The 1972 Free Trade Agreement (FTA) forms the basis for the free trade in industrial products between Switzerland and the EU. Industrial goods originating in the territory of either party are exempt from customs duties under Protocol No. 3 to the FTA. Protocol No. 2 sets out the rules on processed agricultural products. The FTA is the cornerstone of economic relations with the EU, which is Switzerland’s main trading partner.
Since the Agreement on mutual recognition in relation to conformity assessment (MRA) entered into force in 2002, technical barriers to trade have been removed in a large number of industrial sectors. Mutual recognition is based on equivalent technical requirements. By eliminating the need for two conformity assessments, the agreement removes an important barrier to trade. As well as cutting costs (in the product sectors covered by the agreement), companies save time when launching new products at the European level. However, the MRA needs to be updated regularly to take account of the latest legal developments affecting the two states parties. The EU is not prepared to update the MRA at present due to the lack of an institutional framework. As the chapter on medical devices has not been updated, mutual recognition of the relevant requirements is no longer guaranteed in this sector.
The 1999 Agreement on certain aspects of government procurement concluded as part of Swiss-EU bilateral relations broadens the scope of the 1994 WTO Agreement on Government Procurement (GPA). The 1999 agreement states that, within the framework of relations between Switzerland and the EU, the WTO rules shall also apply to purchases made by the regional and communal authorities, public and private railway operators, public and private enterprises involved in supplying gas or heat, and private companies that provide a public service on the basis of exclusive rights and which are active in the sectors of drinking water, electricity, urban transport, airports and maritime or inland ports. This agreement gives Swiss suppliers access to a market worth billions.
Free movement of personsThe 1999 Agreement on the Free Movement of Persons (AFMP) and its protocols make it easier for Swiss and EU nationals to live and work in each other's territories. In addition to the free movement of labour, the agreement provides for the mutual recognition of professional qualifications and the coordination of social security systems. The same rules also apply between Switzerland and the member states of the European Free Trade Association (EFTA). The AFMP makes it easier for Swiss companies to recruit workers from the EU/EFTA zone, and thus plays a significant role in maintaining Switzerland’s competitiveness as a business location and in boosting economic and job growth.
Accompanying measures
The introduction of the free movement of persons was accompanied by the implementation of measures designed to protect workers from the undercutting of wages and employment conditions that are customary in Switzerland.
The 1999 Agreement on trade in agricultural products facilitates trade between Switzerland and the EU in this sector. It permits preferential tariff arrangements for a certain number of basic agricultural products and reduces, and in some cases eliminates, non-tariff barriers in the veterinary field and in a number of other areas. In addition, an agreement on the mutual recognition of protected designations of origin (PDOs) and protected geographical indications (PGIs) for agricultural products and foodstuffs has been in place since 2011. The EU is also Switzerland’s main trading partner for agricultural products. The agreement has created new opportunities for Switzerland to export its agricultural products: exports, especially of cheese, have seen continuous growth since it entered into force. The veterinary annex (Annex 11 to the agreement on trade in agricultural products) creates a common veterinary area in which the same conditions apply to trade between the two parties. In other words, it abolishes border checks on the trade in live animals and animal products, and regulates the measures taken to control epizootic diseases.
The Agreement on linking emissions trading systems (ETS), ratified by Switzerland and the EU in December 2019, entered into force on 1 January 2020. Negotiations on linking the trading systems for greenhouse gas emission allowances first began in 2011. Specifically, linking the two systems allows Switzerland to participate in the European emissions trading market, thus enabling companies covered by the ETS to reduce their emissions at a lower cost. This creates a level playing field as large Swiss emitters now pay the same carbon prices as their European competitors. In addition to environmental benefits, this linking of the two ETS also has economic advantages: it enables companies participating in the Swiss system to trade emissions on the larger European market. The emissions generated by civil aviation activities are also to be incorporated into the Swiss ETS, thus bringing it into line with that of the EU. Moreover, this linking of the Swiss ETS with that of another state was the first agreement of its kind and an essential step in exempting Switzerland from the EU’s Carbon Border Adjustment Mechanism (CBAM). The ETS agreement is affected by dynamic developments in the EU's climate policy. This means that the Swiss ETS must be continuously reviewed and amended, if necessary.
This agreement authorises Switzerland to take part in the European satellite navigation systems established under the Galileo and EGNOS programmes. It gives Switzerland access to all signals and the right to membership of various committees and working groups. In addition, the agreement ensures that the Swiss aerospace and service industries enjoy the same conditions as their EU counterparts when tendering for contracts. In return, Switzerland makes an annual contribution to the programme costs. The market opportunities associated with the GNSS programmes are of long-term importance, and the many ways in which these European programmes and the signals they generate can be used hold great potential for a wide group of users.
Switzerland’s second contribution to selected EU member states is intended to boost its credibility as an active and supportive partner of the EU and, in so doing, to strengthen Switzerland’s bilateral relations with the partner countries. It also seeks to contribute to stability and prosperity in those countries, and to better manage migratory flows by reducing economic and social disparities. At CHF 1.3 billion, the second Swiss contribution matches its 2007 ‘cohesion payment’. The new contribution is earmarked for 13 countries that joined the EU between 2004 and 2013. The Swiss funds will be invested in projects and programmes that run until 2029, with the countries in question providing a minimum of 15% in co-financing. Switzerland also sees this as an opportunity to encourage partnership between the countries and the Swiss actors involved, in particular when it comes to leveraging Swiss advice and expertise.
Given the closely linked nature of the Swiss and EU economies, anti-competitive practices affecting both jurisdictions are on the rise. However, the competition authorities have difficulty enforcing competition law in such cases, as their jurisdictional reach is generally restricted to their national territory. At the international level, it is now widely accepted that effective cooperation between competition authorities helps ensure better protection of competition. The Agreement between the EU and Switzerland concerning cooperation on the application of their competition laws, concluded on 17 May 2013, aims to strengthen cooperation between the competition authorities of the two parties. The agreement, which entered into force on 1 December 2014, improves the implementation of competition law by enabling the two parties to exchange information on cross-border cases and coordinate their processes.
Last modification 23.06.2025
