to administer
antibiotics and similar substances to animals as performance stimulators.  Their use for therapeutic
purposes is subject to an obligation to notify and it must be recorded in a treatment record.  For
imported meat, the Federal Council acts in accordance with LAgr Article 18.  For imports, it is the
Agricultural Ordinance on Declaration that determines the labelling rules.  Meat and meat-basedpreparations must state "may have been produced with antibiotics and/or other antimicrobial
substances as performance stimulators" if the requirements for breeding animals for production are
not identical to those in Switzerland.
Risk assessment is largely based on the emergence of resistance to antibiotics.As indicated above, therapeutic treatment is au thorized as in the past in Switzerland.  The
registered antibiotics can be looked up at the following address:
http://www.vetpharm.unizh.ch/perldocs/index_t.htm.The restrictions are also mentioned above (obligation to notify and compulsory entry in the
treatment records).  Restrictions on the observance of the waiting period and others relating to
veterinary practices are obvious.  Substances prohibited by the EU are also prohibited by Switzerland.
Question (United States)
The report notes that Switzerland recognizes  the key role of the International Labor
Organization, and that Switzerland has ratified the core ILO conventions.  We understand that
the Swiss Government is preparing legislation to  comply with ILO Convention No. 87 on the
Freedom of Association.  When will it be introduced?
Answer (United States)
Switzerland ratified Convention No. 87 on 25 March 1975.  The Convention entered into
force for Switzerland on 25 March 1976.  According to the ILO supervisory bodies, the problem of
implementing the Convention lay in the fact that federal officials not in a position of authority(Article 23(1) of Civil Service Regulations SR 172.221.10) were not entitled to strike.  The new Law
on the Personnel of the Confederation was accepted by a large majority of the Swiss people (67 per
cent) in a referendum on 26 November 2000.  The new law now meets the conditions laid down in
Convention No. 87, in accordance with the jurisprudence of the supervisory bodies.  It also
contributes to enhancing the social partnership through the negotiation of collective labouragreements for the consultation and information of personnel and their organizations.  The
implementing ordinances for the new Law will be finalized in consultation with the trade unions in
the months ahead, to allow as rapidly as possible for phased implementation of the Law (scheduled
dates:  on 1 January 2001 for the federal railways, on 1 July 2001 for the postal services, and on
1 October 2001 for the federal administration).
Question (United States)
The report notes that Switzerland is gradua lly abandoning an agricultural policy of
price and marketing guarantees and protection from international competition, and that
following the introduction of all the elements of  “Agricultural Policy 2002,” the Government
will play a lesser role in the market.  Will the level of Government support to agriculturedecrease as a result of these changes?WT/TPR/M/77/Add.1
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Answer (United States)
For the period 2000-2003 the total expenditures have been stabilized.  There is, however, a
shift from the product support – reduction from 1.200 million Swiss francs to 800 million Swiss
francs, and a corresponding increase in expenditures for public goods.
Question (United States)
What tasks and guidelines were establis hed within Article 104 of the Federal
Constitution specifically addressing non-commodity outputs of agriculture? How does
Switzerland ensure that its agricultural  tasks which are multifunctional are not tradedistorting?
Answer (United States)
The constitutional article on agriculture lays down the guidelines for the new agricultural
policy.  The goal:  agriculture oriented towards the market and towards sustainable development.  The
means:  separating price policy from income policy and providing contributions for payment of
services, notably environmental, supplied in the public interest.  The production of food and fibres is,
in principle, regulated by the market.  However, the State makes direct payments for non-commercial
services in agriculture (public goods), which are generally decoupled from production, for example,
maintenance of the countryside, decentralized settlement and preservation of natural resources.  This
new orientation has gone hand in hand with major reductions in price support.  In most instances,production of public goods leads to extensification of commercial production.  Consequently, there is
no adverse impact on trade.  On the contrary, the volume of domestic production falls.
Question (Discussant)
Do environmental expenditures put the country on a competitive disadvantage or more
generally how to perceive the link between environmental performances and economic
competitiveness?
Answer (Discussant)
According to Switzerland's experience, high environmental standards do not necessarily have
negative impacts on the competitiveness of industry.  On the contrary:  high environmental standards
may stimulate innovation and efficiency and thus even increase the competitiveness of the industry.
Nevertheless, there clearly are areas where the unilateral introduction of environmental measures –such as e.g. taxes on Greenhouse gas emissions in  order to comply with the commitments under the
Kyoto Protocol – would result in a competitive disa dvantage for specific industry sectors.  Therefore,
Switzerland strongly supports international coordination in adopting such measures.
Question (Discussant)
To what extent are sustainable development requirements also applicable to formulation
of trade policy objectives?
Answer (Discussant)
See our response to US questions:  Switzerla nd takes the view that the best means to make
trade policy supportive of sustainable development is to ensure coherence within the internationalWT/TPR/M/77/Add.1
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regulatory framework, such as WTO, CBD, FAO, UNEP and CSD.  Therefore, Switzerland actively
promotes measures which make the trade regime mutually supportive, especially Switzerland strivesto clarify the relationship between trade rules and MEA.
Question (Discussant)
Swiss experience on cooperation between the State and the private sector on
environmental issues.
Answer (Discussant)
Switzerland considers that on the whole, experience to date on cooperation has been
promising, even if it has not been positive in every case.  Many examples show that the principle of
cooperation is settling in little by little.  However, this requires a certain amount of time coupled with
a considerable contribution of human resources and funds by the confederation.  It is also essential
that the problem should be recognized by business circles and that there should be a clear will to find
a common solution.  In this context, all operators in a given sector of activity must join in, so as toprevent some from taking advantage of an agreement without abiding by it.  Quite often, however, it
is business circles themselves that hesitate to resort to cooperation or prefer detailed and binding
regulations.  Switzerland hopes that the cooperation principle will play an even greater role in energy
and environmental policy.  Indeed, on the basis of the 1983 Environmental Protection Law, close
cooperation has been possible for some years now, for instance, with the appropriate actors in
connection with waste management, with the Energy 2000 action programme or with the Order on
Energy.
Question (Discussant)
WTO-Multilateral Environmental Agreements (MEA):  importance to clarify the
consistency of their rules.
Answer (Discussant)
The clarification of the WTO-MEA relationship would not only increase legal certainty and
predictability and prevent the risk that different dispute settlement procedures in different regimeswould result in conflicting decisions, it would also reduce impediments for future MEA-negotiations.
Switzerland takes the view that WTO and MEAs should be mutually supportive and that therefore
each regime should focus on its primary area of competence.  Thus, the WTO should not adopt
environmental standards and it should leave the question, which specific measures are necessary to
realize environmental goals to MEAs.  WTO should also not reassess such decisions of MEAs but usedeference to the competence of MEAs.  Namely, the WTO should accept the necessity of
MEA-measures for the protection of the environment.  This implies that  MEA-measures should be
assumed to be WTO-compatible – the concrete implementation of such  MEA measures could,
however, still be challenged as being arbitrarily or unjustifiably discriminatory or protectionist.
Until now, no agreement on the relationship between WTO and MEAs could be reached.
While some delegations suggest that this question should be left to the WTO – panels, Switzerland
states that the WTO Members should clarify the relationship between WTO and MEAs and that such
an important and political decision should not be left to the WTO – panels.WT/TPR/M/77/Add.1
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(2) F OREIGN POLICY AREAS
Question (Hong Kong, China)
Switzerland has proposed that the new round of negotiations should aim at achieving a
zero tariff rate by 2010 for a substantial pr oportion of tariff headings for manufactured
products.  While 2010 is the ultimate target, we would like to know whether Switzerlandenvisages any phasing-in arrangement apart from this ultimate target?  What is the scope of
"substantial proportion" as envisaged by Switzerla nd?  Why not target at eliminating tariffs for
all manufactured products?
Answer (Hong Kong, China)
The Swiss tariff scheme provides for MFN and preferential duties.  The simple MFN average
for industrial products (HS 25-97) is around 2 per cent on an ad valorem  base.  More than 50 per cent
of the Swiss foreign trade is dealt under preferential schemes.  The overall average duty for industrial
products is around 0.3 per cent on an ad valorem  base (1999).  Therefore Switzerland is ready to
abolish the remaining duties in the respective field, within the target on which all WTO Members
have to agree.
Question (United States)
How will Switzerland’s agricultural reforms over the next few years be
“euro-compatible?”  Does the Government of Switzerland envision adopting the policies of theEU’s Common Agricultural Policy much like the applicant countries of central and eastern
Europe are currently doing?
Answer (United States)
The Swiss Government has no intention to adopt EU's Common Agricultural Policy, as long
as Switzerland has not adhered.  Given the strategic governmental objective of accession to  EU, it
will not introduce measures which would make it more difficult to achieve "euro-compatibility".
Switzerland is already harmonizing the rules on technical regulations, for example in the veterinary
and phytosanitary field.
Question (United States)
What portion of agricultural trade (in value  and volume) is covered by the bilateral
agreement between Switzerland and the EU?  What percentage of tariff lines receive duty-freetreatment?
Answer (United States)
Total liberalization on a reciprocal basis of trade in cheese after a period of five years
following the entry into force of the agricultural agreement between Switzerland and the EU is the
cornerstone of the agreement.  This liberalization of the cheese sector affects, in value, some 13 per
cent of Switzerland's agricultural exports and 3 per cent of its Swiss agricultural imports.  Tariff
concessions in the other sectors concerned (horticulture, fruit and vegetables, bovine and pig meat
specialities and wine specialities) are not so broad in scope.  In all, about 60 tariff lines receive tariff
exemptions, some of them within the limits of preferential tariff quotas.WT/TPR/M/77/Add.1
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Question (United States)
What factors will determine the timetabl e for reactivating the request to open EU
accession negotiations?
Answer (United States)
The schedule for reactivating the application to open negotiations for EU accession will have
to be worked out in particular by the Federal Council once the first experience has been gained with
the implementation of the bilateral agreements, once th e preparatory work to ensure the success of the
accession process has been completed and once broad political support has been obtained in
Parliament.
Question (United States)
The report notes that Switzerland and its EFTA partners have signed 15 free trade
agreements.  What percentage of Switzerland’s trade is covered by these trade agreements?What percentage of tariff lines receive duty-free treatment?
Answer (United States)
Answer will be provided at a later stage.
IV. SWISS POSITION IN A NEW ROUND OF MULTILATERAL TRADE
NEGOTIATIONS
Question (Uruguay)
In paragraph 39, which refers to a possible new round of multilateral trade negotiations,
Switzerland stresses its interest in continuing liberalization in certain sectors such as industrialproducts and services, among others.  However, in referring to agriculture it places emphasis on
Article 20 of the Agreement on Agriculture, on non-trade concerns and on what it calls the
multifunctionality associated with agricultural ac tivity.  Does this mean that even in a new
round of negotiations Switzerland's position on agriculture would continue to be the same as for
the ongoing agricultural negotiations of the built -in agenda, that is, based on Article 20 of the
Agreement on Agriculture?
Question (United States)
The United States is pleased that Switzerland is committed to a new round of
multilateral trade negotiations, but is concerned that Switzerland is less committed to reform of
agriculture -  its most protected sector.  Government support to agriculture still represents
nearly three fourths of gross farm receipts, and the average ad valorem  equivalence of MFN
tariffs on agricultural imports is 34 per cent,  nearly four times the overall average with a
maximum of 678 per cent.  Is Switzerland prepared  to take significant steps to reduce domestic
support and export subsidies in the next phase of negotiations?
Switzerland states it is prepared to enter ne gotiations as foreseen in Article 20 of the
Agreement on Agriculture.  However, Switzerlan d’s  willingness to conduct further negotiations
is qualified by the statement  that “non-commercial interests and multifunctionality associated
with agricultural activity” are taken into ac count. Please clarify wh at Switzerland wouldWT/TPR/M/77/Add.1
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consider as sufficiently taking into account non-commercial interests and multifunctionality
associated  with agricultural activity.
Answer (Uruguay and United States)
Switzerland does indeed intend to continue negotiating on the basis of Article 20 of the
Agreement on Agriculture.  This includes the three traditional pillars of market access, domesticsupport and export aid, but also the multifunctional aspects of agriculture and the specific interests of
the developing countries.  In the case of Switzerland, there are still other elements which are of
importance in the agricultural negotiations, namely, geographical indications, and labelling as a means
of informing consumers about production methods in particular, or food security.
Switzerland also stands ready to negotiate a further reduction in tariffs and in current total
AMS on the basis of bound values.  As to export subsidies, Switzerland is proposing flexible
reductions by product groups on the basis of bound values and in accordance with a formula to be
agreed upon.  The extent to which our partners are ready to make efforts in fields of interest to
Switzerland will help to determine the pace of the negotiations.
Question (United States)
The report notes that Switzerland believes that a new round would also serve as an
essential catalyst for establishing new internal reforms and accelerating the reforms under way
in Switzerland and in the economies of other WTO Members.  What reforms does Switzerland
see as most important?
Answer (United States)
The statement in §38 of the report by the Government of Switzerland saying that a new round
could serve as a catalyst for future reform reflects primarily the experiences drawn from the UruguayRound and its implementation in domestic policies.  The results of Marrakesh indeed shaped reform
in many areas, particularly so in infrastructure, public procurement and, not least, agriculture.  Trade
in services has also to be mentioned.  A new round would essentially help to deepen reform in these
sectors, not only in  Switzerland, but in other countries as well.  With respect to Switzerland it can be
said that part of these supplementary reforms will occur as a consequence of the bilateral agreementsSwitzerland has concluded with the EU.  We may mention:  the extension of the WTO government
procurement agreement to local communities, and the mutual recognition agreement in the area of
technical exams.  If it is true that these essential steps towards a facilitated access of foreign producers
to the domestic market benefit primarily EU member States, it may be added that many of these
reforms are beneficial to other countries as well.  Very often, they will no longer have to distinguishbetween producing for the Swiss and producing for the EU market, as rules are harmonized.
REPORT BY THE SECRETARIAT
SUMMARY OBSERVATIONS
(1) T
HE ECONOMIC ENVIRONMENT
Question (United States)
The report notes that the development of bran ches such as tourism has been negatively
impacted by high wages and input prices of hi ghly protected sectors (e.g. food products, energy,WT/TPR/M/77/Add.1
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construction and telecommunication services - at least up to 1998) and low productivity growth
due to market rigidities.  What steps is Switzerland taking to reduce input prices and increaseproductivity in order to boost the tourism sector?
Answer (United States)
Tourism is still an important branch of Switzerland's economy.  A good many regions greatly
depend on its development.  Fortunately, the economic recovery has not bypassed this major sector.
The year 1999, for example, was one of the best in terms of the number of overnight stays.  However,
this favourable performance should not mask the sect or's structural reform requirements.  To begin
with, further to the bilateral agreements, tourism will lose a great deal of its privileged access to
foreign labour.  Contrary to what is suggested in the question, wages in the sector will even tend torise (whereas for Switzerland as a whole, the introduction of free circulation of persons with the EU
will avoid bottlenecks in specific segments of the labour market and thus make production more
competitive).  The tourism sector will have to face this wage challenge largely through its own efforts
(renewal/replacement of existing facilities).  It is supported by a number of reforms in upstream
sectors, for example the Lex Friedrich reform, whereby foreign investment in commercial buildingssuch as hotels has become possible.  While the share of food costs in overall hotel and restaurant costs
should not be exaggerated – as the Secretariat report tends to do – the visible tendency for some
agricultural prices to draw closer to world prices is also welcome from the standpoint of sector price
competitiveness.  This is also true for other prices mentioned in the question because they involve
sectors that are currently being reformed (telecommunications, construction, energy).  As in many
other sectors in Switzerland, the future of the tourism sector depends not so much on price
competitiveness as on developing the product offered (booking systems, innovations in leisureactivities, hospitality, preservation of an attractive environment to which agriculture contributes by its
non-commercial services).
Question (India)
Paragraph 4 of the Summary Observations in the Secretariat Report notes that even
though agriculture accounts for only around 4 per cent in total exports and also employment
and contributes to only 2 per cent of the GDP, it has remained highly protected.  Further, it
notes that development of branches such as tour ism have been negatively affected by high wages
and input prices of highly protected sectors like food products, energy, construction andtelecommunication services.
The delegation of Switzerland is requested to give its reaction to these observations.  We
would also like to know if it has any plans for autonomous liberalization of the agricultural
sector.
Answer (India)
Please refer to the introductory remarks made by the Head of the Swiss Delegation.
Question (Discussant)
Allow the following questions in relati on to the general economic environment:
What are in the eyes of the Swiss authorities major risks to the short-term macroeconomic
prospects?  What would be the operational approach to a new fiscal policy framework after 2001
when the Confederation budget is supposed to be balanced over the cycle?  How will a new fiscalequalization framework, which is under preparation, contribute to the harmonization of tax ratesWT/TPR/M/77/Add.1
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across cantons and to what extent is tax compet ition between cantons beneficial?  And finally, is
Switzerland's large external current account surplus I referred to, a policy issue for the authorities?
Answer (Discussant)
1. The Swiss external current account surplus – an issue for the authorities?
Starting at the beginning of the 1980s, the striking increase of the CA surplus is characterized
by many major developments:
- A strong increase of net capital income by about 10 billion Swiss francs (from below
10 billion at the beginning to close to 20 billion francs at the end of the 1980s);
- a significant rise of net services income, esp. income from financial services income
over the 1980s;
- finally a sharp improvement of the trade balance over the first half of the 1990s, due
to weak economic development and continu ous improvement of the terms of trade.
In the meantime, between 1995 and 1999, the current account surplus increased from about
25 billion to 45 billion Swiss francs, corresponding to some 11 per cent of  GDP.  This increase is
exclusively due to a new sharp increase in capital income and a further moderate increase in net
financial services receipts.
Over the last five years, at least 80 per cent of the whole CA surplus and the bulk of the rise
in the overall surplus consisted of net capital income from abroad, mainly from foreign direct
investment abroad.  This surplus reflects the im portant international investment efforts of our
economy and the resulting important net creditor position of Switzerland in the world.  This major
element is inevitably structural in nature and is certainly a meaningful contribution to worldinvestment developments.  A major part of this net income is also reinvested abroad.
The merchandise trade balance has switched from a insignificant surplus in 1995 to an even
less important deficit in 1999.  A more important deterioration of the trade balance, which could have
been expected in a period of considerably improving economic developments and of progressing realimport penetration, is prevented by the ongoing terms of trade improvement.
Finally, there is no savings/investment gap of the classical type:  Switzerland is still among
the countries with the highest investment to GDP quota.
Considering this special nature, in our view there is no reason for the current account surplus
to be made a policy issue.
See Annex 1:  Graph (Page 131)
2. Major risks to the short-term macroeconomic prospects
The main risks to rapid economic growth  lie in the foreign economic situation
.  The first risk
is that of a hard landing in the American business cycle, which may be triggered by an unforeseen
hike in prices followed by a rise in interest rate s, a collapse in share prices, less readiness abroad to
finance the American foreign debt, exchange rate disruptions and considerable repercussions on real
savings.  However, there are a number of signs that the American business cycle will make a softlanding.  The second potential risk, less substantial, would be the persistence of high oil prices, whichWT/TPR/M/77/Add.1
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would lead to slower growth rates.   The slow-down would in fact be  less significant if in Europe, in
particular, the situation did not lead to a wage-price spiral that would compel the central bank totighten its policy.  Overall, the risks and other uncertainties not mentioned here are not in any way
disturbing, and even if virulent, they could be controlled.
(2) I NSTITUTIONAL FRAMEWORK
Question (India)
Paragraph 10 notes that keeping in mind it s strategic objective of EU membership,
Switzerland has concluded a package of seven bilateral agreements on sectors such as
agriculture and government procurement which would come into effect in 2001 uponratification by the EU member States.  It is further stated that Switzerland and Liechtenstein
offer non-reciprocal tariff preferences to developing countries.
We would request the delegation of Switzerland to indicate the present position
concerning ratification of the bilateral agreements by EU member States.  We would also beinterested if any more bilateral agreements are envisaged with the EU.  Keeping in view the
current proposals for enlargement of the membership of the EU, does Switzerland plan to have
any bilateral agreement with some of  the candidates for EU membership?
Answer (India)
Ratification of the agreements by the EU member States is under way for entry into force of
the agreements by 1 July 2001.
The negotiation areas, as proposed by Switzerland or by the EU, are:  processed agricultural
products, training, youth, media, statistics, environment, overall liberalization of services, taxation of
pensions of retirees from EU institutions living in Switzerland, the struggle against fraud, taxation ofsavings, and internal security in the broad sense, including migration and asylum.
Apart from Malta, Switzerland already has free trade agreements with all the candidates for
EU membership.  Once they become members of the EU, the free trade agreements with those
countries will be replaced by the Switzerland/EU agreements subject to some adjustments.
Question (India)
We are interested to know the details of the GSP scheme as well as the percentage of
imports into Switzerland and Liechtenstein under the GSP.
Answer (India)
The details of the Swiss GSP Scheme has been  notified in document WT/COMTD/N/7.  The
preferential tariffs applied to exports of developing countries are designed to help increase anddiversify their exports.  The Swiss scheme within  the Generalized System of Preferences (GSP) was
introduced on 1 March 1972, in compliance with Switzerland's intention to implement Resolution 21
(II) adopted by UNCTAD (United Nations Confer ence on Trade and Development) II in 1968.  The
last substantial revision of the Swiss scheme took place as of March 1997.WT/TPR/M/77/Add.1
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Beneficiaries of preferences
In principle, all developing countries and countries in transition are eligible for preferences
under the Swiss Scheme, with the exception of countries and territories which have attained a high
level of development.  The exclusion is based on objective criteria.  GSP benefits will not be granted
to countries which are members of OECD or have a free-trade agreement with Switzerland.  Excluded
are also countries and territories which the Development Assistance Committee (DAC) of the  OECDhas classified as a most advanced developing country or territory under Part II of its list of the
development aid recipients.
Scope of preferences
Agricultural products – Switzerland grants preferences for a large number of agricultural
products.  LDCs are exempt in most cases of any duty.
Industrial products – Switzerland grants preferences to all industrial products liable to duty.
The products covered by this system are admitted duty free with the exception of textiles and clothing,on which, however, preferential reductions amounting to 50 per cent of the normal rate are granted.
Switzerland does not apply any quotas.  The least-developed countries benefit from exemption of all
industrial products.  Some products originating from China, North Korea and Macao only benefit
from a reduced degree of preferences.
The completed and updated tariff-scheme can be obtained at the Swiss Customs Office.
Rules of origin applicable to the Swiss scheme of preferences
The rules of origin in the Swiss scheme are si milar to the rules of the European Union (EU)
and of Norway.
The Swiss Scheme includes rules of origin with which the goods must comply to qualify for
GSP-treatment.  To satisfy the rules of origin the goods have to be either wholly produced in the
beneficiary country or they must have undergone working or processing in a beneficiary country
according to specific processing criteria laid down in the regulations.  As of 1 October 1998 the list
rules for industrial products have been changed by harmonizing the rules of origin with those of thepan-European cumulation system.
Swiss trade-related technical assistance under the various agreements:
Switzerland provides trade-related technical assistance on the following lines:
(a) Capacity and institutional building in the trade policy area, e.g. policy advice to
capitals (e.g. Switzerland is working with Mr. A. Dunkel, former Executive Director
of GATT), trade negotiations support in Geneva (Switzerland has created "Aitic",
Agency for International Trade Information and Cooperation in Geneva), training ontrade policy issues (e.g. with the world Trade Institute in Bern and UNITAR, mainly
in Central Asia), support for implementation of WTO Agreements (e.g. with WTO)
supported;
(b) by measures aiming at strengthening the supply aide, e.g. transfer of clean technology
(e.g. setting up of Cleaner Production Centres in several developing countries),
measures aiming at lowering transaction costs (several programmes with theInternational Trade Centre (ITC) in Geneva;  andWT/TPR/M/77/Add.1
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(c) by measures improving market access for goods and services, e.g. tariff concessions
(GSP);  import promotion (through SIPPO:  Swiss Import Promotion Programme –
OSEC), technical assistance in the area of standards and conformity assessments
(technical assistance programmes with the International Standardization
Organization).
(3) T RADE POLICY INSTRUMENTS
Question (United States)
The report notes that the main trade policy instrument is the customs tariff, consisting
entirely of specific duties.  As a result the tariffs are highly dispersed, giving rise to a wide range
of ad valorem  equivalents.  What is Switzerland do ing to increase the transparency and
predictability of these tariffs?
Answer (United States)
Switzerland has notified in the WTO its specific duties as well as the ad valorem  equivalents.
The Swiss tariff overall average (including preferential trade) is very low.  In 1999, the incidence was
less than 0.3 per cent for industrial products (HS 25-97) and 0.97 per cent for the whole tariff
(HS 1-97).  Furthermore, the duties do not change often and are usually lowered and not increased.
This is a central point regarding transparency and predictability.
Question (India)
Paragraph 11 states that while the overall tariff protection measured by ad valorem
equivalents averages around 9 per cent, the tariffs are highly dispersed and the imposition of
specific duties give rise to a wide range of ad valorem  equivalents.  Paragraph 12 suggests that
the maximum rate of 678 per cent applies to out-of-tariff quota imports of meat and edible offal
of poultry while a rate higher than 400 per cent applies to some products including dairy
products, live plants and specified edible vegetables.  Paragraph 13 notes that the ceiling
bindings on mostly agricultural products and clothing, with bound duties reaching 770 per cent
provide an unpredictable climate for the exporters from trading partners.
Answer (India)
See general declaration.
Question (India)
Paragraph 13 further notes that at the end of June 2000, the applied duties were found
to be higher than the bound tariffs for three tariff lines at the HS eight-digit level.
Switzerland may clarify the position.  We may also be informed if any corrective
measures are being taken so that  such instances do not recur.
Answer (India)
For the three items, the reason for the too high applied MFN duty is a copy error dating from
the transfer of the Uruguay Round schedule into the revised schedule according to the second HSWT/TPR/M/77/Add.1
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revision;  the impact on trade is insignificant.  These mistakes are likely to be corrected by mid-2001
in the framework of relevant WTO and national procedures.
(4) S ECTORAL TRADE POLICY DEVELOPMENTS
Question (United States)
Could Switzerland please explain the “prise en charge” system on imports of certain
agricultural products under which the allocation of tariff quotas is contingent upon local
purchase?
Answer (United States)
The prise en charge system applied by Switzerland refers to the importer's obligation to buy a
certain proportion, in relation to tariff quota imports, of local food of the same type during a given
period.  It is a tariff quota allocation method agreed on during the Uruguay Round which:
- From a legal point of view, constitutes a domestic measure with no impact on the
rights of WTO Members and does not violate any of Switzerland's obligations under
the different WTO Agreements;
- from an economic point of view, does not represent any restriction on imports in
addition to the restriction inherent in any quota system – tariff quota in this case – and
does not infringe any of Switzerland's quantitative market access commitments, sinceall quotas may be filled and the origin, quality and price are not affected.
(5) T
RADE POLICY AND TRADING PARTNERS
Question (United States)
The report notes that the steps Switzerland ha s taken to adjust its economy to the new
international economic environment have resulted  in a  more efficient allocation of resources
and better trade performance.  Reforms are still incomplete in certain highly protected sectors
like agriculture.  What is the Swiss Government doing to make them more certain?
Question (India)
Paragraph 22 suggests that further liberalization of the highly protected sectors like
agriculture could enhance the competitive framework and contribute to lowering domesticprices, to the benefit of the economies.
Answer (United States and India)
We welcome the recognition in the report by the Secretariat of the importance of the reforms
undertaken since the previous WTO trade policy review in 1996 and the fact that it sees notable
progress in major sectors under reform.  But as globalization is a process that is not going to lose its
momentum, the Swiss Government is mindful of the need to further pursue these reforms.  In many
sectors, the first steps taken could lead to other re forms.  For example, following the opening up of the
telecommunications market, the Federal Council initiated discussions on the full privatization of
SWISSCOM last summer;  and the opening up of the electricity sector will serve as a model for
opening up the gas sector, which is smaller in the case of Switzerland.  Again, a specific article in theLaw on Agriculture expressly requires an impact assessment of the PA 2001 reform before the yearWT/TPR/M/77/Add.1
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2004.  More generally, international price comparisons (like the OECD's PPPs) or in-depth reviews of
our trading system (like the present Secretariat document) are carefully studied by Governmentdepartments and will lead to the preparation of new proposals for reforms that should take effect,
depending on Parliament's demands, in the 2003 to 2007 legislature, whereas the years 2001 and 2002
will be marked by the implementation of reforms under the bilateral agreements with the EU.
Question (India)
Keeping in view the comparative advantage  of developing countries in the highly
protected sectors like agriculture and clothing, would Switzerland consider taking a lead in
autonomous liberalization of these sectors?
Answer (India)
In textiles, Switzerland has already a very liberal regime with no quota and no import
licences.  The fact that the Swiss industry lost about 40 per cent of employment in the 1990's clearly
shows that the textiles sector is fully exposed to import competition.  It is therefore not forSwitzerland to take the lead in further autonomous liberalization of textiles.
Question (India)
Paragraph 23 suggests that shifting from the existing system of specific duties with
provisions for modification every quarter, to a system of fixing ad valorem  duties on agricultural
products would ensure transparency and predictability.
We would like to hear the reaction of the delegation of Switzerland.  We would also like
to know if any tariff simplification/rationalization programme is under way to address these
issues which affect the market-access possibilities of its partners, especially those from
developing countries.
Answer (India)
The Swiss tariff overall average (including preferential trade) is very low.  In 1999, the
incidence was less than 0.3 per cent for industrial products (HS 25-97) and 0.97 per cent for the wholetariff (HS 1-97).  Furthermore, the duties do not change often and are usually lowered and not
increased.  Overall, Swiss tariffs can not be regarded as "protective".  Therefore, in general, traders do
not complain, neither about the tariff duties, nor about the procedures.  More than 70 per cent of the
trade is cleared electronically, which reduces the time for administrative procedures remarkably.
Apart from streamlining the procedures, a change to ad valorem  duties is not envisaged, also because
Switzerland participated in the WTO zero-for-zero initiatives (pharmaceuticals, ITA etc.) and aims in
a possible new round of negotiations achieving a zero tariff rate by 2010 for a substantial proportion
of tariff headings for manufactured products.
With regard to the market access for developing countries, the Swiss Generalized System of
Preferences (GSP) provides for duty free or reduced access into Switzerland for industrial but also for
most of the agricultural products.  Due to the distance, the small size of the Swiss market and the fact
that shipments for many countries including Switzerland arrive either in Rotterdam or in  Genova (and
are statistically considered as imports from the EU) or other problems, the GSP is not used to a full
extent, especially by small exporters.WT/TPR/M/77/Add.1
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I. ECONOMIC ENVIRONMENT
(1) M AJOR FEATURES OF THE ECONOMIES
(2) E VOLUTION OF THE ECONOMIES
(3) T RADE PERFORMANCE AND FOREIGN INVESTMENT
(i) Trade in goods and services
Question (Uruguay)
Could Switzerland explain why, if economic growth has induced a rise in imports in
recent years, the share of agricultural products in total imports has recorded a downward trend
despite the reforms launched in 1993, and why that share has remained under 10 per cent of
total imports?
Answer (Uruguay)
In absolute terms, statistics show that imports of agricultural products rose in recent years
from an average of 6.9 billion francs over the period 1990-1992 to 8.2 billion francs in 1999, i.e. close
to 20 per cent.  However, their share in total impor ts fell owing to the stronger rise in imports –
approximately 27 per cent – in the other economic s ectors over the last decade.  Furthermore, while
the share of agricultural imports in total imports is admittedly less than 10 per cent, Switzerland has
never fixed a quantitative target for agricultural imports as a share of total imports.
(ii) Foreign investment
Question (Hong Kong, China)
It is observed that Switzerland recognizes the need for inclusion of investment in the
WTO framework with a view to promoting furth er liberalization of investment.  In line with
this broad objective, does Switzerland envisage any specific plans to further liberalize its
current domestic framework to encourage foreign investment?  If yes, what are the details?
Answer (Hong Kong, China)
Due to the close relationship between trade and investment, Switzerland supports the
establishment of an agreement on investment in the WTO.  The cornerstone of such an agreement
should be the principles of national treatment and of the most-favoured-nation.  Other key dispositions
ought to be full protection and security, free transfer of the amounts relating to investment,
dispossession and compensation.
Switzerland's foreign investment regime is very liberal;  measures in force have no impact on
commercial activities and aim mainly at restricting access to real estate for holiday homes by non-residents.  This implies that no further liberalization of the Swiss foreign investment regime is
envisaged.WT/TPR/M/77/Add.1
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(4) O UTLOOK
Question (United States)
The report notes that new reforms are planned in sectors such as energy.  When is the
electricity market law, which allows third part y access to the national grid, expected to be
adopted?
Answer (United States)
In order to avoid any misunderstanding, third party access will be provided not only to the
national grid, which will basically cover the transmission level, but also to the grid(s) in general.
The electricity market law is expected to be adopted by the Swiss Parliament at the end of its
present session (end of December 2000).  Then this law will be finally subject to a popular
referendum which has already been announced by opponents.
II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES
(1) I NSTITUTIONAL FRAMEWORK
(2) P OLICY FORMULATION AND IMPLEMENTATION
(3) P OLICY OBJECTIVES
(4) L AWS AND REGULATIONS
Question (Chile)
Paragraph 10 on page 17 in the subsection entitled "Policy Formulation and Implementation"
of the Secretariat report states that international laws, including the WTO Agreements, take
precedence over Swiss national legislation but that the Swiss Federal Court has not so far held any
WTO provision as directly applicable.  What implications does this have for the implementation of
each one of the Agreements, in particular those with "minimum standards" like the TRIPSAgreement?  Is the confirmation of the Swiss Federal Court needed?
Answer (Chile)
The direct applicability of a provision of an international agreement to which Switzerland is a
party is examined by the Federal Court (in the final instance) only in the context of a lawsuit
involving the provision, but never a priori.  To date, no case in point has met the requirements of
direct applicability of a rule of a WTO Agreement (such a rule must grant rights to and impose
obligations on the person concerned, and must be clear and sufficiently concrete to serve as the legal
foundation for a decision by a judge).
Question (Hong Kong, China)
It is mentioned that the establishment of various forms of commercial presence in
Switzerland (joint-stock company, cooperative soci ety, enterprises withou t juridical personality)
is subject to residency requirements.  Would Sw itzerland consider relaxing the requirements so
as to encourage foreign participation in investment?WT/TPR/M/77/Add.1
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Answer (Hong Kong, China)
The historical reason of nationality and residency requirements is to ensure that the directors
of a company can more easily be brought to court in case of unlawful behaviour.  For the time being
the existing legislation in this connection is under examination by the competent administration.
Question (Hong Kong, China)
We note that harmonization of differential investment requirements among cantons is
under way.  We would be interested in knowing the progress of the harmonization.
Answer (Hong Kong, China)
The Federal Law on Internal Market from 1995 is aimed at establishing the fundamental
principles of market access throughout the Confederation.  The law gives all persons having their
establishment or headquarters in Switzerland the right to offer goods and services throughout the
whole of Switzerland.  Market access is regulated by  the laws in force in the supplier's own market.
This principle applies to all lucrative activities.  In particular, the legislation of the cantons concerning
cantonal qualifications or those recognized at the cantonal level are to be adapted in order to be valid
throughout Switzerland.  The application of the Federal Law on Internal Market is monitored by the
Swiss competition authority.
Question (Japan)
Are there any information centers to resp ond to inquiries concerning the laws and
system of investment or trade in Switzerland? Please explain what measures the Swiss
Government intends to take in order to improve  the transparency of its laws and system (for
example, inviting public comments, etc.)?
Answer (Japan)
As to investment in Switzerland, the Swiss Go vernment maintains two specific units that
provide information:  Location:  Switzerland (a communication and assistance programme assisting
foreign companies in all matters related to foreign investment in Switzerland) as well as a specialized
unit within the State Secretariat for Economic Affa irs (for more technical matters related to GDI).
As to trade matters:  The Swiss Office for Trade Promotion (OSEC) is the focal point for
information related to exports.  Additional units within the administration provide information on
specific trade-related issues, such as for example the State Secretariat for Economic Affairs (on tradematters in general) and the Federal Customs Administration (on customs-related matters).
All federal laws and regulations applicable to investment and trade issues are also accessible
to the public via the Internet (via www.bk.admin.ch) (systematic collection of Swiss law).
Question (Japan)
What conditions are to be satisfied when Swiss and foreign companies wish to proceed
in joint research and development?  When a fo reign company establishes a research institute in
Switzerland, for how long and under what conditions can a foreign researcher stay in
Switzerland?  In general terms, on the movement of persons, for how long and under what
conditions does the Swiss Government permit foreigners to stay in Switzerland?WT/TPR/M/77/Add.1
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Answer (Japan)
Movement of persons
The admission of a foreign researcher may, in principle, fall within the field of application of
Switzerland's general and specific commitments under the GATS.  In this respect, Switzerland
undertakes, in the context of its legislation on foreigners to respect the principle of equal treatment onthe grounds of nationality in connection with the conditions for entering and staying in Switzerland
for temporary services, subject to certain reservations.
In application of Switzerland's specific commitments, executives and highly qualified
specialists who are essential in supplying a particular service enjoy guaranteed market accessconditions.  A highly qualified worker in the scientific research sector may benefit from this
liberalization if his/her presence is directly linked to the preparation and implementation of an applied
research project - projects which are mainly academic are not covered - for profit-making purposes,
and if he/she is appointed by the private sector.  To the extent that a person meets these conditions,
he/she is in principle entitled to stay for a period of three years (which may be extended to amaximum of four years ) and is not subject to the principle of priority for local workers.
Otherwise, the person will be subject to the ap plicable Swiss legislation.  The law in force in
connection with market access for foreigners is described below in general terms.
The Ordinance on the Limitation of the Number of Foreigners (Ordinance, OLE) together
with the Federal Act on the Temporary and Permanent Residence of Foreigners is the cornerstone ofthe effective regulation regarding foreigners.  The purpose of the Ordinance is a balanced relation
between the Swiss and foreign residents, the improv ement of the labour market structure and a best
balanced employment situation (Article 1 OLE.)
In order to work, foreign citizens need a residence respectively a work permit which entitles
them to take up gainful employment.  In case of stays of over four months such permits can only be
issued within the scope of the quota system established by the Federal Council (Article 12 OLE).
Foreigners without a residence permit are only allowed to take up self-employment by way of
exception.  Besides any change of jobs and profession as well as moving to another canton requires an
authorization.  Before issuing a permit the labour market authorities have to decide whether theeconomic and labour market situation allows an admission and if the general conditions regarding
taking up gainful employment are fulfilled.  (Article 42 and 43 OLE.)
Permits may only be issued if the wage and employment conditions customary at the place
and in the trade are being met (Article 9 OLE) and if no domestic worker who is willing to work
under those conditions can be found.  (Article 7 OLE;  priority of domestic workers.)  The domestic
worker priority is not effective in terms of international transfers of executives and highly qualified
specialists as well as of persons who obtained a residence permit in connection with the family
reunion.  Exceptions concerning the domestic worker priority can be made in case of training and
further education purposes.  According to the principle of recruiting areas (Article 8 OLE) residencepermits for the purpose of gainful employment can be issued to nationals of the member States of the
European Union and the European Free Trade Association (EFTA).
First time work permits can only be exceptionally issued to non-EU/EFTA citizens if they are
highly qualified or if special reasons justify an exception.WT/TPR/M/77/Add.1
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Types of work and residence permits:
Permanent residence permit (C permit)
Is usually granted after an uninterrupted stay in Switzerland of ten years.  Nationals of the
EU/EFTA member States and USA citizens qualify for the permanent residence permit after a stay of
five years according to specific bilateral agreements.  This permit is not subject to any labour marketrestrictions and the holders have practically the same rights and opportunities as native workers,
except the right to vote and elect.
Year round residence permit (B permit)
Is initially issued, as a rule, for the duration of one year and basically can be extended every
year.  Permits falling under the federal quota system are primarily granted to qualified specialists.  For
temporary activities permits limited up to four years may be granted.
Short-time residence permit
Is restricted to a maximum period of 18 months for the purpose of vocational further
education or for activities of limited duration.
Occupational and geographical mobility of year round residents or holders of a border
commuter permit may be granted already within the first year of arrival (Article 29 OLE).  Holders of
temporary permits are usually not allowed to change their jobs, profession or move to another canton.
Subcontract of labour force from abroad to Switzerland is in principle not allowed.Family members (spouse and unmarried children up to 18 years) of year round residents may
be admitted without waiting period if they stay and gainful activity appear to be secure.
Family reunions regarding other permit holders are generally not allowed.  Permits granted to
family members are exempt from the quotas (admission of family, Article 38-39 OLE).
Documented residence permit applications for the purpose of gainful employment have
always to be submitted to the cantonal authority through the employer.  The labour market authorities
do not provide job placement services to foreign workers who wish to work in Switzerland.
(5) A
GREEMENTS
(i) Multilateral agreements
(ii) Bilateral agreementsQuestion (Canada)
According to paragraph 37, Switzerland has two years to eliminate the preferential
treatment granted to indigenous workers; five years to phase out its quota system for work
permits to EU citizens; and seven years to reintroduce the quota system for work permits if it
deems the resultant immigration excessive.  Plea se explain your current regime with respect to
temporary work permits for citizens outside the EU.  Please explain the role, if any, of cantons
in setting their own professional qualification cr iteria.  What recent changes, if any, have been
undertaken and what further reforms are anticipated?WT/TPR/M/77/Add.1
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Answer (Canada)
According to the current regime with respect to temporary work permits for foreign workers
priority is given to workers from EU and EFTA countries.  Nationals of non-EU or non-EFTA
countries are given a work permit primarily if they have particular qualifications and if special reasons
justify an exception from the principle of priority of EU and EFTA citizens (Article 8, Regulation onthe Limitation of the Number of Foreigners).  A new regulation on the Limitation of the Number of
Foreigners will enter into force together with the Agreement on the Free Movement of Workers with
the EU.  The draft of this new regulation, as well as the draft project of a new Foreigners' Law, adopt
a similar regime as is in place today.  The quota for foreign workers from countries outside of the EU
under the new Regulation on the Limitation of the Number of Foreigners has not been fixed yet but itwill be within the same range as today's quotas.
Question (European Union)
Switzerland mentions in paragraphs 38-39 of its Government report in relation to the
launch of a new round that, "La Suisse soutient la reconnaissance au sein de l'OMC des objectifs
du dévéloppement durable et de la protection de l'environnement".   In this respect the EU would
like to ask: What means does Switzerland use to make its trade policy supportive of sustainable
development?  To what extent does Switzerland use, or is planning to use, instruments such as
sustainability impact assessments, as a tool in this sphere?  In particular, what other
mechanisms is Switzerland using to promote synergies between its trade policy and its
environmental policy?
Answer (European Union)
Switzerland takes the view that the best means to make trade policy supportive of sustainable
development is to ensure coherence within the in ternational regulatory framework, such as WTO,
CBD, FAO, UNEP, CSD.  Therefore, Switzerland actively promotes measures which make the trade
regime mutually supportive, especially Switzerland strives to clarify the relationship between trade
rules and MEA.
Switzerland is very much interested to le arn more about the methodology of impact
assessment, such as the one developed in the OECD and the concepts elaborated by the EC
Commission.  On these bases Switzerland will assess the need for developing its own modalities or to
adapt existing models to its own needs.
Question (European Union)
What are the priorities of Switzerland in relation to consultations with domestic
stakeholders?  How does Switzerland consult with civil society (NGOs, business community,
etc.) on the formulation of its trade policy?  What are Switzerland's views on improving WTO
transparency?
Answer (European Union)
Switzerland is of the view that it is primarily up to each WTO Member to consult with its
domestic stakeholders.  The WTO Secretariat may complement such activities with the organization
of symposia and High Level Meetings and other activities, as it has usefully done in the past.
Switzerland has a well developed consultation mechanism leading to a dialogue between theauthorities and all interested circles.  This mechan ism is applied for changes in the constitution, for allWT/TPR/M/77/Add.1
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federal laws, including amendments thereof and for important federal ordinances.  This system is also
applied by cantons and several local authorities.  The leading ministry has to present an evaluationreport on such which then allows the Government to decide on changes to be given to draft texts.  The
same procedure is more and more frequently used for international agreements, such as the results of
the Uruguay Round, the seven sectorial agreements concluded with the EU and the UN accession.
Furthermore, the Swiss Parliament is regularly informed and consulted through its commissions on
foreign policy.  The federal authority responsible for the elaboration of the Swiss position in WTOalso has regular contacts with the business community, labour associations as well as NGOs through a
liaison group which meets regularly, three to four times a year.  Furthermore, this group is consulted
when a negotiation mandate is prepared and has also been consulted during the preparation of this
trade policy review, and especially during the drafting of the government report.
Regarding the improvement of WTO transparency, Switzerland welcomes greater
transparency, but without altering the intergovernmental nature of the WTO.  This e.g. means that
derestriction of documents should be improved (more documents should be restricted more rapidly,
keeping some exceptions).  Also, symposia should be organized for the business community and
NGOs to discuss issues of relevance to them.
Question (Japan)
What prospect and motivation does the Swiss Government have for concluding free-
trade agreements or regional integration agreements with other countries?  How far is the Swiss
Government considering liberalizing its trade beyond tariff liberalization through these
agreements?  Does such liberalization include areas of services (such as financial services), IT(such as e-commerce) and the exchange of persons?
Answer (Japan)
Switzerland is greatly attached to trade liberali zation at the multilateral level.  It hopes that
the conditions will soon be met for the launching of a new round of multilateral negotiations.
However, it has to take account of the growing trend towards liberalization on a preferential
basis of trade on a regional or nearly worldwide scale.  WTO membership and adherence to
preferential agreements reflect an advanced degree of integration in the world economy.
The Swiss economy's dependence on and opening up to foreign markets encourage the Swiss
authorities to seek to ensure that its foreign market access conditions are equivalent to those of
competing countries.
The free-trade agreements that have been concluded are consistent with the rules of the
multilateral trading system.  Switzerland hopes that this trend towards a proliferation of preferential
agreements will stimulate trade liberalization on a worldwide scale.
Switzerland, with its EFTA partners, aims to conclude in the future, as it has just done with
Mexico, agreements covering not only trade in goods (including coverage of government
procurement) but also services, particularly financial services, and investment.  Such agreements
should include provisions on intellectual property and rules of competition.  On the other hand,
movement of persons will be dealt with for the time being solely at the European level, i.e., with the
EU and the EFTA countries.WT/TPR/M/77/Add.1
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Question (Japan)
As a result of concluding bilateral agreements between Switzerland and the EU, a
drastic liberalization would be realized in seven sectors (i.e. agriculture, government
procurement, technical barriers to trade, r oad transport, air transport, free movement of
persons and research).  Are all these agree ments consistent with the WTO agreements?
Answer (Japan)
Yes, these agreements are consistent with the WTO:
Agriculture:  the bilateral agreement forms part of the 1972 – EEC-Switzerland Free Trade
Agreement, which was notified under Article XXIV.Free movement of persons:  for this bilateral agreement the EU and Switzerland have an MFN
exemption under the GATS.
Road transport:  for this bilateral agreement the EU and Switzerland have an MFN exemption
under the GATS.
Air transport:  this field is not covered by the GATS.
Government procurement:  the bilateral agreement extends the scope of the GPA to Swiss
communes and districts and adds to the liberalization further areas and further contracting
authorities.
Technical barriers to trade:  the bilateral agreement is consistent with the WTO TBT
Agreement.
Research:  not a relevant field for the WTO.
Question (Japan)
Upon the conclusion of these agreements, can countries other than the EU enjoy the
same treatment as the EU member countries?
Answer (Japan)
Not without specific negotiations to the extent possible.
Question (Japan)
If not, such countries would suffer a disadvantage due to unequal treatment.  For
example, in the cases of the mutual landing of  air transportation, the liberalization of the
movement of persons and the facilitation of te ndering in government procurement, can such a
situation happen as countries other than the EU member countries would not enjoy the same
treatment as the latter?
Answer (Japan)
Indeed, these countries will not receive the same treatment as the EU.WT/TPR/M/77/Add.1
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Question (Japan)
In footnote 31, it is stated that, “Swiss relations with the EU  members on trade in
services are currently regulated by bilateral agr eements on an individual basis”.  Why are these
bilateral agreements not notified under Article V of the GATS?  Does the Swiss Government
have any intention to make these agreements consistent with Article V of the GATS?
Answer (Japan)
To date, the services agreements between Switzerland and the EU member countries – if we
include the seven recent bilateral agreements – cove r direct non-life insurance, air transport and land
transport.  The agreement on direct insurance does not contain any preferential component in terms ofmarket access and national treatment.  It does, however, provide for mutual recognition for the
establishment of branch offices.  In this regard, it  falls not under GATS Article V, but Article VII.  It
was notified on 6 November 1996 (S/C/N/33).  The air transport agreement covers traffic rights, a
field to which the GATS does not apply.  Lastly, the land transport agreement is MFN exempted by
both the parties to the agreement.
Question (Japan)
The Report states that “[T]he agreement (w ith the EU) on agriculture will provide for
gradual liberalization (dismantling of tariffs and non-tariff measures) of bilateral trade in
certain products”.  Is this agreement consistent with Article XXIV of the GATT?  What
percentage of all the agricultural trade between Switzerland and the EU will be liberalized bythis agreement?
Answer (Japan)
As far as Switzerland is concerned, the agreement, which is preferential in nature, is
consistent with the provisions of the General Agreement on Tariffs and Trade concerning customs
unions and free trade areas inasmuch as it substantially extends preferential market access that was
limited to certain products in the 1972 Free Trade Agreement, and supplements it with more ample
provisions and facilitation measures in the non-tariff area.  There is no strengthening of customs
protection vis-à-vis  third countries.  The market access possibilities defined in the Uruguay Round
remain unchanged and are open, without any restriction or modification, to all of Switzerland's trading
partners, in accordance with the Schedule of Commitments (LIX).  The tariff concessions granted to
the EU are made under preferential tariff quotas.
Total liberalization on a reciprocal basis of trade in cheese after a period of five years
following the entry into force of the agreement is a cornerstone of the agreement.  This liberalization
of the cheese sector affects some 13 per cent of Switzerland's agricultural exports and 3 per cent of its
agricultural imports.  Tariff concessions in the other sectors concerned (horticulture, fruit and
vegetables, bovine and pig meat specialities, (and wine specialities) are not so broad in scope and
often take the form of preferential tariff quotas.
(iii) Regional and other agreements
Question (Chile)
Regarding "Regional and other agreements" on page 24 of the report of the Secretariat,
paragraph 41 mentions that under EFTA Switzerland and Liechtenstein are negotiatingbilateral free trade agreements with six countries .  We understand that with Mexico this processWT/TPR/M/77/Add.1
Page 75
has already been completed.  Could you please in dicate the areas included in the negotiations on
services, government procurement, investment, an ti-dumping, safeguards, intellectual property,
agricultural products and others?  With regard to agricultural products, what sectors are
involved?
Answer (Chile)
On 27 November 2000, the EFTA states signed a free-trade agreement with Mexico.  The
agreement is expected to enter into force on 1 July 2001.
For industrial products customs duties will be dismantled to a maximum level of 5 per cent by
2003, to be completely abolished by 2007.  Rights and obligations of the parties regarding anti-dumping measures are governed by Article VI GATT (94) and the WTO Agreement on the
Implementation of Article VI.  The Agreement affords an opportunity to consult before initiation of
an investigation under the WTO.  Emergency safeguard measures may be taken under specific
conditions (serious injury or serious disturbances caused by increased quantities of imports) for a
limited time and insofar as necessary to remedy the difficulties.  The Agreement provides for priornotification to, and examination by, the Joint Committee established under the Agreement and
requires compensation to be offered to the party against which the action is to be taken.  Given the
absence of a common EFTA policy in this area, trade in agricultural products are subject to bilateral
agreements between the individual EFTA states and Mexico.  These agreements will enter into force
at the same time as the EFTA Mexico agreement.  In the Swiss Mexican agricultural agreement over
400 tariff lines are covered, including basic and processed agricultural products (e.g. coffee, honey,
fruit, juice, flowers, vegetables, soups, sauces, candy, chewing gum, soft drinks, beer, spirits).
Regarding trade in services, the agreement covers  all services sectors, except for air services
other than aircraft repair and maintenance services, selling and marketing of air transport services, and
CRS.  The contracting parties have undertaken to substantially eliminate remaining barriers to trade in
services over a period of ten years.
In connection with direct investment, the free transfer of current payments and capital
transfers is guaranteed.  In addition, three years after the entry into force of the agreement, the
contracting parties undertake to examine further poss ibilities to negotiate co mmitments with regard to
investment.
Mexico and the EFTA states grant each other, on a national treatment basis, access to public
procurement (goods, services, construction contracts) of the central government (in Switzerland the
Federal Government) and a series of public utilities (amongst others, oil and gas, water supply,
electricity, post, telecommunications and public transport).
The parties undertake to protect intellectual property according to high international
standards, taking into account the principles of most-favoured-nation treatment and of national
treatment.  Specific commitments relate to geographical indications, trade marks, designs and patents.
The parties undertake to apply their national competition laws in such a manner as not to
admit calling into question the advantages of the agreement by anti-competitive business behaviour.
The parties will inform each other if anti-competitive behaviour of private entities or measures taken
by the authorities risk to affect the territory or the interests of the other party.
If there should be disputes about the application of the agreement, the parties are obliged to
reach agreement by way of consultations.  If this fails, an arbitration procedure may be invoked.WT/TPR/M/77/Add.1
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Question (Hong Kong, China)
As Switzerland is involved, through EFTA, in a number of EFTA initiatives, we would
be interested to know if there is any specific ta rget or objective, applicable across the board, as
to the sectoral coverage of trade liberalization under such agreements, bearing in mind the
necessity to fulfil, among others, the requirement of "substantially all the trade" under GATT
Article XXIV.
Answer (Hong Kong, China)
The free-trade agreements that the EFTA States conclude with their partners cover industrial
products, processed agricultural products, fish and ot her marine products.  Basic agricultural products,
given the absence of a common EFTA policy in this area, are covered in bilateral arrangements
between each EFTA State and the third country partner.  These bilateral arrangements form an
integral part of the instruments establishing free trade between the EFTA States and the respective
third country partner.
In the case of the FTA signed with Mexico, both processed and basic agricultural products are
covered by the bilateral arrangements.
Question (United States)
What percentage of Switzerland’s imports are covered by preferential trade
agreements, such as Regional Trade Agreements and the Generalized System of Preferences?
Answer (United States)
GSP:  In 1999 there were Swf 7.78 billion ("milliard" in French) out of Swf 153 billions  of
global imports to Switzerland covered by the GSP which amounts to a share of approximately 5 per
cent of all imports.
In 1999, 80.2 per cent of Switzerland's total imports were from partners with which a free-
trade agreement was in force.
Question (Japan)
According to the Report, EFTA members are negotiating bilateral free-trade
agreements with Canada, Mexico and some other countries.  With regard to the agreements
with Canada and Mexico respective ly, when will these be concluded?  What is the date of their
entry into force?  Please indicate details on each agreement.
Answer (Japan)
Mexico:  see the question by Chile above.
As to the agreement with Canada, negotiations are still being conducted.  Details on the
agreement will be given after the negotiations are completed.
Oral question (European Union)
We would like to know whether Switzerland intends to follow the EU's intention to grant duty
- and quota-free treatment to imports from the least-developed countries.WT/TPR/M/77/Add.1
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Answer (European Union)
Switzerland has embarked on work at the domestic level to further extend the tariff
preferences for the LDCs.  We hope to be in a position to announce this new regime no later than the
United Nations Meeting on the LDCs to be held in May 2001 in Brussels.
Question (Discussant)
To what extent is trade with other countries governed by different rules?
Answer (Discussant)
In some very limited cases, an import by Liechtenstein falls under the EEA Agreement, but
not under the bilateral free-trade agreement Switzerland – EC.  The difference in scope concerns
mainly HS chapters 1-24.  This implies that some goods have to pay a duty, when "re-exported" from
Liechtenstein into Switzerland.  In practice, Swiss customs (which are on duty also in Liechtenstein)
announce every import with destination Liechtenstein to the Surveillance Body, check, if the goods
stay in Liechtenstein or not, and, what appropriate measure to apply.
Question (Discussant)
To what extent a new EU/Swiss agreement on technical barriers to trade may close the
gap between EEA and Swiss rules and t hus lead to changes in the MSCSM?
The Swiss-EU Agreement on technical barriers to  trade is different in structure than the
respective field in the EEA.  The latter prescribes a constant adaptation of EC legislation, which is not
the case in the Swiss-EU agreement.  Therefore, the decision to adapt the Swiss legislation to EU
standards is autonomous  and not compelling (though done on a voluntary base on the basis of
Article 4 of the federal law on technical barriers to trade).
III. TRADE POLICIES AND PRACTICES BY MEASURE
(1) O VERVIEW
(2) M EASURES DIRECTLY AFFECTING IMPORTS
(i) Registration, documentation, and customs procedures
Question (Uruguay)
We would be grateful for comments on paragraph 12, which states that the maximum
rate of 678 per cent applies to out-of-tariff quota imports of meat and edible offal of poultry,
and that rates higher than 400 per cent apply to meat of bovine animals, meat of swine, edible
offal, certain dairy products, live plants, and specified edible vegetables, roots and tubers.  How
are such high tariff levels reconciled with the statements made in paragraphs 2 and 6 of the
Report by the Government concerning the importance which Switzerland attaches to open
world markets for goods and services and to firmly supporting the integration of developing
countries into the global economy?WT/TPR/M/77/Add.1
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Answer (Uruguay)
These rates are the result of tariffication of non-tariff measures for these products under the
Uruguay Round negotiations.   They are bound rates agreed upon during the Round.  Switzerland
would nonetheless like to recall that in keeping with the provisions of the Agreement on Agriculture,
it has maintained current access possibilities for the mentioned products in the context of tariff quotas.
Generally speaking, Switzerland's tariff quotas are amply filled and often even exceeded.  Forexample, 15 out of the existing 28 tariff quotas were exceeded in 1999.
(ii) Tariffs, other duties and taxes
Question (Uruguay)
Could Switzerland comment on the statement in paragraph 22 that the further
liberalization of certain sectors by Switzerland and Liechtenstein, mainly agricultural, might
enhance the competitive framework and contribute to lowering domestic prices, to the benefit of
both economies?
Answer (Uruguay)
The reform of Swiss agricultural policy in  1999 (Agricultural Policy 2002) resulted,
inter alia , in the removal of price and marketing guarantees.  One of the two main objectives of this
reform is to set up the liberalization of the agricultural sector at the domestic level.  It has called for
many sacrifices by Swiss farmers, who are now more exposed to the demands of the market.  In
five years, milk and wheat prices, for example, have each fallen by 30 per cent.  The first results of
this reform process may be described on the whole as  positive, and Switzerland intends to pursue this
policy aimed at developing a more market-oriented but at the same time sustainable agriculture that
provides public-interest and environmental services.
Question (Uruguay)
Could Switzerland comment on paragraph 23, which states, in relation to the applied
tariff, that a shift to ad valorem  duties may introduce more transparency in the tariff and reduce
the frequency of modifications, thereby increasi ng predictability?  We would also appreciate
comments on Box III.1 (pages 31-32) concerning the difficulties arising from the system for
determining the level of protection afforded dome stic producers, principally with respect to the
impact of the frequent changes of specific duties by Switzerland and the incentives granted
under various schemes designed to enhance the positi ve escalation of the tariff on the effective
rate of protection.
Answer (Uruguay)
Specific duties and ad valorem  duties;  transparency and frequency of changes
The fact that Switzerland applies specific duties has long been known in the GATT and the
WTO. Moreover, these duties are set out in its Schedule of Concessions annexed to the Marrakesh
Protocol.  In other words, they were negotiated in the Uruguay Round and fully accepted by the
participants in the negotiations.  And Switzerland has also bound the ad valorem  incidence of its
specific duties on industrial products.
(See also the Swiss statement of 6 December 2000)WT/TPR/M/77/Add.1
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Since tariffs in the industrial field are very low (MFN incidence of about two per cent;
incidence, including preferential trade, of about 0.3 per cent), the tariff system no longer plays a reallycrucial role.  Even cheap and bulk goods now pay only a slight duty.
The Secretariat Report is mistaken about frequent changes in customs duties.  The changes
relate to one field alone:  fodder.  Generally speaking, the duties on industrial products are still the
same or have fallen.  For most agricultural products, they have also fallen, and do not change often.
In actual fact, only some 100 tariff lines out of more than 8,000 existing lines, i.e. slightly
more than 1 per cent (!) are changed every quarter.  As to Box III:1, the statements contained in the
last paragraph do not reflect reality.  There are no such incentives granted under various schemes
designed to enhance the positive escalation of the tariff on the effective rate of protection.
Question (Uruguay)
Could Switzerland comment on the statement in paragraph 18 that the simple average
tariff on imports of agricultural products (WTO definition) is 34.3 per cent, while the averagefor manufacturing products is 2.3 per cent?
Answer (Uruguay)
The tariffs applied reflect Switzerland's trade policies both in the industrial sector and in the
agricultural sector.  Border protection is greater in the agricultural sector than in the industrial sector.
This higher protection of the primary sector can be explained, inter alia , by the high cost of
agricultural inputs and generally high wages as a result of which production costs in the agricultural
sector are among the highest in the world.
Question (Norway)
The Secretariat Report mentions that the Swiss and Liechtenstein General System of
Preferences was revised in 1997 and that certain  former beneficiaries were graduated on the
basis of criteria developed in the OECD Development Assistance Committee (DAC).  Norway
would appreciate it if you could expand on the information provided on this issue.
Answer (Norway)
The rule of automatically granting tariff preferences to countries which declare themselves
developing countries has been abandoned as of March 1997.  GSP treatment was abolished for
countries which have achieved a high level of economic development.  For the selection of countrieswhich have been excluded from the scheme two objective criteria have been applied.  The first one is
OECD membership.  GSP benefits is no longer granted to countries which are members of OECD.
The second criterion is based on OECD evaluation.  The Development Assistance Committee (DAC)
of the OECD establishes a list of development aid re cipients.  This list contains two parts.  Part I
includes "developing countries and territories".  For OECD donor countries only aid to theserecipients is considered as official development assistance (ODA) and is taken into account in the aid
statistics of the OECD donor countries.  In Part II are listed "countries and territories" for which aid
flows are not considered as ODA and therefore not incl uded in the statistics of performance of  OECD
donor countries.  The assessment of the development status and therefore the inclusion in Part I or
Part II of the DAC list is based on objective developm ent indicators and an analysis of needs.  The list
is revised by the DAC on a regular basis.  Follow ing countries have been graduated from the Swiss
scheme as per 1 March 1997 (entry into force per 1 March 1998):  Cyprus, United Arab Emirates,WT/TPR/M/77/Add.1
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Brunei, Hong Kong, South Korea, Kuwait, Qatar,  Singapore, Bahamas, Bermuda, Cayman Islands,
Mexico.
The revision of March of March 1997, however, had the effect of globally extending the
beneficiary list, as we added following countries to the Swiss scheme:  South Africa, Eritrea, Gaza
and Westbank, Federation of Micronesian States as well as the following CIS countries:  Armenia,
Azerbaijan, Georgia, Kazakhstan, Kyrgyz Re public, Moldova, Uzbekistan, Tadjikistan and
Turkmenistan.
Question (Japan)
According to the tariff schedule, Switzerland imposes specific duties on all products,
regardless of whether they are agricultural or industrial products.  Imposing such specific
duties should be decided after due consideration of the character of the respective products.
Japan would like to seek the explanation by th e Swiss Government how such consideration has
been carried out regarding each pr oduct subject to specific duties.
Answer (Japan)
Imposing specific duties.
Like most other tariff schemes, the Swiss one is also based on the harmonized system which
follows the line of production from basic materials to semi-finished and finished products.  Following
this line, the value of the respective good is increasing.  On an ad valorem  based duty, this is reflected
directly ;  in the Swiss specific duty scheme, the value is considered indirectly  for the calculation of
the duty.  This means, the ad valorem  charge (which is also notified in the WTO) is the starting-point
for the calculation of the specific duty.
Question (Japan)
As the value of the specific duty is in proportion with the amount of imports, it has the
advantage of not being influenced by the fluctuation of import prices compared with the
ad valorem  duties.  On the other hand, it is often claimed by exporting countries that these
specific duties are not transparent and conceal hi gh duties.  What is the Swiss Government’s
view?
Answer (Japan)
Specific duties and price fluctuation.
The Swiss tariff overall average (including preferential trade) is very low.  In 1999, the
incidence was less than 0.3 per cent for industrial products (HS 25-97) and 0.97 per cent for the whole
tariff (HS 1-97).  Taking into consideration this fact, price fluctuation becomes very unimportant for
duty collection, but in general it is true, specific duties are independent of such fluctuations.Furthermore, the duties do not change often and are usually lowered and not increased, which plays
its role regarding transparency.  Apart from the fact, that Switzerland has notified also the ad valorem
equivalent for the respective specific duties, the calculation of the latter should not cause any major
problems for exporters, since the weight can be usually found on the customs forms also.WT/TPR/M/77/Add.1
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Question (Japan)
According to the Swiss tariff schedule, all th e tariffs are indicated per 100 kg.  Is 100 kg.
the minimum unit for imposing tariffs, or, can tariffs be imposed on products less than the
100 kg. in proportion to their weight?  For ex ample, for a cassette deck (HS8519) weighting
1 kg., is it correct to understand that a 0.84 CHF tariff is imposed when the tariff schedule
indicates a duty of 84 CHF per 100 kg.?  If not, and the 100 kg. is the minimum unit forimposing tariffs, Japan thinks that a smaller minimum unit should be used. Japan is under the
impression that the retail price of products such as colour televisions, is higher in Switzerland,
than in Asian countries.  Please explain, using the examples of the following specific products,
what procedures the import goods have to undergo when entering Switzerland, and at what
price such goods are sold:
(a) Colour televisions produced in Asia (20 kg., 1,000 CHF)(b) colour televisions produced in Holland (20 kg., 1,000 CHF)
(c) automobiles produced in Asia (1,000 kg., 10,000 CHF)
Answer (Japan)
The Swiss tariff law states in its Article 2, that the calculation of the duty is based on
100 kilograms, but rounded to the next 100 grams.  This means a cassette deck of 1 kilogram and
20 grams is charged under a weight of 1.1 kilogram, but except for travellers, customs duties under5 Swiss Francs are not collected.
Asian colour televisions under HS8528 pay 58 Swiss Francs per 100 kilos which makes
CHF 11.60 for the example in Japan submission (or somewhat more than 1 per cent of the state price
of 1,000 CHF).  Depending on the weight of a single colour TV, the duty is even less than 1 per centof the respective value.
A colour TV from the Netherlands can enter duty free under the free trade agreement
Switzerland – EC from 1972, under the assumption, the rules of origin are fulfilled.
However, apart from the customs duty, 7.5 per cent VAT must be also paid.
According to a substantially higher price level in Switzerland (compared to some Asian
countries), the retail price for a TV is higher than in Asia, not as a result of the import duties.
The procedure for cars is basically the same.  Depending on the type, the customs duty is
ranging between 12 and 74 CHF per 100 kg.  In addition, a 7.5 per cent VAT and a 4 per cent motor
vehicle tax has to be paid.
Oral question (Malaysia)
Would Switzerland be ready to review the duties on cocoa, rubber and timber products
in view of the strong tariff escalation?
Answer (Malaysia)
Malaysia is eligible to benefit from the Swiss GSP, under which rubber and timber products
may be imported into Switzerland at zero duty provided they are accompanied by a certificate ofWT/TPR/M/77/Add.1
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origin.  In the case of basic cocoa products, the same tariff treatment applies as for rubber and timber.
For other cocoa products, the GSP involves substantial reductions in import duties.  Consequently,tariff escalation has no significant impact on access to the Swiss market for these products under the
GSP.
As to the question of tariff escalation in general, most of Switzerland's trade (more than
75 per cent) is done under preferential schemes (free trade agreements, GSP), and the impact ofescalation should be seen in that perspective.
Oral Question (Czech Republic)
It is stated in the report by the Secretariat that Switzerland and Liechtenstein have no
specific legislation on customs valuation.  Good s whose packaging ensures sufficient protection
against damage during transport are cleared on  the basis of their gross weight.  Unpacked
goods and those whose packaging do not provide su fficient protection against transport damage,
are liable to an additional tare.  The decision  as to whether packaging is adequate determined
by the packaging requirements that the same type of goods must meet for international
transport by rail, in homogeneous loads.  In this connection, we would appreciate if the Swiss
and Liechtenstein delegations could comment on how the term "same type of goods" is
interpreted.
Answer (Czech Republic)
The Czech delegation is asking on how the term "same type of goods" is interpreted in
relation to the Swiss Regulation on the "additional tare".  The term "same type of goods" means in
practice the " the same product ".  If a certain type of product (electronic apparatus, furniture etc.), is
transported for example in a truck and only protected by shrinking foils but not packed into boxes,
this type of packaging material would not be sufficient for international transport by rail.  The
"additional tare" according to the above-mentioned Swiss Regulation would apply in such a case.
Question (Discussant)
Prospects for changing from specific to ad valorem  duties?
Answer (Discussant)
The Swiss tariff overall average (including preferential trade) is very low.  In 1999, the
incidence was less than 0.3 per cent for industrial products (HS 25-97) and 0.97 per cent for the whole
tariff (HS 1-97).  Furthermore, the duties do not change often and are usually lowered and notincreased.  Overall , Swiss tariffs cannot be regarded as "protective".  Therefore, in general traders do
not complain, neither about the tariff duties, nor about the procedures.  More than 70 per cent of the
trade is cleared electronically, which reduces the time for administrative procedures remarkably.
Apart from streamlining the procedures, a change to ad valorem  duties is not envisaged, also because
Switzerland participates in the WTO zero-for-zero initiatives (pharmaceuticals, ITA etc.) and aims ina possible new round of negotiations achieving a zero tariff rate by 2010 for a substantial proportion
of tariff headings for manufactured products.WT/TPR/M/77/Add.1
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(iii) Import prohibitions, licensing, and controls
Question (Uruguay)
Could Switzerland comment on the tariff qu ota allocation mechanism based on the
"prise en charge " system – which makes the allocation of tariff quotas contingent on the
purchase of like domestic products from producers in Switzerland or Liechtenstein – as well ason the mechanism based on pa rticipation in auctioning?
Answer (Uruguay)
The " prise en charge " system applied by Switzerland refers to the importer's obligation to buy
a certain proportion, in relation to tariff quota imports, of local food of the same type during a given
period.  It is a tariff quota allocation method agreed on during the Uruguay Round which:
- from a legal point of view constitutes a domestic measure with no impact on the
rights of WTO Members and does not violate any of Switzerland's obligations underthe different WTO Agreements;
- from an economic point of view, does not represent any restriction on imports in
addition to the restriction inherent in any quota system – tariff quota in this case – and
does not infringe Switzerland's quantitative market access commitments, since all
quotas may be filled and the origin, quality and price are not affected.
Like the " prise en charge " system, the tariff quota allocation system in the form of an auction
is a transparent, equitable internal measure which ensures at least partial transfer of the importer's
inherent income from any quota to the government.  Auctioning does not constitute a border trade
measure, within the meaning of Articles II and VII of the GATT 1994.  The rights and interests of
exporters are not affected.
(iv) Trade sanctions
(v) Contingency trade remedies
Question (Discussant)
Use of anti-dumping or countervailing measures.
Answer (Discussant)
Switzerland does not apply antidumping measures or countervailing duties and has no
legislation to this effect, given the self-executing character of WTO Law.
(vi) Rules of origin
Question (Hong Kong, China)
It is mentioned that under a tolerance rule of  the preferential rules of origin of the
EU/EFTA, the incorporation of semi-manufactured inputs from third countries, up to a
percentage threshold, is allowed.  Yet, textiles and clothing are excluded.  We are interested to
know the rationale for the exclusion.WT/TPR/M/77/Add.1
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Answer (Hong Kong, China)
The so-called tolerance rule allows for small inputs (processing) from outside the free-trade
area.  However, textiles are excluded .  They are subject to special treatments, not only in the
preferential field .  Nevertheless, product-specific rules in the respective annexes or protocols enable a
deviation from this exclusion to a certain extent.
Question (United States)
Please confirm that inputs or materials imported into Switzerland that originate outside
the pan-European cumulation system of orig in – and used in the manufacture of goods
originating under the cumulation system and subsequently exported – are not eligible fordrawback or exemption of customs duties.
Please provide the specific date or dates that Switzerland implemented the "no
drawback" rule for trade with each country invol ved in the pan-European cumulation system of
origin, along with the annual amount of trade in such inputs or materials affected by thischange in treatment.
Please describe any exception Switzerland m ay allow to the "no drawback" rule in its
preferential protocols for agricultural products or other inputs if exported to Switzerland from
countries participating in the pa n-European cumulation system.
Answer (United States)
The so-called pan-European cumulation system entered into force on 1 January 1997 and does
not provide for the use of drawback .  Turkey entered the system on 1 February 2000.
Switzerland did not apply drawback under the free trade agreements, even before the entering
into force of the pan-European cumulation system;  therefore, separate data is not available.
(vii) Local-content and local-purchase requirements
(viii) Standards and other technical requirementsQuestion (Chile)
With respect to "Health, phytosanitary and environmental protection regulations",
paragraph 55 on pages 44-45 of the Report of the Secretariat states that imports of fruitsusceptible of being infected are banned.  What scientific criteria are used to determine the
fruit's susceptibility of being infected?
Answer (Chile)
The import ban applies solely to contaminated fruits.  The list of fruit species possibly
affected by such contamination is modelled on the list of fire blight host plants prepared by the
European and Mediterranean Plant Protection Organization (EPPO).
Question (European Union)
On page 43, paragraph 52 of the Secretariat Report, it is stated that Switzerland has
concluded a MRA with the EU.  Has Switzerland concluded a parallel mutual recognitionWT/TPR/M/77/Add.1
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agreement on conformity assessment with the EF TA-EEA States as referred to in the preamble
of the MRA with the EU?
Answer (European Union)
Switzerland is about to finalize an MRA with the EEA/EFTA States .  It will enter hopefully
into force at the same time as the MRA Switzerland-EC.
Question (European Union)
Is Switzerland involved in any other MRA negotiations?
Answer (European Union)
Currently, Switzerland is engaged in MRA negotiations with the Czech Republic and
Australia.
Question (United States)
Please explain the process by which representatives of foreign private associations and
institutions can participate in the Swiss Association for Standardization.
Answer (United States)
Under Article 4 of the Statute of Swiss Association for Standardization (SNV), SNV
membership is in principle open to all communities and persons under private and public law
concerned with the preparation and harmonization of technical rules.  Consequently, the membership
process is the same for foreign organizations as fo r Swiss associations and institutions.  Becoming a
member of the SNV requires a written application submitted for the approval of the Association'sgoverning board (Article 5 of the Statute).
(ix) Government procurement
Question (Japan)
The Report states that "Switzerland conc luded a bilateral agreement on government
procurement with the EU (Chapter II(5)(ii)).  The agreement is to come into effect on
1 January 2000 at the earliest, subject to ratification by the EU member States.  The agreement
provides for the extension of the GPA to purchases by communes, the railways, thetelecommunications services, institutions oper ating in the areas of energy, and by private
companies operating with exclusive or special ri ghts in the areas of water, electricity and
transport.  A best endeavour clause encourages purchasers not to discriminate against suppliers
from other parties to the agreement in procur ement below the relevant threshold values".  In
this regard:
4. Please indicate in a concrete manner which companies can be regarded as "private
companies operating with exclusive or special rights in the areas of water, electricity,
and transport".  Japan asks Switzerland to submit detailed information in accordance
with Article XIX of the GPA.WT/TPR/M/77/Add.1
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Answer (Japan)
The private companies operating in the areas of water, electricity and transport on the basis of
special and exclusive rights according to the bilateral agreement between Switzerland and the EU are
defined in Annex IV B to the bilateral agreement .  That definition corresponds to the definition of
public companies contained in Annex 3 of Appendix I of Switzerland to the GPA, with one
difference:  under the GPA, only public  companies operating in these fields are covered .  Public is
defined in the above-mentioned Annex to the GPA .  The bilateral agreement with the EU covers the
private  companies operating in the above-mentioned fields .  Thus, all companies operating in the
areas of water, electricity and transport on the basis of special and exclusive rights are now covered
by international obligations, be it the GPA (for public ones) or the bilateral Agreement  with the EU
(for private ones), and this with the same threshold values.
Question (Japan)
5. What is the condition to judge whether a co mpany has an "exclusive and special right"?
Answer (Japan)
There is no single definition of "special and exclusive right" for the companies active in these
areas .  The definitions vary according to the area and are contained in Annex IV B of the bilateral
Agreement (same definition as in Annex 3 of Appendix I to the GPA) .  For water e.g. it is the
cantonal or community legislation which defines the requirements, for the electricity and transport
areas it is federal legislation .  The possession of a concession or the right to expropriate is one of the
main characteristics of a company having a special and exclusive right .  The Swiss legal term is
"concession".
Question (Japan)
6. How is "a best endeavour clause" implemented in practice?  Is it correct to understand
that suppliers as well as their products and se rvices from other parties, including Japan, can
enjoy the same treatment as those from the EU?
Answer (Japan)
As the bilateral Agreement has not yet entered into force, the best endeavour clause has not
been implemented yet .  However, what is already clear today is that the treatment under this clause
will not grant bidders from the EU the bid challenge procedures, as is specified in Annex IX of the
bilateral Agreement between Switzerland and the EU .  What is also important in this context is that, in
principle, an entity can consider a bid from any bidder, even if no international obligation requires the
said entity to do so .  In such a case, however, no challenge procedure is available to the said bidder.
Question (Discussant)
I am confident it would be useful to learn from the experience Switzerland has with
extending non-discrimination in public procurement to cantonal and local levels?WT/TPR/M/77/Add.1
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Answer (Discussant)
Non-discrimination between Swiss residents on a cantonal and on a local level was introduced
in 1996, with the Law on the internal market .  Non-discrimination between Swiss bidders and bidders
from a GPA member on a cantonal level was introduced with the GPA in 1996 as well .  With the
bilateral Agreement between Switzerland and the EU , non-discrimination between Swiss bidders and
bidders from the EU will be introduced on the local level when the bilateral agreement will enter into
force next year.  By then, on the federal, cantonal and local levels, non-discrimination will have been
introduced .  A characteristic of the way non-discrimination has been introduced into Swiss law on all
levels is that the federal legislator introduced it on the federal level and the cantons introduced it,
separately, on the cantonal and local levels .  Such procedure required consultations between the
different legislators, but it was thus possible to maintain the constitutional division of power betweenthe Confederation and the cantons in this field .  Due to the short time elapsed between the entry into
force of the new rules and today, it is however not yet possible to give an assessment of the effects of
the liberalization .  The legal impact is subject to a report to be available after 15 December 2000.
(x) Other measures
(3) M
EASURES DIRECTLY AFFECTING EXPORTS
(i) Registration(ii) Prohibitions, controls, quotas, licensing, and voluntary restraints
(iii) Export taxes, charges, and levies
(iv) Export subsidies(v) Duty and tax concessions(vi) Export promotion and finance(vii) Export insurance and guarantees
(viii) Other provisions
(4) M
EASURES AFFECTING PRODUCTION AND TRADE
(i) Subsidies and adjustment assistance
Question (Japan)
The Report states that "Swiss cantons may also grant subsidies (on an individual basis)
to the extent that these do not distort compet ition between firms located in different cantons".
Please indicate, in concrete terms, examples of such subsidies (i.e. the conditions, the sectors to
which subsidies are granted, etc.) that the Swiss cantons supply.
Answer (Japan)
The assistance granted by a number of cantons is based on the competence of the cantons in
matters related to economic development.  The instruments used may include financial aid for start-upcompanies (e.g. guarantees and contributions towa rds internet payments, mostly for SMEs), limitedWT/TPR/M/77/Add.1
Page 88
tax holidays (within the limits of the Federal Law on Tax Harmonization, which restricts undue tax
competition between cantons) as well as assistance related to administrative and other start-upprocesses (e.g. support related to personnel search, search and development of appropriate sites and
office buildings, etc.).  Due to the limited budgets of the cantons, these measures are generally modest
in scope and only of local importance.
(ii) Assistance for research and regional development
(iii) Competition policyQuestion (United States)
The Secretariat's Report states that the Se cretariat of the Competition Commission has
submitted proposals to the Federal Council concerning the introduction of  "Direct penalties",
and that a decision is awaited from the Federal Council.  What sanctions is the Competition
Commission seeking with respect to hard core cartels, and when will the Federal Council adopt
these sanctions?
Answer (United States)
Under the draft revision of the Law on Cartels, direct penalties will be administrative in
character and will consist in imposing a special tax on the offending enterprise (a fine).  The
seriousness of the penalty will depend on the amount of time the restriction has lasted, its importance
and the company's profit therefrom.  The upper limit of the fine is set at ten per cent of the turnover inSwitzerland of the companies concerned in the course of the last three financial years.
Question (India)
We understand that Switzerland's anti-trust laws are weaker than those of many other
industrialized countries.  We would like to hear details of the existing anti-trust laws and also
whether any corrective action is being envisaged.
Answer (India)
The new Law on Cartels and other restraints on competition (LCart) of 6 October 1995,
which entered into force on 1 July 1996, withstands international comparisons.  The OECD has
confirmed this in reviews of Switzerland's economic policies.  However, it has to be acknowledged
that the Law contains one weakness when compared with some countries' legislation on penalties:  it
allows penalties to be imposed only in the case of a further offence, in other words when enterprisescontravene a decision by the Competition Commission, more particularly when the Commission has
prohibited a cartel or an abuse of a dominant position.
To remedy this shortcoming, a draft amendment to the Law, providing for the introduction of
direct penalties, will be submitted to Parliament in 2001.  This draft amendment, adopted by theFederal Council this year, is now the subject of a consultation procedure.
Oral question (New Zealand)
The Secretariat Report notes that competition remains limited by monopolies or
exclusive rights in a number of service areas;  how will some of these issues be addressed in
future?WT/TPR/M/77/Add.1
Page 89
Answer (New Zealand)
Most of the fields involving exclusive rights, such as those appearing in Table AIII.5 of the
Report are the result of natural monopolies (for example, air traffic control) or of a deliberate policy
(exclusive rights of the Swiss Railways or fire insurance monopolies in certain cantons).  In some of
these fields, changes in the scope of the exclusive rights have already been made.  This is true, for
example, of rail transport, where access to the railway network is possible under certain conditions forthe transport of goods.  Some fields, like the privileges granted to Swissair for air routes, are not
covered by WTO Law.  Again, some descriptions in the Report are inconsistent with the current
situation, as reflected moreover in Switzerland's GATS commitments;  this is true, for instance, of
telephone service transmissions, which have been liberalized and on which there are no restrictions,
either in terms of market access or in terms of national treatment.  Similarly, it is incorrect to maintainthat the SSR is the sole nationwide broadcaster .  In fact, Switzerland has around 70 regional
broadcasting stations and programmes by many foreign broadcasters are available in Switzerland.
(a) Legislation
Question (Canada)
According to paragraph 99, the Law on Cartels and other Restraints on Competition
applies in principle to all anti-competitive arrangements producing their effects in Switzerland.
... .  Exceptions to the application include … areas where the Federal Council may grant
exceptional authorization on the grounds of co mpelling public interest.  Has the Federal Council
recently had the opportunity to make such authorizations? If yes, in which activities and onwhat public interest grounds? Please provide details on the criteria employed by the Federal
Council in authorizing such excep tions? Are the decisions of the Federal Council challengeable
in the Swiss Federal Court?
Answer (Canada)
The Law on Cartels and other Restraints on Competition (LCart) specifies that, at the request
of the enterprises concerned, the Federal Counc il may grant an exceptional authorization on the
grounds of compelling public interest where a competition agreement, a business practice by an
enterprise with a dominant position or a concentration has been prohibited by the CompetitionCommission.  The Federal Council is not competent to exempt particular areas on the grounds of
compelling public interest.  The exemption relates so lely to a specific practice or concentration which
has been prohibited by the Competition Commission.
To date, only one request for exemption for reasons of compelling public interest has been
submitted to the Federal Council.  The request was made further to the Competition Commission's
1998 prohibition of the musical scores cartel. The Federal Council did not grant the exemption
requested and the prohibition of the cartel was therefore confirmed.
As the Federal Council states in its message concerning the Law on Cartels and other
Restraints on Competition (LCart), when the Fede ral Council receives a request for an exemption, the
compelling public interest requirements must be severe .   As noted by the Federal Council, "not every
public interest warrants such authorization:  the public interest claimed must take precedence over the
major drawbacks of the agreement or practice from the standpoint of competition.  The justification
invoked must occupy a significant place on the scale of values of public interests.  […]  Generally
speaking, the competition agreement to be justified will also have to be a necessary and not merely a
useful means of addressing the public interest concerned;  appropriateness does not suffice to satisfythe necessity requirement."   (Federal Council message concerning the Federal Law on Cartels andWT/TPR/M/77/Add.1
Page 90
other Restraints on Competition of 23 November 1994, page 100).    Since no exceptional
authorization has been issued so far by the Federa l Council, it is impossible to provide more detailed
information about the conditions for granting such authorizations.
It should be noted that, under Article 31 (LCart ), an exceptional authorization by the Federal
Council lasts for a limited period and may be accompanied by conditions and costs.  The decisions of
the Federal Council on exceptional authorizations are not open to appeal.
(iv) Protection of intellectual property rights
Question (Argentina)
Questions on TRIPS:I. In paragraph 112 of Section III(4)(iv) entitled "Protection of Intellectual Property
Rights", the Secretariat points out that the Swiss Law on the Protection of Trademarks and
Geographical Indications extends protection to indications of source in the field of services,indirect indications of provenance, and types or recipes that imply a geographical origin.
Could Switzerland explain what these "types or  recipes that imply a geographical origin" are?
Answer (Argentina)
Article 47(1) of the Law on the Protection of  Trademarks and Indications of Source of
28 August 1992 (LPM;  RS 232.11) specifies that indication of source means "any direct or indirectreference (= geographical indications) to the geographical source of goods or services, including
reference to properties or quality in connection with the source".
The "reference to properties or to quality
 in connection with the source to the source" covers
such expressions as "product prepared from a Swis s/Argentine/etc. recipe" or "Swiss/Argentine/etc.
type or style product".  Under Article 47(1) of the Law, these expressions are regarded as constituting
indications of source.  It is therefore forbidden to use such indications of the quality or properties of a
product by suggesting a geographical source that does not correspond to the genuine origin of the
product (Article 47(3) of the Law).
Question (Argentina)
2. In paragraph 118 of Section III (4)(iv) en titled Protection of Intellectual Property
Rights, the Secretariat notes that the Swiss Federal Tribunal upheld the principle of national
exhaustion in relation to patent rights.  Could Switzerland provide details on this ruling (case,year, content)?  We would also like to know whether parallel imports involving patent rights are
authorized.
Answer (Argentina)
The First Civil Chamber of the Federal Tribunal confirmed the principle of national
exhaustion in relation to patents in a ruling issued on 7 December 1999 in the Kodak SA v. Jumbo-
Markt SA (ATF 126 III 129ss, currently being published).  The ruling is already available in its
entirety (but in German only) on the Federal Tribunal's site:  http://www.bger.ch/.WT/TPR/M/77/Add.1
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Question (Argentina)
3. In paragraph 116 of Section III (4)(iv) en titled Protection of Intellectual Property
Rights, the Secretariat notes that changes were  made to the Swiss Federal Law on Patents
relating to "the conditions for granting compul sory licences, and the circumstances in which a
patent is considered to be exploited".  It adds that "The law provides for the revocation of a
compulsory patent if its granting 'fails to sa tisfy the needs of the Swiss market' within two
years".  Could Switzerland please clarify:  (1) Whether its legislation envisages the granting of
compulsory licences;  (2) the nature of the ch anges introduced to modify the previously
established conditions;  (3) the conditions for th e granting of compulsory licences;  (4) the
criteria for determining that the granting "fails to satisfy the needs of the Swiss market";  (5)
the system for the granting of compulsory licences?
Answer (Argentina)
Ad 1:  The Law on Patents of Invention (LBI, RS.232.14) sets out the conditions for granting
compulsory licences in Articles 36 to 40(b).
Ad 2:  The first change is a clarification:  in the event of non-exploitation of the invention in
Switzerland, the Court may grant only a non-exclusive licence (cf. Article 31(d) of the
TRIPS Agreement).  The second consisted in introducing in Article 37 of the Law the principle, set
out in the TRIPS Agreement, that importation is equivalent to exploitation of the invention in the
country.  In accordance with Article 31(c) of the TRIPS Agreement, Article 40(a) of the LBI governs
the granting of compulsory licences in semiconductor technology.  Article 40(b) of the LBI covers, in
a single provision, a number of minimum requirements established in the TRIPS Agreement for the
granting of compulsory licences (TRIPS Agreement, Article 31(a) to (c) and (e) to (h)).
Ad 3 and 5:  LBI Article 37(1) sets out the conditions for the granting of compulsory licences.
After a period of three years from the issue of the patent but at the earliest four years after depositingit, anyone justifying an interest may request the court, in a civil action, to grant a non-exclusive
licence if the patent holder has not exploited the invention sufficiently in Switzerland and cannot
justify the inactivity.  The same applies, under LBI Article 40, where the public interest so requires
and the patent owner refuses, without sufficient reason, to grant the requisite licence.  In the field of
semiconductor technology, an exclusive licence may be granted solely to remedy a practice that hasbeen declared anti-competitive further to a judicial or administrative proceeding (LBI Article 40(a)).
Ad 4:  To date, in no case has LBI Article 38 ever been applied so that it is difficult in the
absence of any case-law, to determine the criteria that would apply.  At best it should be borne in
mind that this provision is intended to ensure that the market is supplied and not to stimulate industrialproduction in Switzerland.
Question (Argentina)
4. With respect to the "enforcement of intell ectual property rights", could Switzerland
indicate the occasions on which the Swiss courts have ordered precautionary measures?
Answer (Argentina)
Switzerland has no statistics on the granting of precautionary measures .  However, it is
common for the applicant to request such measures when alleging a violation of an intellectual
property right, so that if the request is substantiated, the courts will comply. It should also beWT/TPR/M/77/Add.1
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emphasized that decisions on requests for precautionary measures are not published separately, but
appear only in the substantive judgement.
Question (Argentina)
5. In paragraph 15 on page 65 (Section IV(2) on agriculture), the Secretariat points out
that as a result of the "Agricultural Policy  2002" (AP 2002) initiative, a new Federal Law on
Agriculture was adopted which came into force on 1 January 1999.  Footnote 99 (page 57 of the
Report of the Secretariat) in the section on inte llectual property mentions this Law as one of the
Swiss legislative instruments protecting geographical indications.  (a) Could Switzerland please
indicate whether prior to this Law agricultural products were protected in Switzerland as
geographical indications?  (b)  Given that th e mentioned Law was passed in response to the
AP 2002 initiative, which, as stated in paragraph 15 on page 65 is aimed at, inter alia ,
introducing structural improvements, cost cutting, liberalization of markets, and state
assistance predominantly through direct payments, we would like to know how the protection of
"geographical indications" for agricultural produc ts introduced by the said Law fits into this
policy;  (c)  Could Switzerland indicate whether the agricultural products protected bygeographical indications enjoy any kind of agri cultural aid different from that granted to
products which do not enjoy such protection (direct payments, ecological payments, financial
contributions, concessionary credits, price compensation, refunds, tariff protection, subsidies,
financial assistance, government involvement in marketing, price systems and guaranteed
margins, etc.)?  (d)  Does Switzerland consider that the protection of agricultural products by
geographical indications under the Federal Law on Agriculture will increase competitiveness in
the sector, which is one of the objectives of AP 2002?  Why?
Answer (Argentina)
Ad a:  Before the entry into force of the Federal Law on Agriculture of 29 June 1998
(RS 910.1), geographical indications for agricultural products already received protection under theLaw on Trademarks and Indications of Source of  28 August 1992 (RS 232.11) and the Law on Unfair
Competition of 19 December 1986 (RS 241).
Ad b:  The new Law on Agriculture does not fall within the framework of the "Agricultural
Policy 2002" report but is intended to guarantee the credibility of designations, to promote the qualityand marketing of agricultural products and processed agricultural products and to issue provisions on
product designation.  Products will thus be designated on the basis of the following characteristics:
preparation in accordance with particular production methods;  the presence of specific
characteristics;  source in mountain regions;  and distinction based on origin .  It is on the basis of the
last point that Switzerland has prepared a system of protection and registration of appellations oforigin and geographical indications for agricultural products and processed agricultural products.
Ad c:  Agricultural products protected by appellations of origin and geographic indications do
not receive any particular financial aid or contributions.
Ad d:  As a result of the implementation of the Law on Agriculture, producers are in a
position to effectively protect  traditional agricultural products with a strong identity, that is,
displaying a quality or other characteristics attributable to their origin .  In this way, producers are able
to give added value to their products;  in other words this can be a means of increasing product
competitiveness.  Furthermore, it is a form of protection for the consumer.WT/TPR/M/77/Add.1
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Question (Argentina)
6. Paragraph 19 on page 6 of the Report by the Government of Switzerland states that
"The protection of appellations of origin and geographical indications is also essential for both
agricultural and manufactured products",  and adds that "consequently, recognition and
international respect for geograp hical indications is a priority for Switzerland".  Could
Switzerland explain why it is essential to protect agricultural and manufactured products byappellations of origin and geographical indications at the national level?  How does this type of
protection relate to the notion expressed in th e previous sentence that "Only solid protection in
a strict international framework can justify enormous research costs in a number of sectors"?
Answer (Argentina)
To begin with, it is worth noting that what is true about protection of geographical indications
at the national level is even truer at the international level.  The negative impact of gaps in the
protection of geographical indications at the national level is still greater in the context of a global
market.  The Swiss legislature took the view that a strong protection for all types of goods, without
distinction, was therefore essential.
1. The availability and diversity of products depend on market rules governing supply and
demand.  Nowadays, in a modern national economy, there is inevitably an increase in the production
and distribution of goods which form part of one and the same category but do not necessarily display
the same characteristics and qualities.  Consumers, like producers, need to be able to identify a
product among similar products.  The consumer in particular is faced with a wide variety and will beguided not only by a simple trade name, for example, but also by an indication of the product's
geographical origin.  Within one category of similar products, the consumer appreciates being offered
the opportunity to distinguish the subtle differences in products.  Furthermore, while seeking
diversity, the consumer will also look for "aut hentic" products which are from well-known regions or
match his wishes.  Geographical indications are a suitable tool in meeting consumers' needs.
In modern economies, geographical indications are also an important marketing element.  A
producer can considerably increase a product's commercial value with a geographical indication that
directly or indirectly evokes certain characteristics and qualities.  Consumers will tend to be
favourably inclined, concluding that the product offered by the producer has the characteristics andqualities they are looking for.
The use of a geographical indication for products which are not from the real place of origin
has adverse consequences.  Such use would be against the interests not only of consumers, enterprises
and different producers, but also of the WTO Members States, in that it would lead to a deteriorationin the national heritage (namely geographical indications) and to trade distortions.
2. Enormous research and development costs arise above all in the life sciences sector.
Accordingly, this does not apply directly to geog raphical indications, as the wording of the question
implies.  Nevertheless, there is a price to pay for developing manufacturing processes or specialtechniques and guaranteeing the quality of those processes and techniques.  It would be pointless for
the persons concerned to try to maintain that quality in the knowledge that, at the same time,
competitors were placing goods and services on the market that did not match that quality and yet
were profiting from the economic value inherent in the corresponding geographical indications.WT/TPR/M/77/Add.1
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Question (Argentina)
7. In paragraph 39 of the Report by the Government concerning the Swiss position in a
new round of multilateral trade negotiations, indicates as one of the main negotiating topics
"Extending the protection of geographical indica tions to food products other than wine and
spirits, as well as to specific industrial products".  (1) Could Switzerland please explain the
consistency of this proposal with the communication submitted by Switzerland together withother countries to the Council for Trips in do cument IP/C/W/204/Rev.1, which states that the
extension of protection is part of the built-in agenda of the Council for Trips?;  (2) Could
Switzerland please confirm that it only considers necessary the extension of protection to "food
products" and "specific industrial products"?;  (3) To what "specific industrial products" does
Switzerland consider that protection should be extended?
Answer (Argentina)
Ad 1:  Switzerland, along with a growing num ber of other Member States, considers that
under Articles 24.1 and 24.2 of the TRIPS Agreement, Member States have a mandate to negotiate theextension of additional protection under Article 23 of the Agreement to products other than wines and
spirits.  In this respect, the issue of additional protection of geographical indications forms an integral
part of the present negotiating mandate.  It is quite likely, however, that this issue will not be brought
to a conclusion before the next round of negotiations.  Switzerland therefore thought it necessary to
mention it specifically among the main topics of a forthcoming round of negotiations.  In any event,
mentioning the question of extending the protection of geographical indications as one of the topics
for a forthcoming round of negotiations has no bearing on the fact that this question already appearson the present negotiating agenda.
Furthermore, the apparent ambiguity mentioned by Argentina in its question is based on an
inaccurate translation of the original French text.  The text of the English translation of paragraph 39,
like the original version, is in fact the following:  "The main negotiating topics of relevance are
[and not could be] the following" (emphasis added).  A change to the Spanish translation is therefore
necessary in order to properly reflect the original French text and to remove any ambiguity as to
Switzerland's position.
Ad 2 and 3:  Switzerland supports an extension of additional protection to all products and
does not intend to confine it to food and industrial products or to some of them alone.  It is clear,
however, that each State has its own sectors for which it feels that good protection of geographical
indications is needed.  Switzerland, for its part, attaches great importance to some food products and
to specific industrial products, as mentioned in its report.
Question (United States)
How is ex officio protection provided for geographical indications? Please provide
examples of instances where the geographical indications of non-Swiss nationals have been
protected ex officio.
Answer (United States)
The Federal Law on Protection of Trademarks and Indications of Source (= geographical
indications) of 28 August 1992 (LPM; RS 232.11) sets out the requirements for the protection of
geographical indications for all goods and services in general (LPM, Articles 47 to 51).  This Law,
which consists of two separate and independent parts, one for trademarks and the other forgeographical indications (called indications of source in the Law), grants automatic protection withoutWT/TPR/M/77/Add.1
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any formal notification and registration procedures in the case of geographical indications (LPM,
Article 47(1 and 2)).
Mention should be made subsidiarily of the Law on Unfair Competition of 19 December 1986
(LCD;  RS 241) and the Law on Foodstuffs of 9 October 1992 (LDAI;  RS 817.0), which also ensure
protection of geographical indications (inaccurate or misleading indications on goods, services, etc.).
With respect to foreign geographical indications that are protected ex officio, we can cite:
- The refusal by the Swiss Federal Tribunal to register the "CUSCO" and "CUSKO"
trademarks for chocolate, cocoa, confectionery and pastries, on the grounds that they
constituted a geographical indication (ATF 97 I 79);
- the refusal by the Swiss Federal Tribunal to register the "ALASKA" trademark for
non-alcoholic beverages, mineral water, fruit juice, beer and syrups, on the grounds
that it constituted a geographical indication (PMMBL 1994 76).
Question (United States)
Please provide the contact information, mailing address, and fee information regarding
application, maintenance and any other fees necessary for non-Swiss nationals to apply for and
maintain protection of geographical indications in Switzerland.  If no centralized point for
receipt of requests for protection exists, please explain why.
Answer (United States)
General protection under the LPM does not require any notification and registration
procedure. In the event of litigation, it is the civil and criminal courts that determine whether a
geographical indication is involved or not.  However, general information on the protection ofgeographical indications may be obtained from the Federal Intellectual Property Institute of the
Federal Department (Ministry) of Justice and Police, Einsteinstrasse 1, 3003 Berne, www.ipi.ch.
Geographical indications for agricultural products other than wines may be registered with the
Federal Office of Agriculture (OFAG) of the Depart ment (Ministry) of the Economy, which considers
applications and accepts registration (Article 5 ss of the Ordinance concerning the Protection of
Appellations of Origin and Geographical Indications with Respect to Agricultural Products and
Processed Agricultural Products, hereinaf ter the AOP and IGP Ordinance (RS 910.12)).
Fees are based on the Ordinance of 7 December 1998 on OFAG fees (RS 910.11).  However,
OFAG has not charged any fees to date.  All re levant information may be obtained from OFAG,
Quality and Sales Promotion Section, Mattenhofstrasse 5, 3003 Berne, www.blw.admin.ch.
Protection of geographical indications for wines can be obtained from the cantonal
authorities.  The cantons determine the use of appellations of origin and indications of source, but arealso required to respect the federal provisions laid down in the Law on Agriculture (RS 910.1) and in
the Ordinance on Viticulture and the Importation of Wine (RS 916.140).
Any fees are governed by cantonal legislation.Full information may be obtained from OFAG,  Special Crops and Wine Economy Section,
Mattenhofstrasse 5, 3003 Berne, www.blw.admin.ch.WT/TPR/M/77/Add.1
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Question (United States)
How is Swiss recognition of a foreign geographical indication achieved?  For example,
does "protection in the country of origin" requi re that the country of origin have in place
national laws describing a particular geographical region and a quality standard for the goods?
Answer (United States)
With respect to general protection of geographical indications under the LPM, it is the civil
and criminal courts that are competent to determine whether a geographical indication is involved or
not, regardless of whether it is Swiss or foreign.  While the Swiss court does not make the outcome of
its examination contingent upon the existence of an y special regulations governing the geographical
indication in the country of origin, if one of the parties adduces evidence of such legislation, the court
may take it into account together with other evidence in issuing its ruling.
In the "CUSCO" and "ALASKA" cases mentioned earlier, the Swiss court recognized the
existence of a geographical indication and the need to protect it, irrespective of any mention ofregulations in the country of origin.
As to agricultural products other than wine, applicants for registration of a geographical
indication under the AOP and IGP Ordinance must submit evidence in accordance with Article 6 of
the Ordinance and list the specifications required under Article 7.  The specifications include a
description of the product and the method of preparation, the geographical area and the name of a
certification body (supervisory body).  Applicants prove that the geographical indication is notgeneric, that the product is actually from the geographical area in question (by preparing a file on
history and traceability) and submit other evidence of the link with the source or with the
geographical area (i.e. evidence that the product is typical of the area concerned).  Consequently, a
law setting out a specific area and describing the quality of the products protected by the geographical
indication is not necessary, since those particulars are included in the specifications .  In the case of
wines, the cantons regulate the use of designations.
Question (United States)
May only a governmental organization/entity apply for recognition of a geographical
indication in Switzerland?
Answer (United States)
It should be noted in this connection that Switzerland provides for general protection for all
geographical indications under the LPM and that this Law does not require any notification and
registration procedure for geographical indications to be protected.  It is the civil or criminal court
which, in the event of litigation, determines whether or not a geographical indication can be used.
To register a geographical indication for agricultural products other than wine, the applicant
must be a group of producers representative of the product, and to register an AOP, the group must
also, depending on the nature of the product, include  producers at all stages of production (AOP and
IGP Ordinance, Article 5).  In the case of wine, an application may be submitted by industry groups.
Question (United States)
How does Switzerland implement its obligations under Article 22.2 of the TRIPS
Agreement?  For example, how may interested parties, as required under Article 22.2 of theWT/TPR/M/77/Add.1
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TRIPS Agreement, challenge the validity of a geographical indication after recognition has been
granted?
Answer (United States)
The LPM regulates civil actions for all geographical indications, whether they concern
agricultural products, wines or any other product.
The civil actions possible are the following:  action to assert a right or legal relationship
(LPM, Article 52);  action to enforce performance, i.e. prohibition of an infringement or threat of
infringement of the geographical indication, order to desist, order to reveal the source of the goods
unlawfully bearing the indication of source (LPM, Article 55);  action for damages, etc. (LPM,
Article 55);  confiscation, destruction, etc. (LPM, Article 57);  provisional measures (LPM, Article
59);  publication of judgment (LPM, Article 60).
The LPM also contains criminal provisions:  the penalties are imprisonment for up to one year
or a fine up to SwF 100,000 for anyone who intentionally uses an inaccurate geographical indicationor a designation liable to be confused with an inaccurate designation, or creates a risk of deception by
using a name, address or trademark for goods or services from another source.   If the offender is
making a business of it, he shall be prosecuted ex officio (LPM, Article 64).
Border measures are also possible;  the Federal Customs Administration is entitled to notify
the beneficiary of an indication of source or a trade or business association with the capacity to
institute legal proceedings that there are grounds for suspecting the imminent importation orexportation of goods to which the indication of source has been unlawfully affixed (LPM, Article 70).
The holder of the indication of source may request the Federal Customs Administration to detain the
goods for a maximum of ten working days .  In exceptional circumstances, the detention period may
be extended by a maximum of ten working days.  If there is a risk of damage, the Federal Customs
Administration may ask for appropriate security.  Anyone who improperly requests the detention ofthe goods must make good the injury caused if the provisional measures are unjustified or if they have
not been ordered (LPM, Articles 70 to 72, and OPM, Articles 54 to 57).
Trade and business associations whose rules and regulations authorize them to protect the
economic interests of their members and organizations of national or regional importance with astatutory duty to protect the consumer also have the capacity to bring legal proceedings (LPM,
Article 56).
There are specific provisions that apply to geographical indications for agricultural products,
processed agricultural products and wine.  Indee d, the Law on Agriculture (LAgr) contains criminal
provisions:  anyone who intentionally and unlawfully uses a geographical indication protected under
Article 16 of the LAgr (agricultural products and processed agricultural products) or Article 63 of the
LAgr (wine) will, further to a complaint or denunc iation, be liable to imprisonment for a maximum of
one year and a fine of not more than SwF 100,000 .  If the offender is making a business of it, he shall
be prosecuted ex officio.   The penalty is a maximum of one year's imprisonment and a fine of not
more than SwF 200,000 (LAgr, Article 172).
The Law on Unfair Competition (LCD) also cont ains civil law provisions.  Anyone whose
goodwill, credit, or professional reputation, or business or economic interests are the subject of an act
of unfair competition or are threatened therewith may request the court to prohibit it, if imminent, to
put an end to it if it still continues, or to declare it illegal if the trouble it has caused persists .  In
particular, he may request that a rectification be made or that the judgement be communicated to thirdparties or published.  He may also ask for damages (LCD, Article 9).  Provisional measures are alsoWT/TPR/M/77/Add.1
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possible (LCD, Article 14).  Proceedings may be in stituted by customers whose economic interests
are threatened or injured by an act of unfair competition. Proceedings may also be initiated by trade orbusiness associations whose rules and regulations authorize them to protect the economic interests of
their members and organizations of national or regional importance with a statutory duty to protect the
consumer (Article 10, actions to prohibit (prevent) or terminate the unfair act) .  The LCD also
contains criminal provisions .  Anyone who intentionally engages in unfair competition (for example,
gives inaccurate or misleading information on his goods, takes measures liable to give rise tomisunderstanding with respect to the goods etc.) will , upon complaint, be liable to imprisonment or a
fine of up to SwF 100,000 (LCD, Article 23).
The Law on Foodstuffs (LDA), as well, contains criminal provisions.  Anyone who,
intentionally or as a result of negligence, gives false or misleading indications on foodstuffs, will beliable to short periods of detention or a fine of up to SwF 20,000 (LDA, Article 48(h)).
Question (United States)
Please reference the relevant Swiss law/regu lation(s) which address the means by which
interested parties may request termination of a geographical indication based on non-use or
failure to maintain the criteria identified.  If no relevant laws/regulations are available, please
explain why.
Answer (United States)
Since the general protection of geographical indications under the LPM is ex officio
protection, Swiss law does not contain any provisions addressing the means by which an interested
party may request termination of a geographical indication based on non-use or failure to maintain the
criteria identified.
In the event of litigation, the case is settled by the civil and criminal courts.  However, the
legal action will relate not to the cancellation of a geographical indication, since it is not registered,
but with preventing improper use of the geographical indication (LPM, Article 47).
In the case of agricultural products other than wine, there are no specific rules on non-use of a
registered geographical indication.  A geographical indication confers a right of use.  This means thatit may be used if the specification requirements are fulfilled.  Failure to respect these requirements
does not lead to cancellation of the geographical indication but to a prohibition of its use .  The
question of the protection of geographical indications for wines is governed by the various cantonal
laws, which do not require renewal of registration but provide the possibility of cancelling a
registration.
Question (United States)
Please explain how Switzerland complies with its obligations under Article 24.5 of the
TRIPS Agreement.
Answer (United States)
There is no notification or registration procedure for the general protection of geographical
indications.  Accordingly, it is for the civil or criminal court, in a case of conflict between a
geographical indication and a trademark, to settle the matter in observance of Article 24.5 of the
TRIPS Agreement.  Apart from this general rule, in the case of agricultural products, reference shouldWT/TPR/M/77/Add.1
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be made to Article 16(6) of the Law on Agriculture, and Article 10(3)(d) of the AOP and IGP
Ordinance.
IV. TRADE POLICIES BY SECTOR
Question (Chile)
Table AIII.5 in the Annex (page 126) shows St ate or private enterprises with monopolies
or exclusive rights.  Is there any indication that there may be a change of  policy in the future in
any one of these industries with a view to enhancing competition?  Under what conditions would
this be done?  Is there any possibility that they  could be opened up to competition from foreign
suppliers?
Answer (Chile)
Agriculture:  (a) Wheat (bread flour) and other cereals for human consumption, feeding stuff, straw
and related products:  exclusivity arrangements will be eliminated in 2001;  (b) bread flour:  no importrestrictions;  (c) distilled beverages and spirits:  liberalization under discussion;  (d) potatoes:  no
exclusive rights for potato production or marketing.
Salt:  No sign of liberalization.  The salt trade monopoly is based on an intercantonal concordat of
22 November 1973 (all cantons except Vaud, where the Bex saltworks has the monopoly) and is
exercised by one enterprise, Vereinigte Schweizerische Rheinsalinen AG.
Electricity, gas:  Both sectors will be gradually liberalized in the years ahead.
Telecommunications network:   Liberalization under discussion.
Certain telecommunication services:   The telephone service transmission monopoly (except for
closed user groups using leased lines) is in the pr ocess of being liberalized with the unbundling of the
local loop (ULL).
Air transport:  Integration in European legislation.
Airport management:  The general trend is towards liberalization;  integration of European
legislation as regards slots and handling regulations.
Air traffic control:   Integration of military and civil (Swisscontrol) systems;  no liberalization.
Rail transport, passenger transport by bus, tramway, cable, boat, etc.:  A concession is required
in order to operate such transport on a regular basis .  The enterprise with the concession  is required to
provide the services described in the concession document .  The purpose of the concession is to
guarantee a particular level of public transport services.
The regional transport supply is ensured through the "concession" principle, by which the
cantons and the Confederation grant concessions for regional road transport services after obtaining
bids from road transport companies.  This mean s that there is competition between the various
companies, and a choice can be made on the basis of price/quality ratio.
As in the case of railway transport concessions, road passenger transport concessions may be
withdrawn at any time, particularly when another enterprise offers a more cost-effective service of theWT/TPR/M/77/Add.1
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same quality.   A regional road passenger transport concession cannot, therefore, be treated as a
monopoly that excludes all other enterprises from operating a particular route.
Radio TV:  The Law on Radio and Television has now been amended, but  the changes will not enter
into force until 2004 at the earliest.  A dual system will follow.  The SSR (Swiss radio and television
company) will have to offer a public service and will receive a monopoly tax for that purpose.   Private
companies will be able to operate freely in terms of advertising, programmes and coverage area.  Inpractice, this means more particularly:  greater similarity with the more liberal provisions of the EU in
regard to advertising and the replacement of a concession system by a permit system.
Foreign broadcasters are already allowed access.
Postal service:  At the present time, the Poste Suisse has a monopoly on letters and packages
weighing up to 2kg.
A liberalization scheme is to be prepared by 2001 for the purpose of closer alignment with
EU rules, and should enter into force in 2003 or 2004.  Foreign enterprises can now operate in non-
monopoly postal service areas.   With the liberalization, new foreign competitors should be able to
enter the Swiss market.
Ports:   No initiative envisaged.
Certain insurance services:  No liberalization envisaged.
Certain mortgage bonds:  No liberalization envisaged.
Chimney sweeping, drinking water:   No liberalization envisaged.
(1) I
NTRODUCTION
(2) A GRICULTURE AND RELATED ACTIVITIES
Question (European Union)
Switzerland prohibits the importation of fresh pig-meat of Spanish origin on the
grounds of the possible presence of Aujeszky's di sease, when this case is not covered by the
Office International des Epizooties.  Does this not constitute arbitrary application of
phytosanitary rules?  Does Switzerland intend to take steps to remedy the situation and allow
European products normal access to its market?
Answer (European Union)
Switzerland prohibits the importation of fresh meat from any country which does not provide
any guarantee against Aujeszky's disease.  At the present time, Switzerland has no intention ofaltering these measures.
Question (Chile)
According to press reports published toda y, 1 December, the Swiss authorities have
decided to prohibit the use of meal of animal origin in animal feedingstuffs.WT/TPR/M/77/Add.1
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We understand that this is an emergency measure designed to deal with the serious
situation caused by the transmission of Creu tzfeld-Jacobs disease in connection with BSE
(bovine spongiform encephalopathy) in the use of animal meat and bones used in the
preparation of such meal.
However, we have learned that this measure would also be extended to fishmeal. Our
question is as follows:  what is the scientific basis for including fishmeal in this measure?  Isthere any scientific evidence to show that the BSE pathology that can be found in bovine
animals can also be found in fish?
Answer (Chile)
Switzerland is currently studying the situation concerning fishmeal which is not concerned by
the recent measures.
Question (Argentina)
Questions on agriculture:
According to page 72 of the Report of the Secretariat (WT/TPR/S/77), the allocation of
tariff quota import licences for various agricultural products is based on the so-called " prise en
charge " system, which makes tariff quota allocation conditional on the purchase of similar local
products.  This is one of the "trade-related investment measures" included in the Annex to the
TRIMs Agreement.  As such, it is considered in consistent with the national treatment obligation
and should have been notified and eliminated before 31 December 1996.  Could Switzerland
confirm that this trade-related investment measure was not duly notified?  Could Switzerland
explain the legal reasons why it has continued to make use of this measure that is inconsistent
with the TRIMs Agreement?
Switzerland does not consider "prise en charge" to be a TRIM.  It is a tariff quota allocation
system approved during the Uruguay Round (for further details, see the reply to the question from
Uruguay − (iii):  Import prohibitions, licensing and controls).
According to paragraph 24 on page 69 of the Report of the Secretariat (WT/TPR/S/77),
Switzerland applies a "threshold-price" system  to regulate imports of certain agricultural
products.  Under this system, variable tariffs are imposed on imports of "groups" of products.
Article 4.2 of the Agreement on Agriculture prohibits the use of "variable import levies" and
"minimum import prices".  Could Switzerland explain the legal reasoning behind the
maintenance of a tariff system that is inconsistent with the Agreement on Agriculture?
Answer (Argentina)
The tariffs notified by Switzerland in its schedule of commitments concerning fodder
products in respect of which the threshold price system is applied are bound and were approvedduring the Uruguay Round.  The tariff adaptations carried out by Switzerland for fodder products
remain within the WTO bound rates, in no case exceeding those rates.WT/TPR/M/77/Add.1
Page 102
Switzerland has notified a number of tariff quotas which include a "basket" of tariff
lines.  For example, the quota for meat mainly  produced on the basis of green fodder covers
44 tariff lines, and the quota for vegetables, 106 tariff lines.  This means that the administration
of tariff quotas can involve a considerable amount of discretion, and hence, can generate
problems of transparency.  Has Switzerland consid ered taking any initiative to make its system
of tariff quota administration more transparent?
Answer (Argentina)
Switzerland considers that its system of administering tariff quotas is transparent for all
operators.  In fact, Switzerland publishes a detailed report each year which is available to anyone
seeking information on the subject.  This report contains, inter alia , precise information on the various
modes of tariff quota allocation, who is entitled to them and the quantities allocated.  Taking the case
of vegetables, for example, the report provides such data for each type of vegetable forming part of
the global tariff quota.  At the same time, the tariff quota fill rates are very high – for the two quotas
mentioned, they are generally just under 100 per cent.
Questions (Australia)
Question 1
The Secretariat Report highlights the fa ct that agriculture in Switzerland and
Liechtenstein is the most highly protected sect or domestically and the most highly protected
agriculture sector amongst OECD countries, involving, inter alia , export subsidies for a number
of  products (including dairy products, cattle, and fruit), high average tariffs, tariff peaks and
tariff escalation, and high levels of direct support payments.
(a) Given the well documented damage that export and production and trade distorting
subsidies inflict on third countries, including developing countries, in what ways doSwitzerland and Liechtenstein consider that these policies contribute to a fair and
equitable multilateral trading system?
(b) The Secretariat Report also noted that th e development of sectors such as tourism have
been negatively impacted by policies adop ted in the highly protected sectors such as
agriculture.  Does Switzerland acknowledge that protectionist agricultural policies can
also undermine non-agricultural activities in rural areas.
(c) Is Switzerland prepared to make a commitment to avoid such domestic and
international outcomes by ensuring that any policies intended to address non-tradeconcerns are targeted, transparent and non-trade distorting?
Answer (Australia)
(a) Switzerland would like to highlight that a given economic system in general, i.e. outside
agriculture as well, is evolving all time-depending on a multitude of factors in a country and
outside a country.  At the same time multilateral rights and obligations are evolving as well.
Switzerland is integrated in this multilateral sy stem and contributes to this system with the
aim to improve it.  Coming to the issue of agriculture:  Switzerland is respecting its
obligations under the URAA and is engaged in the ongoing negotiations on agriculture.
(b) As possible "reasons for delayed normal development of branches such as tourism", the
Secretariat's report enumerates among a multitude of factors "food production" and adds eachWT/TPR/M/77/Add.1
Page 103
time "at least up to 1998".  Indeed, reforms in different sectors, as in agriculture, are ongoing
in Switzerland resulting in lower prices for products as well.  [Of course no one would denythat lower input costs under ceteris paribus conditions enhance the performance of a sector.]
Especially food costs are constantly decreasing as the decline in the average private household
spending for food and beverages from 12.8 per cent in 1990 down to 9.7 per cent in 1998
illustrates (reductions;  25 per cent! which are confirmed by the price indicators for these
product groups showing impressive real reduction).
(c) Commitments of all WTO-Members will be addressed in the agricultural negotiations.  So far
we can say that Switzerland is actually preparing its negotiation proposal to be submitted to
Members in December and discussed in the next special session of the Committee on
Agriculture.  The proposal is likely to comprise a paragraph on disciplines for instrumentsaddressing non-trade concerns.
Question 2
The Secretariat Report notes that the existence of the "prise en charge" system under
which allocation of tariff quotas for certain agricultural products is contingent upon domestic
purchases.  Can Switzerland explain how this system is consistent with Article 4.2 of the
Agreement on Agriculture?
Answer 2 (Australia)
The Swiss "prise en charge" system is a tariff quota allocation method that was agreed on
during the Uruguay Round and which:
- from a legal point of view, constitutes a domestic measure with no impact on the
rights of WTO Members and does not violate any of Switzerland's obligations under
the different WTO Agreements;
- from the economic point of view, does not represent any restriction on imports in
addition to the restriction inherent in any quota system – tariff quota in this case – and
does not violate any of Switzerland's quantitative market-access commitments, since
all quotas may be filled and the origin, quality and price are not affected.
Question 3
What role does science-based risk assessment play in the Swiss regulatory framework
and strategy for genetically-modified organisms?
Answer 3 (Australia)
Risk assessment plays an important role in  the Swiss regulatory framework.  In 1999
Switzerland introduced two new ordinances concerning risk assessment for the contained use oforganisms, the use of organisms in the environment and the placing on the market of genetically-
modified organisms.  Both ordinances are harmonized with the two Council directives of the
European Union 90/219EEC and 90/220EEC.
At the moment the Swiss Parliament is disc ussing a new proposal, the Gen-Lex, with more
stringent rules on the use of genetically-modified organisms (including transgenic animals, release of
GMO etc.).  Ethical issues should also be introduced into the authorization procedure for genetically-modified organisms.WT/TPR/M/77/Add.1
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Ordinance on the contained use of organisms (according to the European directive 90/219EEC:
Anyone involved in the contained use (experimental work, deliberate activity using
organisms, culturing, processing, multiplication, pr oduction, research, etc….) of genetically-modified
or pathogenic organisms must assess the possible damage to people and the environment (risk
assessment) in advance.  The damage to be considered includes in particular diseases of people,animals and plants;  nuisances or harmful effects resulting from the natural transfer of genes to other
organisms.
Anyone using genetically-modified or pathogenic organisms must notify the activity to the
competent authority for the control of the risk as sessment.  This is either the Swiss Agency for
environment, Forest and Landscape (environmental issues) or the Federal Office of Public Health
(human-related issues).  The Swiss Expert Committee for Bio-Safety (members are exclusively
scientists and researchers) advises federal and cantonal authorities on questions regarding bio-safety.
Ordinance on the deliberate release of organisms in the environment (according to the European
directive 90/220EEC:
Anyone involved in the use of genetically or pathogenic organisms in the environment must
take all due care to ensure that organisms, their metabolic and waste products do not endanger people
and the environment.  Releases for experimental purposes are permitted by the Swiss Agency for
Environment, Forest and Landscape if there is no danger for people and environment.  A science-
based risk assessment is the basis for the decision.  Anyone who intends to introduce genetically-modified or pathogenic organisms has to assess the risks of the products with regard to the safety for
people and the environment (animals, plants, ecosystem).  Depending on the product, different
authorities are involved in the authorization procedure.
Question (Chile)
Table IV.7 on page 72 of the Report of the Secretariat, entitled "Market-access
commitments via tariff quotas", includes "Apples, pears, quinces, fresh", with a tariff quota of
15,800 tonnes, allocated under the "prise en charge" system.  What is the degree of utilization of
this quota?  What is the percentage of like do mestic products that must be purchased for the
import quota to be allocated?  Is this percentage the same for all of the products affected by this
measure?
Answer (Chile)
The tariff quota for seed fruit (apples, pears and quinces, fresh) is distributed differently
according to the product.  Only apples are partially allocated according to the "prise en charge"
system, during the period from 15 July to 14 June.  The rest of the time, i.e. from 15 June to 14 July,
apples are imported without allocation under the tariff quota.  During the period from 15 July to
14 June, the tariff quota shares are  allocated in proportion to the purchase of Swiss or foreign applesby eligible importers during the preceding year.  In the case of pears, tariff quota shares are allocated
to eligible importers according to their imports during the previous year.  Imports of quinces and
Nashi pears under the seed-fruit tariff quota are free.  The quota fill for seed-fruit averaged 98.8 per
cent over the last three years.WT/TPR/M/77/Add.1
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Question (Chile)
Paragraph 24 on page 69 of the Report of the Secretariat mentions that the "threshold-
price" system is maintained on imports of certain agricultural products, currently fodder
products.  What other products are likely to be included?  How is the overall estimated import
price calculated?  Every how often is it calculat ed?  Why is it defined as a "variable tariff" on
imports of "groups of products"?
The threshold price system applies only to fodder products and seeds.  The import price is the
free-at-frontier price, uncleared.  This price represents the value of the imported goods prior to
clearance.  It includes the purchase price of the product plus transport and insurance costs up to the
Swiss border.  It is calculated by the Swiss authorities according to the data obtained from the officialcommodities exchange market and the European Union and on the basis of information supplied by
traders, cooperative companies and producers of compound foodstuffs for animal consumption.  The
Swiss authorities monitor the world market situation constantly and tariffs are adapted, as a rule,
every three months.  An exception is made to this rule where there are significant changes.  The Swiss
Government fixes the threshold prices for 11 basic products (see Table IV.6).  On that basis, theDepartment of Economic Affairs establishes indicative values (see Table AIV.1)  for each group of
products assigned to these basic products.  On the basis of these indicative values and the import
prices, the Swiss authorities establish a tariff which can normally vary every three months.  In no
circumstances, however, can the tariff thus established exceed the WTO bound rate.
Question (Uruguay)
Could Switzerland please explain the assertion in paragraphs 7 and 10 that although
agriculture only accounts for about 2 per cent of real GDP, employs some 4 per cent of the
active population, and contributes less than 4 pe r cent to the value of goods exports, Switzerland
is one of the OECD countries which provides the most aid to farmers − equivalent to 73 per cent
of gross receipts from agricultural products in 1999, which is well above the average of 40 per
cent for OECD countries?
Answer (Uruguay)
From a purely economic point of view, it is true, as shown by the global indicators, that
agriculture occupies a relatively modest position in the Swiss economy, a position which has in fact
grown weaker over the past few years, as has been  the case in many other industrialized countries.
However, it must be pointed out that as stipulated in Article 104 of the Constitution, approved by the
people in 1996, in addition to its purely productive role Swiss agriculture must also contribute to the
conservation of natural resources and upkeep of rural scenery and to a decentralized inhabitation ofthe country.
Question (Uruguay)
According to paragraph 32, Proviande, a private cooperative of producers', butchers'
and traders' organizations, has been commissioned, for a period of four years as from
1 January 2000, to price live animals and meat in domestic markets, to monitor the live animals
market, and to register and control applications for tariff quotas on live animals and meat.
Does Switzerland consider that this system and the expenses arising from such services will
contribute to effectively improving imports of the agricultural goods in question?WT/TPR/M/77/Add.1
Page 106
Answer (Uruguay)
The registration and control of applications for tariff quota shares for animals for slaughter
and for meat entails certain costs for the Confederation.  The Federal Council therefore decided that
the task would not be assumed by the Federal Office for Agriculture, but would be submitted to a call
for bids and awarded to the best bidder.  This decision has no impact on the above-mentioned imports,
since it is merely an administrative task necessary to the allocation of tariff quota shares and to thesmooth functioning of imports.
Question (Thailand)
We note that the Government of Switzerland subsidizes its farmers through direct
payments programme of which social payments are also included.  We are interested to know
more detailed information on the social paymen ts, especially child allowance for farmers which
constituted a subsidy of US$79 million in 1999.
Answer (Thailand)
The family allowances in the agricultural sector are granted in the form of child benefit
allowances and household allowances.  In the case of child benefit allowances, the purpose is to
support low-income rural families with children.  The income limit is SwF 30,000 plus SwF 5,000 per
child eligible for the allocation.  The figures are as follows:  child benefit allowances vary from
SwF 60 to Sw F 185 per month;  household allowa nce per farm worker, SwF 100 per month;  total
expenditure in 1999:  Sw F 135.2 million.
Question (Thailand)
We would also like to hear the view from the Swiss delegation on how this measure is
consistent with Annex 2 of the Agreement on Agriculture.
Answer (Thailand)
It is a social, family policy measure and has no effect on production.  It is clearly a green box
measure (annex II, paragraph 2).  Over the past years, Switzerland has notified these allowances insupporting table DS:1 under the item "General Services".
Question (Thailand)
We note that the Swiss Government grants interest-free loans of a maximum duration of
20 years to farmers who improve conditions for animal welfare.  Although Thailand does not
oppose any financial contributions or credits granted for animal welfare by developed countries,
we are of the view that this measure should no t be used as the condition for imports especially
from developing countries.  Moreover, we do not agree to include this measure under the green
box provision.
In this regard, we would like to seek more information on the amount of budget granted
for animal welfare for the last three years, ty pes of animals, and whether Switzerland notified
this measure under the Committee on Agriculture or not.WT/TPR/M/77/Add.1
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Answer (Thailand)
In the animal welfare area, Switzerland has two programmes which apply to all categories of
animals (cattle, pigs, sheep, poultry, etc.):  (a) "regularly released in the open air" (SRPA) and (b)
"animal housing systems that ensure a particularly high standard of care in the open air" (SST).  The
first of these programmes establishes requirements with respect to access to outdoors, pasturing, range
and housing of the animals (for example, organi zation of rest areas).  The second of these two
programmes concerns the additional requirements for housing and for the confinement of animals, for
example, housing systems with different areas adap ted to the different activities of the animals.
Expenditure on these programmes (in millions of Swiss francs) over the past three years has
amounted to:
Programme 1997 1998 1999
SRPA 44.4 56.4 72.7
SST   9.5 12.6 21.0
Switzerland notified these two programmes in Supporting Table DS:1 under the heading
"Environmental Protection".
There is no connection between these measures and imports, which are not subjected to any
animal welfare restrictions.
Question (Thailand)
We note that the Swiss Government applies "prise en charge" allocation system for
imports of several products under tariff quota.  It  is also mentioned that the "prise en charge"
system makes tariff quota allocation  conditi onal on purchase of similar local products.
We would like to seek more detailed information of this allocation system, i.e., how the
system works, which authority is in charge of this system, and what proportion of each local
product purchased per each import.
Answer (Thailand)
The "prise en charge" (PC) refers to the ob ligations for an importer to buy, in a given
proportion to his IQTR imports over the considered period of time, domestic goods of the same type
as the imported goods.  The following principles are being applied:
(a) no PC applies to imports at tariff rates outside access commitments (OQTR);(b) no domestic purchase obligation is higher than during the base period;
(c) no product would be subject to a ratio for imports vs. domestic purchase which would
pre-empt the possibility of a full  absorption by the domestic market of the total
import quota for that product.  E.g., total consumption for one product is 1000 t
and the tariff rate quota 500 t, the obligation to purchase domestically must not
exceed 1:1;WT/TPR/M/77/Add.1
Page 108
(d) no PC is being applied for products where the volume of OQTR imports is
substantially higher than that of IQTR imports (because of the disincentive for IQTRimports, thereby reducing de facto the value of the IQTR commitment);
(e) in general, where PC is applied IQTR imports are possible without the TQ limit in the
Swiss Schedule LIX being applied;
(f) new entrants are eligible to import TRQs as a matter of general policy.
The Federal Office for Agriculture is charged with the implementation of these regulations.The PC's share varies according to each product in relation to the market capacity but always
in a manner that allows to absorb the whole TQ (see above letter (c).  More details can be found in the
notification MA:1 of Switzerland.
Question (Thailand)
We would also like to hear the view from the Swiss delegation on this allocation system.
Does Switzerland consider this system consistent with the TRIMs Agreement?  If yes, how?
Answer (Thailand)
The "prise en charge" system applied by Switzerland is a quota allocation system which:
- legally, constitutes an internal measure  with no infringement on WTO rights of
other Members nor on obligations of Switzerland under the various WTO
Agreements which may be applicable;
- economically, does not impose a trade restriction in excess of the limitations
inherent in any TRQ, and in no way pre-empts WTO-bound market-access
commitments, since all quotas can be filled and origins are not affected.
Question (United States)
Paragraph 15
What are the criteria for "enhancing the [agricultural] sector's competitiveness" under
"Agricultural Policy 2002"?  What is the targ et date for achieving this objective?  What
commodities are covered by this objective?
Answer (United States)
The main criteria for the competitiveness of the agriculture is the price difference between
domestic prices and those of the surrounding countr ies.  According to Government forecasts, the
present difference will be reduced about 50 per cent.  The target should be reached in the next few
years.  There are no specific targets for particular commodities.  The result shall be measured by a
weighted average.WT/TPR/M/77/Add.1
Page 109
Question (United States)
Paragraph 16
Please provide estimates of the taxpayer costs associated with the policy measures.  How
do these costs compare with previous years' taxpayer outlays for agriculture?
Answer (United States)
Since 1997, this figure has remained constant, in nominal terms, at 3.9 bn Swiss francs (with
the exemption of 1999 with 4.2 bn Swiss francs).  It will remain the same, according to budget
forecasts;  until 2003.
Question (United States)
Table IV.3
Why were payments for farming under complementary direct payment in 1999 higher
than 1998 payments - more than 400 per cent higher?
Answer (United States)
Since 1999 the "Agricultural Policy 2002" is in force, based on the new agricultural law.
According to it the previously voluntary programme "integrated production" became the minimumstandard production method to be complied by the farmers in order to be eligible for direct payments.
Thus, the voluntary programme "integrated production" had to be stopped and the respective
payments have been recorded under complementary payments.
Question (United States)
Paragraph 17
What is the percentage difference between the concessionary rate of interest and the
market rate of interest?
Answer (United States)
The difference is 4.5 per cent.
Question (United States)
Paragraph 21/Table IV.4.
Switzerland's total domestic support for agriculture has declined since 1995.  However,
the share of green-box support has increased over the same period from 37.6 per cent to 49 per
cent.  Green-box support for 1999 increased five per cent from 1998.  What is the reason for the
increase?
Answer (United States)
Since 1999 the minimum required production standard for farmers to be entitled for direct
payments is the "integrated production".  It comprises clearly defined standards concerning animalWT/TPR/M/77/Add.1
Page 110
husbandry, nutritional balance, soil cover, crop rotation and pesticide use.  In order to get additional
direct payments, further conditions apply.  As of today, most farmers fulfil the required minimumstandard.  Consequently, the previous complementary payments have been listed under green box
payments.
Question (United States)
Paragraph 25
How are applied duties set?  What are the criteria?
Answer (United States)
Customs duties on fodder products are calculated on the basis of the threshold prices fixed
once a year by the Government and the world market price of a product c.i.f. Swiss border (for
threshold prices please refer to Table IV.6).  The c.i.f. commodity price consists of the following
elements:  the commodity price, the costs for freigh t and insurance of the cargo delivered to the Swiss
border.  Commodity prices are determined by the Federal Office for Agriculture based on board of
trade notifications and representative price informations of trading partners and trading companies.
Question (United States)
Paragraph 26
Of the variety of tariff quota allocation  mechanisms, including the non-automatic
licensing system, the "prise en charge" system, traders' past imports, auction procedures, the
first-come-first-served principle, the order of customs clearance, the pro-rata principle, and
"historical right", what is the basis for selecting which mechanism or combination of
mechanisms is used for each product?
Answer (United States)
The various possibilities for tariff quota allocation mechanisms are laid down in Article 22 of
the Federal Law on Agriculture.  This article also requires that allocating tariff quotas, the rules ofcompetition should be preserved.
The allocation criteria are decided by the Government upon consultation with producers,
importers and consumers.  The quantity of the tariff quota, price gaps, demand and trade patterns,
seasonal aspects and product sensitivity are among the elements taken into account.
Question (United States)
Table IV.8
A few agricultural products registered lower than 100 per cent-filled tariff-quota rates –
ranging from 26 per cent (casein) to nearly 70-80  per cent (coarse grains and wheat) filled rate
in 1998.  What were the reasons for this shortfall?WT/TPR/M/77/Add.1
Page 111
Answer (United States)
Casein
Over the past few years, demand for foreign casein has fallen sharply.  The support provided
for local casein has not increased.
Durum wheat
During the calendar year 1998, the quantity of durum wheat cleared through customs was
considerably less than average, i.e. 86,143 tonnes (as opposed to 122,000 tonnes in 1997 and 1999).
Anticipating the reduction in the contribution to the guarantee fund as of 1 January 1999, the millsreduced their stocks.  Production of durum wheat mills corresponds to the average of several years.
Coarse grains
Over the past few years, local consumption of oat-, barley- and maize-based products for
human consumption has been on the decline.  The sales of milled products have declined as a result.
Only foreign cereals are processed for human consumption.
Question (United States)
Paragraph 30
How has the "target-price" system reduced  surpluses of milk and dairy products?
Answer (United States)
This is a misunderstanding.  Surpluses are not avoided by fixing a target price, but by
allocating production quotas to milk producers (which is what Switzerland did).
Question (United States)
Table IV.9
What are the reasons that the notified export subsidies for dairy products (quantity),
fruit (value and quantity), and other processed pr oducts for 1999 were greater than the levels in
1998?
Please provide detailed information on export  subsidies by commodity, in addition to the
previously supplied information on subsidies by aggregate category.
Answer (United States)
Dairy products
The increase in quantity is linked to the dissolution of the Swiss Cheese Union, a semi-public
organization.  Owing to the consequent de-stocking, increased quantities were placed on the market
and partially exported.  In 1999, skim milk powder was once again exported with the help of the State
(within WTO-approved limits), while during the preceding years, milk producers had financed these
exports by themselves (mutual assistance).WT/TPR/M/77/Add.1
Page 112
Fruit
In 1998, the apple and pear harvest was abundant.  A large share of the fruit was used to make
concentrated fruit juice.  The increase in export subsidies for 1999 (quantity and amount) is due
exclusively to the marketing of this concentrated juice.  However, cumulative quantities and amounts
from 1995 to 1999 remain below the corresponding annual bound levels.
Processed agricultural products
Export subsidies for processed agricultural products in 1999 were in real terms smaller
(SwF 130.1 million) than in 1998 (SwF 136.8 m illion).  The commitment for year 5 of the
implementation period amounts to SwF 125.7 million.  Although the quantities exported in 1999decreased by some 2 per cent, the total export subsidies paid for processed agricultural products were
even reduced by some 5 per cent.  According to Article 9 paragraph 2(b)(i) of the Agreement on
Agriculture, Switzerland complies with these provisions as the amount which has not been used from
year 2 to 5 of the implementation period was more than SW F 70 million.
Question (United States)
(b) Other products
Cereals and oilseeds
Has the guaranteed-price system for oilseeds been eliminated?
Answer (United States)
The guaranteed-price system was abolished in 1999, at the same time as the production quota.
Question (Japan)
Japan commends the efforts by Switzerland to promote agricultural reform, emphasized
in its gradual reorientation of farm assistance , from price support measures towards that of
direct payments.  In addition, the "Agriculture  Policy 2002" initiative, adopted by the Swiss
Parliament in April 1998, is aimed at sustaina ble and market-oriented agricultural production
that should contribute substantially to a sa fe supply of food, the preservation of natural
resources, the maintenance of the rural landscap e, and the decentralized use of land.  Japan
supports this position.
Under the "Agricultural Policy 2002" (AP 2002), the production methods used by
farmers eligible for direct payments must comp ly with "integrated farming" techniques, i.e.
specified basic environmental standards and an imal-friendly conditions.  Please provide a
detailed explanation on the environmental standards which have to be satisfied for benefiting
from the direct payments.
Answer (Japan)
The required "integrated farming techniques" are clearly defined and thoroughly controlled
yearly on at least one third of all Swiss farms and they comprise:
- animal keeping according to the legal standards on animal protection;WT/TPR/M/77/Add.1
Page 113
- a limitation of the fertilizer inputs (including farm yard manure) to the total N- and P-
demand of the produced crops;
- at least 7 per cent of the agricultural farm land must be covered by ecological
compensation areas (semi natural habitats like extensive meadows or hedges);
- a regulated crop rotation (minimum intervals for each crop);
- a minimum green cover of the arable land;
- rules on integrated pest management plus restrictions on the use of certain pesticides.
Question (Discussant)
Elaborate on environmental considerations in  formulation of trade and other economic
policies.
Answer (Discussant)
Under the "Agricultural Policy  2002" (AP 2002), the production methods used by farmers
eligible for direct payments must comply with "i ntegrated farming" techniques, i.e. specified basic
environmental standards and animal-friendly conditions.  Hereafter in short the environmental andanimal welfare standards which have to be satisfied for benefiting from the direct payments.
The required "integrated farming techniques" are clearly defined and thoroughly controlled
yearly on at least 1/3 of all Swiss farms and they comprise:
- animal keeping according to the legal standards on animal protection (e.g. prohibition
of battery hens and hormone treatment of cattle;  (See also answer to a similarquestion of Thailand);
- a limitation of the fertilizer inputs (including farm yard manure) to the total N- and
P-demand of the produced crops;
- at least 7 per cent of the agricultural farm land must be covered by ecological
compensation areas (semi natural habitats like extensive meadows or hedges);
- a regulated crop rotation (minimum intervals for each crop);
- a minimum green cover of the arable land;
- rules on integrated pest management plus restrictions on the use of certain pesticides.
Question (Discussant)
Could you clarify your statement regarding th e future role of the State in the market
once all the elements of the 2002 agricul ture policy have been introduced?WT/TPR/M/77/Add.1
Page 114
Answer (Discussant)
In principle, the production of food and fibres is regulated by the market.  However, the State
provides direct payments for non-commercial agricultural services (public goods) generally decoupled
from production.  In the case of public goods, the State will always necessarily be involved.  But it
will be fulfilling its constitutional mandate, independently of the existence of tariffs.  At the same
time, we would like to recall that State agricultural  trading has been abolished in Switzerland.  The
private promotion agencies with State support contribute to sales promotion projects during the
introduction of a product onto the market.
(3) M ANUFACTURING AND ENERGY
(i) Manufacturing
Question (Canada)
Footnote 37 states, the textiles and clothing branch, dominated by small enterprises
producing high-quality yarns, fabrics and silk products, industrial textiles, and luxury clothing,
has for decades experienced strong pressures.  Has the textiles and clothing branch found strong
niches that Switzerland believes will survive the increased competition as of 2005, or are these
industries seen as sunsetting?
Answer (Canada)
The economic crisis of the early 1990s forced the Swiss textile industry to restructure and
focus on the production of high-quality yarns, fabrics and silk products as well as industrial textiles
and luxury clothing.  In other words:  since th e crisis, the Swiss textiles and clothing branch
concentrated to a bigger extent on niches (small series, customs-made solutions), However,
Switzerland does not apply any quotas on textiles (despite the right to do so under the MFAagreement) nor does the Government support the textile industry by other means, Switzerland
believes to be competitive also in the future with a newly-structured textile industry.
Question (United States)
The level of tariff protection in the manufacturing sector has remained relatively low.
However, owing to the imposition of specific duties, tariff dispersion is more pronounced in
manufacturing than other sectors, since the value of manufactured goods is not generally
proportional to their weight.  In addition to the Information Technology Agreement, the
Pharmaceutical Initiative and the Plurilateral Ag reement on Trade in Civil Aircraft, what is
Switzerland doing to promote further liberalization in this area?
Answer (United States)
Switzerland's foreign trade is based to more than 70 per cent on imports from and exports to
the European Community.  Therefore, preferential trade plays a central role in Swiss external trade.
As mentioned above, the overall tariff rate (including preferential trade) is less than 1 per cent and
plays no crucial role any more and can not be regarded as "protective", especially in the industrial
field.
Together with the zero-for-zero initiatives in WTO (pharmaceuticals, ITA etc.), a possible
new round of negotiations should aim at achieving a zero tariff rate by 2010 for a substantialproportion of tariff headings for manufactured products.WT/TPR/M/77/Add.1
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(ii) Energy
Question (Canada)
According to paragraph 57, the Electricity Market Law (EML), will provide a phased
opening of the electricity market (21 per cen t in 2001, 34 per cent in 2004 and full opening in
2007).  However, this market opening schedule is still under discussion.  Please provide an
approximate timeframe as to when discussions w ill conclude and a final decision on the market
opening schedule can be made.
Answer (Canada)
The Swiss Parliament is in the final phase of dealing with the Electricity Market Law (EML).
The law should be adopted by the end of year 2000.  The opening schedule coming out of the
Parliamentary debates is the following one:
- 30 per cent opening during the first three years after entry into force of the EML (ca.
2001-2003);
- 50 per cent opening during the following three years (ca. 2004-2006);- 100 per cent opening as of 2007.
This law is finally subject to a referendum which has already been announced by opponents.
Question (Hungary)
What are the Swiss plans to deregulate the electricity and gas market?
Answer (Hungary)
Switzerland is planning to open the markets for electricity and gas compatibility to the
respective directives of the European Community.
Electricity:  at the moment Swiss Parliament is finalizing the draft electricity market law,
presumably by the end of the on-going parliamentary session.  This law provides regulated third party
access, step-wise opening (first three years 30 per cent, second three years 50 per cent, after six years
full opening), the establishment of a regulatory authority ("regulator"), unbundling of accounts fordistribution companies and organizational unbundling for the transmission grid operator.
According to our plans, the law will come into force mid-2001.Gas:  At the moment the administration is preparing a draft gas market law.  During 2001 the
draft will be subject to the public consultation procedure.  The Federal Council will presumably be
able to decide upon a draft gas market law to be presented to the Parliament by the end of 2001.  As
there have not yet been any discussions nor decisions at the level of the Federal Council, details are
not yet available.  But it already can be said, the ne w law will be in line with the internal gas market
directive of the EC.WT/TPR/M/77/Add.1
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(4) S ERVICES
Question (Chile)
According to the TPR, the measures relating to the presence of natural persons (mode 4)
are not bound.  What are the main measures applied to professional services and other business
services such as advertising and services rela ting to agriculture and mining?  Are there any
plans to bind these measures in the future?  In what sectors?
Switzerland's commitments in the area of movement of natural persons are contained in the
horizontal section of its schedule of specific commitments annexed to the GATS.  In other words, the
regime applied in Switzerland is bound.  The main measures applied in this area can be found in theabove-mentioned horizontal commitments.
Generally speaking, Switzerland's immigration regime applies to all sectors.  In other words,
there are no sectoral specificities in this resp ect aside from Switzerland's commitments under the
Third Protocol to the GATS.  No measures specific to a particular sector are currently envisaged.
Question (Chile )
With respect to commercial presence and cro ss-border trade, limitations and conditions
are imposed on a variety of services.  Is there any plan to reduce such limitations?  In what
sectors?
Answer (Chile)
The conditions and limitations applicable under Switzerland's trade regime in the services
area can be found in its schedule of specific commitments annexed to the GATS.  Any future changes
to this schedule will depend on the ongoing services negotiations.
Question (Chile)
Switzerland maintains a number of reservations with regard to MFN treatment on
various grounds, and even requires reciprocity in  areas such as construction and engineering
services.  Can changes be expected in the future in any of these industries?
Answer (Chile)
The recent review of MFN exemptions conduc ted by the Council for Trade in Services
revealed that on the whole, the exemptions are justified on the basis of national policy, and are
therefore consistent with the GATS.  As stipulated in the GATS Annex on MFN exemptions, existing
MFN exemptions will be subject to negotiation in  subsequent rounds.  Any changes in the Swiss
schedule of MFN exemptions must be the result of those negotiations.
Question (United States)
Please describe the restrictions Switzerland maintains on legal services.  What restraints
are there on foreign lawyers providing legal s ervices and advice on forming partnerships?WT/TPR/M/77/Add.1
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Answer (United States)
The Parliament recently approved a Law on the free circulation of lawyers which should
ensure that a lawyer registered in one canton can also practice in another canton.  The Law also lays
down the basic conditions for access to the profession of lawyer.  Its entry into force is scheduled for
1 July 2001.
The new Law provides for the free circulation of lawyers by developing cantonal registers of
lawyers to replace the control that is currently exercised through a system of cantonal authorizations.
Lawyers wishing to offer legal assistance will apply for entry in the register of lawyers of the canton
in which they have their practice.  To that end, they must produce a certificate providing proof that
their technical qualifications meet certain requirements (law degree, one year of practical trainingfollowed by an examination) and produce proof of certain personal qualifications.  Once registered in
their canton, lawyers may be called to the bar anywhere in Switzerland without any other
authorization.  The Law contains provisions on the holding and constant updating of cantonal registers
and on cooperation between the supervisory authorities.
At the same time, the Law also regulates the es sential principles governing the practice of the
profession of lawyer.  It unifies, at the federal level, the professional regulations which appear today
in the cantonal legislations.  The unification of disciplinary measures is another measure contributing
to free circulation.
The certified lawyers must guarantee their independent and own full personal liability.
Therefore, they must practice in the form of an individual firm, unregistered partnership or registeredpartnership or registered partnership, in which the lawyers may not restrict their liability for
professional faults or dishonesty.  As a consequence, certified lawyers (i.e. licensed for representation
of customers before courts or in administrative pr ocedures) may not incorporate.  In particular, they
may not establish in the form of a joint stock company or a cooperation with limited liability.
(i) Financial services
(a) Banking and fund managementQuestion (Canada)
According to paragraph 67, Swiss Federal Baking Commission (SFBC) approval is
required before a foreign bank, having established a Swiss subsidiary, may open branches.
Please outline the substantive and procedural requirements for obtaining such approval from
the SFBC.
Answer (Canada)
The setting up of Swiss branches or agencies as well as representative offices by a foreign
bank is regulated by the Ordinance on Foreign Banks (OFB) of 21 October 1998.  For the setting upof a branch Article 4, OFB applies.  For a Swiss subsidiary of a foreign bank Article 4, OFB applies
as well, though there have to be applied some modifications, since the Swiss subsidiary is already
supervised by the Swiss Federal Banking Commission.  Therefore, the specific provisions regarding
the cooperation between home country supervisor and the SFBC and other requirements that had been
met when licensing the Swiss subsidiary need not be re-examined.
A Swiss subsidiary of a foreign bank is granted a licence to open a branch, if it is
appropriately organized and possesses adequate qualified staff and financial resources;  theWT/TPR/M/77/Add.1
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responsible foreign supervisory authorities make no objection to the establishment of a branch by the
Swiss subsidiary;  the managers of the branch meet the fit and proper requirement and the branchpossesses a charter that precisely defines its business activities and provides for an adequate
organization.
Question (Chile)
According to the Report of the Secretari at, the minimum capital requirement for
foreign banks is SwF 10 million.  What is the amount for Swiss banks?  Can branches of foreign
banks be set up in Switzerland without resident capital requirements?
Answer (Chile)
The same minimum capital requirement applies to foreign banks and national banks.  It
amounts to CHF 10 million.  There is no minimum capital requirement for branches of foreign banks.
However, according to Article 7 of the Ordinance on Foreign Banks the Swiss Federal Banking
Commission may require a branch to lodge security, if necessary, for the protection of creditors.Basically during the procedure which lead to the granting of licence does the SFBC, check, whether
the foreign bank has enough funds to carry out the intended business in Switzerland.
Question (Chile)
According to the Report, "In general, the same regulatory requirements apply to Swiss
and foreign banks."  What are the regulatory differences for Swiss and foreign banks?
Answer (Chile)
Foreign banks operating in Switzerland are subject to the same provisions of prudential
regulation as national banks, as far as they are applicable.
Question (Discussant)
Elaborate on actions taken to meet challenges  resulting from external competitive forces
and technological development.
Answer (Discussant)
Currently a report on the architecture of the supervision and the supervisors of the Swiss
financial market is on consultation.  Its results have to be taken into consideration prior to making anofficial statement on future steps.
Further, the SFBC is enhancing the supervision of  large banks both by enlarging the staff and
undertaking on the spot inspections in Switzerland and abroad as lead supervisor.
With regard to supervision of financial conglomerates, the SFBC and the Federal Office for
Private Insurance seek close cooperation on a case-by-case basis.
Furthermore, the SFBC is actively taking part in the revision of the Basle capital accord as
well as in several other international organizations and technical committees (e.g. the Basle
Committee, the IOSCO and the Joint Forum).WT/TPR/M/77/Add.1
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With regard to e-banking, a project has been established.  For the years to come, the issue of
e-banking will require considerable resources.
(b) Insurance
Question (Canada)
Paragraph 80 outlines the minimum share ca pital requirements for foreign insurance
companies, based on the type and expected volume of insurance contracts.  Do these
requirements also apply to Swiss insurance comp anies?  If no, what are the requirements for
Swiss insurance companies?
Answer (Canada)
These requirements also apply for the Swiss insurance companies.
Question (Chile)
In the case of insurance, risks that are physically located in Switzerland must be covered by
local firms (there is no cross-border trade for these serv ices).  Is there any plan to change this in the
future?  Switzerland is a major cross-border supplier of insurance services.
Answer (Chile)
For the moment, no change in the regime currently in force is envisaged.
Question (Hong Kong, China)
While we appreciate the prosperous de velopment of the insurance market in
Switzerland, we would be interested in knowing whether Switzerland has any plan to terminate
or liberalize in a progressive manner the State monopoly on fire, natural damage, and insurance
against workplace accidents.
Answer (Hong Kong, China)
The present system with its dual conception of state monopoly and private insurance
companies has been studied under various aspects and was discussed in an exhaustive manner.  To our
understanding, no plans exist for modification in the short term.
(ii) Telecommunications and postal services
Question (Chile)
Would it be possible to introduce a process of disaggregation of networks in order to
foster competition in the interrelated services of  telephony, the Internet and data transmission?
Technically, the spectrum used for radiocom munication could be enlarged.  Does the
Government plan to take this measure?
Answer (Chile)
The frequencies are first allocated at the international level within the framework of the ITU,
while harmonization in Europe takes place in the framework of the CEPT.  At the national level,WT/TPR/M/77/Add.1
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countries are free to assign their frequencies as they see fit.  Switzerland is trying, in the framework of
the NAFZ, the national frequency allocation plan, to use its own frequencies as economically aspossible.
Question (European Union)
On page 97, in paragraph 91 of the Secretariat Report, it is stated:  "subject to
international obligations and to the absence of  reciprocity, the licence may not be granted to
enterprises incorporated under foreign law":  Co uld Switzerland indicate if there are licences
granted to foreign entities pursuant to such recip rocity rules?  As regards allocation of licences
by ComCom and OFCM, what is the delay for decision?
Answer (European Union)
Reciprocity rules have not been applied so far.
Delay for decision:  as a rule within six months of submitting the application (Article 6,
paragraph 3 of the Telecommunications Law).
Question (European Union)
On page 97, in paragraph 92, it is stated that providers of telecommunications services
that have a dominant market position are subject to interconnection rules.  Is the list of such
dominant operators public?  How often is it reviewed?
Answer (European Union)
Switzerland does not apply the concept of SMF, but of market dominance.  There is not a
public list of dominant operators.  Market dominan ce is examined case-by-case within interconnection
procedures.
Question (European Union)
On page 97, in paragraph 93:  The EU would like to know if the universal service only
covers prices of certain services and their quality, but not the availability?  Furthermore, which
services are mandated by the universal service?  Also it is stated that "Cross-subsidization of
telecommunications services is not legally prohibited."  How is this compatible with
paragraph 1 of the reference paper?  More generally, what are the legal provisions to prevent
anti-competitive practices as per paragraph 1 of the reference paper (cross-subsidization, shareof information, …)?
Answer (European Union)
Following Article 18 of the Telecommunications  Law, the Commission and the Office shall
ensure that the universal service is provided for all sections of the population in all parts of the
country.
Services mandated by the universal service following Article 16 of the Telecommunications
Law:WT/TPR/M/77/Add.1
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(b) a public telephone service, i.e. transmission of speech in real time by means of
telecommunications techniques, including transmission of data employing transferrates compatible with the channels for transmitting speech;
(c) access to emergency call services,
(d) public call boxes in sufficient number;
(e) access to the Swiss directories of subscribers to the public telephone service,
(f) a transcription service for people with impaired hearing, allowing them full access to
the telephone service and the emergency call services on comparable terms and
conditions.
Cross-subsidization:
The regulations of the Swiss competition legislation in general aim at ensuring effective
competition which prevents companies from hurting competition by cross-subsidization.  As far as
providers with a dominant market position are conc erned in particular, the Swiss Cartel Law ensures
that such providers must not thwart competition by  abusing their position.  Market power in a specific
market should not enable anti-competitive behaviour in other related markets.
Swiss telecommunications legislation in particular does not contain any regulation prohibiting
cross-subsidization explicitly.  Nevertheless, the de termination to prevent such competitive distortion
builds the foundation of the reflections and practice of OFCOM.
As far as the services offered within the universal service licence are concerned, the risk of
cross-subsidization is suppressed by fixing upper limits for the prices.  These limits have to follow
market development.  When it comes to communications, the universal service licensee is confrontedwith intense competition.  Therefore, he is not able to get out unjustified profits suitable for financing
other services.  As far as physical connections – which are not exposed to competition – are
concerned, the risk of cross-subsidization is low since the prices applied in Switzerland are in line
with those demanded in other OECD countries.  Ther e are even speculations that the cost of physical
connections would not be covered entirely by the pr ices applied if the whole Swiss territory is taken
into account, but such speculations could not be verified so far.
Question (Japan)
The Report states that the "PTT was split into Swiss Post (in charge of postal services)
and Telecom PTT (for telecommunications services).  In October 1998, Telecom PTT was
transformed into a stock corporation called Swisscom AG".  How much did it cost to call Tokyo
from Geneva, for example, at 3 p.m. on 28 November 1995, when the PTT was still the
operator?  How much is this cost reduced today?
Answer (Japan)
Rates for Japan:
- November 1995:  SwF 2.13 per minute (single rate);- November 1996: SwF 0.65 per minute (week days) and SwF 0.50 per minute
(weekend rate).WT/TPR/M/77/Add.1
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Question (Japan)
Under what conditions can foreign capi tal enter the mobile phone market in
Switzerland?
Answer (Japan)
None, there is no restriction under Swiss law c oncerning foreign capital.  To enter the Swiss
mobile phone market, the only thing requested is a licence  There is no consideration of nationality.
Question (Japan)
Although several companies, including foreign companies, participated in the tendering
process of UMITS (the third generation mobile phone licence) in Switzerland, the process was
suddenly prolonged.  Does this mean that the procedure for market access taken by the Swiss
Government is not transparent?
Answer (Japan)
As ComCom decided to continue the UMTS auction according to the rules published earlier
this year, the process for the market access is as transp arent as it can be and as it ever was.  Please see
also the ComCom press release and the UMTS auction page http://www.umtsauction.ch.
(iii) Transport
(a) Air Transport
Question (Canada)
According to paragraph 106, airlines with passenger traffic shares exceeding 4.5 per
cent in Geneva and 1.55 in Zurich are allowed to  provide their own ground-handling (including
check-in).  Does this mean that foreign-owned airline companies are not permitted to establish
their own ground-handling facilities at the airpor ts of Geneva and Zurich if their share of total
tariff is below these percentages?
Answer (Canada)
Yes.  However, Switzerland intends, as from next year, to apply in this regard the European
Directive 96/67 which foresees a liberalization of handling based on reciprocity for third countries.
Question (Chile)
Paragraph 106 in Part IV (Trade Policies by Sector) of the Report by the Secretariat
states that only certain airlines are allowed to  provide their own ground-handling services in the
airports, but may not supply these services to other airlines.  Who provides such support
services to airlines which cannot or do not wish to provide their own ground-handling services?
Can any enterprise, national or foreign, which is  not an airline, offer ground-handling services
including catering?  What is the situation in the aircraft maintenance sector?  Are there any
plans to liberalize ground-handling and aircraft maintenance services in the short term?WT/TPR/M/77/Add.1
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Answer (Chile)
There is no precise legislation concerning handling services.  This area falls within the
competence of the airport operators.  The practice in Zurich and Geneva is for airlines to be given the
choice between two services suppliers (this applies both to scheduled flights and charter flights).
There is no nationality clause for aircraft handling or maintenance firms.With respect to handling, Switzerland will apply European regulations as soon as the bilateral
agreement with the EC comes into force.
Question (Chile)
The same paragraph states that the new Law of 1998 repealed the monopoly of Swissair
over international traffic.  Why was an exception  made until 2008 for the destinations for which
Swissair is actually operating and what are they ?  Does this monopoly include routes that are
not operated directly by Swissair, but rather by one of the airlines of the Qualiflyer Group or onthe basis of code-sharing as with American Airlines?
Answer (Chile)
Swissair's monopoly has been guaranteed until 2008 in order to protect its long-term
investments made on the basis of the concession on which its monopoly was based.  Code-sharing
flights departing from Zurich are protected.  In the case of flights departing from Geneva and Basel,the protection is less rigorous, and has even been given up by Swissair for certain routes originating
from those airports.
Wet-lease flights operated by Crossair for Swissair are covered by the monopoly.  As soon as
the bilateral agreement with the EC  enters into force, the monopoly will cease to exist on flights to
countries within the territory of the Union.
Question (Thailand)
We would like to seek more detailed information on the bilateral agreement between
Switzerland and the European Union on Civil Avia tion, especially on the gradual liberalization
plan.  In fact, we are interested to know whet her the agreement will affect the air transport
services of other countries or not.
Answer (Thailand)
Third and fourth freedoms upon entry into force of the agreement;  fifth and seventh freedoms
two years later.  Cabotage will be discussed five years after entry into force, but there is no automatic
procedure in this respect.  Third countries are not directly concerned.
Question (Thailand)
We are interested to know the conditions or criteria of both Switzerland and
Liechtenstein for foreign direct investment on air transport services, especially the conditions
on:
- domestic and international scheduled air services for passenger and cargo planes;WT/TPR/M/77/Add.1
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- domestic and international non-scheduled air services for passengers and cargo
planes;  and
- other related activities such as ground-handling services, the computer reservation
system, catering, and others.
Answer (Thailand)
Airlines must be majority Swiss-owned (simple majority of share capital) and under the
effective control of Swiss citizens, subject to international agreements providing for national
treatment of citizens of other countries.
There is no nationality clause for other firms (handling, CRS, etc. ...).
Question (Thailand)
Do Switzerland and Liechtenstein have any plans to reduce/remove the conditions on
these activities?  If yes, when?
Answer (Thailand)
As soon as the bilateral agreement with the EC  enters into force, citizens of EU member
countries will be entitled to national treatment in Switzerland.
Question (Thailand)
Please provide details of Switzerland's criteria for slot allocation.
Answer (Thailand)
Switzerland applies the IATA regulations (Worldwide Scheduling Allocation Guide).  As
soon as the bilateral agreement with the EC enters  into force, Switzerland will apply the European
regulations.
Question (Thailand)
Please provide details of Switzerland's procedure and criteria for tariffs approval.
Answer (Thailand)
The procedure for tariff approval follows, in principle, the provisions of the bilateral
agreements.  However, in general Switzerland has a liberal policy which goes beyond those
agreements.  As soon as the bilateral agreement with the EC enters into force, Switzerland will apply
the European regulations.
(b) Overland Transport
Question (Canada)
According to paragraphs 109 and 110, Switzerland has a rail network of 5,041 km, of
which about 3,007 km are owned by the Swiss Federal Railways (SBB), a State-owned company,and 2,034 km by regional companies … .  The SBB still holds exclusive rights over regularWT/TPR/M/77/Add.1
Page 125
passenger transport (along the main railways).  Is there a timetable for the privatization of
passenger rail services along the main railways?
Answer (Canada)
Under the Ordinance on passenger transport co ncessions (OCTV), regular passenger traffic
by rail in Switzerland is contingent upon the obtention of a concession.  The company that hasreceived a concession is required to provide the services described in the concession document.  The
purpose of a concession is therefore to guarantee a certain level of public transport service with
respect to both regional traffic and the transport of passengers over longer distances.
Regional passenger services, whether provided by the CFF or other railway companies, is
determined according to the principle of commi ssioning.  In other words, the cantons and the
Confederation commission regional transport services through a call for bids among the railway
transport companies.  This introduces the elem ent of competition among enterprises and ensures
better cost-effectiveness.  Although as a rule, concessions are granted for ten years, they may be
withdrawn at any time, particularly if another enterprise is able to offer the same quality of service ata better price.  In other words, this system cannot be described as a monopoly.
As regards long-distance passenger traffic, the CFF have been given the possibility, over a
limited transitional period, to operate alone on their network.  The purpose of this measure is to
provide a long enough exploitation period to ensure the profitability needed to cover the considerable
investments made.  Another important purpose of this provision is to ensure the best possible
integration of the Swiss public transport system, and in particular to ensure a certain coherence in thescheduling of the said traffic, which constitutes a benefit for the user.
(iv) Tourism
Question (Canada)
According to paragraph 118, the Swiss Corporat ion for Hotel credit (Société suisse de
crédit hôtelier) provides concessional loans and credit guarantees to small and medium-sized
companies investing in tourist areas.  Are these concessional loans and credit guarantees
available to foreign companies investing in tourism areas?
Answer (Canada)
The loans and credit guarantees of the Swiss Corporation for Hotel Credit are available to
foreign companies.  The Swiss Hotel credit Law does not distinguish between Swiss and foreigncompanies.  Loans and guarantees are restricted to tourism areas.
Question (Japan)
The report states that "in certain cantons, the required tests are not open to foreigners".
In which cantons are they not open to foreigners?   What kind of tourist guide services are not
open to foreigners in those cantons?
Answer (Japan)
The tests for tourist guide services not opened to foreigners refer to mountain guide and ski
instructor.  Restrictions can also refer to the ability of foreign mountain guides and ski instructors toWT/TPR/M/77/Add.1
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practise independently.  These restrictions are applied in some alpine cantons and included in the
Swiss GATS schedule under tourist guides services (CPC 7472).
(v) Construction
Question (Canada)
Paragraph 123 states that in order to acquire land, foreigners, who are not permanently
established in Switzerland, must receive prior authorization from both cantonal and federal
authorities.  Please outline the procedures a nd criteria for obtaining such authorization  To
what extent is the authorization to acquire real estate holdings at the discretion of individual
cantons?
Answer (Canada)
The "Lex Friedrich" (Federal Law on the Acquisition of Real Estate in Switzerland by Non-
Residents) restricts the acquisition of real estate in Switzerland by non-residents.  Therefore, realestate acquisition require prior authorization.  However, the acquisition of real estate for commercial
purposes (foreign investments) do not need any authorization neither by the competent Swiss federal
authority nor by the cantonal authority.  With regard to specific categories of real estate laid down in
federal law (e.g. social housing scheme) cantonal authorities have the competence of discretion
whether or not prior authorization is necessary.
Question (Canada)
General question on services:
While the Secretariat Report does not refer to professional services, we are interested in
obtaining information in this area.  What are the recent developments in terms of regulatory
reform in the area of professional services?
Answer (Canada)
Generally speaking, the service trades are hardly regulated at all in Switzerland.  This is
reflected in Switzerland's far-reaching commitments in this area.  Certain trades are regulated at the
cantonal level.
As regards lawyers, the Parliament recently approved a Law on the free circulation of lawyers
which should ensure that a lawyer registered in one canton can also practice in another canton. Itsentry into force is scheduled for 1 July 2001.
The new Law provides for the free circulation of lawyers by developing cantonal registers of
lawyers to replace the control that is currently exercised through a system of cantonal authorizations.
Lawyers wishing to offer legal assistance will apply for entry in the register of lawyers of the cantonin which they have their practice.  To that end, they must produce a certificate providing proof that
their technical qualifications meet certain requirements (law degree, one year of practical training
followed by an examination) and produce proof of certain personal qualifications.  Once registered in
their canton, lawyers may be called to the bar anywhere in Switzerland without any other
authorization.  The Law contains provisions on the holding and constant updating of cantonal registers
and on cooperation between the supervisory authorities.WT/TPR/M/77/Add.1
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At the same time, the Law also regulates the es sential principles governing the practice of the
profession of lawyer.  It unifies, at the federal level, the professional regulations which appear todayin the cantonal legislations.  The unification of disciplinary measures is another measure contributing
to free circulation.
Question (Canada)
General question on investment:
Please describe Switzerland's Investment reg ime with respect to the division of powers
between the federal government and that of the cantons?  In what areas does the federal
government retain authority?  To what extent do individual cantons have discretion in applyingdifferential investment policies?
Answer (Canada)
Switzerland's investment regime (access for foreign investors) is predominantly regulated by
federal law.  With respect to economic promotion activities (i.e. investment incentives) the cantons
have their own competence (concerning tax concession federal law requires cantonal harmonization).
5. O THERS
Question (Chile)
Does Switzerland have any kind of agreement recognizing education, experience,
licences or certificates for the supply of professional services with third countries?  If so, with
which countries?
Answer (Chile)
- The recognition of diplomas for the purposes of study abroad (academic recognition)
is covered by bilateral agreements with certain EU states.  Within the EU, leaving
certificates are mutually recognized.
- Germany and Austria:1  in 1994, Switzerland concluded agreements with Germany
and Austria for the recognition of degrees delivered by the colleges of higher
education.  The two agreements make no mention of diplomas from the HES (Higher
Vocational Institutions), but cover diplomas from the ETS (technical colleges) and
the BSCEA (Higher College of Economics and Administration).  An addendum to theagreement with Germany is currently being prepared to provide for the recognition of
HES diplomas.  Negotiations should end in 2000, just in time for the awarding of the
first HES diplomas.  As soon as the agreement with Germany has been adapted, the
agreement with Austria should also be adapted in the same way.
                                                     
1 Cf. international agreements to promote university mobility and to regulate questions of recognition,
Berne 1998, in particular:  Agreement on Mutual Recognition of Qualifications in Higher Education Germany-Switzerland, 1994 (this agreement does not cover arts and music which will be negotiated separately starting inautumn 2000), and the Agreement on Mutual Recognition of Qualifications in Higher Education Austria-Switzerland, 1994.WT/TPR/M/77/Add.1
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- Italy:  Internal consultations are under wa y to reach an agreement with Italy to work
towards mutual recognition of periods of study and programmes offered as well asdiplomas.
- France:  The conferences of rectors of the universities of France and Switzerland
concluded an agreement in 1994 on the mutual recognition of studies carried out in
the colleges of higher education (Nice Agreement).
2  Since an agreement will have to
be concluded on the mutual recognition of HES diplomas at the level of the rectors'
conferences, the parties must first agree on the level in the French system of
vocational training which corresponds to the HES diplomas.  This classification could
cause a number of problems, since the level of the French "bac" which serves as a
basis for qualifying all higher education degrees ("bac + x years") cannot becompared with the level of the Swiss " maturité gymnasiale"  or " maturité
professionnelle ".
- United States:  In the United States, admissions are controlled by the different
universities.  The association of admission officers last drew up a classification (notvery flattering) of the diplomas delivered by the ETS and ESCEA in 1991.
3  I t did
mention, however, that the quality of the training could be considerably higher than
the proposed classification would suggest in individual cases.  Thanks to the personal
contacts of certain teachers or directors in the engineering schools, over the past few
years it has been possible to have graduates from the Swiss engineering schools
admitted to American schools in the final semesters.  Following the introduction of
the " maturité professionelle " and the granting of the first HES diplomas in late
2000/early 2001, the framework conditions in Switzerland will have changed to such
an extent that it will be time to seek a new classification of our vocational training
institutions from the American authorities responsible for admission.
Question (Chile)
Are the Swiss Professional Associations public or private bodies?  Is it mandatory for
Swiss professionals to belong to a professional association?  What is the situation of foreign
professionals in  this respect?
Answer (Chile)
The professional associations, whether of  employers or employees, are private-law
institutions.
Reference:  Federal Constitution of 26 October 1999:
"Art. 23.  Freedom of Association
                                                     
2 Franco-Swiss Framework Agreement between the Conference of University Presidents (CPU) and the
Conference of Rectors of the Swiss Universities (CRUS)  on the recognition of diplomas and validation of
acquired qualifications.  Cf. Conférence universitaire suisse – Swiss Central University Office – Federal Office
of Education and Science. International agreements aimed at promoting university mobility and regulating
questions of recognition, Berne 1998, in particular the Agreement on Mutual Recognition of Qualifications in
Higher Education, Germany-Switzerland 1994.
3 Karlene N. Dickey – Karen Lukas.  Swiss Higher Schools of Engineering and Swiss Higher Schools
of Economics and Business Administration, American Association of Collegiate Registrars and AdmissionOfficers, Washington, 1991.WT/TPR/M/77/Add.1
Page 129
1. The freedom of association is guaranteed.
2. Every person has the right to form associations, to join or to belong to them, and to
participate in their activities.
3. No person shall be forced to join or to belong to an association."
The term "every person" covers all persons regardless of nationality.
Annex 1
15.2 18.9 19.8
-6.8 -6.5 -6.520.830.038.4
-5.0 -4.9 -6.2-0.4 -0.51.0
-20.00.020.040.060.0
1995 1997 1999
Merchandise transactions Services Labour income Capital income Unilateral transfersSwiss Current Account Surplus, 1995 to 1999
Major components, Billion Swiss Francs
Source:  Swiss National Bank.25.237.045.0WT/TPR/M/77/Add.1
Page 131
ANSWERS BY LIECHTENSTEIN
TABLE OF CONTENTS
Page
1. Introduction 131
2. Trade and Economic Policy Environment 131
3. Trade Policy Developments and Future Policy Directions 134
1. Introduction
This is the first review of Liechtenstein under the TPRM arrangements. The review comes
after some key developments for the Liechtenstein economy have taken place. In 1995 Liechtenstein
ratified the European Economic Area Agreement and the WTO-Agreement. In parallel the customs
union treaty with Switzerland was changed in order to allow Liechtenstein to become a party to theEEA Agreement and to make it possible at the same time to remain in the bilateral customs area with
Switzerland, the latter not being a member of th e EEA. In 1997 Liechtenstein joined the Government
Procurement Agreement of the WTO. These steps of new international obligations led to far-reaching
internal legal and organisational adjustments in Liechtenstein.
During the past years Liechtenstein’s broadl y diversified economy has grown rapidly as a
consequence of some vital ingredients such as the political stability, the close connection with
Switzerland (customs union, monetary union), its European integration through the EEA Agreement
and its robust entrepreneurial culture. One of the objectives of economic policy is to avoid that the
rapid growth will lead to imbalances between the different economic sectors. The existing constraints
for further growth, namely the very low supply of and the high prices for land and property as well as
the dried-out labour market dampen the danger of overheating.
A significant proportion of both Liechtenstein’s prosperity and employment is generated by
its manufacturing sector as well as by its financial services activities. Its manufacturing sector already
flourished before Liechtenstein took off as a financial services centre two decades ago.
At present one of the major tasks of Liechtenstein’s economic policy is to prepare
Liechtenstein’s economic environment to meet the cha llenges in view of a rapidly changing political,
economic and regulatory environment, especially due to the changes of the shape of Europe but also
due to new international developments for financial services.
2. Trade and Economic Policy Environment
Liechtenstein is a small open economy heavily dependent on external relations. Industrial and
services exports constitute a major source of foreign earnings. As there is no significant domestic
market, production is almost entirely for export. Li echtenstein has always believed in the virtue of
free trade. Legally binding systems for international trade as the WTO-Agreements are of utmostWT/TPR/M/77/Add.1
Page 132
importance for Liechtenstein  due also to the fact that a small state  can defend its vital interests
primarily in the context of international fora with enforceable rules.
(a) Economic growth
The current economic situation of Liechtenstein can be considered as highly prosperous.
Since  no GDPfigures are available for Liechtenstein so far, the steady growth of the Liechtensteineconomy has to be shown by other data. During the past five years, the number of workplaces
increased in total by 12%, exports improved by nearly 40%, the total balance sheet of the banks rose
by about 32%. Income from gainful activity of both residents and commuters has grown since 1994
by 20.7%. Liechtenstein has the same low inflation rate as Switzerland (1999: 0.8%). Interest rates are
stable with only some slight increases. There are no figures available reflecting private consumptionor investments. An indicator of investments is the number of permissions for new constructions. The
permission for the construction volume given by the authorities has increased during the past five
years. The public finances have shown a surplus for some years now. (The public budget totals
approximately 650 million Swiss francs.) During the same time the unemployment rate has steadily
increased as new workplaces have been partially filled in by new immigrants or by cross bordercommuters, and reached its peak of 2% at the end of 1998. The unemployment rate has then
constantly decreased and stands currently at 1.1%.
(b) The economic sectors
Liechtenstein’s economic strength is often linked with its financial services activities. While
admitting that the growth of  these activities in th e past two or three decades has been important for
Liechtenstein’s „success story“, it is also important to underline that Liechtenstein is much more than
a financial services centre. A significant proportion of both its prosperity and employment is
generated by its manufacturing sector, which already flourished before Liechtenstein took off as a
financial centre. Liechtenstein’s services companies as well as its industrial concerns rank among the
very best in their sectors, despite the fact that they have to cope with the absence of state support, adeficiency of raw material, high salaries and a limited labour market.
Almost half of the workforce is employed in the second sector (industry and skilled trades). In
Liechtenstein there are around 1’700 commercial businesses established. It is worth  mentioning that
Liechtenstein’s industrial companies employ outside Liechtenstein almost as much personnel as thetotal Liechtenstein workforce. In 1999 around 43% of the industrial exports went to other EEA-
countries, around 13% to Switzerland and 44% to other countries. Exports to the other EEA-countries
have decreased by 5.5% compared to 1998, those to Switzerland and other countries increased by
8.5% and 25.5%, respectively. In the ranking of the main export destinations the United States of
America are followed by Germany, Switzerland, France, Italy, Austria, Great Britain, Taiwan, Spain,Hong Kong and others.
Liechtenstein’s industrial manufacturers enjoy a worldwide reputation. Productivity is very
high by international standards. Due to the high sa lary level, simple mass production is not profitable.
The economic interests concentrate on niche products as well as on high-technology products.Therefore, the economy is dependent on the availability of a well--educated workforce. Liechtenstein
manufacturers mainly specialised in products of a capital- and research-intensive nature. Liechtenstein
is the source of items such as industrial fastenings, heating equipment, precision devices, coating
machinery and dental technology equipment, along w ith many other products requiring a high level of
technical expertise.
Around 50% of the labour force is involved in the third sector (trade and service). The branch
financial services employs one-seventh of Liechten stein’s total workforce. Liechtenstein’s financialWT/TPR/M/77/Add.1
Page 133
services providers have been competing successfully at international level for decades. Liechtenstein
is a high-quality financial centre in the fields of banking, insurance and investments.  The financialservices providers act in a liberal economic environment. But a liberal system can only survive in the
long run if high supervision standards are respected and enforcement of these standards is secured. To
further improve standards and their enforcement the Parliament of Liechtenstein passed in September
2000 some new legislation and government is in the process to reform the surveillance institutions in
the field of financial services.
Liechtenstein adopted some years ago  legislation to combat money laundering and organised
crime (Due Diligence Act, Law on International Legal Assistance in Criminal Matters, Criminal Code
articles on money laundering), partly as a transposition of relevant EU directives. The legislation in
Liechtenstein is therefore in compliance with European standards. The Due Diligence Act obligesthose subject to its provisions (including banks, financial institutions, lawyers, trustees, legal agents)
to identify the contractual party and the beneficial owner when entering into business relations. Under
the Act, a suspicious transactions reporting mechanism has been established. In order to further
improve the situation, various amendments and reinforcements of current provisions are expected to
enter into force on 1 January 2001, e.g. in the future  lawyers and trustees will be obliged to disclose
the beneficial owner to the bank and the Due Diligen ce Act will be expanded to include internal and
external cooperation regulation and exchange of information.
In the area of legal assistance, where problems have arisen, the reform will accelerate the
applicable procedures and will also strengthen other aspects of the enforcement of the prevention of
and the fight against money laundering.
The steadily decreasing primary sector today employs 1.3% of the total workforce. Two thirds
of the gross agriculture return comes from the dairy industry.
Liechtenstein’s economic life has benefited from social harmony for many years. The
relationship between employers and employees is a peaceful and co-operative one. The country boastsa fully-fledged social welfare system.
(c)  State activities
The liberal economic policy aims at keeping state interventions to a necessary minimum and
at offering attractive conditions for business activities. This is reflected in unbureaucratic legal and
administrative requirements and procedures for the foundation of enterprises, as well as in the tax
system. There is neither public funding for private undertakings nor a public policy specifically
intended to attract new foreign direct investments. On the contrary, the Government has always
encouraged Liechtenstein companies to also resort to expansion abroad.
Despite Liechtenstein’s liberal economic policy, the Government uses the instruments of
regulation of foreign direct investment
4 and immigration in order to preserve a balanced economic
growth, commensurate to the country’s small territory and in view of its relatively high proportion of
non-Liechtenstein citizens in the resident and in the working population. The  background of theseaims and the aim of the Government to preserve national identity can shortly be explained as follows.
First, Liechtenstein has a very special geographic situation. Liechtenstein is a rural, mountaineous
country with an area of 160 square kilometres. Liechtenstein consists of eleven village communities.
Even the capital, Vaduz, has less than 6’000 inhabitants. These facts reinforce Liechtenstein’s rural
character. By regulating foreign direct investments (also for non-resident Liechtenstein citizens) the
                                                     
4 The regulations concern only market access but not national treatment of new foreign investments.WT/TPR/M/77/Add.1
Page 134
Government respects the existing geographic situa tion and preserves access to real estate for the
resident population.
Second, the striking facts of the Liechtenstein labour market deserve some special remarks.
By 1999 Liechtenstein’s population has risen to  some 33’000, and its labour force to just under
25’000, a third of whom commute daily from Austria and Switzerland. More than 60% of those
working in Liechtenstein in 1999 were non-Liechtensteiners (30 years ago, foreigners accounted forno more than a third of the work force.) Because of these facts Liechtenstein needs clear rules
concerning immigration and the working place. In view of this specific situation, Liechtenstein has
even in the European Economic Area (EEA) special rules as far as free movement of persons is
concerned.
Third, there is a danger of growing imbalances between the sectors, due to the attractive
conditions for doing financial services in Liechtenstein. The Liechtenstein Government is more than
ever aware of the need of a diversified economic structure.
(d) Prospects
The economic prospects for the near future are good. There are however constraints for
further growth, namely the very low supply of and the high prices for land and property as well as the
dried-out labour market. These obstacles for growth are in principle welcomed by the political
authorities, since a too strong growth in a small country like Liechtenstein could lead to an
overheating of the economy. An external factor  that might have a slowing down effect on the
economic growth is the revaluation of the Swiss fr anc. Further potential constraints are mentioned
under the following titles.
3. Trade Policy Developments and Future Policy Directions
For Liechtenstein trade policy means to find a balance between the economic operator’s
interests for progressive trade liberalisation in order to achieve further access to other markets and thetask to take care of Liechtenstein’s specific situation (limited area, limited human and natural
resources and the already high percentage of non-Li echtenstein citizens in the workforce) in order to
preserve its national identity.
(i) The World Trade Organization (WTO)
Liechtenstein is fully committed to the multi lateral rules-based trading system and will
continue to emphasise the importance of universal broad-based trade liberalisation.
Liechtenstein strongly supports progressive trade liberalisation at a multilateral level and the further
strengthening of multilateral trade rules, as such rules are very important for small countries withouttheir own means of enforcing power. Thus, Liechtenstein is a strong advocate for the launch of a
broad and comprehensive round of multilateral trade negotiations in order to further improve gradual
opening of markets, predictability and transparency, which are of utmost importance for a small open
and outward-oriented economy. However, the active role of Liechtenstein in the WTO  will also in the
future remain limited due to limited human resources in the public administration. Also due to thecustoms union treaty by means of which Switzerland acts also on behalf of Liechtenstein in customs
union issues.
What we need is a World Trade Organization adapted to modern economic and social
realities. Rapid economic and technological changes demand  a fitting common rules-based trading
system.WT/TPR/M/77/Add.1
Page 135
Experience with the WTO during the last 5 ½ years has revealed some shortcomings of the
system. Effective implementation of the WTO agreements must be kept as a central issue of theagenda of WTO. Without faithful implementation of the present agreements, potential new rules have
less value and are not credible. Further efforts are necessary to integrate developing countries and
countries in transition in the global economy. The impact of trade liberalisation and globalisation on
employment and wealth distribution has to be addressed. Liechtenstein firmly supports all efforts to
further liberalise multilateral trade rules, to elimin ate protectionism, and to remove trade barriers and
trade distorting measures. Consistency between WTO rules and environmental protection measures
must be strengthened, as the fruits of an open trading system can only be fully enjoyed in a sound
environment. Trade liberalisation and environmen tal conservation should be seen as mutually
reinforcing. Issues that are closely trade related such as trade facilitation, electronic commerce,
competition, TRIPS, investment or government procurement have to be tackled by the WTO. Publicawareness as well as transparency of the WTO should be key words of our work, in order to improve
the credibility of the system.
(ii) The European Economic Area (EEA)
The Agreement on the European Economic Area ( EEA) extends most of the single market of
the EU to the three EFTA countries Iceland, Liechtenstein and Norway. This means that the four
fundamental freedoms of the internal market of the EU, the free movement of goods, services, capital
and person
5, apply within the EEA basically in the same way as in the EU. The EFTA-EEA-States
have the possibility to contribute to the shaping of this legislation. In addition, the Agreement includes
flanking and horizontal policies in order to strengthen the internal market. These horizontal policies
include research and development, statistics, education, social policy, the environment, consumerprotection, tourism, small- and medium-sized enterprises, culture, information services and
audiovisual services. The EFTA-EEA States participate in EU programmes in these fields and have a
say in developing and managing them through participation in the respective committees. The
common rules ( aquis communautaire) are continuously updated by adding new EC legislation to the
EEA Agreement.
Liechtenstein became a Member of the EEA Agreement on 1 May 1995 in order to secure its
economic success on a long term basis. This was a radical step for Liechtenstein, requiring
concentrated action at the political and administrative levels over an extended period of time, as well
as far-reaching legal and organisational adjustments, not least in order to preserve the customs unionbetween Liechtenstein and Switzerland. However, the efforts have been worthwhile – the outcome has
been largely positive. The beneficial economic impact has been recognised and the EEA Agreement is
well accepted as a form of integration adapted to Liechtenstein’s needs and possibilities.
Major adjustments were necessary or still are in progress especially in the field of public
services since the European policies as regards the liberalisation of the hitherto monopolised public
areas such as telecommunications, postal services , electricity markets etc. are part of the EEA
Agreement. However, the changes also have been regarded as chances to build up new business
activities in fields where Liechtenstein had no big experience up to that point. As regards
telecommunications and postal services the respective services had been provided by the then Swiss
monopolists on the basis of bilateral agreements. So the newly developed activities in these areas also
posed new challenges and offered new opportunities similar to those which were taken on much
earlier in the financial services sector. It is too early to draw any conclusions in these fields and it has
                                                     
5 In the EEA Liechtenstein has special rules as far as free movement of persons is concerned, by which
nationals of EEA States are still subject to a permit from the Liechtenstein authorities to take up residence inLiechtenstein.WT/TPR/M/77/Add.1
Page 136
to be taken into account that the processes are still going on and are being extended to new fields. But
so far, the overall experience in general is positive.
Glimpsing ahead Liechtenstein’s integration policy will be challenged by some developments
that take place beyond the sphere of influence of Liechtenstein. The enlargement process of the
European Union continues. Also in the light of the process of further deepening the Union’s existing
policies and adding new areas to the European integration , the EU will develop significantly in theyears to come (Monetary Union, Establishment of an Area of Freedom, Security and Justice,
development of a more effective Common Foreign and Security Policy or the consolidation of the
EU’s existing system of government). Liechtenstein will have to develop forward-oriented strategies
in order to be ready for the challenges of various possible scenarios, taking into account the policies
of its EFTA- and EEA partners Iceland, Norway and Switzerland.
(iii) The European Free Trade Association (EFTA)
Liechtenstein became a full EFTA member on 1 September 1991. Hitherto, Liechtenstein had
been covered by the EFTA Convention through a particular Protocol under which the interests ofLiechtenstein were taken care of by Switzerland.
The EFTA Convention as well as EFTA’s free trade agreements cover free trade in industrial
products, fish and marine products and processed agriculture products. In addition, the EFTA-
countries have concluded bilateral agriculture protocols with each of the third country partners. (Due
to the customs union treaty, Liechtenstein is cove red by the bilateral protocol between Switzerland
and the third country partner.) The agreements include rules on state aid, public procurement,competition and intellectual property. In addition, the agreements contain evolutionary provisions for
services and investment.
EFTA’s network of contractual relations is continuously expanded according to its policy of
making a dynamic and independent contribution to improving economic conditions across Europe andbeyond and of forging strong links with trading partners outside the continent. Starting in 1992, the
EFTA States have concluded free-trade agreements with 15 countries. They have in addition
declarations of cooperation with nine states or group of countries, respectively. Free trade negotiations
with Canada and Jordan are nearly finalised. First rounds of negotiations with Mexico have just taken
place; formal negotiations with Chile are going to be opened in autumn. Negotiations are in progresswith Egypt, Jordan, Cyprus and Tunisia. The EFTA-States are actively studying the regional trade
arrangements developments in Asia.
(iv) Customs Union Treaty/economic integration with Switzerland
Switzerland is a key partner of Liechtenstein in many respects. The customs union treaty
between Switzerland and Liechtenstein of 1923 has strongly influenced the political and economic
development of Liechtenstein in the 20th centu ry. The economic integration between the two
countries has been deepened through the conclusion of further 50 agreements between the two
countries in the course of the years (e.g. the Postal Treaty of 1978 (dissolved in 1999), CurrencyTreaty of 1980 (the Swiss franc has been introduced as legal tender in Liechtenstein already in 1924),
the Patent Protection Agreement of 1978, several agreements on the Movement of Persons and Social
Security, the Treaty on Value Added Taxes of 1994, Agreement on direct insurance of 1996.)
The customs union treaty has long been the basis for Liechtenstein’s integration in Europe,
manifested through the application of the free trade agreement between Switzerland and EU to
Liechtenstein and Liechtenstein’s participation in EFTA. Since Liechtenstein  became a member ofthe EEA in 1995 but Switzerland  refused that member ship, the integration paths of the two countriesWT/TPR/M/77/Add.1
Page 137
are somewhat different now. With the support of  the EU and Switzerland it became possible for
Liechtenstein to belong to two economic areas - the EEA and Switzerland - at the same time.
The main provision of the customs union treaty between Liechtenstein and Switzerland lays
down that the Swiss customs legislation – as well as any other Swiss federal legislation whose
application is called for by the customs union – is applicable also to Liechtenstein, as long as the
customs treaty is in force and with the exception of  law incompatible with the EEA rules. In addition,
all trade and customs treaties signed and ratified by Switzerland with third countries are automatically
applied  to Liechtenstein under the customs trea ty. At the same time Switzerland is empowered to
represent Liechtenstein in matters of this nature and to sign such treaties on behalf of Liechtenstein as
well (article 8 of the customs treaty). This article 8 has been changed twice: First in 1990 in order to
enable Liechtenstein to become party or member on its own to international treaties and ininternational organisations in the areas covered by the customs treaty; second in 1994 in order to
enable Liechtenstein to become a party to the Agreement on the European Economic Area (EEA)
while remaining part of the bilateral customs area with Switzerland, the latter not being a member of
the EEA.
Future developments of the existing close links between the two countries will strongly
depend on the integration policy Switzerland will choose towards the EU.
__________