Sustainability in free trade agreements
Sustainable development is a core element of Switzerland's free trade agreements (FTAs) and an integral part of its foreign policy. Switzerland seeks to negotiate agreements that support sustainable development both in Switzerland and in partner countries, promote sustainable trade, and prevent environmental and social dumping.
Sustainability provisions in free trade agreements
Switzerland aims to conclude FTAs that enable sustainable growth at home and in partner countries alike. To this end, it is committed to including specific provisions on trade-related social and environmental issues in all new FTA negotiations and when modernising existing agreements.
These provisions apply to all sectors covered by an FTA, including agricultural and food production, and reflect the parties' commitments under the UN Sustainable Development Goals. They provide a common framework for preferential economic relations, ensuring that FTAs pursue environmental protection and labour rights alongside their economic objectives.
Switzerland and its EFTA partners drafted the first model provisions on trade and sustainable development in FTAs in 2010. Between 2017 and 2020, they revised these provisions and added a range of new elements. An enhanced dispute settlement mechanism further helps ensure that the parties enforce these provisions effectively.
ince 2010, Switzerland and the other EFTA states have systematically included provisions on trade and sustainable development in their FTAs. Dedicated chapters appear in EFTA's FTAs with Montenegro (signed in 2011), Bosnia and Herzegovina (2013), the Central American states (2013), Georgia (2016), the Philippines (2016), Ecuador (2018), Indonesia (2018), Moldova (2023), India (2024), Kosovo (2025), Thailand (2025), Malaysia (2025) and Mercosur (2025). The FTA with Hong Kong, China (2011) and the bilateral FTA between Switzerland and China (2014) contain chapters on trade and the environment, complemented by parallel agreements on cooperation in labour and employment matters. A chapter on trade and sustainable development has also been added as part of comprehensive efforts to modernise the FTAs with Turkey (2018), Chile (2024) and Ukraine (2025) and to the existing FTAs with Albania (2015) and Serbia (2015).
The joint committees established under each FTA meet regularly and monitor compliance with sustainability provisions. Further information on monitoring implementation.
Sustainability impact assessments
Ex-ante sustainability impact assessments analyse the potential effects of planned or ongoing FTA negotiations on sustainable development. In its revised foreign economic policy strategy, the Federal Council established that targeted scientific assessments should be carried out ahead of major economic agreements. The Federal Council report Ex-ante assessment of the impact of free trade agreements on sustainable development (German version), prepared in response to Postulate 19.3011 (German version), explains how this approach is applied to FTAs in practice.
The report draws on an OECD study commissioned by Switzerland reviewing methods for conducting ex-ante sustainability impact assessments of FTAs: Sustainability Impact Assessment of Free Trade Agreements – A Critical Review. The study examines the requirements, possibilities and limitations of the various methods and highlights factors and challenges that are particularly relevant for mid-sized open economies such as Switzerland.
Authorities decide whether an ex‑ante sustainability impact assessment is required on a case‑by‑case basis, following an initial study. An in-depth assessment is carried out where they identify sensitive sectors or areas that could be significantly affected by changes in market access conditions resulting from an FTA.
As Switzerland negotiates most of its FTAs within the EFTA framework, it conducts such assessments jointly with the other EFTA states wherever possible. The ex-ante sustainability impact assessment of a future EFTA–Thailand FTA, published in September 2024, was the first conducted under the EFTA framework.
Sustainability impact assessments of the EFTA–Mercosur Free Trade Agreement
The State Secretariat for Economic Affairs (SECO) commissioned two complementary studies that examine the potential impacts of the Free Trade Agreement (FTA) between EFTA (Switzerland, Norway, Liechtenstein, Iceland) and Mercosur (Brazil, Argentina, Paraguay, Uruguay). The studies assess environmental, social and human rights impacts using a comparable methodology.
Both studies model trade flows on the basis of the negotiated outcome and use a general equilibrium model to estimate economic effects and the resulting environmental and social impacts. Qualitative analyses complement the modelling; for the social study, these also draw on consultations with around 80 representatives from civil society, business and academia. The results are based on projections for the year 2040 and should be interpreted as a conservative (worst‑case) scenario.
Under the FTA, Swiss exports to Mercosur countries would be 55% higher in 2040 than without the agreement, while exports from Mercosur countries would rise by about 5%. Overall economic effects are modest: trade flows would change only marginally at the global level (Switzerland: around +0.31–0.33%; Mercosur: around +0.12–0.13%), with similarly modest effects on GDP (Switzerland: +0.06%; Mercosur: +0.01%).
Environmental impact assessment
An environmental impact assessment was carried out by the World Trade Institute at the University of Bern on behalf of SECO and published in 2020. It analyses the effects of the agreement on greenhouse gas emissions, air pollution and land use.
Overall environmental impacts are limited: greenhouse gas emissions would rise slightly in Switzerland (around +0.1% in 2040), while the impact in Mercosur countries (+0.02%) and globally (+0.0004%) is negligible. Air pollution would increase marginally in Switzerland but remain largely unchanged in Mercosur countries and worldwide.
The modelling shows similarly limited impacts on deforestation in Mercosur countries (around +0.02%; worst-case +0.1%). Scientific evidence suggests that actual impacts are likely lower or negligible. As the agreement would not significantly change existing trade flows in environmentally intensive goods, it is unlikely to lead to substantial additional environmental impacts.
Social and human rights impacts
A study on social and human rights impacts was conducted in 2024/2025 by the Geneva Graduate Institute (Centre for Trade and Economic Integration) in collaboration with the World Trade Institute at the University of Bern. It examines impacts on labour markets, labour rights and selected human rights aspects.
Here too, overall impacts are limited. The modelling indicates modest positive effects on wages and employment in both Switzerland and Mercosur countries, with only minor sectoral adjustments. In Switzerland, low-skilled workers and the agricultural sector are expected to benefit most. In Mercosur countries, modest employment gains are anticipated in agriculture and services, accompanied by slight declines in manufacturing. Impacts vary by gender and between urban and rural areas, but remain small overall.
With regard to labour and human rights, no significant changes in protection levels are expected, as the relevant provisions largely correspond to existing international obligations. The study identifies potential for longer-term improvements through enhanced cooperation, dialogue and monitoring.
Structural challenges in Mercosur countries – particularly regarding the enforcement of labour rights, informal employment, and regional and gender-based inequalities – persist independently of the agreement. The study therefore highlights the importance of accompanying measures focused on implementation, cooperation and oversight of existing standards.
Conclusions
The two studies reach consistent conclusions. Since overall changes in trade flows are limited, the agreement's environmental, social and human rights impacts are likewise modest. A positive overall outcome will depend decisively on the existing regulatory framework and the effective implementation and monitoring of the agreement.
Index
Press releases
Agreement on Climate Change, Trade and Sustainability (ACCTS) signed
15.11.2024
Further information
OECD Guidelines on Responsible Business Conduct
The guidelines include recommendations on risk-based due diligence in areas such as human rights, labour rights, the environment and anti-corruption.
International regulatory developments and CSR standards
Swiss companies are often affected by foreign sustainability regulations. International standards on responsible business conduct strengthen their competitiveness.
Contact
Foreign Economic Affairs Directorate
World Trade / Free Trade Agreements/EFTA Division
Holzikofenweg 36
3003 Bern